Standing in the centre of appliance giant Haier’s shop floor in the north Chinese port city of Qingdao is a well-worn, 1m sledgehammer in a glass case.
Legend has it that Zhang Ruimin, Haier Group’s then newly arrived chief executive, was so incensed by the poor quality of the factory’s products that he used the tool to smash several washing machines.
Publicity stunt or genuine outrage, the deed – featured in a movie last year – has served to enhance Zhang’s mystique and Haier’s domestic reputation.
The world’s fifth-largest maker of white goods is a rare blend of Chinese and Western production paradigms, where communist-era slogans adorn the walls and workers are rewarded in an innovative, high-pressure, performance-based system.
Haier hopes to leap-frog competitors Siemens and General Electric to become the world’s No 3 appliance maker, behind Whirlpool and Electrolux.
It aims for United States sales of US$520 million ($889.5 million) this year and US$1 billion by 2005, on the back of niche products such as dorm-room size mini-fridges and space-saving freezers that double as computer tables.
At home, Haier is targeting an 11.1 per cent sales leap to 80 billion yuan ($16.5 billion) this year.
But Haier, which owns Qingdao Haier Refrigerator and mobile phone firm Haier CCT, will have to overcome a 13.4 per cent slide in first-half earnings, suffered as a result of the Sars virus and as competition heated up.
“The company still faces a crowded market with overcapacity, so for longer-term development it needs to diversify and look for more sales to overseas markets,” said Guotai Junan Securities analyst Li Xiaoyong after results last month.
The sledgehammer – lying in state as production lines hum, manned by thousands of workers in overalls – is a testament to Zhang’s radical management ideas in 1980s China, and his rather un-communist corporate ingenuity.
One visit to Haier’s facility, big enough to cover 33 soccer fields, dispels the cliche of drab Chinese workers toiling away in a grimy sweatshop.
>From factory hands in clean uniforms to pristine workshops and a fully automated logistics centre, Haier today represents the modern face of Chinese companies looking to spread their wings overseas via foreign management and production techniques.
When Zhang took over Haier in 1984, the state-owned dinosaur was in such dire straits that workers had to burn the factory’s wooden window frames for heat.
Two decades of acquisitions and restructuring transformed it into one of China’s best-known names with sales of US$9 billion.
“It’s so different now. We spend so much money on things like research and development to tailor our products for customers,” said the 54-year-old Zhang.
Zhang wants to ensure his company remains on the cutting edge through a Japan-style just-in-time production system, while sharing output platforms among several products to trim costs.
He also takes inspiration from US competitor GE – another industrial giant that prides itself on innovative management. “Despite their size, they still find ways to motivate their employees and continue innovating,” Zhang said. “That is what we must learn here.”
Zhang believes in nurturing talent. In Haier’s showroom, whiz-bang gizmos, from fridges with solar panels to washing machines that clean fruit and vegetables, bear inventors’ names.
Every employee has a stake and is treated as a small business unit responsible for his or her own bottom line.
“Each employee has his own balance sheet, with credits and debits, like a regular company. If debits exceed his credits, then he has a problem,” Zhang said.
Employees say they thrive in that environment.
The elusive entrepreneur seems to understand that consistent corporate culture is essential to Haier’s success.
The sole task of Haier’s “Enterprise Culture Centre” is imparting the company’s culture to newly acquired businesses.
From The New Zealand Herald
