Haier

In what way should we think? In what way should we proceed? How can we win? The world is divided into three consumption regions for household electric appliances: the United States, European Union and China. Japan is not listed in for its demand for household electric appliances is small. China makes up one third of the world market demand. Occupation over domestic markets will pave the way to entering international markets; when you become powerful on international markets, you will be more competitive on domestic markets. Therefore it is necessary to establish a coordination system for the domestic and international markets. How can we win? Now that we know in what way we should think and proceed, the eventual objective is how to win. How to win, I think, is concerned about corporate restructuring at the information age. The aim of restructuring is to hold the invisible hand ¨C market and to make everyone become a SBU ¨C an automatic innovator. At the beginning of April, I was invited to give lectures at Columbia University and Aodun Business School of Pennsylvania University in the United States. My main topic was the "market chains". During my lectures, many American professors asked me what was meant by the "market chains". Bote proposed a concept of "value chains", which is world-wide recognized. I replied that the concept of "market chains" is quite different from that of "value chains". First, the "value chains" stresses the objective of long term profit for enterprises. However, at the information age, this objective is difficult to obtain as enterprises should be aimed at the maximization of customer satisfaction. If you want profit, you must satisfy your customers to a maximum extent and profit is one result of the maximization of customer satisfaction. In addition, I think, the concept of "value chains" is not appropriate any longer at the information age. In the past, an enterprise could control each value chain while at the information age this control is impossible. Some large foreign companies sound very powerful and are very competitive. But they are not necessarily quick at responding to market demand. Haier's market share is rising rapidly. Although Haier has not many comparative advantages over large foreign companies in respect of reputation, capital and human resources, Haier is more powerful in terms of speed. Haier only needs 7 days to satisfy customer requirements while large foreign companies take two months to do the same. They will spend half a year to produce a new product while it take us only two months. The most important thing at the information age is speed. People said that companies focused their attention on quality control in 1980s', process structuring in 1990s and speed in 2000s. In fact Haier has won market share by acting at a higher speed. Therefore every Haier staff member is required to keep in line with market demand. One professor with Aodun Business School asked me, "What are Haier's market chains aimed at?" I think the aim is to make every Haier staff member become a SBU. In this way, everybody will be capital for the company. If everybody's capital increases in value, the company will perform very well. To a company, what is innovation? What dose innovation imply? I think innovation is to become doubtful about your successful experience in the past and set up an equilibrium between the past success and the unknown road to new success.