Horizontal Expansion at Haier Group
Introduction and Background
"Haier is the leading brand of home appliances globally and the most valuable brand in China with its 29 manufacturing plants, 8 comprehensive R&D centers, 19 overseas trading companies across the world and more than 60,000 global employees" ("Introduction to the Haier Group," 2008). In 1984, which is the early days of China's reform and opening to the world, the company started in producing one product, refrigerator. Eight years later, Haier began to expand horizontally in scale and scope. The company expanded its brand to other home appliances, such as washing machines and air conditioners, and also to another eleven fields, such as IT products and medical equipment; its products are sold not only in China, but also to over 160 countries around the world. In recent years, it has begun to build a local Haier brand in each geographic area around the world.
Through almost thirty years of operation, Haier has evolved into a giant multinational corporation.
Most of its horizontal expansion has brought the company reputation, honors, and profits. But some of its horizontal expansion, especially the expansion not close to its core business fields, such as IT industry, is not thought highly of by many experts. It is thought that Haier gained its name especially after its horizontal expansion, but now it needs to pull back its business to its core business fields to have real business efficiency.
By focusing its production only on refrigerators for seven years, 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. In addition, before its horizontal expansion, Haier was the number one refrigerator brand in China because of its brand building strategy...