Haler Seeks Cool U.S. Image
NEW YORK, Aug 2 (Reuters) -- For most American shoppers, "Made in China" may still suggest cheap toys, but China's largest household appliance maker has ambitious plans to change that with its sales of a growing range of sleek minibars.
Haler Group Co., which according to some industry estimates is the world's second- biggest maker of refrigerators, is seeking to outflank America's three major appliance makers by competing on image rather than price, and by targeting students in the hope that they will remain loyal as they get older.
And so far the strategy, which may signal the way for future campaign in the U.S. market by other Chinese consumer products companies, may be working -- at least according to two arms of the world's largest retailer Wal-Mart Stores Inc.
"It's not about whether they're made in China," said Melissa Berryhill, a spokeswoman for Wal-Mart's Sam's Club, whose last holiday season catalog featured a black Haier cooler with smoked glass doors that is big enough to chill 3o bottles of wine.
"They're an exceptional value," she said of the $300 luxury machine, sold along with the more ordinary Haier chest freezer that costs about $16o.
Wal-Mart's main discount operation in April began selling the chest freezers in half of its 2 6oo stores, while most of its stores sell at least one of two versions of compact refrigerators made by Haier.
"They're popular and beating our expectations on sales," said Wal-Mart spokesman Rob Phillips, who added that the Haier 4.6 cubic feet and 5 cubic feet freezers cost about the same as General Electric Co.'s comparable products, selling for around $169.
COLLEGE TOEHOLD
GE, Whirlpool Corp. and Maytag Corp. currently dominate the U.S. marketplace for household appliances but they tend to focus most of their attention on mainstream areas such as large refrigerators and freezers.
Haier, which says it currently sells $200 million worth of appliances in the U.S. annually, now claims more than a 35 percent share of the U.S. market for refrigerators 4 cubic feet and smaller -- the minibars found in hotels and college dormitories.
"When those college kids using our little refrigerators grow up and marry, we want them to be thinking of us for their first fridge," said Michael Jemal, Haier America's president, who was Haier's first U.S. distributor before setting up the unit in 1999.
Haier may need to depend less on the Chinese market because it is likely to face an increasing challenge on its own turf. China's entry into the World Trade Organization will open up Chinese manufacturers to greater foreign competition at home.
Haler, which had global revenues of $5 billion last year, spent $30 million setting up a plant late last year in Camden, South Carolina that will make large Haier brand refrigerators. Company officials say they hope initiatives like that will grow U.S. sales to $1 billion by 2004.
"They're building up their learning curve in the U.S., and then picking up niche markets," said Ming-Jer Chen, a professor at the Darden School of Business Administration at the University of Virginia and the author of a new book, Inside Chinese Business.
BROADWAY HEADQUARTERS
The company, whose Chief Executive Zhang Ruimin is famous in China for being filmed smashing sub- standard products with a hammer, last week bought a historical bank building on Broadway in Manhattan for $14 million.
"Buying a New York building for $14 million is not what's going to make us," said Jemal. "It's about offering the customers the products the competition doesn't have."
In the third quarter of 2002, for example, the company plans to launch stainless steel Internet-linked appliances with Flash Gordon stylings, such as a home clothes washing machine that can be started via the Internet, he said.
To grow its brand in the U.S., the company has taken out ad space on a ease-by-ease basis on trolley cars at JFK International Airport in New York and on billboards in Miami and Chicago, but has not yet contracted with any of the big advertising firms. And Haler America is not only battling rival appliance makers in the U.S. -- it is also manufacturing for some of them. As OEM , Haler America does about 20 to 25 percent of its manufacturing on a contract basis for other companies, including big U.S. competitors, who sell its products under their own brand names.