Haier’s disruptive ways

The Haier Group is known for its innovative ways and as part of its 2015 plan, it will continue along this path of innovation even further. The company is looking to disrupt the household electrical appliances and consumer electronics market within China and perhaps eventually globally.

Yet to be fully disclosed, the company’s plan is said to include two interesting business strategies, online factories and e-commerce in transit. These strategies are designed to create efficiencies and the ability for customers to customize products to fit their needs.

Underway since 2012, Haier’s online factories strategy involves revamping its manufacturing facilities. For example, its drum washing machine production line in Qingdao, China was originally staffed with 92 workers but now robots have replaced the employees and are directly connected to the entire production line. In addition, just one production line at Haier’s refrigerator factory in Shenyang, China can now support more than 500 different types of large-scale customization.

As part of its e-commerce in transit strategy, Haier will implement its ‘person-van-shop-warehouse’ vision. The goal of this strategy is for an efficient last-mile delivery by providing an on-demand and as-needed logistics service that integrates sales, distribution, installation and after-sales services while involving the customer throughout the process.

Both of these strategies incorporate the use of the internet/ e-commerce as the primary platform. Haier has been quick to grasp the potential of e-commerce and logistics combined, and, according to the company, it currently covers 400 cities in China with a delivery commitment of 24 hours or the delivery is free. In addition, through its relationship with Alibaba, Haier’s logistics arm is responsible for 90% of large items ordered from Alibaba’s T-mall website.

Logistics is very important to the company’s success. Following an investment by Alibaba into Haier’s logistics subsidiary, Qingdao Goodaymart Logistics, Haier then acquired a 60% stake in Shanghai Boyol Now Brothers Supply Chain Management and all of Boyol Logistics Offshore in early 2014. In addition, Haier noted in late 2014 that it plans for new acquisitions to aid its fast-growing logistics service business and to meet its strategy to help meet demand on the China mainland, where more businesses are expected to outsource the storage, transport and distribution of their goods to third-party logistics companies.

As one of the largest household electrical appliances and consumer electronics brands in the world, Haier’s growth in logistics as well as its changes in manufacturing could spread outside China and present challenges to logistics handling of heavy goods as well as in manufacturing operations.