Haier Group Inc. Chief Executive Zhang Ruimin says the China-based electrical appliance maker plans to expand capacity at its South Carolina, U.S. refrigerator plant to meet expected growth of its market share in the U.S.
Speaking in an interview published in the McKinsey Quarterly, Mr. Zhang said Haier plans to climb up in the world rankings of appliance makers to third from its current fifth place. He said that Haier sold 80,000 full-sized refrigerators in the U.S. in 2002, accounting for about 2 percent of the market, but plans to boost U.S. sales will eventually lead to an expansion of the company's South Carolina plant.
Any shortfall in capacity at the U.S. plant in the next few years will be met by exports from Haier's manufacturing facilities in China, he said.
"To achieve our objective of a 10-percent market share in 2005, we need an output of 500,000 units," Mr. Zhang said. "The production capacity of our factory in South Carolina is 400,000 units a year, though we have plans to expand, so the difference will be met by exports."
The state-run collective, which also lists shares in Shanghai as Qingdao Haier Refrigerator Co. and in Hong Kong as Haier-CCT Holdings Ltd., is one of a few manufacturing companies in China attempting to create a global brand name.
Mr. Zhang said Haier's strategy is to use differentiation - products with unique features - and speed of innovation to win over customers in western markets.
While China's cheaper labor costs are almost 10 times below those in the U.S., Mr. Zhang defended the strategy of expanding production in the U.S. to meet a forecast increase in local sales.
"Our strategy in the U.S. market isn't to manufacture cheap products, take them out of the factory and push them into the market," he said. "We intend to manufacture quality products that we can sell at a premium."
Haier to Expand South Carolina, U.S. Plant Capacity
Jul 9, 2003
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