QUESTION 1 Why was Haier so successful in China? ANSWER Haier Group became the business leader in appliance manufacturer business in China by the end of December 2004. The fact that it was the second largest manufacturer of refrigerators globally was evidence of its outstanding growth. Haier strictly abided by its objectives in a very focussed way and worked hard towards achieving success. The following are the reasons for Haier's sucees story in China: Commitment to Quality: Haier stressed on greater commitment towards quality than their competitors. Zhang believed that this commitment should percolate down to the lower ranks as well. Haier realised that in a business as theirs, they had to provide supreme quality in order to stay for long. Hence, in order to make workers realize to the importance of quality, Zhang once ordered them to smash 76 refrigerators which did not meet the required specifications. Continuous Innovation: Haier realised that differentiation is the key to succeed in this kind of a market. They felt they would employ innovation to differentiate their products. They continuously increased their product range through innovation. They had about 96 product categories with 15100 specifications. The company always won praise for its innovative products. This ensured healthy cash inflows to the company in the long run. High Market Responsiveness: Haier believed in high market responsiveness. It employed the principle of understanding the needs of its customers and then manufacturing products to suit them. Its 42 distribution centres around China operated as independent "sales companies" that were responsive to the needs of the customers. It was a customer focussed company. Reputation of the Brand: Haier followed a single brand approach. They believed that a strong brand name would help them in their approach to go global. Their strategy involved developing brand around a single product first by spending immensely and once it was successful, they would diversify into other products. Customer Service: Another key differentiating factor was superior after sales service to its customers. They had a service network 5500 independent contractors, one for each sales outlet. It provided free temporary repairs and full repair costs within warranty periods. . Operational Efficiency