Qingdao Haier Ltd

Qingdao Haier Ltd. – Considering the Maytag Acquisition

The senior executives at Qingdao Haier Ltd., China’s largest home appliance marketer, faced a major decision in June 2005, whether or not to bid on the purchase of Maytag Corporation, the third-largest U.S home appliance manufacturer. After being offered a bid of $1.13 billion by a private-based U.S group in May 2005, Maytag’s Board of Directors was willing to entertain competitive offers.

A decision by Haier to purchase Maytag would be in favour and compatible with the encouragement of the Chinese government for its large companies to consider overseas international acquisitions, and as a result these companies would turn into transactional corporations featuring an overall single corporate global brand name. Along with this the Chinese named Qingdao Haier Ltd., as one of six domestic companies which it hoped to develop and convert into one of the world’s top 500 companies by 2010.

As Haier focused its products on specialization rather than diversification, their key strategy was to develop and expand into global markets, establishing a brand reputation overseas and creating a localised brand name, with which America and Europe can associate with. Taking into account the competitive nature of this market, localisation is extremely important with Haier being the fifth largest household appliance company behind; Whirlpool, General Electric (U.S), Electrolux (Sweden) and Bosch-Siemens (Germany).

Maytag’s has a smaller competitive position in the large household appliance industry in comparison to GE and Whirlpool. In the U.S. alone they hold a 20% market share but Haier is right behind them. Maytag is a Fortune 500 company that designs, manufactures, sells, and services home and commercial appliances in North America and some international markets. Haier’s decision to bid on Maytag would depend greatly on an assessment of competitive issues, along with the marketing opportunities that Maytag business...