Haier's boss surprises his acquired US management - Bill Fischer

Bill Fischer

When Haier took over GE's Appliances, US management feared the future. But the Chinese takeover is very different from the American style, they discovered. Western firms are victim of their traditional viewpoints, tells IMD-professor Bill Fischer, who studied Haier's very different corporate style, to AP.

AP:

Haier has tried to speed up product development by using the internet to ask potential customers for suggestions and feedback, an approach taken by Chinese smartphone brands. The company says a new appliance can go from drawing board to market in as little as one year, down from more than three years. 

CEO's Zhang Ruimin’s management changes “are more impressive than we see anywhere,” said William A. Fischer, a professor at the IMD business school in Switzerland who has followed the company for a decade. He co-wrote the 2013 book “Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform.” 

“He trusts his employees to play more of a leadership role,” Fischer said. 

He said a group of European executives he took to Haier headquarters two years ago refused to believe its decentralized style could work. 

“I was struck by how daring Haier was in their thinking. And the people I was working with were hostages to very traditional ways of working,” said Fischer.

More at AP.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on China's outbound investments at the China Speakers Bureau? Do check out this list.
 

Haier´s strategy to enter American homes - Bill Fischer

Bill Fischer

When China´s leading white goods producer Haier bought the appliances department of GE it caught the headlines. But the acquisition might not be as important as the underlying strategy to enter American homes, says IMD professor Bill Fischer, co-author of the book Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform to Bloomberg.

Bloomberg:

Besides the purchase, Haier forged a "long-term strategic partnership” with Fairfield, Connecticut-based GE to jointly expand in high-tech manufacturing areas such as healthcare and the industrial Internet. According to Bill Fischer, a professor of management at the Lausanne-based IMD business school, that was Haier’s biggest coup. 

“I believe that Haier sees the partnership as potentially more important than the acquisition itself,” said Fischer, who’s written a book about Haier’s transformation. 

The tie-up between Haier and GE was discussed “at the senior-most level” of both companies and potential global projects that draw on each other’s expertise have been identified, a Haier spokesman said in an e-mail. A joint working group is being put together to narrow down details, according to the spokesman.... 

Haier’s true aim is likely not in emulating the old GE, but to go for a less asset-heavy and nimbler strategy, where the company uses its assets as a “platform” to collaborate with others, much like how app programmers work with the iPhone and iPad, said IMD’s Fischer.

More in Bloomberg.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on innovation? Do check out this list.

Related articles

• China's Twitter is making a lot of investors very happy
• China just dethroned the U.S. as the largest iOS app spender
• Amazon Echo can now control some GE appliances

Rising labor costs and lower sales growth drive outbound expansion - James Roy

James Roy

Haier´s purchase of GE´s appliances and Midea´s efforts to get a bigger stake at Germany´s robotic company Kuka both reflect the challenges the giant Chinese firms face at home, says business analyst James Roy to Barron´s. Rising labor costs and slowing growth of domestic sales makes both look abroad.

Barron´s:

James Roy, an analyst at consultant China Market Research Group, says the deals represent two very different ways in tackling the challenges both face. For Midea, “labor costs are continuing to rise and the pool of available workers shrinking over time,” Roy tells Barron’s Asia. A number of Chinese provinces have lavished annual increases in minimum wages, while an ageing workforce and preference for services jobs are also draining the talent pool. A quick hunt through Midea’s annual financial reports indicates wages as a percentage of sales costs have risen exponentially over the last few years. 

That’s been eating in to Midea’s bottom line. The company’s traditionally focused on the low-to-middle end of the Chinese market for appliances like refrigerators and washing machines, which typically have lower margins. ... 

The rationale behind Haier’s purchase of GE’s appliances business looks simpler to decode. The company’s battling similar headwinds to Midea, namely sluggish domestic sales due to the Chinese economy’s slowdown. In fiscal 2015 its total revenues slumped by about 5%. A recent fightback in China’s property market hasn’t brought much reprieve either, given the rebound’s been mostly confined to top tier cities like Shanghai and Shenzhen. Haier bills itself as the world’s biggest white goods maker, with global market share of 10%, but the vast majority of this comes from China. Estimates put Haier’s U.S. sales at a tiny 1% of its overall revenue. GE “gives them access to a higher end segment than they’ve previously been able to get to through their own self-branded products,” explains China Market Research’s Roy.... 

Still, there’s more both Midea and Haier could do to clean up their act. China Market Research’s Roy reckons both have been slow to catch up with new trends in home appliances, or have made missteps here in the past. Case in point: Both Haier and Midea have been slow to the punch when it comes to new offerings like air purifiers – products with obvious captive markets given the poor air quality in Chinese cities. Additionally, dryer machines, for example, just haven’t caught on given locals’ propensity for hanging clothes out of windows to dry. Roy thinks by bringing more international expertise into the fold, the pair is more likely to avoid being taken to the cleaners in future. “There’s a growing comfort among large Chinese companies to acquire other companies and learn from their best practice,” he believes. “There’s a realization that they need to learn more international know-how.”

More at Barron´s

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on China´s outbound investments? Do check out this list.  

Related articles

• The global road of China´s white goods producers - James Roy
• Buy Robot: Silicon Valley Misses Out as China Nabs Kuka
• Rise of the machines: Robots wipe out 60K jobs at Taiwanese factory
• Innovation experts at the China Speakers Bureau (updated)
• Midea Makes $5 Billion Bid For German Robotics Company

Haier´s strategy into US homes - Bill Fischer

Bill Fischer

The purchase of the GE appliances section by Haier is part of a strategy to enter American homes, says IMD professor Bill Fischer, who studied Haier intensively, to Bloomberg. How different is Haier from GE?

Bloomberg:

Besides the purchase, Haier forged a "long-term strategic partnership” with Fairfield, Connecticut-based GE to jointly expand in high-tech manufacturing areas such as healthcare and the industrial Internet. According to Bill Fischer, a professor of management at the Lausanne-based IMD business school, that was Haier’s biggest coup. “I believe that Haier sees the partnership as potentially more important than the acquisition itself,” said Fischer, who’s written a book about Haier’s transformation. 

The tie-up between Haier and GE was discussed “at the senior-most level” of both companies and potential global projects that draw on each other’s expertise have been identified, a Haier spokesman said in an e-mail. A joint working group is being put together to narrow down details, according to the spokesman.... 

GE’s sale of its appliance unit comes as the manufacturer is itself attempting to positionas a digitally savvy industrial manufacturer, by expanding a business providing data analytics capabilities for its heavy-duty equipment. The company earlier this month announced it would move its headquarters to Boston to bolster those plans. 

Haier’s true aim is likely not in emulating the old GE, but to go for a less asset-heavy and nimbler strategy, where the company uses its assets as a “platform” to collaborate with others, much like how app programmers work with the iPhone and iPad, said IMD’s Fischer.

More at Bloomberg. 

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more innovation experts at the China Speakers Bureau? Do check out this list.  

GE-deal upward boost for Haier brand - James Roy

James Roy

Haier might be the largest white good manufacturer, globally active, but is not yet seen as a global brand. The purchase of the appliances section of GE for US$5.4 billion might just change that perception, says James Roy, Associate Principal of the China Market Research Group (CMR) in the International Business Times.

The International Business Times:

Haier, the world's No. 1 manufacturer of white goods by volume, has little more than 1 percent of the U.S. market. It is one of the reasons why it was able to win the deal -- a previous sale of GE Appliances to Sweden’s Electrolux was opposed last year by U.S. antitrust regulators, who said the merged company's significant combined market share would lead to higher prices. 

“The GE deal would give Haier a stronger brand,” James Roy, associate principal at China Market Research Group in Shanghai, told International Business Times. “The company is a big player, but it has struggled in brand positioning, particularly in the U.S., where it’s seen as mass market.” 

Even in the Chinese market, Roy said, it's seen as a volume maker. Haier is always present, and reasonably priced, with a service infrastructure that people respect for its scale and reliability — but it's maybe not something people get excited about. "We haven’t seen them making the kind of innovative moves we’ve seen from a brand like [smartphone maker] Xiaomi , which has leapfrogged competitors by introducing its own brand air purifiers, for example," Roy added. 

Zhang Ruimin, who has spoken of his desire to turn Haier into a “great company," has long emphasized the importance of innovation, experimenting with innovative management structures in the company, and seeking to invest in smart devices, such as 3-D printed air conditioning units. 

The takeover, experts say,  aims to take Haier to the cutting edge, giving it not just GE's brand name but also its software. "GE is famous for its strong emphasis on best practice, and Haier could learn from its innovation culture, too,” Roy told IBT... 

(Haier) will require all of its flexibility to make a success of running one of the world’s oldest and most respected household appliance brands. China Market Research Group’s Roy said the example of Lenovo, which took over IBM personal computers and is now a market leader in the sector, is a promising one -- if Haier approaches its acquisition in the right way. 

“I could see it working if they don’t squander GE's brand equity," he said. "As long as they don’t look at this as a vanity acquisition, and are willing to learn from GE, they could make this work."

More in the International Business Times.

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.  

Related articles

• Xiaomi CEO not concerned about declining sales
• Arrest Fosun chair shocks private sector - Rupert Hoogewerf
• China Technology Innovation Comes of Age

US Congress members fear loss of military secrets - Wendell Minnick

Wendell Minnick

Two members of US Congress have asked for a National Security Review and a Committee on Foreign Investment in the United States review into a new GE joint venture with the Aviation Industry Corporation of China (AVIC), writes defense analyst Wendell Minnick in Defense News.

Wendell Minnick:

Two letters sent to [defense secretary Leon] Panetta - from Rep. Randy Forbes, R-Va., and Rep. Frank Wolf, R-Va. - criticize the GE deal with AVIC by questioning the formation of an enterprise to develop integrated modular avionics (IMA) hardware and software for China. 

"This IMA technology was developed originally for the ... F-22 and F-35 fifth-generation fighter program," Forbes wrote in the Oct. 17 letter. 

Forbes said he is concerned the technology could end up in China's new stealth fighter, the J-20, under production by AVIC. 

Wolf responded with a Nov. 14 letter strongly supporting Forbes' call for a review and questioning whether GE could protect secrets from an aggressive Chinese espionage effort. 

"Given the breadth and scope of this espionage, GE's assertions that they will be able to fully protect sensitive technology lacks credibility," he wrote. "Should the GE-AVIC joint venture proceed, there is no question that all the sensitive technology involved will be completely compromised by the PLA [China's People's Liberation Army]."

More in Defense News.

Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch, or fill in our speakers' request form.  

Related articles

• Report: PLA's A-team spies on the internet - Wendell Minnick (chinaherald.net)
• New military leadership expected - Wendell Minnick (chinaspeakersbureau.info)
• Singapore sets up naval design firm in China - Wendell Minnick (chinaspeakersbureau.info)
• China leading on economic espionage, US report - Wendell Minnick (chinaherald.net)
• US aerospace firms might help China's military - Wendell Minnick (chinaspeakersbureau.info)

More links to Wendell Minnick at Storify.

Bernanke, manipulating the US currency - Shaun Rein

Ben Bernanke via Wikipedia

Ben Bernanke, chairman of the Federal Reserve, is wrong in pumping 600 billion US dollar into his economy, writes Shaun Rein in Forbes. The dependence of the US economy on its addiction to debt in increasing its problems, not solving them. Bernanke is shifting the problems of the US to the rest of the world, including China, holding large amounts of US-dollar denominated bonds.

Global investors are rightly worried that with the U.S. money supply growing the value of the dollar will continue to drop. So what are they doing? Companies like Apple, General Electric  and Pepsi are investing in emerging markets like Brazil, India and China that are rebounding better from the crisis. The result is massive asset bubbles in those places that could create great volatility if they popped.

In other words, Bernanke is unleashing America's economic woes and bubbles on the rest of the world. America's closest allies like Germany and Brazil are protesting, sensibly, as are the Chinese. They don't want Bernanke to fob off America's problems onto them.

More in Forbes

Commercial

Shaun Rein by Fantake via Flickr

Shaun Rein is a speaker of the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

Related articles

• Bernanke hits back at Fed critics, points at China (reuters.com)
• Aung San Suu Kyi: economic sanctions do not help - Shaun Rein (chinaherald.net)
• Food price controls temporary - Shaun Rein (chinaherald.net)
• Next 5-year plan: a leaner and greener economy - Shaun Rein (chinaherald.net)