Haier in India free essay sample

Case Report 1. Haier in India: building presence in mass market beyond China 1. Why did Haier enter India? What did it plan to achieve in this new market? Haier entered the global markets and started an internationalization strategy in the 1990s. Starting from European countries including Italy, the United Kingdom, and France, it stretched over even to the Asian market and opened its first manufacturing facility in Indonesia. Although the first entrance into the Asian market was in 1996, it did not enter the Indian market until early 2004.There were many reasons why Haier didn’t, and one of them is the high tariffs and barriers that stopped it from doing so. But in 1991, after a balance of payment crisis that situated India in debt with large loans from international agencies, India went through some policy changes of internationalization. These changes finally allowed wholly owned foreign entities and treated them like local companies. Even after the barrier reduction, Haier hesitated in entering India, but in 2004 Haier entered the Indian market at last. There are many reasons why Haier made the step to actually go into the Indian market. First of all, a series of policy changes in the 1990s definitely opened the doors and set the environment that made it possible for Haier, a foreign company, to enter the Indian market. In addition to that, the Indian market itself was in a favorable state for Haier. Around 2003-2004, India had rising disposable income, an expanding middle class, and a relatively low entry barrier in the white goods market. These conditions were very attractive for Haier to launch its new facility in India.This kind of approach stemmed from the inverted duty structure, whereby the imported parts of a product were taxed, but a finished product imported whole would be duty-free. A heavy tax burden played a role in making Haier use this kind of strategy too. And eventually in 2007, when sales volume grew large enough to justify local production costs, Haier acquired a manufacturing facility at Ranjangoan in the Pune district of Maharashtra. The step Haier took in acquiring a factory in India turned out to be profitable and beneficial.It served not only as a source of supply for the Indian market, but also as a sourcing hub to markets in Africa, the Middle East, and Southern and Western Asia. It allowed Haier to reduce the delivery time and better serve its broader global network of clients. Having a new factory in one of the Indian government’s technology parks also allowed Haier to import capital goods, raw materials, and components duty-free, and to receive tax exemptions on export profits or refunds on central sales tax.The next step Haier took in its strategy was to create a name brand in the host market. Under the brand message â€Å"Inspired Living†, Zhang and Banerjee tried to use the Chinese identity as strength in stead of a weakness. Haier recognized the liability that came with the â€Å"Made in China† label, undertook a strategy of acquiring household brands in overseas markets to leave its â€Å"Chinese-ness† behind, and tried to appear more as a local brand.Through this strategy, Haier became the 19th most trusted brand in India and fourth in the electronics sector in 2011. With the success of establishing its brand name in the Indian market, Haier then opted for a premium price strategy in India. Haier introduced India-centric product line-up for Indian consumers, and some other unique and innovative products. Examples of these products include detergent-free washing machines, wine cellars and mini bars sold at high prices. Haier also tried to break into the mass market segment in 2007 at the same time.But as Haier tried to target too many different markets and produce so many different products, it brought a pause resulting in sluggish revenue growth. 3. Discuss Haier’s localization model in India and other markets. Were they different? If so, why? Haier started off with a â€Å"Three-in-One† localization strategy of which Haier position itself as a local brand, produce locally, and carry out a local sales strategy and create products tailored to locals’ needs. The localization model Haier used in India is similar to the one it used when entering the United States market.The strategy into the two countries’ markets are similar in that it began exporting to the scattered channel in the country and then expanded when the timing and situation was appropriate. This means that it did not start its â€Å"Three-in-One† localization strategy properly until it was the right time to do so. And then as the company grew in the country, Haier tried to produce some products especially designed for the local customers of the country. But Haier had a different localization strategy when entering Indonesia, the Philippines, Malaysia, and Yugoslavia.Haier did seek â€Å"Three-in-One† localization strategy by making all its products with energy-saving and flexible-voltage qualities to accommodate households that frequently experienced power shortages and unstable voltage supplies. This kind of production helped Haier gain 28% of the Indonesian freezer market in four years. However, when entering Indonesia, Malaysia, Yugoslavia, and the Philippines, Haier built the manufacturing facility in the country as it entered the new market of these countries. This is how the localization model in India was different from models in some other countries.