Haier’s GE Appliance Division: acquisition and outlook

Purpose The purpose of this teaching case is to introduce students to an alternative business model as practiced by the Haier Group, a Chinese company, and how that model was used to turn around an acquired company in the United States of America (USA). The explicit teaching objectives are threefold. First, the case provides insights into Haier’s unique employee-centered culture. Second, Haier’s efforts to transfer parts of its culture to the newly acquired General Electric (GE) Appliance Division are discussed. Third, to improve the performance of the acquired division, Haier had to invest in people, equipment and new product technology. Design/methodology/approach This case is based on both primary and secondary research. The authors interviewed the chief executive officer. In addition, one of the authors spent a week in China observing and participating in meetings at the Haier Group. Both before and after the interviews, the authors searched both print and electronic media for additional information. Findings The case describes how Haier, a large Chinese appliance manufacturer, learned from its own difficult growth in building an employee- and client-driven organization. Haier was able to transfer key aspects of its culture, management practices and technology to help turnaround the well-known American appliance brand GE. The results of the first five years have been financially successful and investment in new product technology (Smart Home) bodes well for the future. Research limitations/implications This case represents only one successful turnaround of one acquisition, GE Appliances, by the Haier Group in the USA. Whether the changes introduced would work with other acquisitions in other countries is unknown. Thus, additional follow-up research needs to be done. Practical implications This case brings into question the traditional, hierarchical, bureaucratic, spreadsheet-driven model of management that is the predominant model taught and practiced in the USA. Others, such as Gary Hamel and Michele Zanini, have also raised the same question. This case introduces readers to another way and is just one more example of how managers who practice a high engagement style and share financial success with workers can outperform those who do not. Social implications This case documents the introduction of nontraditional management and human resource management practices by a foreign, Chinese company, into what at one time had been a highly regarded division of a traditional major American corporation. GE had become known for strident labor-management relationships. The employees’ acceptance of the alternative approach to management was in doubt prior to the acquisition, but over the past five years, the labor–management relationship appears to have improved as well as the profitability of the division. Originality/value Although the acquisition of the GE Appliance Division by the Haier Group has been widely reported in the press, knowledge of how the acquisition was successfully turned around from a money-losing GE Division to a profitable and growing portion of the Haier Group has been largely ignored in both the popular press and in instructional material for the classroom. This case study seeks to ameliorate the latter deficiency.