Technical Articles
2025-01-07

How Haier’s Model Can Help Chinese Enterprises Accelerate in the IoT Era

How Haier's Model Can Help Chinese Enterprises Accelerate in the IoT Era

For Chinese enterprises, “globalization” has become an important strategic choice. Especially in recent years, as the domestic demographic dividend continues to disappear and industry competition intensifies, it has become a trend for enterprises to seek opportunities in the global market.

Chinese enterprises have been “going out” for decades, but very few have gained a foothold in the international market. In addition to the capabilities of the enterprises themselves, understanding the market and local consumers, policies, resources, and other factors cannot be ignored.

How Haier's Model Can Help Chinese Enterprises Accelerate in the IoT Era

Facing the upcoming era of the Internet of Things, Chinese enterprises going out may find an opportunity to “accelerate” from Haier’s global development.

As the world’s number one white goods brand, Haier is undoubtedly a prime example of Chinese enterprises going global. From initially implementing a gap product strategy to pioneer overseas markets, to opening up market patterns with a “joint brand” strategy, and now utilizing a localized approach of R&D, manufacturing, and marketing to mobilize local advantageous resources, Haier has gradually found its unique way, continuously evolving along the path of globalization.

Haier’s approach is “one person, one unit”. This model not only helped Haier open the door to globalization but also created a whole new brand track of IoT ecological brands, changing the competitive landscape of brands in the IoT era.

For more Chinese enterprises going out, when the era of the Internet of Things arrives, Haier’s experience provides significant insights: enterprises must timely transform in the face of new market periods: First, a transformation of orientation, from pursuing scale expansion to creating an ecosystem in the IoT era; Second, a transformation of brand, from product branding in the industrial era to ecological branding in the IoT era; Third, a transformation of business model, from the industrial era’s value chain to the IoT era’s business ecosystem model.

On October 19, at the first Multinational Corporations Leaders Summit in Qingdao, Zhang Ruimin, Chairman and CEO of Haier Group, delivered a keynote speech titled “Business Model in the IoT Era – One Person, One Unit”, sharing Haier’s innovative business model exploration. On the same day, as the founder of this one person, one unit model, Zhang Ruimin was awarded the “Forbes China Lifetime Achievement Award” at the 2019 Forbes China Leadership Forum for his outstanding theoretical and practical achievements with this model.

How Haier's Model Can Help Chinese Enterprises Accelerate in the IoT Era

Walking the Globalization Path with “One Person, One Unit”

Chinese enterprises have been on the international stage for decades, but very few have been able to stand firm on the international stage. The main problems are: First, reliance on cheap labor has left international market consumers with a cheap impression; Second, they are squeezed by high-end brands in the international market, leading to a small market space.
As early as the 1990s, in response to the “going out” strategy and to promote Chinese brands on the international stage, Haier launched its internationalization strategy. In the process of internationalization, Haier has also deepened its thinking on development in the international market and upgraded its “internationalization” strategy to a “globalization” strategy, reflecting a qualitative change in Haier’s business model: From being based in China to radiating to the world, creating international brands with Haier’s own resources, to utilizing global resources to create localized mainstream brands. From this thinking, we can see the germination of the “one person, one unit” model.
To successfully achieve globalization, the first issue to resolve is the path to globalization. The “one person, one unit” model emerged at this time. According to Zhang Ruimin, “One person, one unit, the most important thing is to support the corporate spirit of ‘creating resources, gaining global reputation’. When multinational companies occupy the market in China, it is ten to one; When Chinese enterprises create brands globally, it is one to ten. The most effective way is that each person must be as effective as ten people; everyone must be clear about their global position and goals, and then be able to achieve them as quickly as possible, which is to create a kind of resource.“
The “one person, one unit” model breaks the barriers of traditional closed organizations, transforming the organization into an open entrepreneurial platform where employees and users interact directly, understanding user needs through interaction, concentrating various products and services to provide the best scenario experience for users, and continuously meeting user needs through iteration.
This business model has helped Haier “conquer” one market after another, becoming one of the few well-known Chinese enterprises on the international stage. Today, in the international market, the Haier brand is both well-received and well-sold. In 2018, Haier was selected as one of the “World’s 500 Most Valuable Brands” compiled exclusively by the World Brand Lab, surpassing brands like Panasonic, Mitsubishi, Siemens, and LG, becoming the most globally influential Chinese home appliance brand. The Haier model has been included in Harvard Business School case materials three times, and Zhang Ruimin has been invited to Harvard classrooms twice to share the Haier model with Harvard Business School faculty and students.

The Replicable Haier Model

For Haier to successfully achieve globalization, another issue to address is the replicability of the “one person, one unit” model on a global scale.
However, for “one person, one unit”, this is not difficult. The core of “one person, one unit” lies in its revelation of the essence of all industries under the internet ecology, which is user-centered, attracting various resources to freely combine around user needs, continuously iterating, and dynamically satisfying user needs in different scenarios; at the same time, it also captures the pursuit of the source of all cultures, which is to affirm the value of people first. Zhang Ruimin has stated: “‘One person, one unit’ can be replicated and can be replicated worldwide. Because everyone hopes to gain respect from others, and everyone hopes to reflect their own value.” Therefore, the “one person, one unit” model inherently possesses replicability, applicable in the domestic market environment, and can also function globally.
In 2016, when Haier acquired GE’s home appliance division, GE Appliances was still a typical hierarchical enterprise with cumbersome workflows and slow development. After introducing the “one person, one unit” model, GE Appliances adjusted its organizational structure, completing the upgrade from direct enterprise investment to open linking of social resources, forming an open ecosystem where cross-industry resources compete to enter, attracting first-class resources and creators from industries such as Ford and Adidas. As a result, GE Appliances transformed from a closed hierarchical enterprise into an open co-creation space, which also promoted the emergence of innovative products in more fields. It can be said that the Haier model has activated GE Appliances.
Many Chinese enterprises, when entering the international market, adhere to the philosophy of seizing the international market, obtaining orders, and selling products. Fundamentally, the difference in the Haier model lies in the different paths and logic, meaning that Haier starts from user needs, providing the best user experience and iteration, using dynamics to lead optimization objectives. Under this logic, the enterprise’s goal shifts from pursuing scale expansion in the past to creating an ecosystem in the IoT era. Another major advantage of this model is that the goals and “units” are determined by the market and users, not by the company’s leadership. Market and user demands are constantly changing, and teams autonomously optimize based on these changes, avoiding the traditional model’s competition between the market and headquarters, and between regions and headquarters.
Haier once launched a “no-bend refrigerator” in India, which was based on Haier’s insight into local market users: Over 70% of local consumers are vegetarians, and due to the tropical climate, Indian users are accustomed to buying large quantities of ingredients at once for storage in the refrigerator, with vegetables needing refrigeration accounting for over 75%, indicating that users take food from the lower refrigerated compartment far more often than from the upper freezer compartment. Therefore, the biggest pain point of using the refrigerator is: too many times bending over. As a result, Haier designed this “no-bend refrigerator” by flipping the refrigerator upside down. This refrigerator was a disruption for the Indian market. In addition, in Russia, Haier creatively designed a 2-meter high refrigerator product to cater to the taller stature of local people, allowing users to more conveniently and comfortably access food; in Pakistan, based on the local population size and preference for wearing Islamic robes, Haier specifically designed a large-capacity washing machine that can wash 32 robes, which was also well-received by local users.
In summary, based on a series of localized applications of the “one person, one unit” model, the Haier brand has taken root in the global market. Especially along the Belt and Road, in many countries and regions, the Haier model has successfully activated the local economy, meeting local market demands while creating numerous jobs and promoting the comprehensive upgrading of technology, standards, and industrial structure in the region.

IoT Ecological Brands: The Future of Branding

If “one person, one unit” opened the door for Haier to go global, then ecological brands allow Haier to stand more firmly in the global market.
Human history has gone through the industrial economy era, the internet era, and now the IoT era. In the industrial economy era, the core of branding was product branding, where brands played the strategic role of “product premium”; in the internet era, the core of branding was platform branding, which relied on traffic, large-scale customization, and price competition, but could easily fall into price wars.
As we enter the IoT era, as user demands become more personalized, the relationship between enterprises and users must upgrade from a “transaction” mechanism to an “interaction” mechanism. According to Zhang Ruimin, the essence of the IoT is “connecting people”. Enterprises need to continuously build an entire ecosystem that can meet user demand maps based on the continuously excavated user needs, while iterating and upgrading to achieve mutual value growth in the ecosystem. Therefore, brands also need to transform from product brands in the industrial era to ecological brands in the IoT era to adapt to user needs in the IoT era.
Clearly, Haier’s “one person, one unit” model aligns with the requirements of the IoT era, and more importantly, it has successfully opened up a new brand track for Haier: IoT ecological brands.
In the 2019 BrandZ Global Top 100 Most Valuable Brands list, the brand category of “IoT ecological brands” appeared for the first time, reflecting the brand values of co-creation and win-win in the IoT era, with Haier being the first to be included in this category. David Roth, CEO of The Store WPP for Europe, the Middle East, Africa, and Asia, and chairman of BrandZ and BAV Group, stated: “We see a new trend of the era, where brands are transforming from providing single products and services to disruptive ecosystems. Brands that want to succeed in the future need to understand the value that this new model can create and adopt this new model.“
How Haier's Model Can Help Chinese Enterprises Accelerate in the IoT Era
Ecological brands are the way to “create brands” in the IoT era, and their emergence will change the pattern of the future business world.
Firstly, in the past understanding, a world-class brand usually comes from an industry with a sufficiently large market capacity, such as retail, technology, finance, fast-moving consumer goods, etc. However, in the IoT era, Haier constructs industrial ecosystems through its business model, creates ecological income, breaks the iron law of diminishing marginal returns, and thus breaks through traditional industry barriers to achieve world-class ecological brands.
In 2018, Haier Group achieved an operating income of 266.1 billion, a year-on-year increase of 10%, of which ecological income reached 15.1 billion, a year-on-year increase of 75%, demonstrating strong growth in ecological brands. “A more important indicator is how much ecological income is generated. The initial sales revenue of a product is fixed, while ecological income is unlimited.” Zhang Ruimin once said.
Secondly, ecological brands also rewrite the connotation of traditional brands. Traditional brands are a form of trading goods, while ecological brands are about connecting people, continuously and dynamically discovering user needs through connections between employees and users, iterating and optimizing products and services to meet user needs in different scenarios. This breaks the past “one-time transaction” trading model, turning users into lifelong customers of the enterprise. This is also Zhang Ruimin’s goal, for Haier to shift from focusing on product life cycles to focusing on user experience cycles.
Furthermore, ecological brands can complete their self-renewal through continuous iteration. As Zhang Ruimin said, he hopes Haier is an ecosystem: “Like a tropical rainforest, where life and death occur every day, but this rainforest will definitely be everlasting.”
In the IoT era, the enterprise’s business model will also transform from the industrial era’s business model—value chain to the IoT era’s business ecosystem model, allowing enterprises to continuously develop in the ecosystem’s renewal process.
In the context of globalization, the Haier model transcends the “globalization” context, with user value as the only driving goal, breaking through cultural, political, and other limitations, linking global resources with an open ecosystem, allowing enterprises to smoothly approach users in various parts of the world, enabling Haier to co-create, share, coexist, and win with ecological resource parties worldwide in the process of jointly meeting users’ personalized needs.

Harvard Business Review

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How Haier's Model Can Help Chinese Enterprises Accelerate in the IoT Era

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