Profile: President of Asia-Pacific for Haier Philip Carmichael

As far as Chinese brands go, Haier has always had a reputation for doing things a little differently. In the company’s early days, its chairman Zhang Ruimin, incensed by the failure rate of the company’s products, famously brought a sledgehammer on to the factory floor and urged workers to smash up 76 faulty refrigerators in order to highlight the importance of quality. The workers were hesitant - at that time, one refrigerator cost almost two year’s wages - but the lesson was learned and Haier now sells more refrigerators than any other company on the planet.

The hiring of Philip Carmichael as president, Asia-Pacific, in 2008 could certainly be seen as another example of Haier’s eccentricities. As a foreigner heading up a major function at a Chinese firm, Carmichael is still in an exclusive club - very few domestic enterprises have responded to the government’s call to recruit overseas talent. In addition, Haier chose to locate Carmichael not in the economic centres of Shanghai or Beijing, where the majority of his compatriots can be found, but within the vast company headquarters at Haier Industrial Park in the less fashionable coastal city of Qingdao.

For Carmichael, who is fluent in Mandarin and can trace his first exposure to China back to 1976, the rationale for joining Haier was straightforward. “I had spent 32 years working for Fortune 100 companies building sustainable businesses in Asia,” he says. “At the same time Haier were looking to take their ambition in Asia-Pacific to the next level.”

He has already gone a long way to justifying his appointment. According to Euromonitor, Haier was the world’s leading white goods brand in 2009 with a retail volume market share of 5.1 per cent, and is catching up fast on rivals such as Sony and Samsung in the consumer electronics category. Closer to home, Haier increased its revenue in Japan in 2009 by over 10 per cent. Japan is now Haier’s largest market in Asia outside of China.

Carmichael attributes much of this growth to how it operated during the global financial crisis. Bucking the general trend, he points out that Haier actually increased its marketing spend at a time when many other companies were looking to make savings.

“Instead of cutting back on our marketing activities, we actually increased our budget during 2009 and this helped us grow our market share,” notes Carmichael. “In Asia, we had 50 per cent more resources to use on marketing in 2009 than in the previous year. That’s a very strong commitment from Haier to branding. It was a very savvy thing to do, and it was a Chinese company that made that decision, not an IBM or a GE.”

Understandably, Carmichael is proud of the achievements Haier has made in the past two years. But this, he says, is only the beginning. More importantly, he wants the brand to replicate its dominance of the Chinese market on a global stage, and much of that will depend on convincing consumers around the world that the Haier brand promise is one of quality and service. “We recognise that outside of China, the label ‘Made in China’ is not necessarily a positive one,” he admits. “But we have to communicate that not all Chinese companies are the same.”

This emphasis on quality, Carmichael says, is part of the company’s DNA. The sledgehammer incident apart, the brand has been at pains to establish this in not only its goods and after-purchase service, but also in the conversations it has with consumers.

Haier’s anecdotal case studies have become the stuff of legend in the white goods industry. One such example is the story of the customer in rural China who called Haier to say his washing machine was repeatedly breaking down. When a service engineer arrived, he found the machine was being used exclusively to wash cabbages. Rather than ignore the problem, the company’s R&D team came up with a new dual-function model that could be used for both cabbages and clothes and which is still on sale today.

It is tales such as this that have contributed to Haier’s standing as a creative and innovative brand, again very atypical in the context of China. In terms of marketing, this is perhaps best reflected in the company’s tendency to shy away from traditional Chinese advertising strategies. Instead of focusing on mass media campaigns to spread the company name, Haier is these days much more likely to be investing in digital.

“Information about this product sector does not come from TV and it also does not come from outdoor advertising,” says Carmichael. “If the customer is going to look for this kind of product, their first stop is to do a search online. The second thing they are going to do is get word-of-mouth recommendations from friends. The third area is the last three feet. It’s the person who is working on the floor in those final three feet who helps you decide to buy the Haier refrigerator over the many other choices. So to get our brand name known to people who are searching in those areas, we need to focus our branding in those areas.”

Carmichael explains that this is all part of Haier’s longer-term future goals. “We are already the dominant brand in China but it has taken us 26 years to get to this position,” he notes. “We don’t want it to take another 26 years to get to the dominant brand position worldwide. We want to figure out ways to leapfrog our competitors. If we do the same things our competitors do, then we will only be followers. We would never have enough money to spend to overcome brands such as Apple if we did it in the traditional way, but online and non-traditional media, this is where people are getting their information from.”

To achieve this, Haier is working with a variety of media, creative and public relations partners. The brand has so far avoided taking on an agency-of-record for the region, although it does work with Hill & Knowlton for its PR across Asia-Pacific, preferring to utilise the local strengths of agencies in different markets. “There is no Asia-Pacific,” asserts Carmichael. “Asia-Pacific for us is 26 separate countries where we have 10 subsidiaries, R&D, manufacturing, sales, marketing, and about 9,000 staff.

“A lot of agencies may be strong in Korea or Japan, but not good in India or Australia. It’s very difficult to get somebody that is truly A-list across the entire geography. I had this challenge before coming to Haier. And it is a challenge. It’s like finding a law firm that has great lawyers in every country in which you do business throughout Asia. It’s difficult.”

What Carmichael does want from his agency partners in the region though is results. “We are very metric driven; we can put metrics around anything and very often we do. We are very keen on looking at not just marketing and advertising in and of itself - we look specifically at the ROI. So there has to be a clear understanding of what it is we are looking at for an impact.”

Agencies looking to team with Haier would also do well to align themselves with Haier’s philosophy of doing the unexpected. Asked what is next for Haier, Carmichael’s response confirms the image of a company not constrained by industry convention: “Our customers are not really looking for a washing machine; they are looking for clean clothes. We are using that paradigm to rethink where things are going in the future.”

Philip Carmichael CV

• 2008 President, Haier Asia-Pacific
• 2004 Chief operating officer & partner, Fusion Systems, business operations advisor, Longreach Group
• 1999 Chairman & CEO Lexmark Asia-Pacific
• 1993 Vice-president Asia-Pacific, Rockwell
• 1991 President EG&G Services (Perkin Elmer)
• 1987 McDonnell Douglas /Douglas Aircraft (Boeing)

Personal File

• Residence Qingdao
• Time in Asia 30 years
• Family Married with three sons
• Activities Chairman Emeritus of AmCham China
• Achievement One of China’s first foreign private homeowners

 

This article was originally published in the October 2010 issue of Campaign Asia-Pacific.