Posted on 10/26/2003 5:11:48 PM PST by Republican Party Reptile
OCT 27, 2003 Chinese fridge, Made in the USA Apart from saving on transport costs, Haier's factory in the US is also an expression of Chinese nationalistic pride
CAMDEN (South Carolina) - While many United States manufacturers look to China as a place to make their products with cheap labour, an odd turnabout is taking place in this small town north-east of Columbia.
There, one of China's best-known companies, the Haier Group, is churning out refrigerators at a factory staffed by US workers.
The decision to build in South Carolina was a step towards the company's goal of making Haier a household name in the US, like Whirlpool or Maytag.
Haier argues that the plant saves transportation costs.
To the company, which had revenue of US$8.5 billion (S$14.8 billion) last year, the plant is at the core of its vision to expand in the US.
The factory, completed in 2000 at a cost of US$40 million, is designed to respond nimbly to US retailers who stock little inventory but want to replenish supplies quickly when products run out, said Mr David Parks, a senior vice-president of Haier's American unit.
Shipping refrigerators from Asia can take up to six weeks.
But the factory is about far more than saving money on refrigerators.
It is an expression of nationalist pride and of the Chinese government's determination to expand overseas in markets that it considers prestigious.
So far, the opening of the South Carolina factory has brought Mr Zhang Ruimin, the company's chief executive, a flood of glowing coverage in the Chinese news media.
The story of his success at turning an anaemic stateowned factory into an appliance giant with overseas sales has been made into a movie.
Many Chinese have become more enamoured with corporate executives than revolutionaries, so Mr Zhang is something of a national hero.
In that context, the opening of Haier's US factory is as much a cultural victory as a business one.
Haier, partially owned by the government of the northern city of Qingdao, where it is based, has made some headway in small US market niches.
In Camden, a quiet town of 6,000 people, the boxlike, squeaky-clean factory among the hayfields provides 200 much-needed jobs.
Several US manufacturers have shrunk or closed plants in the area.
Cultural clashes are few because almost every employee at the factory is American.
Haier pays most of its machine operators little more than US$10 an hour, 10 times what it pays in China, along with health care benefits.
But other large Chinese companies eager to grab market share in the US are not following Haier.
They know the market can be perilous.
Konka, which dominates China's TV market, shut a branch in San Diego after failing to crack the market.
At times, the government's enthusiasm makes some of the Chinese companies' US business partners cringe.
Mr Roger Zhao, who has set up a joint venture with a large television maker in Shanghai to sell its products in the US, said his objective and his partner's are 'disconnected'.
As for why Haier has set up a US plant, he has his own explanation.
'To have it in Mexico would make more sense,' he said. 'But to the Chinese, expanding abroad without expanding to America doesn't feel like the real thing.' \-- New York Times
-------------------------------------------------------------------------------- Copyright @ 2003 Singapore Press Holdings. All rights reserved.
Not mentioned in the article but what I hear from a co-worker from Beijing is that in terms of cost of living, this is close to parity.
You can bet it is sending chills up Whirlpools spine too. That is the market share Haier will go after. Of course, the idea of these appliances is to send chills....
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