Chinese are not afraid of digital transformation, says Zhang Ruimin, CEO of Haier.
In Qingdao, a Chinese seaside town a short flight away from Beijing, I had a two-hour long conversation with Zhang Ruimin, the legendary founder and CEO of Haier, one of the first Chinese brands with real international success. As Wikipedia correctly notes, Zhang is credited with turning an almost bankrupt Chinese refrigerator manufacturer into one of the world´s largest white appliances company. He is also great fun to talk to, a real thought leader. In his company´s headquarters, we talked about drinking with peasants to get a business loan, destroying company property with a sledgehammer and the Chinese philosopher Laotse, among other things.
Smashing arguments
One of the first things Zhang Ruimin did when he became the director of his company, was to pick up a sledgehammer. He asked his workers to join him in smashing 76 brand-new refrigerators, because he thought their quality was not good enough.
That was in 1985. Back then, a refrigerator cost the equivalent of two years´ wages for a Chinese worker. They were shocked.
“Some workers wept, but it proved to be a useful exercise”, says Zhang Ruimin.
Now Zhang, one of China's best-known and most influential business leaders, has started Haier´s digital transformation with an equally radical approach. He is not only embracing the Internet of Things or IOT by making all of Haier´s products interactive and connected. Think smart fridges that finally know when you run out of milk or beer and air-cons controlled from your office via the internet. This is only a small part of the strategy.
Digital transformation. And no fear of change
Zhang Ruimin is simultaniously turning his company into an internet-enabled platform business. Consumers order customized products directly from their mobile phones. More and more orders are delivered to them directly from the factory.
“Production used to be for the warehouse. Now we are seeking to supply specific products directly from the workbench to specific consumers”, says Zhang.
In Zhang´s opinion, it is no coincidence that Chinese companies are embracing digital transformation with such a zeal. He believes that Chinese are less afraid of change than people in Europe or the US.
“European brands seem to think that they don´t need to communicate directly with their customers because of their high brand acceptance,” says Zhang Ruimin.
“That is where our opportunity lies.”
The Haier U+ app now allows consumers to personalize certain appliances while they are still being built in the workshop.
Zhang thinks that constant change is a must for any company, big or small. Their “lifeblood”, as he calls it.
Talk to your customer!
Perhaps the biggest change that Zhang has ordered is that Haier has started to become much more open, more transparent. The company´s communication strategy has embraced the internet age and social media like not other manufacturing business in China. The company already has millions of Facebook followers worldwide. The new vision has been named “zero distance to the customer”.
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Note: Part of this conversation with Zhang Ruimin was also published as a CEO interview in Roland Berger´s magazine Think Act. You can read it following this link here.
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Last updated September 3, 2018
By Henrik Bork, published in "China Notepad". Henrik is the founder of Asia Waypoint and Lychee.com in Beijing. A former correspondent of the German national daily Sueddeutsche Zeitung in China, he believes that research is the basis for good communications.
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