BUSINESSWEEK ONLINE : JUNE 14, 1999 ISSUE
INTERNATIONAL -- ASIAN COVER STORY

Zhang Ruimin, CEO, Haier Group, China (int'l edition)


ZHANG RUIMIN IS FAMOUS FOR WIELDING A SLEDGEHAMMER. It was in 1985, just after the bureaucrat became the fourth person appointed to run the lackluster state-owned refrigerator factory now known as Haier Group Co. ''The real problem was that workers had no faith in the company and didn't care. Quality didn't even enter into anybody's mind,'' recalls Zhang, 50. After a customer complained, he lined up 76 defective models of the 400 on the factory floor. He picked up a sledgehammer and told those responsible to smash them. And he included himself in the task. ''The message got through that there's no A, B, C, and D quality,'' he notes. ''There's only acceptable and unacceptable.''

Such tactics helped Zhang transform Haier into China's largest appliance maker, with $2.1 billion in sales. Now, with deflation in China lowering sales growth from 50% last year to around 30% this year, Zhang is embarking on a new strategy: expanding into computers, TVs, and DVDs. He has also opened a refrigerator plant in the U.S. and plans to expand into Europe as well. ''We want to become a global company,'' he explains. Analysts who previously lauded Zhang for his management ability say his diversification plan deserves kudos, too.

Zhang says motivating workers is a constant challenge. It's especially hard when Haier, under government pressure, has to bring other ailing state-owned enterprises under its umbrella. ''The real problem is, people do not have the right attitude,'' he says. ''In the Haier business culture, time is money.'' With managers like Zhang driving that message at home, look for China to become an even more important player in the global economy.



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