International Trade Environment: The Case of Haier’s Corporation

1. Introduction

Nowadays with the development of technology especially after the appearance of internet, communications between people become more convenient and frequent. When their relationships become increasingly close, globalization has turned into the trend of the age. Facing such a good opportunity of expanding market, acquiring more profit and resources, various international firms started to spring out. ‘International firms usually mean companies who do business between two or more countries’ (John D. Daniels, 2013). At present, they have comprised a large and growing portion of the world business. To be successful in fierce global competition, international firms have to make many changes actively to deal with different conditions. Changes on corporate governance, internal organization and foreign entry strategy are three major parts of them. However, no matter how many changes have been made, the implication of culture and institution from home country where they started from still exist. And host country culture and institutions also have implications to the choice of foreign entry strategy. To prove this, the paper use famous international company Haier as an example to analyze implications of culture and institutions from home country China and host country America.

Haier was founded in 1984. In the past 30 years, it has transformed itself from a small refrigerator manufacturer into a world famous enterprise who owns over 15,100 different products exported to more than one hundred countries. Through its entrepreneurial and innovative spirit, Haier has become the number one global home appliance brand. In 2013, its global revenue and profit even reached up to RMB180.3 billion (USD 29.5 billion) and RMB10.8 billion (...

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...be seen that, though as an international firm, Haier’s corporate governance and internal organization have made changes to adapt to the changeable international trade environment, they are still at some stage affected by Chinese culture and institutions. And its choice of foreign entry strategies does consider the culture and institutions of America. Thus international firms’ home country culture and institutions still have implications to its corporate governance and internal organization. And host country culture and institutions have implications to its entry strategy. This conclusion can be used to all other firms from China, but the implication degrees depending on their specific conditions will be different. Because there are many other aspects such as company size, financial strength, marketing objectives, customers, products and services need to be considered