Haier is one of the most valuable Chinese brands that specialize in supplying home appliances across the world. Through the leadership of its visionary CEO Zhang Ruimin, the company has expanded its international presence by turning each local brand into a mainstream product in their respective markets. Also, to enhance the expansion plan, Haier acquired several organizations. For instance, Haier acquired Sanyo in 2002 directly challenging other players in the market, such as Panasonic and Mitsubishi. On the other hand, Haier developed a new management system that emphasized individual responsibility through self-managed units (Deresky, 2017). However, it was challenging to implement the system in Japan due to the influential culture.
Evolution of Haier
Haier has demonstrated tremendous transformation and growth over the past 35 years through its exemplary leadership and cultural diversification. Through the leadership of Zhang, who joined the company at the age of 35in 1984, the company has devised new strategies, establishing its image as a global brand. Before 1984, the company was experiencing financial distress and a lack of vision. The company had no proper policies and human resource management practices to shape the work culture. The malpractices and mis conduct among the employees, such as theft and absence from work, were prevailing. Also, the improprieties and inappropriate work culture at Haier culminated in the production of low-quality products. However, after Zhang joined the company, clear rules and objectives were introduced. For example, employees had to sign performance sheets for every product delivered to the customer. As a result, the production of faulty products was terminated. Zhang’s entry into the company created a way for a change in strategy and an opportunity for future advancement .
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Haier ’s management process and change of strategy were manifested in four stages after 1984. These stages are brand building (1984-1991), diversification (1991-1998), internalization (1998-2005), and global branding (2006-present). In the brand-building period, Haier ensured all its customers received quality products as per their specific needs. To ensure consistency in offering quality products, the company implemented the inverted triangle approach that ensured each employee served their clients. Moreover, each employee was rewarded based on the customers’ feedback. The approach was pivotal in transforming the company’s corporate image by ensuring customer satisfaction.
Between 1991 and 1998, Haier adopted a diversification approach which was instrumental in the company’s encroachment into new markets. By identifying and acquiring newbusinesses with advanced equipment and technology, Haier used the businesses as proxies to enhance its brand image. The diversification stage paved the way for globalization, which predominantly occurred between 1998 – 2005. Following its demonstrated success in quality, in which the company’s refrigerators outperformed Liebherr, Haier perceived that it would be pragmatic to establish its image in more challenging markets in the rest of Asia and Europe (Deresky, 2017). The final stage of global branding ensures the company develops customized products that suit the culture and the demands of the customers. As a result, the company became globally accepted, enhancing its sustainability in the emerging markets.
Haier ’s Management System
The effectiveness and performance of Haier’s management are contingent on innovation, dedication, and commitment. To achieve success, the company implemented a new corporate culture, business strategy, and the OEC (Overall, Every, Control, and Clearance) management strategy (Deresky, 2017). For instance, the company selected experienced local staff to run its foreign operations to facilitate a smooth transition. This approach ensured proximity to its local customers, enabling the company to create better distribution channels than their competitors and more importantly, enhanced the company’s understanding of customer’s needs. Also, the company ensured that the top-performing employees shared their practices with the rest of the workforce. Thus, the whole workforce remains competitive and in return increases the sales of the company.
Haier demonstrates its innovative control management strategy through OEC (Overall, Every, Control, and Clearance). The main goal of the OEC strategy is to enforce the company’s work culture and discipline among the employees (Deresky, 2017). The approach ensures that every employee completes their daily tasks. Additionally, Haier management team introduced the concept of miniature companies. Each employee’s performance in the market was to determine their rewards. Also, by implementing the inverted system triangle and ZZJYT (zizhujingyinti) in Japan, the workers were offered a chance to make their own decisions and receive the necessary resources and support from the management (Deresky, 2017). The inverted system triangle and ZZJYT models were a platform for employees to be their bosses and accomplish individual goals as well as work as a team. Therefore, all these strategies have been instrumental to the company’s success, as they have changed the mentality of the workforce from producing substandard products to the pursuit of quality and customer satisfaction.
Role of Zhang in Haier’s Development
Through the leadership of Zhang, Haier managed to integrate China’ s traditional culture with western management ideas. He continuously introduced new strategies that combined Chinese philosophical thought and western management concepts. Even though Zhang did not receive a formal education, he stood out to be diligent and educated himself in various ways. The newly formulated strategies helped Zhang overcome Haier’s challenges. Also, the strategy enabled him to develop a management philosophy and corporate culture where employees worked to fulfill individual goals as well as work as a team.
Mr. Zhang organized Haier’s for mass production of home appliances making the company a global leader in the market. However, he knew to compete with the big players in the market he had to implement a new strategy to meet the demands of the customer faster than his competitors. As a result, he organized the company into self-managed units where each employee served a customer or a group of similar customers. The employees who directly interacted with the customers were to make all the decisions, and the role of the managers was to ensure the self-managed units got the necessary resources. Zhang ensured the managers were not in charge because they had no direct contact with the customers. He offered the members of a unit with the power to vote their manager out if he/she did not perform the expected duties. On the other hand, Zhang ensured each unit was evaluated according to its performance and rewarded accordingly.
I would describe Zhang as a creative and collaborative leader. Under his leadership he managed to encourage creativity and he also supported out of the box thinking. He achieved mass production of different designs of home appliances which enabled the company to meet the demands of the customers. He also viewed synergy to be crucial for catalyzing innovation which created a collaborative environment in which employees could share their ideas and be supported. Zhang was fully committed in embracing every meaningful solution that would make an impact to the company. This shows that Zhang was an innovative leader.
Tensions that Could Arise for Haier
The implementation of the management system in Japan would be challenging. The major problem would be an influential collectivist culture in the country (Sun, Cao, Li & Li, 2017). This culture prevents emerging companies in the country from adopting an individual-based system of employee empowerment through rewards. Implementation of Haier’s ZZJYT business structure would compromise the Japanese culture of seniority since the principal concept of ZZJYT is to measure each worker’s performance as per the market and compensate them (Drifte&Jaussaud, 2016). As a result, employees do not receive salaries but receive rewards based on their contribution. Therefore, communist culture could be a potential issue for management since Japanese workers could find it hard to accept the practice.
Furthermore, the Japanese workers are concerned more about interpersonal relations and what the other people think about them as compared to Chinese workers. For example, they find it hard expressing their feelings directly and instead use subtle ways (Drifte&Jaussaud, 2016). To maintain a perfect working relationship, Japanese culture allows workers to worry about their work environment. On the other hand, the culture at Haier is straightforward, and each employee has an opportunity to contribute to development despite the level of seniority. At Haier, interactions are in the interest of the company while the Japanese culture is for emotional communication among employees. As a result, the contrast of Haier’s culture and the Japanese culture could create strife among the employees.
Tensions Management Strategies by Du
Du paid close attention to cultural differences between the Chinese workers and the Japanese workers and made several efforts to ensure the Japanese workers understood Haier’s management system. For example, Du spent six months discussing the issue of rewarding workers according to their performance with the Japanese team (Deresky, 2017). Upon not reaching an agreement, he withheld the bonuses representing the Japanese side but still focused on implementing the system. With time, the ZZJYT strategy was accepted by the Japanese workers. Du’s boldness in his management style is admirable. He stood by his principles and set clear goals for each individual to achieve. For example, he pushed the manufacturing team to develop new products for distribution within two weeks. The manufacturing team accomplished the goal within the stated time, and thirty-three new products were available for delivery across all Japan leaving all competitors surprised.
I agree with Du’s strategy of paying attention to cultural differences between the Japanese and Chinese workers. This encourages diversity in the company which has shown to have fruitful outcomes especially in understanding the workers personally. He also took enough time to develop the strategy of rewarding the workers and stood by his principles. This enabled the company to achieve it desired goals. However, I do not agree with how Du handles the workers. There is a clear sign that the employees are overworked. As a good leader he needs to be aware of how his team is struggling to achieve everything. A culture of overworked employees may lead to burnouts and a high rate of employee turnover.
Importance of Implementing Haier’s Management System in Japan
Step by step, the Japanese are accepting Haier’s management system. The management should not adapt to the Japanese culture but instead implement the company’s system permanently in Japan because Haier’s management system has demonstrated its success. The management system enables the Japanese to move beyond cultural limitations (Deresky, 2017). It gives them a chance to be treated equally at the workplace, and the only person above them is the customers they serve. As a result, the management system should be used as it will help promote employee-customer interaction and the employer-employee relationship. Haier should however, impose its new system in Japan, to expand its market and acquire more customer base. This will not only enable the company gain a competitive advantage but it will also enable the company to grow by producing more products which are favorable to the Japanese culture.
Cultural Challenges
Haier might face several cultural challenges as it penetrates different markets and regions. Some of the problems may include adapting to a new organizational and corporate culture. For instance, Haier’s management team may need to change how it treats new and existing employees in those cultures to help them develop a strong sense of belonging in the organization. Therefore, to facilitate more straightforward adaptations to different cultures, Haier management teams should carry extensive research on the cultural norms of the regions.
Conclusion
Haier company, under the leadership of Zhang, has overcome several challenges to become one of the most valuable companies in the world. The company’s global strategy enabled it to turn its products from a localized brand through customization into an international brand that meets the demands of the customers in their respective markets. However, to increase their profitability and sustainability, Zhang needs to implement the company’s culture and its innovative management system in Japanese culture. In that way, employees will work to meet the needs of the customers and at the same time, accomplish their individual goals. In the future, the company needs to make sure their management teams are up to date with the changing market trends to remain competitive. Also, if the Haier wishes to expand to other countries, prior research on their cultural norms is crucial. The acquired data from the research will enable the company to make appropriate decisions that will support its growth in the new environment.
Leaders and employees behaviors and decisions are the root to achieving cultural complexity in the global footprint. For any significant behavioral shift, I suggest that Haier leaders make improvements on their behaviors, how they conduct their practices and treat employees from different cultural backgrounds. It is also important for employees to improve their behaviors towards one another to ensure that they are able to understand one another and that the company is culturally diverse. This provides a mirror globally, that reflects how Heier encourages cultural complexity. The company should also improve the level of trust between the employees and the leaders by incorporating a free culture where employees have every opportunity to present their ideas.
References
Deresky, H. (2017). International management: Managing across borders and cultures . Pearson Education, India.
Drifte, R., &Jaussaud, J. (2016). Chinese businesses in Japan: an emerging phenomenon. In Current Issues in Economic Integration (pp. 153-162). Routledge.
Sun, X., Cao, Y., Li, S., & Li, X. (2017). Building a Global Responsive Organization: The Case of the Haier Group. In The Responsive Global Organization: New Insights from Global Strategy and International Business (pp. 149-168). Emerald Publishing Limited.
