Discuss Haier localisation model in India and other markets, were they different ? If so, why ?

Question:

Discuss Haier localisation model in India and other markets, were they different? If so, why?

The strategy established by Haier to enter the Indian market differs to a great extent compared to others strategies for others markets.

In contrary to most of the Chinese companies, Haier decided to penetrate most affluent markets and then enter developing countries, which means that they had the advantage of being well known internationally, before even entering the Indian market.

And in order to enter the Indian market, Haier adopted a Three in One localisation strategy, which means that Haier would position itself as a local brand, by producing locally, carrying out the sales strategy, and create products tailored to locals’ needs.

Furthermore, given the high taxation on imports in the production process that the Indian government was applying, Haier decided to outsource production, by sourcing the low end products, and importing high-end goods, so they can reduce costs.

But when it came to manufacturing, as Haier is following a Three in One strategy, they decided to invest on a manufacturing facility in order to assemble component parts locally in India, while knowing that the cost of the workforce in India is very low, which represented a additional benefit for Haier. 

What makes the localisation model of Haier in India so unique is that instead of making

daring moves, Haier decided to choose the most secure path, which is investing gradually by opting for a step-by-step approach.

More importantly, what makes Haier’s localisation model in India so different to the ones operated in other countries is, the different specificities of that Indian market. The Indian white goods market was tremendously growing, and showing that growth potential just attracted more investors and competitors, in instance, the Korean brands that detained the most important market share in the Indian white goods market, but also Japanese brands that were competing in the premium end, with more sophisticated products.

Moreover, high level of taxation in both sales and imports in the production process obviously represented another main barrier that reduced profit margins of Haier and in contrary to others localisation strategies, Haier was forced to partly outsource their production process, which is against its own Three in One strategy fundamentals