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Haier's Aggressive Strategy

Monday, January 17, 2011
By Mayura Shanbaug

With the ever increasing spending power of the middle and upper middle class Indian, the consumer durable market which is currently Rs 35, 000 crore is set to grow exponentially in the coming years. Global giants realizing that have already geared up to grab a share of the market pie. Haier India a 100% subsidiary of the Chinese Haier group, and amongst the world’s largest Home Appliances and Consumer Electronics brand has also readied itself and have shifted their strategy to reposition and rebrand their company. They are now “ready to cater to the segment of the society who want to better their lives with ‘Inspired living’ .says Eric Braganza, President, Haier India, who has chalked out an aggressive India strategy to get a bigger bite of the pie…Mayura Shanbaug reports.

Q: In India there are lot of aggressive players in the consumer durable segment, in spite of starting your commercial operations in January 2004, the company is still to make its mark .What is the reason?
A: I do not want to talk about the past. We have to look forward, we have registered around 135% growth in 2010 compared to 2009 which shows the momentum we have gained and we now are set to experience a very good year ahead.

Q: What are the products the company currently has and how are they doing?
A:
Currently we have around 9 products in the market. As far as growth figures for FY10 are concerned we have seen tremendous growth across all the product range led by sales in deep freezers - 1138% growth in FY10 over FY 09 and Commercial Air-Conditioners with 1104% growth, followed by Refrigerators 98%, Air- conditioners 132%, Washing machines 105%, Water-heaters 202%, CRT (TV) 64% and the segment which is going to see the fastest growth in coming years… that is LCDs which has posted 417% growth in FY 2010.

Q: How do you plan to up your market share? What is the strategy?
A:
The most important aspect of Haier is its product strength, secondly its penetration network and its experience centres where a customer can have a first hand experience of the range of products available. Currently we have 85 exclusive stores all over India and are aiming to open 300 stores in FY 2011.

Secondly, as far as brand positioning is concerned, we have shifted our focus from the low end segment products to the mid to high end segment and are in the process of introducing a larger range of world class products in India. We feel with Indian consumers want value for money and are ready to spend on that experience. I believe the timing is ripe to introduce high end products in the market. We are expecting 40% of our turnover to come from high end products and 100% growth through other units.

Thirdly, we are also concentrating on advertising through various advertisements channels to reach our existing and new customers. We have signed actor John Abraham as a brand ambassador. In a nutshell, we are trying to sell good products at a good price to Indian consumer.

Q: What is your marketing budget for this fiscal?
A:
Around Rs 100 crore which includes marketing and advertising.


Q: Do you plan to diversify? Which are the new products launches this year?
A:
Off course we are introducing many high end products in the existing segments and are also entering the market with a new set of home appliances. We are making our entry in three product categories: Laptops, Home theatre and Cameras. We are also going to renew our focus on the Microwaves and Dishwashers segment with new offerings. We are also introducing many small home appliances such as blenders, juicers, Tea- kettles and Toasters in the small appliances segment, which amounts to around 3-4% of our total revenue.

Q: Which segment do you see the maximum business coming from?
A:
LCD TVs. I feel, the overall LCD market will grow to 4 lakh units this year as compared to 1.4 lakh last year , followed by Refrigerators, Air-conditioners and Washing machines.

Q: What is your current turnover and what is the target for FY 2011?
A:
Haier India is targeting a turnover of over Rs 1700 crore in FY2011 as against Rs 825 crore achieved in FY2010 between January and December.


Q : What is your current market share and what is the target for this year?
A:
We have a 3-3.5 % market share and hope to double it to 6-7% in 2011.

Q: What is the investment plans for this fiscal?
A:
Well we spend around Rs 14-15 lakh on each Haier exclusive showroom and we are going to expand the showrooms to 300 so you can calculate.

Q: Do you plan to expand the current manufacturing capacity in Pune?
A:
We expanded our manufacturing capacity from 5 lakh units to 12 lakh units in FY2010, so this year we will continue with that, however, we want to take it to 20 lakh units in near future and are also planning to manufacture Washing machines at that facility but that will take time.

Q: What is your percentage of localization? What is the import to local manufactured product percentage?
A:
We manufacture all our low end products locally such as DC-330, Window ACs and CRT TV. While all the high end products are imported.

Q: What about the additional workforce that will be required for your expansion plans?
A:
We have around 1400 employees in all and would increase the number by 10% this year.

Q: what about the after sales service, this is the area most Indian customers have complains about?
A:
Haier has 7 direct service centres (DSC) and 225 franchisees all over India, I feel after sales service at Haier should not be a problem.

Q: Any final words?
A:
We want to see Haier India amongst the top 5 brands in the next 3 years.

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