Haier's headquarters in Qingdao, China. | Photo courtesy of Haier.
Haier’s headquarters in Qingdao, China. | Photo courtesy of Haier.

When Qingdao Haier took over New Zealand appliance maker Fisher & Paykel in 2012, the worries of many Kiwis echoed those voiced by Americans since Friday, when the Chinese company said it plans to purchase General Electric Appliances.

They worried about a Chinese conglomerate taking over a venerable domestic company that dates back to 1934. They worried about job cuts. They worried about the loss of an iconic brand.

Many New Zealanders have a real emotional attachment to Fisher & Paykel — much like Americans have to GE — because they grew up with the company’s appliances in their homes, said Chris Adams, who covered the F&P takeover as business reporter for the New Zealand Herald.

Chris Adams
Chris Adams

People worried the Chinese company would gut the Auckland operations, take the F&P intellectual property, and cut jobs, Adams told IL.

The worries weren’t entirely unfounded — but Adams said Haier’s takeover has benefited F&P more than it has hurt.

In 2009, F&P had racked up a huge amount of debt after having spent a lot of money on expansions. At the same time, demand for appliances fell, and Haier took a 20 percent stake in F&P, allowing it to restructure its debt.

“Haier came in and rescued them, really,” Adams said.

When the Chinese company invited New Zealand journalists to its headquarters in 2010, Adams traveled to Qingdao, a city of about 9 million and a major seaport in eastern China.

Adams said he remembers the company telling reporters that they had no intention of buying F&P — but two years later, the company acquired an additional 70 percent stake in the New Zealand business.

At that time, Haier leaders said they planned to invest in the New Zealand operations, especially in research and development, and though many people reacted with skepticism, Haier has lived up to many of its promises, Adams said.

For example, the company added 80 engineering jobs in 2014.

And many of the executives have remained. CEO Stuart Broadhurst, for example, was in charge before the Haier takeover.

Haier said in 2014 that it planned to eventually shutter the manufacturing operations in Auckland, which employ about 200, but Adams said he would not blame Haier if that happened; many manufacturing operations have been moved out of New Zealand to low labor cost nations in Asia, especially Thailand.

Haier has invested in RnD jobs in New Zealand, Adams said, and “those are the kinds of jobs we like to have.”

A lot of the potentially negative effects that were voiced by New Zealanders when Haier took over in 2012 have not materialized.

A model for GE

For Haier, the Fisher & Paykel acquisition is the model for what should happen with GE Appliances, a Haier spokesman told IL.

GE and Haier announced Friday that they had agreed for Haier to purchase the Louisville-based appliances division for $5.4 billion, though the deal requires regulatory approval. The division employs 12,000 in the U.S., including about 6,000 at Appliance Park.

Screenshot of GE Appliances website.
Screenshot of GE Appliances website.

Haier leaders intend to maintain the division’s current executives and intends to give them the flexibility to run the business as they have been, said the spokesman, who did not want to be identified. What happens to GE’s nine manufacturing operations in the U.S. will be up to the current leadership, including CEO Chip Blankenship.

The GE Appliances division will be run separately from Qingdao Haier, separately from the parent Haier Group, and separately from Haier America, which is based in New Jersey.

Haier does not want to do anything to disrupt any of the businesses, particularly the GE division, which is valuable and performing well, the spokesman said.

As Haier has done in previous acquisitions, it plans to continue to pursue its strategy to produce as close to the end consumer as possible, he said.

Haier produces in Italy for the European market, in Asia for the Asian market, in New Zealand for the Oceania market, and in Africa for the African market.

The idea, the spokesman said, is that management responds not to the corporate owners — but to the consumers in their region. Haier’s approach was profiled last year in a Harvard Business School case study titled “Zero Distance to the Customer.”

Haier said in a press release at the time that the study is based on the company’s “Networking Strategy phase.”

“Haier has set about eliminating internal and external borders. The company has started to invert its management structure and eliminate middle management to instead use the Internet to structure self-managing teams around customers,” the company said. “The aim is to create ‘zero distance’ with customers and to become a flatter, more agile company that responds more rapidly to consumer demand.”

American-made GE appliances in China?

The Haier spokesman also told IL that the company, much like it did with F&P, plans to use its sales and distribution networks in China to increase GE’s presence in Asia.

“Haier definitely sees a market for GE appliances goods in China,” the spokesman said.

While GE appliances likely would be more expensive than those produced in China, Haier believes that the nation’s large upper and middle classes would be willing to pay extra to own a premium American brand.

[dc_ad size="9"] [dc_ad size="10"]
Boris Ladwig
Boris Ladwig is a reporter with more than 20 years of experience and has won awards from multiple journalism organizations in Indiana and Kentucky for feature series, news, First Amendment/community affairs, nondeadline news, criminal justice, business and investigative reporting. As part of The (Columbus, Indiana) Republic’s staff, he also won the Kent Cooper award, the top honor given by the Associated Press Managing Editors for the best overall news writing in the state. A graduate of Indiana State University, he is a soccer aficionado (Borussia Dortmund and 1. FC Köln), singer and travel enthusiast who has visited countries on five continents. He speaks fluent German, rudimentary French and bits of Spanish, Italian, Khmer and Mandarin.