Haier Electronics Group Profits Up 16.4% in 2012
Mar 19, 2013
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Haier Electronics Group Co., Ltd. (Hong Kong) reported full-year 2012 revenue of RMB 55,615,047,000 (approx. US$8.945 billion), up 11% from 2011 revenue of RMB 50,089,857,000.

Haier Electronics Group Co. is one of the publicly traded business units of Haier Group Company.

The results reported were for the year that ended Dec. 31, 2012. The financial highlights report was released March 18, 2013. All results from full-year 2011 were restated in the financial highlights report for full-year 2012.

Gross profits in 2012 were RMB 8,941,181,000 (approx. $1.438 billion), up 19.1% from RMB 7,507,263,000 in 2011. Profit for the year were RMB 1,706,977,000, up 16.4% from 2011's RMB 1,466,923,000.

Statements from the chairman said that the Haier brand of washing machines continued was the world's No. 1 brand for the fourth year. The chairman's letter said the Haier brand's global market share increased 0.9% from 10.9% in 2011 to 11.8% in 2012.

Haier water heaters had a 19.9% share of the Chinese market, making them the top brand in China.

The company further expanded its Chinese retail presence through its Haier brand store channel and Goodaymart channel. It now has more than 8,500 sales points and in 2012 achieved 24-hour delivery in 1,500 counties across China. The company's "direct-delivery-to-town'' fulfillment capability was extended to cover 30% of town level sales points across China.

The sales value the Haier Flagship Store at tmall.com was more than RMB 70 million in 2012.

Haier implemented a multi-brand strategy during 2012, and now goes to market with three brands: Casarte, Haier, and Leader, which helps to better serve under-developed market segments and help grow the company's overall market share.

The statement from Chairman Yang Mian Mian said that the three trends it discussed in last year's annual report will continue to be a factor in 2013. These were:
* Appliance competition in China will change from a price-focus to customer value creation.
* Changes in the multi-layer model of appliance distribution in 3rd and 4th tier markets.
* Changes in market channels caused by the growth of the Internet.

In 2013, the company sees new trends emerging as well. Ms. Yang Mian Mian said Chinese customers will become more brand-conscious, which will be good news for high-profile brands such as Haier.

"However, this does not imply that we will gain market share easily as the competition among major brands will remain fierce," Ms. Yang Mian Mian said. "As customers are becoming more demanding and increasingly require personalized products and services, the winning formula of brands is to innovate products that exceed the customers' expectations."

She also saw online purchases increasing, particularly for large appliances. This is coming about as Internet use in China achieves further penetration. At the same time, logistics handlers are expected to consolidate, which should solve some of the bottlenecks that hindered online sales and delivery of large appliances in the past. This will result in an evolution of the appliance retail landscape in China as well. Notably, there will be fewer big stores, as huge retail establishments in 1st and 2nd tier Chinese cities become unsustainable. " As to physical stores in rural areas, they would provide more variety of products and create better fulfillment experience to consumers with the support of online display and the integration of regional warehouses and logistics networks," she said.

Ms. Yang Mian Mian's chairman's letter predicted that Chinese companies' low-cost manufacturing advantage will continue diminishing with production costs increase and the need for more innovation.

In 2013, the company aims to outgrow the Chinese appliance industry, by, among other things, re-organizing its management structure for more operating efficiency and to empower managers and frontline employees. The company will seek to look for new markets and fulfill emerging consumer needs through new models.

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