Case 1: Opening Case: Haier of China Moves Overseas to South Carolina

Case 1: Opening case: Haier of China Moves Overseas to South Carolina

1. What are the various strategic, market, and economic motives for Haier of China to set up manufacturing operations in the United States

Strategic * Shipping refrigerators from Asia could take up to 6 weeks. * Opening Haier’s American factory is as much as a cultural victory as a business one. * Target, Wal-Mart, Costco and Best Buy * Cultural organization * Discipline of Chinese * Strategic business unit | Economic * Saves transportation costs. * Shipping air (expensive) * Product selling for a third less than competitive markets * 2002. Sales $100,000 or 2% total * Cheaper than similar refrigerators | Market * American marketing it’s considered prestigious. * Gain market share from Whirlpool and Maytag. * Headway in small American market niches * It had a third of the market for compact refrigerators. * Half the market for refrigerated wine cabinets. |

2. In your opinion, why might U.S firms to invest in China?
In my opinion there are several reasons of why American firms would seek to invest in China. One of them is that labor is a lot cheaper in China. Machine operators are paid $10 usd one hour, while in china is ten times lower than that. Other reason in the legal aspect is that in America workers must be paid for every hour the work otherwise the company would probably have a lot of problems with the government while in China these issue could be more flexible. Other reason could be that Chinese are more disciplined than Americans. As it was mentioned Chinese are perfectly lined up while Americans would never do it.

3. What are the political and cultural factors that affect both Haier’s expansion to the United States and U.S firms’ expansion into China?

Political Factors * In America workers must be paid for extra hours. * It is an expression of nationalist pride & of the Chinese government’s determination to expand overseas in markets that it considers prestigious. * Labor law is different in the 2 countries. * The careers of top managers are partially and entirely state-owned are heavily directed by the government | Cultural Factors * Cultural clashes between Chinese and American workers. * When people were losing their jobs all workers were American and the presence of the Chinese was everywhere with slogans * They had different strategic vision. * Refrigerators in China are smaller than in the U.S |