Chinese firm’s dea to take control of GE’s appliance division went through last week after a proposed deal with Electrolux fell through
The deal that has seen Chinese firm Qingdao Haier take on GE’s appliance business is a sound piece of business that will aid both parties, according to Warwick Business School professor of strategic management Kamel Mellahi.
Last week the $5.4bn deal was officially announced. It follows the abandonment of a separate agreement with Swedish firm Electrolux one month previously.
This latest acquisition confirms Qingdao Haier’s desire to move into the US market through a strong growth strategy. GE is already a well-respected brand in China and taking it on is likely to be seen as a major coup in the global market. Mellahi believes the deal is positive both for the acquirer and the target.
“The acquisition of GE by Haier makes a lot of strategic sense for both firms,” he said. “It will help GE offload its ‘white good’ appliance business unit and focus on jet engines and power turbines. At the same it will provide Haier, which is already one of the most innovative white good companies in the world and one of the most trusted brands in China, to deepen its international reach.
“Haier’s penetration of the US market in particular has, to date, focused on some niche markets. The GE brand and its extensive distribution network will broaden Haier customer base and helps it reach the US mass market.
“Haier has a long and successful experience in acquiring and leveraging brands, and has a unique management system and structure that is different from that of GE. It will be interesting to see how the two management cultures work together however.”