Turbulence Expected from Haier’s Planned Acquisition of GE Appliances

Haier perseverance to acquire GE Appliances finally seems to be paying off, so it could now be time for Haier to shift gears and become more aggressive in the marketplace. This acquisition would not only increase Haier’s footprint in the United States and global markets, but also change the overall landscape of the global home appliance market, including the U.S.

Following are possible outcomes in the U.S. and global home appliances markets, if this acquisition receives regulatory approval:

• Haier takes GE brand global: This acquisition allows Haier to use GE’s “Made in America” brand for 40 years. And there is a possibility Haier might take the GE brand global.
• Haier gains share of premium segment: With the GE Appliance brand, Haier would immediately gain a major share of premium-segment of the home appliance market, a positioning which Haier is finding it difficult to achieve.
• Haier also gains share and expertise of “builders” segment: Haier would suddenly become a key player within the U.S. builders segment, not only promoting the well-established GE brand, but also leveraging the acquisition benefits and promoting its own Haier brand among a new audience of builders, property managers and architects. With this added expertise, Haier would also grow its share among builders segment in other regions.
• Haier retains GE business in totality: This acquisition may not result in any closed factories or employee lay-offs. Qingdao Haier would continue to adopt a decentralized management style developed by Zhang Ruimin, founder, chairman and CEO of Haier Group.
  • It would provide GE Appliance the same level of management independence and empowerment as it does with its recently acquired appliance company, Fisher & Paykel, which as it appears is sailing quite smoothly.
• Haier gains GE expertise and access to their loyal customer base: Aside GE’s large loyal customer base, Haier would also get access to GE a large supplier network and a large distribution network in the United States.
• Haier becomes a consumer electronics giant. Haier has gradually tried to increase its business beyond the home appliance market, launching smartphones, smartwatches, tablets, smart TVs and other consumer electronic devices. With access to the largest and wealthiest consumer electronics market, Haier’s ambition could be achieved sooner than expected.
• Haier transformation into a technology company: Haier has been reasonably successful in promoting its smart connected appliances in China, and the company would further gain from GE Appliances’ cutting-edge technological standards -- leveraging them into some breakthrough developments in the connectivity segment, due to GE’s decade of expertise in this area.
• Haier becomes a key strategic partner with GE Group: Aside from the $5.4 billion purchase offer by Haier to acquire GE’s appliance business, Haier gains even more value in being a strategic partner with the wider GE Group – jointly expanding into automotive, healthcare, industrial Internet, advanced manufacturing and other high-tech industry sectors.
• Change in the overall market landscape: Post-acquisition, the market dynamics and the landscape of the home appliance market would change in the U.S. and globally, as Haier, Midea, Hisense and other Asian players get aggressive to gain market share. This would encourage Whirlpool, Electrolux, Bosch, Arcelik and other Western players to respond accordingly.
• Haier may replicate its TV strategy: An example of how aggressive Haier can get can be seen in its recent approach in the Korean TV market, where it launched lower-priced TVs with updated technology against global stalwarts, Samsung and LGE.
• Haier may take the lead in the display market: Haier’s entry into the TV business could also affect how display technology would be used in home appliances. Use of display technology in the home appliances, which is already set to evolve rapidly, would grow faster as appliance makers are using more displays, larger displays, multi-colour displays, touch displays to differentiate.

After the sell-off of the GE Appliances business, there will not be many companies left to acquire. It will be interesting to see the strategies appliance makers come up with to gain market share.

Be free to contact Dinesh Kithany, Lead Analyst, Home Appliances at IHS Technology at [email protected] to discuss further. And click here to know more about IHS Technology's Home Appliance Intelligence Service.

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