Chinese Entrepreneur Striving to Create Global Brand Name

While an increasing number of overseas investors swarming into China, the world's largest potential market, Chinese entrepreneur Zhang Ruimin is doing the opposite. He is busy establishing production lines in other countries.

Over the last few years, Zhang, CEO of the Haier Group, China's largest home electrical appliance manufacturer based in the city of Qingdao in east China's Shandong Province, has already had production centers put into operation in the United State, Indonesia, the Philippines, Malaysia and Iran, all making home electrical alliances under the brand name "Haier."

The latest one, a refrigerator plant in South Carolina, in the United States, cost 30 million U.S. dollars to construct and is designed to make 500,000 refrigerators annually.

"We can't be considered a success unless overseas consumers no longer regard Haier as a Chinese brand name but a global one," the 51-year-old Zhang said in an interview at Haier's headquarters in Qingdao.

Zhang spent only 15 years turning the money-loosing Qingdao Refrigerator Factory, Haier's predecessor, into the country's leading home electrical appliance producer, setting an example for other state-owned enterprises in the structural reforms.

From the early 1990s, Zhang seized the chance brought about by economic globalization to start Haier's international business.

His ultimate goal is to put Haier on the list of the world's top 500 corporations, which at present does not include a Chinese manufacturer.

"Globalization, especially China's anticipated entry into the World Trade Organization will make the country wide open to foreign competition," Zhang said. "Only by actively taking part in global competition can we seize a chance to survive."

Though with an MBA degree from the Chinese University of Science and Technology, Zhang, who believes that a successful entrepreneur should also be a philosopher, is quite familiar with such Chinese classics as The Analects, a collection of about 500 sayings of ancient Chinese thinker Confucius and his major disciples, and Art Of War, a famous military book written by Chinese military strategist Sun Wu about 2,500 years ago.

Enlightened by the fact that there is always a sustainable worldwide market demand for Tsingtao beer, whose main brewery is only a short distance from Haier's office building in Qingdao, Zhang realized that the key to a successful multinational corporation lies with the establishment of a reliable brand name abroad.

He then had more than a dozen information and design centers set up in such developed countries as the United States, Japan and France, which mainly employ local talents, hoping to get closer to local consumers and their tastes.

"Local designers know about the demands of local consumers better than we could," Zhang explained.

As a result, Haier has been able to turn out an average of 1.3 new product designs daily for six years running and this year became the only Chinese member of the Spain-based World Design Organization.

Zhang is particularly conscientious about quality, vowing to make Haier a synonym of good quality and reliability.

After taking over the Qingdao Refrigerator Factory in 1984, one of the first things he did was to smash 76 poor quality refrigerators with a hammer, which astonished or even rocked the whole Factory. He insisted that inferior products be no more than wastes and not be distributed from the factory, although such inferior products still sold well in sellers' market in China then.

"The move was intended to increase employees' consciousness of the importance of quality," Zhang said. The hammer Zhang used is now displayed in Haier's exhibition hall as a signal to alarm both the employers and employees.

Novel designs and improving quality have both helped increase Haier's competitiveness and public recognition, according to Zhang.

Recent statistics indicate that Haier has opened some 30,000 sales outlets overseas, with its market extending to more than 100 countries and regions. It commands a 25 percent share of the small refrigerator market in the United States.

Haier began its ascent by licensing refrigerator technology from Liebherr Corp. of Germany in 1985 and adopted its name from the "herr" in the German company's name, but now it exports a growing number of energy-saving refrigerators of its own design to the European country.

In recent years Zhang has shifted his focus to the localization of production in foreign countries and has had plans to base one-third of Haier's production lines abroad.

"You can't be an international company if you only make things at home and export them," Zhang said.

Haier now manufactures more than 9,000 products, including not only refrigerators and washing machines but also cell phones and laptop computers, with sales growing at a rate of more than 80 percent annually on average for 15 consecutive years to reach US$3.2 billion in 1999.

All this has helped Haier lead the 6,000 businesses funded by Chinese investors abroad, which involve a combined investment of US$6.95 billion.

Zhang's achievement has been written into textbooks of the Business School of Harvard University in the United States, and the Lausanne Institute of Management and Development of Switzerland, which issues the World Competitiveness Year Book annually.

A survey of corporate executives published by the London-based Financial Times in December 1999 listed Zhang as one of the world's 30 most respected business leaders. The other two Asians on the list were Hiroshi Okuda of Toyota and Noboyuki Idei of Sony.

However, Zhang is still soberly minded, saying that Haier is far away from joining the world's top 500 corporations. In this fast changing information age, any business may be left behind unless you continue your creation and innovation to your advantage, he said.

People's Daily Online --- http://english.peopledaily.com.cn/