In almost every product category, rich Chinese prefer foreign brands.

What they call the best of the best are BMW cars, Nokia cell phones, Sony camcorders and cameras, Rolex watches, Chanel fashion, Nike sportswear and French wine, according to a survey published this week by MasterCard Worldwide.

Chery didn’t make the top 10 among autos. Rich Chinese liked Lenovo 1 percent of the time among cell phones. Li Ning was a distant fourth behind Nike, Adidas and Puma.

But when it came to preferred household appliances, rich Chinese chose Haier first, and over Sony, Siemens, Panasonic, Samsung, Phillips, LG, Sharp and Electrolux.

Where so many other Chinese brands have thus far failed at creating premium brands, why has Haier succeeded?

It appears by being a total hard-ass, ensuring worker discipline and therefore product quality.

Every employee, for instance, has to finish a target amount of work every day, and then some, which is monitored with a card system under a management plan called OEC, according to Allbusiness.com.

“O stands for Overall; E stands for Everyone, Everything, and Everyday; C stands for Control and Clear,” said Human Resources Management Director Wang Yingmin. “OEC means that every employee has to accomplish the target work every day. The OEC management-control system aims at overall control of everything that every employee finishes on his or her job every day, with a 1% increase over what was done the previous day.”

Workers are rewarded handsomely for their efforts (by Big Brother).

“If an employee earns more points on the [management checkup cards] than required, he or she makes a higher wage and bonus, and both management and the employee know his or her daily wage and why,” Allbusiness reported.

Rich Chinese also must appreciate that they’re not going to be poisoned by lead paint in a Haier refrigerator.

Allbusiness continued:

Each employee has a quality-check coupon booklet that contains red coupons for rewards and yellow coupons for penalties. The booklet lists all quality problems the firm has detected and provides guidelines for checking each defect. If an employee failed to find and check a quality problem that was later found by his or her team member during a cross-check or by the superior during a managerial check, the employee will lose a red coupon and receive a yellow coupon that will count against that day’s wage and bonus.

Haier doesn’t beat around the bush. It calls a screw-up a screw-up, and also calls 10 percent of its employees screw-ups…

Beyond acknowledging the best and worst employees, Haier implements the 10-10 principle. In a team, 10% of the members are the best, and 10% are the worst, so to improve the team’s overall performance Haier encourages the 10% best to help the 10% worst.

This ain’t B.S.

The company’s fun-as-a-prison culture is rock-solid, even in India, as Pranay Dhabhai, COO of subsidiary Haier Appliances (India) told The Hindu Business Line:

Each factory consists of several lines. And each line has targets such as 450 pieces of whatever product to handle in a day, leaving no time for small talk.

So if you want to create a premium brand in China, the best advice might be to encourage employees to get the hell off MSN and get to work.

    Channel: Movers & Shakers, Vital News     |