Haier Group Company

Haier Group Company is one of the world top ranked makers of white goods and other home appliances based in China.According to Euromonitor’s 2016 survey data, the haier brand occupied the world’s largest market share in white goods for the 8th consecutive year. I ‘d like to lecture an important event, usually called by Chinese populace “ Zhang Ruiyang smashed the refrigerators into pieces” which occurred in its early days of this mammoth company. In 1984 the current CEO Zhang Ruiyang was an assistant manager of city’s household appliance division and was appointed to be managing director of this collective plant -Qingdao Refrigerator General Factory, the predecessor of haier group. At that time, this plant suffered from debt of over CNY1.4 million and was close to bankruptcy. The broader context is in the initial stage of opening-up and reform, the national average of workers only reached CNY 96(equivalent to USD 14.5 of today). Unit price of refrigerator was equal to one worker’s two-year wages. Refrigerator was still a rare luxury item in China. In 1985, one customer came to complaint about product quality. So Zhang and his leadership conducted inspections through the entire inventory of 400 sets of refrigerators and found out nearly 20 percent was under quality standard. Zhang convened manager leadership and employees to talk about what to do with these inferior refrigerators. He sent out staff for the sledgehammers and ordered relative responsible individuals to smash all of 76 inferior ones into pieces .The then-product capacity per month was 80 sets. All staff blamed themselves and stepped forward to take responsibility and persuaded the managing directors to take another solution: either relative responsible managers resign or internal staff bought out all unqualified products paying by deducting from their salary. But Zhang stick to his decision and called out the relative supervisors to stand out and smash refrigerators in person. Every staff watching alongside could fell vicarious punishment and some event burst into tears. He said” Destroy them! If we pass these 76 refrigerators for sale, we'll be continuing a mistake that has all but bankrupted our company.” The refrigerators’ destruction marked the arrival of new era in which Chinese manufactures were going through the awareness of quality. And more significant outcomes were that it drove industry competition to healthier directions and further pushed forward the development of Chinese manufacturing industry. At the beginning of reform and opening up, in the Chinese consumer market，products were classified into four types: Standard products, degraded second and third product, internal processing products. From Zhang smashing the refrigerators, the product standard was emphasized then lead to develop a collectivistic orientation toward product quality. Although three decades passed, the incisive impression of good quality about haier brands draw out by” Zhang smashed refrigerators ”  has still influences on Chinese current customers. Nearly everyone knows this anecdote. Of course, first this was a quality problem. But how to deal with this problem, to some extent it demonstrated the standard set by the leader in terms of right and wrong behavior. And this event marked one indelible imprint on the minds of all staff to reinforce appropriate conduct. Just like Kohlberg’s cognitive moral development theory explicates, conventional individuals look outside themselves to seek guidelines and expectations from significant models. Zhang clarified his expectations toward all staff ”sub-standard products are waste.” When I read this discussion assignment, immediately I thought about this anecdote. It marked the beginning of one company legend. And not only the focus on quality is internalized into the daily conduct of all staff but also build the trust reputation among the customers. In 2016,  Haier was also counted amongst the top 3 in Fortune’s “most admired Chinese companies” – taking the top spot in the electronics category. Indeed, Haier people hold a certain high level of job well-being. Retrieved from https://en.wikipedia.org/wiki/Haier