Haier Group has made several major breakthroughs in its development in the past. What was behind those breakthroughs?
At every stage of Haier’s development, there are always opportunities for innovation awaiting our own discovery. I don’t think it necessary to make comparisons between Haier and other large companies, but I do believe what matters is which company can grasp the right opportunities. In Japan, Apple’s products made a home run and beat all their Japanese rivals, and I think that’s because Apple seized the right opportunity.
I tend to believe that any company with the ability to integrate resources could turn these resources into their own no matter who the real owner is, and I think the situation is truer in the age of widespread internet connections today. What Haier focuses on doing is tapping into the internet age and building a business model that fits in well with this age. In doing that, I’m going to have to ask every Haier employee to take a good look at the market and work as entrepreneurs.
Do you think that the internet could bring Chinese enterprises to the same level as their foreign counterparts?
Let me put it this way: Multinational corporations have a great talent pool that helps them seek markets and profits, and with the perfect match between talent and markets, the outcome would be unimaginable. On the other hand, companies like us need to figure out how to drive our employees [the talent pool] to improve themselves, thus helping to improve the ability to integrate our global resources.
Let’s say the whole world is a gigantic Facebook community made up of tiny communities defined by their own consumer groups and markets. Do you mean that Haier needs to discover and cater to these tiny communities?
You could put it that way. The internet creates customized demand and therefore further market fragmentation. We wouldn’t have known what 1,000 communities or consumer groups want without the help of the internet, but now we do.
What’s so fascinating about Facebook is it creates demand, instead of simply meeting demand as Google does. Facebook is made up of around 45 million tiny communities, every one of which is filled with people sharing similar ideas and interests; thus their personalized demands arise. And here comes a question: How do we turn the personalized demands of tiny groups into the demands of larger groups of people?
This could be quite a daunting task for Chinese enterprises, most of which are better at selling products than services. At Haier, we aim to understand those tiny communities, meet their personalized demands and offer them the right products. In this way, we are actually selling services more than products, and it’s not like we’re giving up our strength as a manufacturing entity. Haier aims to offer our different consumer groups the products they need, rather than just selling them what we have to offer.
How does Haier plan to integrate its global resources?
What’s good about the internet is that with its help, anyone can have access to any resource anywhere in the world. In the past, Haier took a path of what I call internationalization, meaning we nurtured a company based primarily on our own resources and sought growth in the overseas market. But today the concept’s changed, as we focus more on globalization, meaning Haier aims to implement its global strategies with the help of global resources. For Haier, we could bring global resources to our research and development team, to our marketing team, all in an attempt to build a global brand.
Now that Haier Group has exceeded annual sales of RMB 100 billion, what’s the next major goal? Creating more revenue, or more about building itself into an innovation-led leading global group?
The group currently has two listed subsidiaries. Qingdao Haier Co. Ltd. is mainly engaged in product research and development, manufacturing, etc; Haier Electrics Group Co. Ltd. focuses more on distribution and channel management. That being said, the two arms are respectively responsible for the two ends of our operations: R&D and sales. But I’ve been thinking how we could change the operations into a new model that ties R&D directly with the markets, while manufacturing would be taken care of via outsourcing.
Like I said, in the next 10 years, a major part of our development strategy will be the globalization of our brands and the integration of global resources.