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Haier sees growth at bottom of pyramid

Haier sees growth at bottom of pyramid

Author | Source: The Economic Times | Monday, Jul 03,2006 7:38 AM

Haier sees growth at bottom of pyramid

Haier India is on overdrive as it plans to launch an India-specific range of products by mid-'07. This is as per its strategy of capturing the low-end of the consumer durables market.

The product range would consist of refrigerators, washing machines and CTVs specially designed for Indian consumers. All the products, during the test run would be manufactured in China.

With the introduction of this India-centric range of products, the Chinese durables major expects to break even and achieve a turnover of Rs 800 by '07 from the current level of Rs 300 crore, TK Banerjee, CEO, Haier India told ET.

“Our core offerings till now have been high-end products but '07 will see us enter the mass market with direct cool refrigerators and other such mass volume categories in an attempt to gain a bigger chunk of the market. This would also create equity for the brand,” he said. He, however, refused to comment on the details of the investments.

“We entered the Indian market with a premium line of products, which prohibited our brand from building mass appeal. Although there are so many players in the market there is enough space for players like us seeing the economy grow at around 8-10%. We have a strategy in place to topple the apple cart,” he added.

Elaborating on the three pronged strategy Mr Banerjee said, ”Our focus to take the brand to the next level in terms of mass penetration will focus on network, products and retail expansion wherein organised retailers will play a very important part.” Haier has struck deals with Woolworth and Hypercity and is in talks with Reliance Retail as well, which rolls out in August.

“With the introduction of FDI (foreign direct investment) in retail, we expect to get the visibility that hasn't been made available to us till now because of the lack of organised players in the retail segment. Also, with our exclusive brand stores 'Planet Haier' we intend to give a cutting edge retail experience to our consumers,” Mr Banerjee said.

“We are also looking at the tier 2 cities with a population of over 1 lakh as a growth potential zone so we would sell our mass market products there,”he added.

On the manufacturing and sourcing front, the durables company has been talking about setting up facilities in India for some time now but nothing has come to the fore as yet.

“With the introduction of these mass market products the chances of the company starting manufacturing units here look very likely as sourcing these low-end products would be feasible. But it all depends on the response we get for the new range of products,”he added.

Haier is also introducing its range of freezers next summers. He expects the demand for freezers to see a sharp spike not only in the commercial category but for doemstic use as well. It may be pointed out that freezers had made the company turn around its brand presence in the US markets. It, however, does not plan to make a foray directly into telecom or IT products.

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