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Haier Industry Analysis

Autor:   •  January 25, 2018  •  Essay  •  598 Words (3 Pages)  •  546 Views

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Industry Analysis:

Haier is world’s leading brand in household appliances, operating in 25 countries and with 2016 global revenues of $30.4 billion with a CAGR of 6.8%, and bottom-line of around $3 billion with a CAGR of 12.8%. In Pakistan, Haier is operating in multiple product categories including Refrigerators, Air Conditioners, Microwave ovens, Deep freezers, Washing machines, LEDs, Water dispensers and other small home electronic appliances. A lot of these products are produced in-house in China and Haier Pakistan assembles them in their assembling plants. It is ranked number 3rd with respect to market share in the refrigerators category, with Dawlance as market leader followed by PEL at the 2nd as shown in Exhibit. However, in some other electronic appliances such as LEDs, Built-in ovens etc, Haier is the market leader. Other competitors include Orient, Gree, Waves and LG. Apart from these brands, there are other unstructured local manufacturers based in cities like Gujranwala and Gujrat, who compete in the same market with their low-cost products.

The electronics industry in Pakistan is still in a growth stage. In some areas, there is 1 refrigerator for 10 households. With the increasing income levels in the middle class, setup of local assembling plants by the International brands and mass production in China, the industry is set to grow further.

A lot of local investors are coming in the market with join ventures with Chinese and Korean companies. As the cost of production is going lower, localized assembling units are emerging and the cost of acquiring new technology is decreasing, the threat of new entrants is therefore high in this industry.

The bargaining power of the consumers is medium to high as they have a lot of variety and options available to them. One segment of the buyers is of brand loyals who prefer the brands they have used in the past and go with either ‘Dawlance’ or ‘Waves’ in case of refrigerators. Then there is another segment that goes with newer technology and newer brands, and finally there is a segment that is price conscious and they go with the local manufacturers.

Dealers pay a pivotal role in the distribution of the home-appliances in this industry. The bargaining power of the dealers over the companies is also medium to high in the industry. For example, in case of Haier some ‘general dealers’ have over a 100 shops each and command high volumes, hence they dictate their terms and ask for special discounts and benefits from the company. These dealers are not bound to sell Haier products exclusively, so brands have to compete with each other in giving discounts to the dealers and competing on price to get the shelf space. The companies try to counter the power by establishing their brand in the market and capitalizing on their multinational presence to increase the footfall on the dealer shops.

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