Founded in 1984, Haier Group is the world leading brand of major household appliances (Source: Euromonitor), and is now transforming from a traditional household appliance manufacturer into an open platform for entrepreneurship. In the Internet and post e-commerce era, Haier is devoted to transforming into a truly networked company to build an ecosystem of shared creative and win-win results. With ‘socialnomics’ as the company’s guide, a foundation in user value interaction, and a core competitiveness of trust, Haier is set to become an IoT leader.
In an age when the experience economy and sharing economy are becoming ever more present, Haier has adopted creating an ‘Ecosystem of trust and a platform for sharing’ and ‘aligning individuals and goals (RenDanHeYi), igniting potential through micro-enterprise’ as its stated spirit and style in this new era. The company is also exploring disruptive innovations to strategy, organization and manufacturing, establishing a dynamic self-circulating system. In terms of strategy, Haier has established a co-creating and win-win ecosystem with users at the center, and is able to fulfill win-win results and rewards for ecosystem stakeholders; in terms of organization, Haier has managed to overturn a traditional closed hierarchical system into a networked node organization, integrating first-class resources from around the world in an open way; and in manufacturing, Haier has explored replacing traditional physical plants with inter-connected factories and making the transformation from mass manufacturing to mass customization. ‘Human value comes first’ is always the main guiding principle in Haier’s business model, and throughout this transformation, staff are no longer employers and executors, but instead have transformed into entrepreneurs and dynamic partners.
As a result of the social value produced by this transformation, there had already been 15 innovation and entrepreneurship bases established on the Haier platform by the end of 2016, integrating the incubation resources of 3,600 innovation and entrepreneurship bases, 1,333 cooperating venture capital institutions as well as venture capital funds worth RMB 12 billion. Additionally, Haier is also a supporter of open entrepreneurship, partnering to build 108 incubator spaces. There are more than 200 start-up microenterprises, over 3,800 node micro-enterprises and millions of micro-shops now implementing the socialization of capital and labor on the Haier platform, among which more than 100 micro-enterprises have annual revenues of over RMB 100 million and 41 micro-enterprises have received VC funding. Among these 41 micro-enterprises, 16 have estimated values of over RMB 100 million. Because of Haier’s efforts to decentralize, simplify interaction and eliminate internal barriers to communication and cooperation in the process of transformation, employee overhead was decreased by 45% from peak levels, but the platform still manages to provide more than 1.6 million jobs. The State Council of China confirmed Haier as the first demonstration base of ‘Shuangchuang’ (mass entrepreneurship and innovation) in May of 2016. This honor was based on the outstanding achievements and the exemplary role Haier has played in this field, and the company was the only enterprise selected from the appliance industry.
From an industry innovation perspective, Haier focuses on innovation across five major platforms: white goods transformation, investment & incubation, financial holdings, the real estate industry and the cultural industry.
White Goods Transformation Platform: focuses on the transformation from appliances to networked appliances and on to websites. Through community platforms, inter-connected factories, smart life platforms, etc., innovates to become the leader of smart living in the IOT era.
Investment & Incubation Platform: Focused on founding a user ecosystem and trust platform-based brands. By establishing a community interaction system, Haier will occupy a leading IoT position across business spheres.
Financial Holdings Platform: Focused on ‘socialnomics’, acts as a ‘golden steward’ and industrial investment bank entry point. Haier aims to build a co-creation and win-win industrial finance ecosystem through interlinking, restructuring, co-creation, and sharing, thus becoming an ‘industrial finance platform’ pioneer in the Internet finance realm.
Real Estate Industry Platform: Explores how to achieve a leading role in the smart community and life services IoT model.
Cultural Platform: Explores how to achieve a leading role in the ‘content + community + e-commerce’ value interaction model in the Internet age.
Various entrepreneurial resources, including manufacturing systems, logistics, venture capital investment & incubators, and human capital, are provided to entrepreneurs via Haier’s five major platforms, through which entrepreneurs can realize innovative growth utilizing Haier’s ecosystem resources.
Steady growth has been achieved due to Haier’s exploration of IoT business models. From the income generated by the conventional economy, Haier saw its 2016 global revenue hit RMB 201.6 billion, a 6.8% year-on-year increase; its profits hit RMB 20.3 billion, a 12.8% year-on-year growth. The growth of profits also outpaced that of revenue by a factor of 1.8. The compound growth rate of income has reached 6.1%, while that of profit was 30.6% over the past decade. Online transaction volume, which reached RMB 272.7 billion, was generated on Haier’s product online platforms, B2B, B2C socialized online platforms and internet finance platforms, representing a 73% year-on-year increase.
Haier’s transformation is based on its exploration of the RenDanHeYi model. The model, since its first inception on September 20, 2005, has since been upgraded to the RenDanHeYi 2.0, a co-creation and win-win ecosystem model. The ‘Ren’ (representing ‘people’) has been updated from standing for only Haier staff, to know meaning all stakeholders. ‘Dan’ (which means ‘goal’) is updated from ‘user values’ to ‘user resources’. The ultimate goal of this model is to realize multilateral win-win added value in a co-creation and win-win ecosystem. The innovative RenDanHeYi model is supported by world-renowned business schools and management scholars, due to its effective solutions to the particular management problems faced in the Internet era. Many of these institutions have conducted long-term studies of Haier and view Haier’s exploration as a move in the right direction. Furthermore, the Harvard Business School and Wharton Business School have already entered Haier into their case study library as a teaching resource. Every year, thousands of enterprises from China and abroad, both big and small, visit Haier to learn about the RenDanHeYi model. At present, the model has been tested and adapted in the agricultural industry and the medical industry.
At present, more than ten brands make up Haier across the globe, including Haier, Casarte, Goodaymart, GEA, AQUA, Fisher & Paykel, Leader, DCS, and MONOGRAM, among others. They occupy different niche markets, and are able to satisfy their unique users with the best experience across different fields. 2017 will be the first year Haier’s RenDanHeYi model takes root, blooms, and bears fruit. Using the company’s ‘salad’ model of multicultural integration, Haier will continue promoting the internationalization of the RenDanHeYi model to all of its units around the globe.