F&P Appliances ready to take on China as Haier digs in here

Haier's Philip Carmichael says the two companies are 'going after the other guys'. Photo / Paul Estcourt

Results of the co-operation agreement between Fisher & Paykel and its cornerstone shareholder Haier are now evident in home appliance showrooms here and are about to be seen in China.

The Chinese appliance giant's goods have been sold from F&P's dealer network for the past two months and some lines had sold out, said Haier's Asia-Pacific president Philip Carmichael.

Fisher & Paykel appliances will be sold with the backing of Haier's 7000 store network and after sales service in China before the end of next month.

Haier last year bought a 20 per cent stake of struggling F&P as part of a capital raising and entered into a strategic partnership.

Carmichael - Haier's most senior non-Chinese executive - said there were no plans to increase its stake.

"We're working through this collaboration at the moment and have no further plans to change that."

Carmichael said in Auckland yesterday that Haier dishwashers and washing machines had been popular. "We've had very good acceptance from the trade and channel partners."

The Haier appliances are being sold through Fisher & Paykel's approved dealer network but were targeting the mid-range market of those younger buyers of appliances making their first purchase.

Carmichael said Haier was not attacking F&P's market position.

"We don't see it that way - we're adding some segments that are an addition to their product line. There are other competitors and together we're going after the other guys."

Deals on offer through one retailer yesterday included a 647-litre Haier fridge for $3099 while a slightly smaller Fisher & Paykel fridge was on sale for $3954.

The Haier Group was founded in 1984 with headquarters in Qingdao, Shandong Province and sells in more than 100 countries.

Global revenue last year was US$17.5 billion, recording year-on-year growth of 8 per cent.

Carmichael said although not well known outside China, Haier was an iconic brand there in the same way F&P was in this country.

"It might seem there is a big distance between the two of us [but] Haier has the highest investment in R & D of anyone in this industry and F&P is up there in second or third. We speak a similar language in terms of appliances."

When Haier was started 25 years ago - at a time when buyers needed a state issued coupon as well as cash for many consumer goods - it committed to quality with its first boss taking a sledgehammer to a run of substandard fridges.

"He beat the crap out of these things so they couldn't be sold and that set the tone for us. Not all Chinese companies are the same from the standpoint of quality."

The company makes over 15,000 different products and has committed strongly to after sales service which Carmichael said surpassed F&P benchmarks.

Haier's call centre averaged pick up on the third ring in China, repair staff were usually at the customer's home within two to three hours if they lived in a city and 90 per cent of appliances were fixed the first time around.

Deliveries could be made anywhere in China within 24 hours, he said.

Haier's marketing strength and after-sales network would be available to F&P which would be positioned at the fast-growing luxury segment of the Chinese market.

"They well be positioned in China as a high brand and we think there will be a strong opportunity for them. We're the strongest player in China as they are in New Zealand so it's a good natural fit."

Carmichael has been working in China for a number of different multi-nationals for the past 30 years and had seen the middle class there swell to between 350 million and 400 million.

Rates of home ownership were as high as 60 per cent in some of the biggest cities and this provided big opportunities for appliance makers. Chinese bought similar appliances to those in New Zealand, apart from driers, they still nearly all tended to dry washing outside.

Chinese consumers three years ago overtook those in the United States as the biggest buyers of appliances, buying 140 million units. Growth was set to continue as affluence in inland parts of China caught up with the eastern coastal cities during the next 20 years, he said.

"I think it's just going to continue to motor ahead."

APPLIANCE GIANT
* Haier started with a single model of fridge in 1984.
* Now makes 96 different types of appliance with 15,100 specifications.
* Has 50,000 employees worldwide.
* Revenue last year of US$17.5 billion.