Samsung010620BJ-Haier,White Goods Competitor Assessment Haier,Samsung Electronics China (SEC China),August, 2001,CONFIDENTIAL,This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey it is not a complete record of the discussion.,Samsung010620BJ-Haier,1,CONTENTS,1. Background information,Location Starting year IPO date Number of employees Brand value Market share,Sales revenue Equity structure Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure,Sales Profit,2. Strategy,3. Product/market,Corporate strategy,Key product offerings Market position Key customers Value proposition Geographic focus Pricing,Samsung010620BJ-Haier,2,CONTENTS,1. Background information,Location Starting year IPO date Number of employees Brand value Market share,Sales revenue Equity structure Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure,Sales Profit,2. Strategy,3. Product/market,Corporate strategy,Key product offerings Market position Key customers Value proposition Geographic focus Pricing,Samsung010620BJ-Haier,3,BACKGROUND INFORMATION,Source: Annual report; analyst reports; web site; Yuegang Information Daily,Location:,Qingdao,Starting year:,1984,IPO date:,Listed refrigerator business in November, 1993,Brand value (2000):,RMB 30 billion,Market share:,Refrigerator: 31%; Washing machine: 29%; Air Conditioner: 20%; Microwave: 2%,Number of employees:,30,000,Equity structure:,Key shareholders,Percentage,Haier Group Haier Electronic International Co,. Ltd,31.44% 17.93%,Sales Revenue (2000):,RMB 40.6 billion,Samsung010620BJ-Haier,4,HAIERs DEVELOPMENT WENT THROUGH THREE STAGES,Source: Haiers website, literature search,1984 - 1991,1992 - 1998,1998 -,Key initiative,Built a strong brand name in refrigerators through a well deve-loped TQC system,Diversified the product portfolio to “avoid having all the com-panys eggs in one basket“ through mer-gers and acquisitions,To build an international brand name Aspires to become fortune 500,Key results,Won the first prize in “the most favorite light industry products refrigerators” 5 years in a row Won the state prize for quality management Presented with the customer satisfaction cup by Chinas customer satisfaction movement congress,Acquired 14 enterprises under the “eating dormant fish“ strategy. Successfully turned these businesses around by leveraging Haiers brand and introducing Haiers OEC management Expanded product portfolio from 1 product to over 9,000 products in 42 categories,Sold products to over 160 countries and regions and established more than 38,000 sales outlets across the world,Samsung010620BJ-Haier,5,HAIERs BRAND BECAME TREMENDOUS INTANGIBLE ASSET,Source: Literature search, web site,Examples of Haiers successful investment with its brand Acquired Qingdao Red Star Electronic Company and changed its washing machines brand into “Haier“. With the help of OEC management, quickly turned the company into a profitable business. Haier became the No. 1 brand for washing machine the next year and enjoyed the highest market share Acquired controlling shares of Shunde Washing Machine Factory with Haier brand and quickly turned around the business Took controlling shares of Hangzhou Haier Electronic Company with Haier brand and developed Haier series of color TV,Samsung010620BJ-Haier,6,Source: Website,HAIER OFFERS BROAD RANGE OF PRODUCTS,Haiers key product offerings,Samsung010620BJ-Haier,7,HAIER HAS SUCCESSFULLY EXPANDED INTO GLOBAL MARKET,Source: Annual report,Develop global distribution network 62 distributors and around 38,000 outlets across the world,Set up production facilities overseas Set up plants in Indonesia, Philippines, Malaysia, East Europe, US,1999 exports Refrigerator: 568,000 units Air conditioner: 200,000 units Washing machine: 190,000 units,Refrigerator market share in US (2000) 124 L: 30.1% 183 - 266L: 35.88%,Samsung010620BJ-Haier,8,CONTENTS,1. Background information,Location Starting year IPO date Number of employees Brand value Market share,Sales revenue Equity structure Era analysis,4. Value chain strategy,5. Organization and ownership,6. Financial performance,Focus on Marketing, advertising and promotion Distribution (channel and sales force),Organization structure,Sales Profit,2. Strategy,3. Product/market,Corporate strategy,Key product offerings Market position Key customers Value proposition Geographic focus Pricing,Samsung010620BJ-Haier,9,HAIERs STRATEGIC FOCUS IN 2001,Source: Haiers annual report,Focus on improving technical contents in products Produc