Four Strategic Development Phases of HaierBrand Building Phase (1984-1991) In the early days of Chinas reform and opening, the market was still relatively controlled; a limited supply of goods was insufficient to meet the enormous demand. Economic conditions in the early 1980s were such that to buy a refrigerator required first obtaining a refrigerator coupon. Haier observed that the demand was unrelated to product competitiveness, but was rather a byproduct of a closed system which kept companies from tapping an enormous potential market for high quality consumer goods.As a result, Haier established the “Brand Building Strategy“ and the “Zero Defect“ quality standard. In no time, Haier reaped the rewards of these initiatives. In 1988, in only its fourth year of existence, Haier earned the first http:/uklunwen.cn/ibm/2215.html ever National Gold Medal awarded in Chinas refrigerator industry.By the late l980s, the time was changing and the market was flooded with refrigerators, forcing many suppliers to cut prices. Despite the glut, Haiers products remained consistently popular and the company was even able to increase prices by 12%.Features: By only focusing on refrigerators, Haier was able to accumulate valuable business and management experience. This experience allowed the company to build a management model which could be used with future business units.Achievements: Haier was able to transform itself from a small factory operating at an annual loss of nearly RMB 1,470,000 into the number one refrigerator brand in China.Diversification Development Phase (1991-1998)In the 1980s, demand vastly exceeded supply with Chinese firms generally setting sales targets based on production capacity. By the early 1990s, however, the situation had reversed, dealing a significant blow to the strategies of the past decade. Many home appliance manufacturers chose to compete on the basis of price, which provided occasional short-term market gains but reduced their capacity for further innovation and corporate development. For example, by 1998 the average color television manufacturer in China operated in the red, and in 2001 nine publicly listed home appliance companies combined for over RMB 3.545 billon in losses.Haier observed that marketing was less about beating annual sales quotas and more about winning the hearts of the customers. The reduced demand in the 1990s did not mean the market had reached the limits of its potential, but rather that products were not meeting the expectations of increasingly savvy consumers. The company established its “Diversification Strategy“ to expand the Haier brand beyond refrigerators, adding washing machines, air conditioners, and other items to its product line. At the same time, Haier did extensive consumer research, listening to its customers and even regarding complaints as a valuable tool for refining corporate strategy. When the industry followed Haiers example by also focusing on product quality, Haier once again forged ahead of the competition, extending its emphasis on quality to customer service, a move which further bolstered customer loyalty to the Haier brand.Features: Haier moved from a single-product company to a manufacturer with multiple product lines and expanded its brand to include both brown goods as well as white goods. Internally, the company restructured operations to maximize latent corporate potential, using intangible assets to get the mosthttp:/uklunwen.cn/ibm/2215.html out of existing tangible assets. By doing so, Haier was able to quickly grow the scope of its business while enhancing the companys overall strength and position.Achievements: From being a top producer of refrigerators, Haier became the number one home appliance brand in China.Globalization Phase (1998-2005)In the 21st century, globalization provided opportunities for Chinese companies to earn foreign exchange by leveraging lower production costs and functioning as an original equipment manufacturer (OEM), for multinational corporations (MNCs). But as China developed economically, rising labor costs meant that Chinas time as the worlds factory floor would soon be coming to an end, and many MNCs shifted their production facilities to countries, such as Vietnam, which offered a cheaper source of labor. Those Chinese manufacturers who continued to rely on cut-rate production to attract business soon found themselves abandoned by their international partners. Haiers view was that in the age of globalization, only those MNCs with their own proprietary intellectual property and strong brand identities would be competitive in the world business arena. Faced with this reality, Haier knew the time was right to go global.Features: The Haier Group implemented a three-step globalization strategy: 1) enter international mainstream markets; 2) utilize main sales channels to deepen market penetration; 3) establish Haier as an internationally reco