麦肯锡-帮三星对haier的分析

WhiteGoodsCompetitorAssessment–HaierSamsungElectronicsChina(SECChina)August,2001CONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing1Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing2Samsung010620BJ-HaierBACKGROUNDINFORMATION

Source: Annualreport;analystreports;website;YuegangInformationDaily Location:QingdaoStartingyear:1984IPOdate:ListedrefrigeratorbusinessinNovember,1993Brandvalue(2000):~RMB30billionMarketshare:Refrigerator:31%;Washingmachine:29%;AirConditioner:20%;Microwave:2%Numberofemployees:30,000Equitystructure:KeyshareholdersPercentageHaierGroupHaierElectronicInternationalCo,.Ltd31.44%17.93%SalesRevenue(2000):RMB40.6billion3Samsung010620BJ-HaierHAIER'sDEVELOPMENTWENTTHROUGHTHREESTAGES

Source: Haier'swebsite,literaturesearchBrandingDiversification

andexpansionGlobalization1984-19911992-19981998-KeyinitiativeBuiltastrongbrandnameinrefrigeratorsthroughawelldeve-lopedTQCsystemDiversifiedtheproductportfolioto"avoidhavingallthecom-pany'seggsinonebasket"throughmer-gersandacquisitionsTobuildaninternationalbrandnameAspirestobecomefortune500KeyresultsWonthefirstprizein"themostfavoritelightindustryproductsrefrigerators”5yearsinarowWonthestateprizeforqualitymanagementPresentedwiththecustomersatisfactioncupbyChina'scustomersatisfactionmovementcongressAcquired14enterprisesunderthe"eatingdormantfish"strategy.SuccessfullyturnedthesebusinessesaroundbyleveragingHaier'sbrandandintroducingHaier'sOECmanagementExpandedproductportfoliofrom1producttoover9,000productsin42categoriesSoldproductstoover160countriesandregionsandestablishedmorethan38,000salesoutletsacrosstheworld4Samsung010620BJ-HaierHaier'sbrand

valuein2000:

~RMB30billionHAIER'sBRANDBECAMETREMENDOUSINTANGIBLEASSET

Source: Literaturesearch,websiteExamplesofHaier'ssuccessfulinvestmentwithitsbrandAcquiredQingdaoRedStarElectronicCompanyandchangeditswashingmachine'sbrandinto"Haier".WiththehelpofOECmanagement,quicklyturnedthecompanyintoaprofitablebusiness.HaierbecametheNo.1brandforwashingmachinethenextyearandenjoyedthehighestmarketshareAcquiredcontrollingsharesofShundeWashingMachineFactorywithHaierbrandandquicklyturnedaroundthebusinessTookcontrollingsharesofHangzhouHaierElectronicCompanywithHaierbrandanddevelopedHaierseriesofcolorTV5Samsung010620BJ-Haier

Source: Website KitchenappliancesRefrigeratorFreezerMicrowaveGasrangeSmallappliancesElectricironVacuumcleanerVentilatingappliancesAirconditionerRangehoodAirpurifierCleaningappliancesWashingmachineElectricwaterheaterHAIEROFFERSBROADRANGEOFPRODUCTSHaier'skeyproductofferingsMobilehandsetTelecommunicationsBrowngoodsColorTVVCDTelephonePCPDAIT6Samsung010620BJ-HaierHAIERHASSUCCESSFULLYEXPANDEDINTOGLOBALMARKET

Source: AnnualreportDevelopglobaldistributionnetwork62distributorsandaround38,000outletsacrosstheworldSetupproductionfacilitiesoverseasSetupplantsinIndonesia,Philippines,Malaysia,EastEurope,US1999exportsRefrigerator:568,000unitsAirconditioner:200,000unitsWashingmachine:190,000unitsRefrigeratormarketshare

inUS(2000)<124L:30.1%183-266L:35.88%7Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing8Samsung010620BJ-HaierHAIER'sSTRATEGICFOCUSIN2001

Source: Haier'sannualreport"Valuewar"insteadof"pricewar"FocusonimprovingtechnicalcontentsinproductsProduce"individualized"productsGlobalcompetitiveadvantageArrangeallbusinessprocessesaroundorderflowBuildcompetitiveadvantageinquality,costandleadtimethrough"OEC"managementProductdevelopmentDevelopproductsthataretailoredfordifferentcountriesandregionsImprovetechnologyinlargecapacityrefrigeratorsandnetworkrefrigeratorsImproveproductioncapabilityforspecialrefrigeratorsHumanresourceProviderigoroustrainingstoemployeesanddevelopthemintoindustryexpertsandmanagementexpertsServiceBuildextensiveandexclusiveservicenetworktoensurestrongreputationofbeingaserviceleader9Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing10Samsung010620BJ-HaierHAIERS'sKEYWHITEGOODSOFFERING

Source: LiteraturesearchWhitegoodsWiderangeoftypesSide-by-sideRefrigeratorWashingmachineAirconditionerMicrowaveProducttypeDoublechamberDrumPulsatorWindowSplitPackagedCentralairGrillandnon-grillMechanicandelectronic11Samsung010620BJ-HaierHAIERWHITEGOODSMARKETSHARE,2000RefrigeratorWashingmachineAirconditionerPercent

Source: LIICMicrowave12Samsung010620BJ-Haier * RongshengandKeloncombined

Source: SINO-MR,GfK,LIIC 100%=1998Others1999200037.415.58.72.732.435.713.88.25.95.728.030.912.38.610.08.826.1Samsung

ElectroluxMeilingKelon*HaierSiemens8.69.19.4HaierandKelonaretheleadingplayers.However,theirmarketsharesaredecreasingAlthoughlatecomerstothemarket,ElectroluxandSiemensarequicklybuildinguptheirpositionsbyfocusingonmid-tohigh-endandhigh-endmarketsComparedtootherMNCplayers,Samsung'sgrowthinthemarketisratherslowMillionsunits,percentRefrigeratormarketshareofmajorplayersinmajorcities4.5-6.215.6270.7101.23.9-6.9-5.0CAGR(98-00)

PercentSamsungHaier/Kelon/MeilingSiemens/Electrolux2.63.32.70.7HAIERISALEADINGPLAYERINMOSTOFWHITEGOODSMARKETSREFRIGERATOREXAMPLE13Samsung010620BJ-Haier * KelonandRongshengcombined

Source: SINO-MR,GfK,LIIC 100%=North

ChinaOthersSamsungElectroluxMeilingKelon*HaierSiemens2.33.50.5ElectroluxandSiemensaredoingparticularlywellinSouthwestApartfromSouthwest,MNCplayersaredoingbetterineastChinaandSouthChina,relativelymoreaffluentareasSamsungisrelativelystronginEastChinaandSouthChinaNorth

EastEastChinaCentral

SouthSouth

WestNorth

West0.90.71.432.011.68.59.85.31.730.836.616.111.57.65.90.421.926.06.29.79.48.210.130.331.014.36.99.710.53.324.420.411.09.819.218.50.320.833.818.29.68.60.124.15.6Refrigeratormarketshareinmajorcitiesbygeography,2000Millionunits,percentSamsungHaier/Kelon/MeilingSiemens/ElectroluxHAIERHASDEMONSTRATEDSTRENGTHINMOSTGEOGRAPHICREGIONSREFRIGERATOREXAMPLE14Samsung010620BJ-Haier * AnotherKelon'sbrand

Source: SINO-MR,GfK,LIIC 100%=<1,500OthersSamsungElectroluxMeilingKelonHaierSiemens0.92.30.3Siemensisfocusingonveryhigh-endmarketwhileElectroluxisfocusingonmid-to-highendmarketSamsungdemonstratedstrengthinlow-pricemarketKelonusesmulti-brandstrategytotargetbothlow-to-midendmarketandmid-to-highendmarket1,500-

2,5002,000-

2,5002,500-

3,0003,000-

4,000>4,0002.01.92.024.112.51.217.819.624.80016.012.60.17.74.145.713.828.316.50.18.510.031.51.93.447.39.71.15.98.87.21.318.736.32.03.82.919.326.09.40.429.80.14.34.70.348.10.312.5Rongsheng*0Refrigeratormarketshareinmajorcitiesbypriceband,2000Millionunits,percentElectroluxKelon/RongshengSiemensSamsungHAIER’SPRODUCTSCOVERALMOSTALLPRICESEGMENTSREFRIGERATOREXAMPLE15Samsung010620BJ-Haier * AnotherKelon'sbrand

Source: SINO-MR,GfK,LIIC 100%=<100LOthersSamsungElectroluxMeilingKelon*HaierSiemens0.21.00.7HaierisleadinginmostmarketsElectroluxandSiemenshavestrongpositioninmid-to-largecapacitymarketsSamsungisverystronginsmallcapacity

(<100L)marketandisrelativelystronginmidcapacitymarket100-

150L150-

180L0.61.23.1180-200L200-

225L225-

250L250-

300L>300L2.60.03Rongsheng*40.47.8036.90.119.851.213.401.49.602.821.424.823.30.59.07.76.51.127.129.89.10.813.75.27.54.229.735.511.70.85.911.010.12.922.123.45.41.17.824.12.61.234.417.28.55.25.013.730.419.90.125.1019.02.61.152.00.20Refrigeratormarketshareinmajorcitiesbyproducttype,2000SamsungHaier/Rongsheng/KelonSiemens/ElectroluxHAIER’SPRODUCTSCOVERBROADRANGEOFTYPESREFRIGERATOREXAMPLE16Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing17Samsung010620BJ-HaierAPARTFROMSTRONGBRAND,HAIER’SKEYSTRENGTHSLIEINSTRONGATTENTIONTOR&D,SUCCESSFULSUPPLYCHAINANDLOGISTICSMANAGEMENT,WIDEDISTRIBUTIONNETWORKSANDQUALITYAFTER-SALESSERVICESKeystrengthsR&DLeadingtechnologiesinhighefficiency,inverter,energy-saving,environmentalprotection,etc.StrongR&Dresource(R&Dspendingaccountsfor45%ofrevenue)Quickcommercializationofnewtechnologies(75%commercializationrate)ProductdesignreflectingindividualizationFoundedHaierCentralInstituteofResearchwithpartnersfromUS,Japan,Germany,etc.Setup48R&DentitiesworldwideSetupnewproductexperimentcenterineachkeybusinessunitBuildtechnologyalliancewith15researchinstitutesincludingPhilips,C-MoldandNetscreenRecentdevelopmentLogisticsSophisticatedsupplychainmanagementandhighlyefficientlogisticsmanagementLaunched“Idesignmyownrefrigerator"marketingstrategyBuiltERP,BPPandCRMsystemsBuiltChina’slargestandmostadvancedlogisticscenterinQingdaoSalesandmarketingStrongbrandrecognitionInvestedRMB0.5billioninA&PDistributionHighlyefficientdistributionnetwork

(42distributioncenters,andover

9,000salesoutlets)Improveddeliverytimeto8hoursinhubcities,24hoursinsurroundingareas,4daysanywhereinthecountryAfter-salesserviceStrongreputationinofferingexcellent

after-salesserviceContinuepromotetheconcept"customersarealwaysright"18Samsung010620BJ-HaierHAIERLOGISTICSHASGAINEDRICHEXPERIENCEINSOPHISTICATEDSUPPLYCHAINMANAGEMENT

Source:Literatureresearch OptimizedsupplychainmanagementHaier’soperatingobjectiveZeroinventoryZerodistanceZeroworkingcapitalHaierlogisticsmanagementmodel:“one-flowandthree-net”Oneflow:orderinformationflowThreenetGlobalsupplierresourcenetworkGlobalcustomerresourcenetworkITnetworkCurrentcapabilitiesHaier’sorderflow~6,000orders/month~15,000sourcingpartsSupplierbase978supplier(58%lowerthanbefore)20%internationalsuppliersincludeGE,Emmerson,etc.Internetusage100%purchasingordersonline20%onlinepaymentPurchasingleadtime3dayscomparingwith10daysbefore19Samsung010620BJ-HaierHAIER’sDISTRIBUTIONCENTERHASALARGEGEOGRAPHYCOVERAGEINCHINAHaier’sdistributionnetworkHaierlogisticscenter(Qingdao)42distribu-tioncenters1,550specialtystoresand~9,000salesoutletsDistributionnetworkinChinaInternationalpresence:DGforair-conrelatedproductsatHamburgerHarbor,Germany,partneringwithHHLAShanghaiBeijingWithestablishednetwork,Haierhaspromisedacompetitivetimeofdelivery8hourswithincorecities24hoursinadjacentareasofcorecities4daysfornationwidedistributionTransportationequipment:over10,000trucksinChinaHaier’sfacilities20Samsung010620BJ-HaierHAIERHASADISTINCTIVEDISTRIBUTIONAPPROACHWHICHISHEAVILYFOCUSINGONDIRECTRETAILSALESFORBASEAND

HUBCITIES..

Source:Fieldinterview;McKinseyanalysisSpecialtyshoresFirsttiercitySecondtiercityThirdtiercityHaiershop-in-shopsRetailersinfirsttiercitiesRetailersinsomelargesecondtiercitiesSpecialtystoreHaiershopinshopsRetailersinsecondtiercitiesSpecialtystoreHaiershopinshopsRetailersinthirdtiercitiesSpecialtystoresHaierA/CsalesCo.HaiersalesbranchesinsmallsecondtiercitiesWholesalesinsomethirdtiercitiesHaiersalescenterinfirsttiercitiesHaiersalescenterinsomelargesecondtiercitiesHaiersalescentersinfirstandsecondtiercitiesHaiersalesbranchesinbigthirdtiercitiesEastregionNorthregionWestregionSouthregion21Samsung010620BJ-HaierCONTENTS1.BackgroundinformationLocationStartingyearIPOdateNumberof

employeesBrandvalueMarketshareSalesrevenueEquitystructureEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureSalesProfit2.Strategy3.Product/marketCorporatestrategyKeyproductofferingsMarketpositionKeycustomersValuepropositionGeographicfocusPricing22Samsung010620BJ-HaierHAIER’SORGANIZATIONSTRUCTUREBODCEOPresidentExecutive