Chinese Refrigerator Maker Finds U.S. Chilly - WSJ.com
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7/7/2008 12:13 PM
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See photos from Haier's factories in
China and South Carolina.
The Wall Street Journal
March 18, 2008
Chinese Refrigerator Maker Finds
By MEI FONG
March 18, 2008; Page B1
While Western companies cast a covetous eye at China's huge consumer
population, Zhang Ruimin, the chief executive of one of China's largest
appliance makers, was ogling the U.S. His plan: Build a signature, $2,000
refrigerator in America to capture a bigger slice of the lucrative U.S.
Mr. Zhang's strategy brought Haier Group closer to its potential customers
and avoided the cost of shipping bulky appliances from China. But since it
was introduced last year, the new high-end refrigerator has been given a
Tom Torgerson, senior buyer at ABC Appliances, says his chain
of more than 40 Midwestern stores sold only about 50 of the
Haier convertible fridges in the first few months of the product's
launch last year. "Haier's name recognition is small," he says.
One of China's biggest consumer brands, Haier makes more than twice the number of refrigerators in a
year made by
Corp. Even though it is the leading seller of compact fridges used in dorm
rooms, it is still a mere pipsqueak in the $40 billion U.S. market, where it has been selling mostly
lower-cost appliances for years.
Growth overseas is crucial for Haier because profit margins from the company's core products in China --
refrigerators and washing machines -- are razor-thin thanks to increasing foreign competition. That
pressure has increased since 2004, when Haier made an unsuccessful attempt to buy Maytag Corp., losing
out to Whirlpool.
But Haier's U.S. ambitions have run up against hurdles. The new refrigerator, which
allows consumers to set specific temperatures for individual compartments, was
designed and built at Haier's South Carolina factory, at 10 times what it would cost
the company to make in China.
The downturn in the U.S. economy crimped consumer demand just as the company's