Haier Rises Through Reform and Opening Up

This is the first part of a report, entitled "Setting Sail for Oceangoing Voyage to Greet the Surging Tide, which was written by Our Staff Reporters Wang Yantian and Song Xuechun. It was carried on the front page of People's Daily, published here is a slightly abridged version).

Sixteen years ago, the predecessor of Haier, an enterprise in the beautiful city of Qingdao, was still a small collective factory on the verge of collapse. In 2000, Haier Group achieved a global business volume of 40.6 billion yuan, its total assets came to 16.75 billion yuan, it had set up its own production bases in Europe, America, Asia and the Middle East, and sales outlets all over the globe, it had formed the prototype of a big international corporation.

A Good Leading BigBody and Leader Have Led Haier in Breaking Through Dangerous Shoal and Experiencing Constant Development and Growth

Everybody says, without Zhang Ruimin, there would have been no today's Haier.

Zhang Ruimin says, without the State's reform and opening up policy, there would not have been the common striving of all Haier people, and there would not have been today's Haier. These two points are crucial to Haier's success.

On December 26, 1984, 35-year-old Zhang Ruimin, in the capacity of deputy manager of the original household appliance company in Qingdao City, was appointed director of the Qingdao Refrigerator General Factory.

In the face of the small collective plant which suffered losses of over 1 million yuan and had disunited employees, Zhang Ruimin did not shrink back. He understood that for an enterprise to survive, the first thing it should do was to start with basic management. Very soon, a 13-article management regulation was worked out, one of which reads: Passing motions and passing water are not allowed in the workshop. This is the most fundamental!

Failing to grasp product quality, the enterprise won't last long. To ensure the enterprise future development, 76 qualitatively faulty refrigerators were smashed to pieces, the hammer serving as a warning to futurity is still displayed in Haier's exhibition hall. In 1985, the price of a refrigerator was about a worker's two-year wage. In the face of the workers' distressing tears, Zhang Ruimin made up his mind, saying: "If we don't destroy these refrigerators today, what is to be shattered by the market in the future will be this enterprise!". Haier's vision far surpasses the value of these 76 refrigerators. The smash brought about the awareness of quality and a new field. In the following year, Haier's refrigerators sold well in Beijing, Tianjin and Shenyang. In the third year, Haier's refrigerators won the bid in international bidding. In 1991, Haier's brand was cited as the first "National top 10 famous trademarks".

Haier requires that its employees love their posts and respect their work, and respect their work to serve their country. Members of the leading body take the lead to set an example. In the enterprise, Zhang Ruimin requires of himself to act as an ordinary worker. The leading body's realm of thought is the realm pursued for the enterprise's development and the realm of the enterprise's culture.

In market competition, Haier's goal is to create world name brands. Display the spirit of pursuing primary, brilliant achievements, and to pool the wisdom and effort of all the Haier people to become the backbone of Haier as a steamship.

When one wants to do something, one should also have the ability to do it. If an enterprise is likened to a ship, then what part should the factory director play? , it is the view of many people that the factory director should be the captain. Zhang Ruimin says no, the factory director should be the designer of the ship!

Designing and making decision are most difficult. In the opinion of Zhang Ruimin and the leading body, the most important thing is to engage in constant study, practice and innovation. Zhang spends his spare time in reading extensively. When he talks about many works on world economic management and cases of management, which are thought to be rarely seen by many domestic economics professors and experts.

Zhang said, "I'm not only an enterprise leader, more importantly, I'm a Communist Party member." He once said most sincerely to members of the Group's Party committee: we should cherish our personality, reputation, integrity and dignity as we cherish our own lives. At all times we should control ourselves, so that we can do the right thing and keep a right and firm stand. Whether it is the current president Yang Mianmian who has long been working together with him or other young leading members, all can, in the face of difficulties, play their exemplary, vanguard role and fulfill their tasks with credit. In Haier, those serving as middle-level principal managerial personnel are all Communist Party members. The embodied advanced nature of the Party has been merged into one with Haier's operation and development strategy and culture.

Being Connected with the International Market: Globalization of Product Design, the Purchase of Raw and Semi-finished Materials, Manufacture, Sales and capital Operation

In 1985, when Zhang Ruimin was inquiring about refrigerator production technique, the Germans said randomly: On the German market, fireworks and firecrackers are the best sellers among Chinese goods. Could it be that China was unable to produce its own refrigerators?! From that time on, creating Haier's own brand to win honor for the nation has become the greatest motive force of Zhang Ruimin.

With such a determination, Haier devoted seven years' time to making its own refrigerators. On the basis of digesting "Liebherr Haier" technology, Haier carried out technological innovation to turn out quality refrigerators of its own brand.

In 1992 the publication of Deng Xiaoping's talks given during his south China tour inspired the morale of the Haier people, they worked out a bold and far-sighted program, expropriated 800 mu (15 mu = one hectare) of land in the high and new technological zone in the eastern part of Qingdao and set up a modern industrial park there. In October 1993, the "Haier" brand began to replace the "Liebherr Haier". This was our nation's own brand.

Afterwards, Haier drew up the export development strategy, known as "taking on the difficult one first and then the easy one": this means going first to countries that follow the strictest standard requirement, then to the developing countries. First, Haier first went to Germany to sell its refrigerators branded 'Made in China". In 1992, the result of a comparison made between Haier refrigerator and the German refrigerator showed the former excelled the latter. The Germans signed contracts right on the spot for 20,000 Haier refrigerators. The period from Haier's introduction of a German production line in 1985 to 1997 when its refrigerator qualitatively surpassed "Liebherr Haier" with a history of 50 years shows that China's Haier spent seven years' time to cover the whole course which took its German counterpart 50 years to traverse.

International agencies poured to Haier. At present, Haier boasts 56 trade centers and more than 38,000 overseas sales outlets in the world.

After successfully fought its way into the European market, Haier turned around from Europe to the United States. In April 1999, ground was formally broken for the construction of the Haier American Industrial Park, which was completed and put into operation in March 2000. At present, Haier's products have entered some large chain stores of the United States. The Americans have made a comparison: "American Panasonic" used 10 years to bring its sales volume to over US$150 million, while the "American Haier" achieved this sale volume in only three years.

For 16 years, Haier has maintained an average annual 80 percent rapid and stable growth. Currently, Haier's brand is evaluated at 33 billion yuan, while its liability rate is only 56 percent.

Today, Haier is no longer a single-product "Haier, Made in China", rather there are also the "American Haier", the "Europe Haier", the "Middle East Haier", the "Southeast Asian Haier", etc.Haier has set up factories in 12 countries including the United States and Pakistan and has purchased a factory in Italy. It has established 15 overseas designing centers and 56 overseas trading centers, its products are sold in more than 160 countries and regions across the globe. In 2000, Haier's export volume hit US$280 million, and US$218 million in the first half of this year.

In May 2001, the 212-part animated cartoon, the "Haier Brothers", which is permeated with Haier culture and Haier ideas, formally set foot on the United States, the homeland of Micky Mouse. The broadcasting of the "Haier Brothers" in the US Television Station marks the entry of Haier culture into a Western country.

The advancement from the export of products to "the export of culture" means Haier's achievement of a qualitative leap.

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