Haier’s Expansion to North European Markets

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Table of Contents

Introduction
Finnish Market: External Analysis
Conclusion
Reference List

Introduction

Haier is a global brand; the company, whose host country is China, was started in 1984 (White, & Fan 2006) and it manufactures a number of household appliances that are not only environmentally friendly but also hi-tech. In 1996, Haier began its global branding strategy by opening up a manufacturing plant in Europe. Haier’s washing machines have been named as among the top brands internationally by Inspection and Quarantine (Burt, Mellahi, Jackson, & Sparks 2002).

Haier manufactures over 5000 models of washing machines including its popular double-drive type. This model can rotate the inner drum and the impeller at the same time and uses up to 60% less water and power compared to other models (White, & Fan 2006). It is also a detergent-free washing machine that uses electrolyzed water in place of detergents and thus environmentally friendly.

The choice of Haier washing machines for market analysis in this paper is because, since 1996, Haier’s expansion efforts in Western Europe have been quite successful. Moreover, the Haier competitive strategy is founded on the premise of environmental protection. This paper will analyze Haier’s expansion to North European markets particularly Finland.

Finnish Market: External Analysis

External analysis of Finland shows that the country offers a favorable business environment as a new market for Haier. Cespedes (1998) observes that threats or barriers in new markets prevent a foreign company from meeting its business objectives. As such, a macro-environment analysis (PESTEL) of economic, sociocultural, political, legal, physical/environmental and technological factors is important prior to either exporting or intermediate entry mode (Balet, & Ghoshal 1987).

With regard to the economy, Finland is a developed economy with per capita income equal to that of most European nations like Sweden and France. Finland is not a closed economy; it’s a member of the Eurozone and has bilateral relations with many states. Purchasing power i.e. average consumption per household is the same as that in Italy and Germany (Ekeledo, & Sivakumar 1998). Analysis of political factors shows that Finland has a population of about 5 million that is mainly concentrated in cities like Helsinki, which has a population of one million. 67% of the Finnish population is aged between 15 and 65 years.

Finland has removed most trade and investment barriers; the Competition Authority of Finland ensures healthy competitive practices and the Finnish government encourages investments through grants and lower fees and starting capital for limited companies (O’ Donnell 2000).

The Finnish economy also offers many opportunities for investment. The open trade policy and increased investment in higher education and innovation has ensured a steady growth of the Finnish economy. Moreover, with advancement in technology, low mortality rate and investments in the environment and industry, Finland is an ideal new market for Haier.

Unlike other Nordic countries, Finland has no economic class divisions. Culturally, the Finns are easy-going and hardworking people, who like spending their summer time in cottages with saunas (Steinbock 1998). This has been a Finnish tradition for a long time. Technologically, Finnish technology companies are medium-sized and have a wide domestic market base

Conclusion

Haier’s washing machine stands a good chance of being successful in the Finnish market. Finns have a high quality life and a lifestyle characterized by high domestic consumption level. Thus, washing machines that are high-tech, energy-saving and environmental friendly will certainly be in high demand in Finland. Also, Haier has prior experience in Europe that it can use to its advantage.

In a nutshell, given the favorable macro-economic environment, Haier should consider Finland as a potential market in its future European expansion plan. Haier’s marketing plan should involve utilizing Finland’s distribution channels to effectively reach the market. This should involve three approaches: distribution through large electrical retailers; distribution through specialty stores; and distribution through local supermarket chains.

Reference List

Balet, C & Ghoshal, S 1987, ‘Managing across the border: New strategic Requirements’, Slogan Management Review, vol. 33. no. 4, pp. 7-17.

Burt, L Mellahi, K Jackson, P & Sparks, L 2002, ‘Retail Internationalization and Retail Failure: Issues from the Case of Marks and Spencer’, The International Review of Retail, Distribution and Consumer Research, vol.12. no. 2, pp.199-203.

Cespedes, V 1998, ‘Control versus Resources in Channel Design: Distribution Differences in One Industry’, Industrial Marketing Management, vol. 17. no. 9, pp. 215-217.

Ekeledo, I & Sivakumar, K 1998, ‘Foreign Market Entry Mode Choice of Service Firms: A contingency perspective’, Journal of the Academy of Marketing Sciences, vol. 26. no. 3, pp. 274-292.

O’ Donnell, S 2000, ‘Managing foreign subsidiaries: agents of headquarters, or an Interdependent network?’, Strategic Management Journal vol. 21. no. 5, pp. 525-548.

Steinbock, D 1998,The competitive Advantage of Finland: From Cartels to Competition? Financial support of the Finnish National Fund for Research and Development (SITRA), Taloustieto Oy, Helsinki.

White, C & Fan, M 2006, Risk and Foreign Direct Investment, McGraw-Hill, London.

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Haier’s Expansion to North European Markets

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