Staff Writer
Sep 17, 2012

Haier's bid to buy Fisher & Paykel to propel appliance brand overseas

CHINA - Haier Group's intention to buy out all of the remaining shares in Fisher & Paykel Appliances represents a good globalisation move for the Chinese whiteware brand, said Liang Haishan, president of Haier White Goods Group.

Haier's bid to buy Fisher & Paykel to propel appliance brand overseas

Liang said the Fisher & Paykel brand will stay as a stand-alone and will be supported by Haier as a "global premium brand, with the additional advantages of operating within the Haier Group”.

Currently, most of Haier's sales volume is largely from China, its main market. According to Euromonitor data, China was responsible for 78 per cent of Haier's global sales in 2011. Haier's sales in China are expected to expand by 6 per cent this year.

In an effort to expand appliance sales outside of its native market, Haier's bid is aimed at using the strength of Fisher & Paykel's product quality to expand in Europe and North America, said Jamie Ko, head of global appliance research at Euromonitor.

While Haier has attempted to boost sales globally, it has yet to overcome the stigma of poor quality associated with Chinese products. Haier has tried several ways to overcome this, such as inviting European media to its production sites in China. The appliance manufacturer has doubled its market share in the market over the past five years, but it plans to attract more mid-market European consumers with a new feature on an upcoming refrigerator, which will monitor the kitchen via an external camera and touchscreen.

However, the poor reputation of Chinese products is ingrained. According to a report by the Boston Consulting Group last week, Chinese firms have been artificially aided by the size and "hypergrowth" of the domestic market, cost advantages and favourable regulations, which cannot be relied upon indefinitely.

At the same time, Haier is also up against strong competition from South Korea's Samsung and LG, which have aggressively and successfully increased their global foothold. 

Despite this, BCG states that Haier is among the leading "Chinese challengers", with considerable global growth potential.

Ko felt that with Fisher & Paykel's strength in known product quality and technological innovation, the purchase will certainly accelerate Haier's prospects of global success. As Fisher & Paykel's production sites are in Mexico, Italy and the US, this will also hasten Haier's growth in Europe and North America, she added.

However, Haier may need to employ a different strategy to penetrate the European market considering the inherent brand loyalty for brands such as Bosch and Electrolux in the region, she cautioned. Only four per cent of British adults aware of the Haier brand, according to JWT's August trend report Remaking 'Made in China'.

Chinese brands such as Haier need to become "more adept at ... maximising the benefits of productivity and scale, developing innovative products tailored to overseas markets, acquiring and integrating companies, creating global organisations and brands, and developing deep talent pipelines," the BCG report suggested.

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