Walking into a home or an office without seeing a Haier appliance is a rare thing. Haier, which started in 1984 in Qingdao, China, is number one in the world when it comes to appliances like washing machines and refrigerators.
According to Euromonitor statistics, Haier, the global leader in home appliances and consumer electronics, has been the world’s number one brand in major appliances for 10 consecutive years now. When President of Haier Appliances India Eric Braganza joined the company, its market share in India was small.
Now, it is set to become the third largest industry brand in the country by 2020. Eric speaks to The CEO Magazine about applying a Chinese brand to the Indian market.
You’ve been the President of Haier Appliances India for 10 years now. Why did you decide to take on the role?
When I joined the company, Haier India was still at the initial stages of its growth. The company was producing excellent products and I saw there was a tremendous potential for the brand to become a household name in India.
There were several factors to be considered when I came on board, starting from the right positioning of the brand for Indian consumers to tapping into an entire basket of products that Haier was offering worldwide.
It was essential to identify what the Indian market required and ensure we brought those types of products to the Indian consumer. We had to strengthen our dealer network, our after-sales service and adjust our products to the right price point.
How has the industry evolved since you started?
The first thing we did was look at what the Indian customer wanted. Our first success story in India was our bottom-mounted refrigerator. When we surveyed Indian consumers, we found that 80% of the time, consumers opened the traditional refrigerator section more in comparison to the times they opened the freezer section of the refrigerator.
In India, the traditional refrigerators were sold with the freezer on top and the refrigerator down below. We inverted the entire refrigerator, where the most used section, which is the refrigerator part, was placed at the top and the freezer section, which was used 20% of the time, was placed at the bottom section.
It immediately struck a chord with the Indian consumer. Today we have more than two-thirds of the market in the bottom-mounted refrigerator category. We are by far the leaders in this, and this helped establish Haier as a brand that gives good products. We ensured right from the start that we were always positioning Haier as a mid- to high-end brand.
Secondly, we’ve introduced a new feature called Near Zero Pressure Technology in our washing machines, that works with near-zero water pressure. Additionally, we were the first to bring in self-cleaning inverter technology in our air conditioners. Our washing machines are also equipped with this technology.
These are the various product innovations that we’ve made, directly inspired by the evolving needs of our consumers. As part of our Indian growth story in 2014, we said we were aiming to become a top 5 brand by 2018, which we’ve achieved. We also said we will be among the top three brands in our industry by 2020 and we’re on the road to be the third largest brand by next year. Part of this success story is due to our team; we’ve developed an excellent, dedicated team.
“We’ve developed an excellent, dedicated team.”
What has been your greatest challenge?
I think the biggest challenge, honestly, is behind us. I’m not saying that there are not going to be challenges ahead, but I think the biggest challenge was to take a Chinese brand and apply it to India, which no other brand from China in our industry has done at the scale that we have achieved.
One of the biggest challenges we faced was developing a brand in India by convincing the dealer network that we’re providing the right quality product at a mid-price level, and then getting the consumer to buy that product and understand the value.
Now, we’ve reached a scale where we will be the third largest by next year. We will still need to retain what we’ve been able to achieve in terms of market share, but we have managed to overcome the biggest challenge of getting the brand accepted in India.
How do you ensure success?
I believe the first and foremost indication of success is to ensure that your sales keep growing. One can keep increasing market share and make sure that the bottom line is getting better simultaneously. We are a profitable company and we need to ensure that we maintain that in each category. We want to be among the leaders in every area that we deal in, whether it’s refrigerators, washing machines, air conditioners or TVs.
The measurement of success would always be increased sales, increased turnover, increased market share, along with an increase in profitability, with brand image getting better.
In what areas have you seen the company grow?
Before I joined Haier, it acquired a refrigerator factory in India in 2007. We expanded that to our first industrial park in 2017. That industrial park had an in-built capacity to produce 1.8 million refrigerators and 1.5 million each of washing machines, air conditioners, televisions and water heaters.
This was the first water heater manufacturing facility outside China. When we were setting up this plant, we thought that the capacity would suffice us for at least the next three to four years in India, but our sales growth in 2017 and 2018 has been nearly 50% year on year.
We realised that we’d be running short of capacity, so we decided to invest in a second industrial park in the north of India. In March 2019, we conducted a groundbreaking ceremony to initiate infrastructural work for our second industrial park. It will be the largest consumer electronics and appliances industrial park in India exclusively for this sector.
“It will be the largest consumer electronics and appliances industrial park in India.”
No other company will have such a large industrial park, spanned across 123 acres (49 hectares). It will have a built-in capacity for two million refrigerators, one million air conditioners and one million washing machines. I think that should take care of the growing consumer demand for the next three to four years, and then as we grow we’ll have to decide how to further augment our production capability.
What areas do you believe you need to improve?
At Haier, it is critical for us to keep ensuring we deliver consumer-centric products. A simple case, which we knew and which we adapted, was that the Indian consumer doesn’t need a large-capacity freezer.
The freezer ratio to the fridge should be smaller than what a European customer wants, or even what a South-East Asian customer might want. We ensure our refrigerators are designed in a way that not only caters to the needs of the consumers but also maintains high-quality standards at the same time.
As far as the network is concerned, we will continue to ensure the profitability of our dealer network. If my dealer network sees my brand as profitable, they will want to sell Haier more than any other brand in India.
Going forward, these will be the key focus areas, along with strengthening our service operations. The backend operation of the company is one of our core strengths. We’ve been able to utilise the experience and support from our headquarters to ensure that our backend is solid.
What makes your company different?
The way we work is different from the way other brands work in the Indian market. We’ve been consistent in how we do it and that is what has made us reach here. The organised retail sector is still very small. Our network is always segregated into regional retail and mom-and-pop stores across India, and Haier has been constantly managing that network well.
I think this is where we’ve excelled over our competitors. We’ve managed to balance the channel and ensure that every part of our channel is comfortable and working at its best. After all, it’s how people sell the brand.
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