Haier heads to Russia with cool idea for jobs

Appliance maker invests in R&D, manufacturing plants and assembly units in a bid to localize operations in landmark project

Haier Group, a leading maker of home appliances, has opened a refrigerator factory in Russia in response to increasing demand from the European market.

The 24,500-square-meter site in Kamsky Industrial Park, in the industrial city of Naberezhnye Chelny, is the first Sino-Russian business project outside of the energy sector.

The plant involves an investment of about $55 million, of which $39 million has gone to setting up the plant. The rest will be spent on buying components and on production.

The factory is a crucial step for Haier to localize its Russia operations. The company has also started to build a research and development center and TV assembly unit in Russia.

Annual output of the plant will reach 500,000 refrigerators in 2020, the company says. Production capacity in the first stage will be 250,000 units, rising to 500,000 units by the end of the second and final stage. The target markets include Russia, the Commonwealth of Independent States, and some parts of Europe.

By 2017, Haier says it plans to employ 500 people at the factory, with another 1,200 jobs outsourced to other businesses. At present, there are 248 workers in Naberezhnye Chelny.

Liang Haishan, the rotating president of Haier Group, says: "Innovation and cutting-edge technologies are the genes of Haier's global strategy. The Tatarstan Republic (where the plant is based) is one of the most prospective Russian regions in terms of economic development, technology and innovations."

He says Tatarstan has a supportive investment environment, highly qualified administrators, fully developed industrial clusters and good prospects for logistics development. The development of the plant augurs well for the company, he adds.

Rustam Minnihanov, president of Tatarstan, says, "we're very proud that we managed to create all the necessary conditions in the region to attract such a high-tech company as Haier."

As Chinese investors come into the region, he adds, Russian enterprises, encouraged by the Russian government, are expanding in China.

Founded in 1984, Haier Group is headquartered in the eastern city of Qingdao and is one of the world's leading home appliance manufacturers. It held a 9.8 percent share of the global market last year, according to data from market researcher Euromonitor International. In January, the company agreed to buy General Electric's home appliances business for $5.4 billion in cash.

"Haier's strategy is to localize its production in Russia as fast as possible. Over the next two to three years, up to 70 percent of production in Russia is planned to be localized," says Mikhail Babich, Russian presidential plenipotentiary in the Volga Federal District.

In addition to financial investment, Haier is introducing a unique production model and innovative technology to Russia. The company implements special flaw-minimizing technologies at all production stages from manufacturing to assembly and packaging, and has built two laboratories in Naberezhye Chelny, one to check the quality of products and the other to develop innovative technologies.

Haier first entered the Russian market in 2008 and carried out extensive research in the local market, the company says. Among its initial products was a 1.9- to 2-meter-tall energy-efficient refrigerator designed to meet the needs and eating habits of Russian consumers.

The company says its 2015 revenue in Russia was 10 times that of 2010. Although turnover of home appliances dropped 15 percent last year, Haier's turnover increased 78 percent.

Last year, employees from Naberezhnye Chelny underwent training at Haier's factories in China to gain knowledge to apply back home.

Yannick Fierling, chief executive in Europe for Haier, says the new factory will help the company to improve productivity and be more proactive toward the European market. The key to successful globalization is successful localization and getting closer to target markets and end-users, he adds.

Zhou Nan, deputy secretary-general of the home appliances branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, says: "The time for Chinese home appliances (to shine in Russia) is coming. Appliance makers need to improve their global layouts, and they need to speed up the pace of going abroad by virtue of the Belt and Road Initiative."

Xie Chuanjiao contributed to this story.

fanfeifei@chinadaily.com.cn

( China Daily Africa Weekly 06/10/2016 page25)