Haier and higher

Haier

Managing director of Haier UK David Yearsley explains how he is rebuilding the subsidiary.

The Haier Group is the biggest supplier of large domestic appliances in the world, according to Euromonitor, as it owns GE, Fisher & Paykel, Sanyo and Haier. But Haier, as a brand, is still a relatively unfamiliar entity in the UK market, a fact recently-appointed managing director of the UK David Yearsley aims to put right. “Our prompted brand awareness is about 12%. So it’s not well known at all and it’s a huge competitive market”, he says openly. But having come from a strong branded business, Brita Water Filters, he plans to mirror and lead the strategy for the appliance business over the next five to 10 years, with a view to “be one of the recognised brands in the future.”

The Haier brand is still young, having been founded in China in 1985, but within 32 years it has achieved a turnover of $40billion. Its dominant market is Asia but the group has wider plans for globalisation, with David Yearsley reporting the vision of Haier Group’s chairman Zhang Ruimin is for all its brands to dominate across the world.

Mirroring Europe

Haier came to Europe 10 years’ ago, when it was predominately an OEM brand through a distributor, but having taken control of its own brand its stated its ambition to become number five in the appliance market. In fact, Yearsley reports: “In certain categories, we are already in the top five. We are strong in cooling, such as side-by-side, French door and combi models that are mid to premium. If you look at some of those segments in isolation, we are doing very well. We are starting to make more breakthroughs in laundry but I think cooling is our core competency that we’ve seen in Europe.”

France is the largest European market for Haier, while the UK is currently small. Yearsley continues, stating: “It’s currently only about 5% of the turnover for Europe. However, the European market is the second biggest [market for the group], so it should be up there, which is my job with the team to get it up to that point.” He adds: “I’d like to achieve €100million business in the next 5-6 years in the UK.”

Yearsley explains how the brand has developed in Europe “It’s really been built by finding niches with specific product, working closely with partners in each country and then building from those core segments to broaden the range, broaden the distribution and that’s how each country has developed over the years.” And Yearsley is set to follow a similar route, although he points out the UK is slightly different to mainland Europe, as it is aggressive and price-driven but he comments: “We’ve got huge support from Haier, as a group, with some fantastic products coming along. The brand will be built from the product side.”

Making Headway

And Haier has already made headway, as Yearsley states: “In the side-by-side category in the last 18 months, we’re in the top 3-4 brands in a volume perspective but it’s been promotionally-driven.” However, he continues stating the company cannot survive on the success of its side-by-side business alone. Haier believes it has opportunities for growth with Cube, where it offers different temperature zones in a one refrigerator and a 700mm multi-door French Door refrigeration for smaller spaces.

He states that 85% of its business is cooling but continues: “Within three years of my strategic plan, we want that to be 50:50, within white goods, with washing. We are launching a brand new [washing] range, this year, which will be made by us.” The washing machines will feature Direct Motion technology, which Yearsley states was invented by Fisher & Paykel but will become more mass market through the Haier brand. He continues explaining the rationale behind its products: “It’s about offering more for better value. We believe it’s going to be the quietest range of washing machines on the market, which is again one of the USPS. It’s cost-efficient. So we are going to try and offer a package linked around Direct Motion range.”

But offering more for less, isn’t that helping to create an aggressively priced market? Yearsley says not: “No. We are trying to trade people up. So what we’re trying to do is that somebody who wants a standard combi model, no let’s move them to a French  Doors with water through the door.”

Entering Cooking

Although freestanding cooling and washing is the bedrock of the company, it has also recently introduced a range of built-in cooking appliances. Yearsley continues: “Cooking is a hugely sizeable market in the UK but it’s highly competitive as well. So we want to get it right.” He explains this year is about gaining experience of the best routes to market and working with product teams in Europe and China to develop a strategy for cooking in 2018. “But it definitely has huge potential. It’s a massive market but highly aggressive and competitive as well.” And it’s an arena which could see the brand break into the kitchen specialist sector: “It’s definitely a channel we want to explore  but to go into it successfully, you’ve got to offer a broad range. You’ve got to be able to say to a consumer, when they are sat down with a kitchen planner, here is Haier’s whole product offering you can have a one-stop solution. Because, I think, if you don’t do that, you’re then fighting a difficult corner because you’ve got some major brand there and that’s what they offer. You’ve got the likes of AEG and Neff and they are very successful at offering a one-stop solution. And if we are going to compete we have to be at least in that situation.”

In Fact, Yearsley suggests built-in appliances may become an area of interest for product development, commenting: “We need to be able to offer built-in cooling and washing. And within the next couple of years, I think you’ll see we offer built-in dishwasher, cooling and cooking all under one umbrella. They are looking at it now. We have to, if we want to break into the market. “

Building Distribution

Along with development in products he plans: “to build with strong distribution. We need to build trust. We have let people down in the past. I think it’s because we haven’t had a clear strategy. We have promised a lot. We haven’t delivered and I think we want to make sure, this time, we get it right.” He explains how he believes the company has made mistakes, citing: “I think what we have done, historically, is dipped in and out with promotions and not necessarily had the infrastructure that we’re building here in service, in logistics. Don’t get me wrong, we’ve got a long way to go and that’s the point. The key message for me, is we are here to stay but there are some serious building blocks we’ve got to pull apart and rebuild and make sure that we start rebuilding that trust with our customers.”

And Yearsley explains how the company is planning to rebuild and support its distribution base, which includes Currys, AO.com and independent electrical retailers: “We’re employing more sales people. We’ll have three new recruits in sales this year and then we can start to create those relationships more closely with the customer.” And in fact, he claims the company has a vision to be recognised as one of the best for service in the industry, suggesting there may be future synergies between the Haier brand and its group stablemate Fisher & Paykel commenting: “They are trying to evolve their own coverage of trying to have engineers. In the future, if you put us together, does that give us the scalability to do that? I think there is a good opportunity there.”

Brexit Challenge

Building the Haier brand, against established players may be daunting enough but all of this is at the same time as Brexit, which Yearsley says has created an even more price competitive market: “Since Brexit it’s been even more aggressive. Brands are trying to protect their share, maintain their relationship with their customers and maybe invest in other ways to mitigate the pricing. In an ideal world, everything could move up in the market, everybody is in a stable position and we could start adding more value into the category, which is really difficult because you’ve always got someone who wants to take a competitive advantage on a product, with lower price and then it just spirals.”

In fact, he exclaims: “It’s going to be a volatile time over the next couple of year. We have seen a slowdown in consumer confidence at the beginning of this year. But until we see exactly what the plan is for the Brexit process, I think everybody is in the same boat. I think we just need some certainty.”

Taking Steps

But at this early stage of developing product for the market, and strengthening its distribution, Yearley is content with the position of the subsidiary in the UK. Not side-stepping the tasks ahead he confirms “It’s going to be a huge challenge to break into the UK market but it’s making sure we are here for the long-term.” Having been through several UK leadership changes and, arguably, without a defined strategy, Yearsley is planning to put that right, as he states it’s about taking “one step at a time but a positive step forward for the Haier brand. We are very clear where we want to go and each step to get there."

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