Home appliance industry is now overseas mergers and acquisitions

China's home appliance companies have made great achievements overseas. On January 15, Qingdao Haier announced that it had suspended its major asset reorganization for nearly three months and issued an announcement that the company signed the Equity and Asset Purchase Agreement with GE on January 14th, Eastern Time. Under the agreement, Qingdao Haier plans to purchase General Electric’s home appliance business-related assets for US$5.4 billion in cash. At this point, China’s home appliance industry has so far settled on the biggest foreign merger case.

As soon as the news came out, it immediately triggered concern from all walks of life. Bai Ming, deputy director of the International Market Research Department of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, believes that Haier’s acquisition of the GE appliance business will not only broaden the scope for future expansion of Haier's overseas business, but also mean that China’s home appliance industry will take a step in the international industrial division of labor. The last updated step further marks China’s implementation of the “going out” strategy to a higher commanding height.

Haier ranks fifth in the world after mergers and acquisitions

For the Haier's merger and acquisition of GE appliance business, Bai Ming believes that “for the home appliance industry, the $5.4 billion bid is indeed a rare generous. In terms of influence, Haier’s acquisition of GE has a significant degree of significance. ”

According to the statistics of the European survey company of the British investigation company, the global market share of home appliances, Haier ranked 7th in the world, and GE ranked 19th. After the merger, the Haier GE Alliance will surpass Japan's Panasonic and the United States Procter & Gamble, ranking fifth in the world.

It is understood that GE's home appliance headquarters has nine factories in five states in the United States, and it has world-class logistics and distribution capabilities, as well as strong retail network relationships in the United States market. In 2014, corporate income reached $5.9 billion and approximately $400 million in EBITDA. The company has about 12,000 employees, 96% of which are in the United States.

Bai Ming pointed out that GE’s position in the history of U.S. manufacturing development is significant. Its home appliances division currently involves refrigerators, freezers, cooking products, dishwashers, washing machines, dryers, air conditioners, water filtration systems, and water heaters. Due to its strong R&D strength, GE's efforts to achieve “good material” should not be a problem, but it is indeed difficult to achieve “cheap”. Compared to China’s home appliance industry, which has come from behind, GE will be more and more struggling to maintain its existing market share. Continued writing of past glory is very difficult for GE. unfortunately.

For Haier, this acquisition of GE's home appliance business unit can be said to be a big deal in its international strategy. While China praised Haier’s acquisition of GE, American netizens sent out various emotions online: “Another great American brand is gone.”

Chinese home appliance companies go to sea frequently and push their own brands

The “going out” strategy has enabled more Chinese home appliance companies to go to sea, and Haier should be the most successful example. In the past 30 years, Haier has been a poorly-operated small-scale refrigerator manufacturing plant in Qingdao. After many innovations, Haier became a brand symbol of product quality, and then became an outstanding service provider.

Haier continued its overseas deployment during the “going out” process. In 1999, Haier went out of the country and chose the first station in Germany with Siemens, Bosch and many other branded home appliance brands. According to statistics, Haier's march into Germany is not an unwarranted battle. Researching the German local market and introducing differentiated products is one example of Haier's pioneering drawer refrigerator.

Zhang Ruimin, Chairman of the Board of Directors of Haier Group, once said that the reason why Haier has gone better overseas is that the other companies are all “creating foreign exchange”, and Haier is a “creating card” with a single word difference. There is a law in the world that "creating a card" will cost at least seven or eight years of money. Haier has done a lot of money in the world after making a brand.

However, there are many obstacles to enter the US market. Haier has twice attempted to enter the US market through acquisitions. In 2005, Haier tried to buy Mattel, but was defeated by Whirlpool. In 2008, Haier also tried to acquire GE's home appliance business, but trading activities were suspended due to the global economic recession.

It is reported that Haier's mergers and acquisitions are not only GE's home appliance business division, but also GE's related management team, marketing channels, customer groups, brand recognition and other major resources.

Not only Haier, but also other Chinese-funded companies in the home appliance industry have also gone to sea. Earlier it was reported that Midea also participated in the bid for GE Appliances, but the US side replied that "there is no information available on this matter."

Liang Zhenpeng, an analyst in the home appliance industry, believes that the US’s participation in the bid for GE appliance business indicates that Chinese home appliance companies attach importance to the United States, the world’s largest high-end home appliance market, during overseas expansion. “Where there is demand, where our home appliances are placed,” Chen Yaofeng, the brand director of Midea, told the China Economic Herald. “The United States has already deployed in many regions around the world. We not only do the traditional model for the export of OEM products, but also put ourselves in Brand to the world."

In November 2015, Midea Air-conditioner won the bid for the air-conditioning project of the Brazilian Olympic Games and took up all the multi-line projects. On March 23, 2015, Midea established a joint venture with Carrier and Chongqing Electromechanical. On March 31, 2015, Midea announced the establishment of a joint venture with Bosch in Germany to jointly develop the global central air-conditioning market. On April 3, 2015, Midea also announced that it will establish a joint venture with Hicks of Japan to jointly expand the intelligentization of central air conditioning.

Analysts believe that whether it is Haier, or the United States, China's home appliance companies go out, are trying to seek the influence of independent brands in the world, in order to become a truly international appliance giant.