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Innovation-driven business

Updated May 11, 2015


Haier is known for its “commitment to develop products that specifically meet requirements of its Pakistani customers”.
Haier is known for its “commitment to develop products that specifically meet requirements of its Pakistani customers”.

Few companies can boast of having grown as rapidly and establishing themselves as one of the top home appliances brands within just 14 years of entering the market as Haier Pakistan.

A joint venture between Pakistan’s Ruba Group and China’s state-owned Haier Group, the company was launched in 2001 to initially manufacture washing machines, airconditioners and refrigerators.

In 2004, it started local production of other home appliances, including microwave ovens. Later on, new production lines of deep freezers, television sets and washing machines were added in 2012 and 2013.

The company has now started the first local assembly of laptops and plans to set up a mobile handset manufacturing unit with a view to capture a major share in the $1.9bn market.

Haier’s market share rose to over 24pc in 2012, and its airconditioners, refrigerators and washing machines are ranked as market leaders in the country, according to a survey of the home appliances market in Pakistan by Milward Brown.

“We are either the top, second or third place in the other products we produce,” Haier Pakistan’s marketing manager Waheeb Ismail told Dawn, adding that the company is already the top brand in the high-end product market.

Haier Pakistan is the second joint venture between a Chinese company and a Pakistani business group. The first was between Qingqi and a local company for making motorcycle rickshaws in Lahore. But that partnership didn’t last very long.

What distinguishes Haier Pakistan from other domestic home appliances manufacturers is its commitment to develop products that specifically meet the requirements of its Pakistani customers

Haier Pakistan was started with an investment of $500m, with the Haier group sharing 55pc and the Ruba group 45pc of the money.

What distinguishes the company from other domestic home appliances manufacturers is its “commitment to develop products that specifically meet the requirements of its Pakistani customers”. For example, it has developed deep freezers that can keep ice for 100 hours during power cuts, and washing machines for heavy clothing and fabrics.

Little wonder then that the company’s turnover grew to over $100m in 2011 and to $230m in 2013. It is estimated to go past $400m this year.

“We are a very fast growing company and are expecting to become the top home appliances company in the country this year,” Haier Pakistan Managing Director Shah Faisal Afridi told this writer last week.

He said the company is targeting increasing its revenues to $1.5bn over the next five years. “We employ around 4,800 people [directly]; the achievement of our target will add 16,000 more direct jobs,” he said.

The company is already producing over 90pc components of most of the home appliances that it manufactures in its large facility at the Haier and Ruba Economic Zone, spread over 300 acres on Raiwind Road near Lahore.

“We produce 90pc of the components for our refrigerators, microwave ovens, airconditioners and television sets and only the high-tech parts are imported. We are also supplying parts and components to our competitors in the home appliances segment. This has become possible due to the transfer of best technology from China.”

A major factor that has helped Haier Pakistan achieve the rapid growth in sales is the competitive prices and wide range of its products.

“Our prices are very competitive and price band very large. We have products to meet the requirements of different income groups. For example, we have a range of washing machines that cost between Rs23,000 a piece to more than Rs150,000. It gives us a huge advantage over our rivals in the country,” Waheeb contended.

To help boost sales, the company has also set up an extensive branch network across the country, comprising exclusive sales points and dealerships. Moreover, these outlets sell its products on interest-free instalments — a strategy that has helped increase sales rapidly.

“This is a win-win situation for both our company and our customers who otherwise cannot buy fridges, televisions, airconditioners and washing machines etc [by paying a lump sum amount],” Faisal contended.

“We are planning to acquire between 2,000 and 5,000 acres of land near Sheikhupura along the Lahore-Islamabad motorway to expand the Haier and Ruba Economic Zone as more Chinese firms plan to enter the Pakistani market after the $45bn the China Pakistan Economic Corridor gets underway,” Faisal said.

“You cannot imagine the kind of economic activity and jobs the Chinese investment will generate over the next few years. But before that, our policymakers will have to finalise their policy regarding special economic zones and give incentives to investors setting up manufacturing facilities there. The successful implementation of the [Chinese] plan to create an industrial zone or park in Gwadar to make the port commercially viable also depends on the formulation of the SEZ policy and provision of incentives for the investors.”

Published in Dawn, Economic & Business, May 11th , 2015

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