Haier goes to Rus­sia with big plan

The ap­pli­ance maker in­vests in R&D, man­u­fac­tur­ing plants and as­sem­bly units in a bold bid to lo­cal­ize its oper­a­tions

China Daily (Canada) - - BUSINESS - By FANFEIFEI fanfeifei@chi­nadaily.com.cn

Haier Group, China’s biggest­maker of house­hold ap­pli­ances, has opened a new re­frig­er­a­tor fac­tory in Rus­sia in re­sponse to in­creas­ing de­mand from the Euro­pean mar­ket. The new plant is the first joint Sino-Rus­sian busi­ness project in a non-en­ergy field.

The new site, span­ning 24,500 square me­ters, is lo­cated in Kam­sky In­dus­trial Park, Naberezh­nye Chelny, an im­por­tant in­dus­trial city inthe Rus­sian prov­ince of Tatarstan.

It will en­tailupto$55mil­lion in in­vest­ment, of which $39 mil­lion have been in­vested al­ready to set up the plant. The rest will be in­vested this month to buy com­po­nents and to­wards pro­duc­tion.

The fac­tory is a cru­cial step for Haier to lo­cal­ize its Rus­sia oper­a­tions. Haier­hasalso started es­tab­lish­ing an R&D cen­ter and a TV as­sem­bly unit in Rus­sia.

An­nual out­put of the Tatarstan plant will reach 500,000 re­frig­er­a­tors in 2020. Pro­duc­tion ca­pac­ity in the first stage will be 250,000 units, which will swell to 500,000 units by the end of the sec­ond and fi­nal stage. The tar­get mar­kets in­clude Rus­sia, the Com­mon­wealth of In­de­pen­dent States, and some parts of Europe.

By 2017, Haier plans to em­ploy 500 pro­fes­sion­als at this fac­tory, and an­other 1,200 jobs will be cre­ated by out­sourc­ing busi­ness. At present, there are al­ready 248 staff in Naberezh­nye Chelny.

Liang Hais­han, the ro­tat­ing pres­i­dent of Haier Group, said, “In­no­va­tion and cut­ting-edge tech­nolo­gies are the genes of Haier’s global strat­egy. Tatarstan is one of the most prospec­tiveRus­sian re­gions in terms of eco­nomic de­vel­op­ment, tech­nolo­gies, and in­no­va­tions.”

He said Tatarstan has a sup­port­ive in­vest­ment en­vi­ron­ment, highly qual­i­fied ad­min­is­tra­tors, fully de­vel­oped in­dus­trial clus­ters, and good prospects for lo­gis­tics de­vel­op­ment. The future de­vel­op­ment of the plant au­gurs well for the com­pany, he said.

Rus­tam Min­ni­hanov, pres­i­dent of the Tatarstan Repub­lic, said, “We are very proud that we man­aged to cre­ate all the nec­es­sary con­di­tions in the re­gion to at­tract such hi-tech com­pa­nies asHaier.”

Min­ni­hanov saidHaier’s fac­tory sig­nals a good be­gin­ning to­wards mu­tual ben­e­fits. As Chi­nese in­vestors come into the re­gion, Rus­sian en­ter­prises, en­cour­aged­bytheRus­sian gov­ern­ment, are ex­pand­ing in China.

Founded in 1984, the Qing­dao-head­quar­tered Haier Group is one of the world’s lead­ing home ap­pli­ances man­u­fac­turer. It had a 9.8 per­cent share in global mar­ket in 2015, Lon­don-based mar­ket-research firm Euromon­i­tor International data showed.

In Jan­uary, the com­pany agreed to buyGen­eral Elec­tric’s home ap­pli­ances busi­ness for $5.4 bil­lion in cash.

“Haier’s strat­egy is to lo­cal­ize its pro­duc­tion in Rus­sia as fast as pos­si­ble. Over­thenext twoto three years, up to 70 per­cent of pro­duc­tion in Rus­sia is planned to be lo­cal­ized,” said Mikhail Babich, Rus­sian pres­i­den­tial plenipo­ten­tiary in the Volga Fed­eral District.

In ad­di­tion to fi­nan­cial in­vest­ment, Haier is in­tro­duc­ing a unique pro­duc­tion model and in­no­va­tive tech­nol­ogy to Rus­sia.

It im­ple­ments spe­cial flawmin­i­miz­ing tech­nolo­gies at all pro­duc­tion stages from man­u­fac­tur­ing to as­sem­bly and pack­ag­ing. It has built two lab­o­ra­to­ries in Naberezhye Chelny, one to check the qual­ity of the prod­ucts and the other to de­velop

Haier has al­ways made ef­forts to im­ple­ment “One Belt and One Road” ini­tia­tive and es­tab­lish man­u­fac­tur­ing bases in Rus­sia. It be­gan to en­ter the Rus­sian mar­ket in 2008 and car­ried out deep research in the lo­cal­mar­ket, the­com­pany said.

It launched large-ca­pac­ity and en­ergy-ef­fi­cient re­frig­er­a­tors, with a height of 1.9 to 2.0 me­ters, to meet spe­cific needs and eat­ing habits of Rus­sian con­sumers.

Haier’s 2015 rev­enue in Rus­sia was ten times that of the 2010 fig­ure. Turnover of home ap­pli­ances dropped by 15 per­cent in­no­va­tive tech­nolo­gies. last year, while Haier’s turnover in­creased by 78 per­cent.

In 2015, the spe­cial­ists from Naberezh­nye Chelny had un­der­gone train­ing at Haier fac­to­ries in Shan­dong prov­ince of China and have since re­turned to their home base to put their knowl­edge to prac­tice.

Yan­nick Fier­ling, chief ex­ec­u­tive of­fi­cer for Europe oper­a­tions of Haier, said the new fac­tory would help the com­pany to im­prove pro­duc­tiv­ity and be more proac­tive to­wards the Euro­pean mar­ket. The key to suc­cess­ful glob­al­iza­tion is suc­cess­ful lo­cal­iza­tion and getting closer to tar­get mar­kets and end-users, he said.

Zhou Nan, deputy sec­re­tary gen­eral in the home ap­pli­ances branch of the China Cham­ber of Com­merce for Im­port and Ex­port ofMachin­ery and Elec­tronic Prod­ucts, said: “The time for Chi­nese home ap­pli­ances (to shine in Rus­sia) is com­ing. On one hand, the ap­pli­ance mak­ers need to im­prove their global lay­outs; on the other, they need to speed up the pace of go­ing abroad by virtue of the Belt and Road Ini­tia­tive.”

Xie Chuan­jiao con­trib­uted to this story.

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