Haier: From failing fridge manufacturer to global electronic giant | Inside The Storm | Full Episode

that's adorable General Electric is one of the world's most admired brands their inventions reshaped domestic American life these initials came to be known as the initials of a friend in the early 1990s GE tried to buy a small Chinese refrigerator company 100,000 which are finito la has a feed her son she had you swap teenager who are meeting even dirtier so me 20 years on it was GE zone appliance units that faced the ax they were no longer face of General Electric the relevant industries were finance aerospace not refrigerators there was always rumors for years about something might happen to the appliance division an tire made a to buy it's old enemy just watch I'll be very good no would you maybe she want it wasn't do-or-die but it was Now or Never this is the inside story of how a small Chinese company that sold defective fridges came to buy over one of the oldest appliance companies in the world if sefl intentions may work in some igloo with a sauna [Music] the free time we have today to enjoy outside the home owes a lot to one American company General Electric in 1892 the General Electric Company was co-founded by the same man who gave us the light bulb Thomas Edison by the turn of the century General Electric manufactured almost everything needed to produce electricity across the United States equally GE needed to invent things so people would buy electricity our nation was stirring with new ideas new ones new needs we were building a better way of life and we had a powerful force to help us electricity companies like General Electric were finding ways to use electricity to light our homes do our work one of the new things that came along with general electrics famous monitor top refrigerator in the home GE gave Americans their first electric iron toaster and electric range but it was the monitor top released in 1927 that was the game-changer the first affordable household refrigerator in America you know we talk about disruption as if it's a contemporary phenomenon refrigerators were one of the really basic fundamental innovations at the beginning of the 20th century that changed American home life one of the things that it did was it changed the cadence of life so instead of going shopping every day and instead of going to market it was part of the mass consumption of food industry agricultural products changed you could shop infrequently it gave whoever the buyer was more often than not a woman it gave that that individual more time [Music] during the heady post-world War two years American families didn't need much persuading to snap up modern appliances these initials came to be known as the initials of a friend in America GE products could be found in almost every home Kevin Nolan became GE appliances CEO in 2017 the first GE product I remember is in my grandmother's house where she had a very old GE freezer and I remember the different kind of handle and the iconic badge that that that product has and then we also had a GE toaster oven which we really enjoyed as growing up as a kid GE grew rapidly by 1980 it was a corporate giant with 400,000 workers worldwide but GE was also seen as a so-called GNP company one which can never grow any faster than the economy in 1981 GE appointed its youngest ever CEO 40 year old Jack Welch he made an immediate impact you happier I hate it because what does it bureaucracy do it forces people to look inward people don't look at the customer Napier ah cracy they come in and they worry about what they worry about their boss pleasing him or her getting along getting through and getting out safe he does all the wrong characteristics it looks in it doesn't look out it rewards those who curry favor within it Welch ordered a radical restructure he demanded that GE become number 1 or 2 in everything they did I think that most people really believe that the changes that have been made are good and were necessary but that doesn't change the fact that they feel less secure and old morale business is not what it could be business units and staff who didn't make the grade were ruthlessly paired down over 100,000 workers were fired within the first five years of Welch's reign we now go do things simpler faster and smarter Welch wanted to keep only the best workers and develop their talents Welch always felt I think that there was a lot of knowledge throughout the organization and it just didn't reside in the office of the CEO and so part of his commitment was to free up the knowledge the talent in the organization no matter where one was in the hierarchy from jet engines to wind turbines computers to medical devices throughout the 1980s GE was a conglomerate with a reach into every aspect of everyday life but for Welch that wasn't enough one of the things that Welch was insistent on when he made these changes in the 80s and 90s was that the organization reposition itself to be relevant in the future and the relevant industries were finance aerospace and you know jet engines and things like that not refrigerators is restructuring over no change is not done not over will never stop changing when Welch left GE in 2001 it was the most admired company in America by then it had become clear that GE appliances once the heart of the company no longer fit we never fit into the company that well for a lot of years I think we felt that the parent wasn't that interested in being truly in the appliance market so there was always rumors for years about something might happen to be appliance provision [Music] Qingdao East China today the affluent port city is home to China's very own General Electric household appliance giant higher higher now rakes in 37 billion US dollars in sales each year but 30 years ago the outlook was grim for what was then known as the Qingdao refrigerator factory in the early 1980s China was just starting to experiment with capitalism while General Electric was a corporate giant with 25 billion u.s. dollars in annual sales qingdao refrigerator company was then a collective enterprise on the brink of collapse the company had gone through three general managers that year a 35 year old city manager called jiang Raymond became the fourth I taught you that has a Bui of shamanic George mu Chanyeol sugars Tamiami was handy since a revolving door of general managers had failed to stop the rot no one expected Jiang to be any different but he did something revolutionary he declared that a workers pay would be linked to his performance dock worker power wash and draw the imported ruin you can apple ha you can leave your paper sincerely it's Orion now that Russia entered totally uneven it's a go say go to your children your Kochi tournament series are not iran-contra how do you pay to the children enjoy the young at heart and a passion for my country minuto de yada but Chinese work culture proved hard to shake one year after taking over Jiang discovered in a random check that a fifth of the fridges in a warehouse were faulty [Music] at that time the fridge cost almost two years of a workers pay but Jiang ordered that all 76 fridges be destroyed by the workers responsible the dramatic gesture made national headlines my family and I were living in Dalian and Dalian was you know quite a distance away from Qingdao but in 84 when the refrigerators were smashed it was all over the news I remember vividly the the people in Dalian buzzing about this unthinkable act unthinkable request nobody that we knew in those days had a refrigerator in their home we saw the refrigerators in retail outlets saw them on television but nobody had one of them in their home and so if you could get a refrigerator and bring it into your house it didn't matter whether it worked or not there was this wonderful ingenious repair business where people could fix anything and because Chinese quality was so bad and so what I saw was people trying to buy refrigerators in the streets of Shanghai despite the fact that they probably didn't work but because that was the only way they would ever get one and so destroying a refrigerator even though it didn't work made no sense to people it became a signature event in not only in hios history but in the minds of everybody in China who recognized that this was an organization was doing the unthinkable which was promising not to sell products that didn't work she sued her Gardenhire daddy oh she's not you say you're trying bein in Ukrainian a UK charity for now you go you could sing Highness scenario Tiger kendo champions in and whiny cheese's agenda Connie Quadrophenia hydrocodeine anthem being so close to the resonance led Qingdao refrigerator factory turned the tables on quality and within three short years the company's fridges were declared the best in China it was an accolade they would win again and again the government soon rewarded the company for its success and handed it 18 other appliance factories to manage in 1992 the company renamed itself Qingdao mana [Applause] [Music] even so father God soon woman you can see media where Jiang succeeded while other managers had failed was in motivating his workers Jiang was determined to reward his workers according to their contributions because he'd been a factory worker to one who rose from worker to supervisor over ten long years [Music] phenomenon put on confident feeling yourself ten hominid tsukina my father Doc India it'll ruin the whole change Hitler meaningful to walk with Hannity change motors I understand it's officially for me Universal it's a so far not the movie isn't was a pimp attacking Common Core entire financial city so it was all accredited supernova Luciana what your Chinese and teach young cumin but I decide to Chum finito far with Allah [Music] Jiang began to study management theories while he was still a factory worker and one of his heroes was none other than GES Jack Welch and his focus on rewarding talent and ideas teaching on suspicions we change centrality console so I wager murder Taguchi the negative energy colada terminated Shangguan Jie Leo G natural means cheap attempt at heart of America pure a young female financial know me you can change your part idea Pokemon unique physician duty or internal arts yet has already faced confident all-natural chief who didn't we see me dancing same problem cabal ye bobbum eighteen she decided to go Godwin see fungal agenda one of these you got to do is work with you people develop them flippin bring them along encourage him nurture them if you're a manager your job is to flower the seeds Jack Welch himself became an admirer of higher in 1992 when GE was looking for a contract manufacturer in China they tried to buy higher the higher said no omakase is a year than a hula that kind of got another owner who can doubt hardship and empower employees a charity here are or pub or not father the Pinta so he does her to treat you ge did not take the rejection well - who were men hundred thousand push Anthony Atala has a fit her son she - who had she's fully under de ganancia nipple academician a totally hot new medium Lana will you defeat Ontario prana another Canadian emission twenty eight feet high you can't your feet are you teacher tens of freedom in the father who was an illegitimate over children's you put a traditional numata Argonaut Hadassah from Tom Watson are eating a chin later 1380 Eagleman virtuoso me now answer was you get a salsa no way cause in each of our just may water usage a don't from the Franklin was for I'm entire you and to me no parties or maybe it really to conclude by saying Medusa Romanow children's a woman who could say well at the children's at a tuna needleman's higher brushed off g e--'s fighting words and grew quickly through the 1990s and early 2000s banking on its reputation for quality and ability to scale Manufacturing China was a pretty simple game you won by getting big because most Chinese consumers at that point didn't have a lot of money they were just buying basics of life and that was fine because the market was growing so fast that there was room for everybody to win but in the late 2000s being big stopped being enough the growth starts to slow this fight becomes a lot more difficult and so the fight began to change from whose biggest to whose smartest it's harder in washing machines it's easier to be smarter than the other person in smartphones because there's a lot to be smarter about it's hard to have a cutting-edge toaster I mean at the end of the day of toasters a toaster even before this slowdown in demand from Chinese consumers Jang noticed higher developing the sluggishness of big businesses that apathy that jack welch had predicted [Music] Nasri to get shear funny atop my jeweler Jesus also the Tashjian way not really hella leaders are you really human Sienna corneal area so so if you come here yummy makeup boomer to her society Angela by now Jiang had become a much-admired global business thinker but in 2005 he would make his boldest move yet in a bid to connect every worker to the customer and to regain the entrepreneurial zest of small companies Jiang divided his 60,000 global employees into more than a thousand micro enterprises he termed this model Rendon her each unit became a small company responsible for its own decisions and financial survival but during this overhaul they laid off 10,000 experienced employees to the Nightsisters Phaeton and Theresa you mean the event or militant Juanita you can do it was you catch the train yes or her that's all how much is enough so you can feel some face haha there yang go for the Juanita tension I do what you thought 22,000 or phenomena so he turns educator methuselah your manager that's one year your manager or the title meant enormity of the challenges in leading the or 22 the same was a policy topi she can fight in this entrepreneurial spirit workers can vote to kick out team members who do not perform if a units products are not well received by its customers feedback as quick and profit and loss numbers are transparent even on the factory floor on top you move like a know how to us another time here so to Inga you shinji-kun we click on door shut her diamond hats hold war angle safe and wanita to meet someone Tony go tapioca condo down here and her Commodore hat Chung hua Qian tell you how kind of God had some advice yeah yeah your see Ella you're not though you're here serenepoon huh don't wander general what do you hires reinvention is a platform for innovation now draws startups from outside the company inside hire itself random ha e has created unexpected entrepreneurs even among those who've spent decades in the company so you get from Elijah Disher yeah militant young mu city so you know children just as John taught you for a console with non go yeah the whole coma marketing executives son and her team came up with the idea to help retail stores order higher products with an e concierge system higher provided seed funding for the venture but Sun and six others also forked out over 400,000 US dollars to keep the startup afloat universes showing either one are usually the sugar consumed who I not sure what do I make maybe hence the toreador Santo time true that so you know yes you need to go to get whole world how Queen do you should have a checkup or I would do you know sterility in person to fit a fraternity so you want me tell you who to another or what Alton Giada aperture badges time you know the other Shone's year we're one day young for hire became the world's top home appliance brand in 2009 a position it's held since then but slower growth in the huge China market meant higher had to ramp up its international expansion higher had a global strategy before most other Chinese companies in the late 1990s higher took on the developed markets of Europe and America but it had to deal with the perception that the made in China tag meant poor quality the stereotypes you know are hard to disabuse so I think higher has been frustrated by their inability to make more of a statement in the North American and European markets higher finally decided to buy its way into developed markets like Japan and New Zealand in 2011 it snapped up Sonia and shortly after Fisher and Paykel but in the market it values most higher made a little headway hires huge company massive company global champion number one they've entered the US in 1999 but 16 years later 17 years later they've got 2% of the market what happened [Music] 20:16 in the battle for the 40 billion US dollar American household appliance market GE appliances had a 14 percent market share while higher had just one percent but parent company General Electric didn't want to stay in the appliance game certain businesses you get stronger and stronger the more successful you are nobody can compete with you that's WeChat that's Facebook other businesses most businesses you're just in a fight every day forever it's an operational fight get better distribution and do better market and come up with new products keep reinvesting keep reinvesting and you and you fight then you find the fight never ends that's a pretty tough business to be and that's kind of appliances even with leading-edge technology and resources Haier could not overcome an important yet illusive barrier in the American market it looks like you know the Great Firewall against Chinese manufacturing is brand equity though most people in the US they don't buy washing machines in stores they get them with their house I mean washing machines are sold the builders real estate developers and then some trade stores like IKEA and stuff but that system the distribution the marketing and the brand was a pretty defendable position for companies like Maytag and whirlpool and GE in 2014 GE struck a deal to sell its struggling appliance business to Sweden's Electrolux put together GE and Electrolux had almost half of the appliance market in America and objection from antitrust regulators finally scuppered the deal in 2016 ge put its appliance unit on the market again this time Haier was invited to make a bid but how the tables had turned higher was just a small business when GE tried to buy them in the early 1990s oh man our de Luna novel Medical Museum Satoru bill so attached ago question unknown to insert herself and Dalit and the Terra Cotta has a mark and we'll measure fun and happy at higher headquarters some questioned if GE appliances was even a goodbye digger she's a woman named when the years ago in heart emoji Android but a chain you know me versus ah o mio que ella propio domina she's a warrior Mina even were minimal birth in terms of war material joining a member join you get hurt that make whatever pain to working tell me boy really seemed to soften or similar mythologies chanting Timmy took a primitive elephant Donnie Moore who or what Muhammad said only honey she's put such animals you can also see Oh Fran chances yet to be worn a junk another to finance and so the opening days of the bid were tense report suggests there were up to seven bidders or was it for job Evie but no what would you move higher felt that there was no other GE appliances that was going to come out of the market at any point in the foreseeable future so it wasn't do-or-die but it was Now or Never I do think that it would have been really disadvantageous for higher if one of its domestic rivals had wound up buying general Lincoln appliances what hire knew for a fact was that their bid was not the highest Jiang rushed to America to talk to GE then CEO Jeff Immelt Johanna Johanna true also converts each other as a woman today qualitynet who were mentally Linda who is the materia tidy appearance cocoon yacuma worry she's a emeritus Whittaker fit honking but yakumo dingle te kanawa kiichi teleconverter patentee Kundali to achieve quick so it haughty Cheetara she said achievement on achieve energy congestion child she support each other when she also jungle took a champion for time we hardly equipped on the fifteenth of January ge announced it had accepted highest bid the final price five point six billion US dollars what a Meccano of Maori and ERP a hottie gradual warm-up we party to convert or Kumho Tire Ghana woman who Sharon DoDEA so good solution a tyrant a champion to go to the trillion Inga amid the celebrations Jang struck a cautionary note humming Gaussian diode orphan boys you should feel at some dietary senators are not bouncing awards academically Java to the sympathy to Pancho's for higher the next move was key managing the acquisition almost immediately GE appliances had to solve a labor dispute with four thousand union workers at its appliance park headquarters for some there was a fear of the unknown you know trying to understand what does it mean what does it mean to be acquired by a Chinese company why did they really want to you know acquire GE appliances what do they have to offer us as we come together Jiang's Ren down her immortal worked attire become an entrepreneur or leave as part of the acquisition deal GE appliances kept its autonomy so higher could not simply enforce its will bhamini has severe intention mega consumer who with es una FATA Morgana each other woman yelling art what you can ho see enemies marathon in 2016 higher paid 5.6 billion US dollars for General Electric's famous century-old appliance business but the GE appliances that higher thought was no longer the market leader it was in the 1980s in America GE appliances had fallen behind Korea's Samsung and LG higher needed GE appliances to change and fast there's a legacy mindset around I'm gonna call variance reduction it's about getting the surprises out making sure everything's perfect good operational excellence getting the costs down but higher was looking for surprises surprises and product surprises an organization surprising business model and they weren't coming so I think that there was some impatience as to what when is that going to happen Kevin with GE appliances chief technology officer in 2016 he spent a year in Qingdao learning about the company's technology roadmap soon after Nolen was promoted to chief executive when fire finally came in and acquired us it was a relief it was a relief because we're acquired by someone that really wants us it's in the sweet spot of where they want to grow and I think all the employees although there was always the fear of the unknown we kind of knew we needed to do something different in Qingdao Nolen was able to see how the rendom ha model worked in practice it took me a while to start really understanding you hear things ront awfully hear different management but what does that really mean this might sound simple on the surface but there was a lot of definite with GE appliances facing stiff competition in its American home market it couldn't afford to keep doing the same thing in his first year as si Nolan started to break the company into micro enterprises and one of these first units was its laundering business what's great about this model is the speed there's not four layers of approval that we have to go to you're being responsive to the market you're being responsive to owners in the marketplace and let you grow this growth has been dramatic in 2017 the laundry micro enterprise was the company's best performing unit with profit of over 12 million US dollars just a year before that the unit had losses of 3 million US dollars whassaaaa Donna Tamaki jamierand a year pension juice syndrome but any charge the fauna to unit your any charge and each other to move forward for life back at high as HQ there was another area of concern they feared GE appliances would lag in a key pillar of higher strategy the Internet of Things [Music] sure so no one man - Oh Sydney are not there for my cancer Komachi inna a common person the Internet of Things or IOT refers to adding Internet connectivity and senses - traditionally dumb everyday objects these devices can then communicate over the Internet and be remotely controlled in the world of household appliances IOT is the next big thing just a question woman took a heart you got one dog in Central America for jehovah you can watch other politician ear what's your occupation what's your opponent Jiang's vision so the Internet of Things is not just about smart products connected in a smart home fun you talk about me hey ok so just thought ok just look musing on patterns going back across our special we brought up may what did you need she also saw the juices channel you guys iam iam fetus today night or nice or not no time him put the channel susana similitude of wool Sumerian Italia Tata preference Fukuyama Nygaard over many TV interpreters give me a suit incipient are the key need signal superior fine so it's a good you see Cassidy amo Yamashita turned on its ear so futatsuki me Sigma Yuka champion hurts at some time is over you can tapes you give me two more tickets empty chicken you go full fine in the race to make such connected devices for the home GE appliances has to play catch-up to higher but outside the Chinese market both higher and GE appliances have to square up against the tech juggernauts of Apple Google and Amazon now at least both companies are on the same side it is not just the core products they really look further down the line as to where they can provide solutions for their consumers so really trying to get in their words as close to the consumer zero distance to the consumer they so we've we've looked at that and said that's a that's a great strategy buying in that strategy is starting to pay off in 2018 its new kitchen hub was named the most innovative appliance at the annual CES consumer showcase really it allows us to create things like virtual cooking classes it has cameras on it that can create interactions with families that haven't existed before so if you wanted to reach out to mom and have her help you with that recipe you can do it right from the kitchen hub so I can come into my contacts I can select somebody and I can use the cameras that I have so I can come into here and video chat with my mom that might live a thousand miles away you know we are a very dispersed society nowadays we don't live next door to each other like we used to years ago so that this machine really allows us to kind of bring that family back to what it used to be the idea for kitchen hub came from an Innovation Lab backed by GE appliances pulled first build there were four college students from the University of Louisville that didn't want to take out their iPhones or their mom's recipe books around their cooking because they were kind of messy so they invented a system of which they put a projector into a vent hood that actually projected on the back wall behind the the cooking device the oven that they were working on at first built an open community of industrial designers scientists engineers students and makers Co develop ideas with the first build team this was a special project the Kevin Nolan nurtured in 2014 what I develop first build a few years back we always thought it had to be somewhat separate we need to keep it separate so that the parent didn't disrupt what we were doing down there because it was fundamentally different than what we were doing here at appliance park we were worried but a parent coming in and maybe saying hey you shouldn't be so open anyone including GES competitors can walk in with an idea together they develop prototypes make and sell up to 1,000 units of any promising new product now certainly I get the question of hey won't your competitors know what you're working on and the answer is sure so that's just another fire under us to say we're going to be nimble we're going to be quick you need feedback and you can't get feedback from colleagues you can't get feedback from paid research you need to get feedback from people that are honest and will tell you what they think that's a community of people that either buy your products or they want to develop products with you products that do well may be taken on by the main GE appliances line with the inventors getting royalties a promising crowdsourcing model of innovation that GE appliances will continue to bet on in corporate America they don't understand how being open I think it's fundamentally a lot better if you want to be innovative but higher gets it and they're a company that probably gets it more than any other company I've met so far in 2018 GE appliances reported its best results in the past decade with profit growth of some 20% but now higher means GE appliances to step up and become a truly global brand chee-chee-chee Yelena cheated tell me what the vapor the 13 Boozer Honda so he will mention the open exchange what the people wanna to synthetic a parent chooses a tire he unfortunately NC Kenyatta me highest ranked in the town so Kuniko nama Tarragona to saponify gender me what the attrition of total change occurred issue so a time either an agenda or TMG TTG tie routes up you'd imagine higher might dominate the mid to high-end segments of the Chinese appliance market but foreign brands have mostly failed in the Chinese market and it's not yet clear that GE appliances will do any better higher recently opened this GE appliances boutique in Qingdao and one of the stores strategies is to hold networking activities with its customers well Trish you know made sure about you ally yourself so they are from a new corner puts what hill ha ha well it's a digital charter City air pump a map and yet most of the stores customers are like one who ended up spending fifteen thousand US dollars buying the whole set of ten GE appliances for her home a promising start for GE appliances in China higher may now be the top home appliance brand in the world but it has not forgotten the humble fridge the appliance which kicked off its journey the same appliance that General Electric made affordable in the 1920s today higher and GE appliances want to take the fridge into the next century Google wing again Joe meek initial other user take some better lunch ever told me willing to why you gotta why you can have been this year since old minutes yet been digging your so Jennifer on the treadle available which is you don't need looking you your favorite proton even tell you feel and each answer lungs Honda Thanks push the other beam simulator hires research team discovered that 60% of typical food items are dry and not suitable for regular refrigeration first they developed a fridge with moisture settings further feedback quickly led to a radical new product carry on usually de cuyo changes were derided to dodge the sort of a battery me young yo hari who I was awful bad but they did Paulina that hunger hired from one in the Chiefs were bad Yong Chi to do a movie yeah chicks are you who just so would you have the end the portion was the chief will be anything else ha just a mean Widow ha ha Minjae no how can I you know I tell you to hide you Bernard Sarah to burn us inshaallah let anybody who are creations who should head over here you doctors but here Joseph is Pete Hahn decision do you know I been yeah like GP not you to Navy Yard no water in general user your GD ok baby gender God this story of GE appliances and Haier has been one of constant reinvention from the humblest appliance to work culture itself the legacy I want to have is just unleashing the capability that I think we've always had here but we've never really had that hunger to win because we've got a parent now that's really encouraging that wants us to be the best that we can be but with maverick leader January men turning 70 and perhaps close to retirement the two companies may face their greatest challenge yet to you all agency dada can't reduce any conservatorship miss your change and Jordan towards changing channels change and to further open eating way flourish [Music] 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Channel: CNA

Views: 461,425

Rating: 4.7791409 out of 5

Keywords: Haier, General Electric, Inside the Storm

Id: WK7mxBy1fNw

Length: 45min 19sec (2719 seconds)

Published: Wed Sep 19 2018