Larry Rinaldi Resigns as Haier's Top Global Marketing Executive

What's Next for the Chinese Manufacturer's Agency Partners?

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BEIJING--Larry Rinaldi's appointment as the top marketer at Haier Group, one of China's largest manufacturers, was surprising, controversial and, in the end, short-lived.

"I resigned from Haier this week for personal reasons," said Mr. Rinaldi, 53, who joined Haier in the new post of global chief brand officer in November 2007. "But I'll continue to help Haier establish a brand strategy on a consultant basis for at least the next six months," a period that covers the runup to the Olympic Games starting in Beijing on Aug. 8.

Han Xiao Hua, Haier's overseas brand director in Qingdao as well as an official company spokeswoman confirmed Mr. Rinaldi "has left because of some personal reasons. He made a big contribution to Haier and in the future, we want to cooperate with Larry as a consultant. We will keep a relationship with each other in the near future. Larry's background is very qualified and he brings a lot of expertise to Haier. There are no plans yet to find someone to replace him."

His departure jeopardizes the agency appointments announced just last month to handle local sponsor Haier's Olympic-related marketing, especially DDB Worldwide, Initiative Media and Burson-Marsteller.

Belina Tan, managing director, China at Burson-Marsteller in Beijing, which was appointed by Haier after a pitch organized by Mr. Rinaldi, confirmed last Friday, "We are currently not contracted by Haier as this point of time."

"To say we're not concerned would be inaccurate," King Lai, Initiative's Hong Kong-based chief operating officer, Asia/Pacific, said carefully. "We're continuing our ongoing relationship."

Mr. Rinaldi won't elaborate on the reasons for his departure while remaining a consultant, but executives at agencies working with Haier attributed his decision to one of the darker aspects of working with Chinese companies. They frequently don't pay venders on time, or, in some cases, at all.

As a visible and senior marketing figure, Mr. Rinaldi is believed to fear his reputation would suffer if Haier dodged its contractual agreements, a complaint agencies have lobbed at Haier in the past.

"Haier has gotten the new companies in so deep at this point that everyone is bending over backwards to try to make things work and get back the investment they have already put into the relationship," said one executive familiar with the situation.

"Larry's departure is very unfortunate because he brought a lot of integrity to the contract," said Dick van Motman, president-CEO, China at DDB Guoan, a joint venture between DDB and the advertising subsidiary of the Chinese conglomerate Citic Group. "A lot of stuff is going on and things are still unsure. As far as we're concerned, we have an agreement with Haier and we have tried to take adequate steps to protect ourselves, but doing business in China is always challenging."

Media agency Initiative, owned by Interpublic Group of Cos.', has revised its agreement with Haier to a month-by-month contract on a much smaller scale than originally planned.

"If we can get the terms we need, then we will continue to work with them," said Initiative's Mr. Lai. "We treat our clients with integrity and expect they will work with integrity as well."

Mr. Rinaldi's move to Haier has been the subject of intense industry gossip since it was announced in late November 2007. A high-profile and controversial figure who has lived in Beijing for a decade, the Italian-American is considered difficult by many of his past colleagues in China.

He has held senior positions at Ogilvy & Mather, Young & Rubicam and Wunderman, and was VP-chief marketing officer, Asia at Motorola Corp. Before joining Haier, he ran his own brand consultancy, O.N.A., in Beijing.

But the state-owned behemoth he joined, one of the few Chinese companies to establish a global presence by turning out large appliances and electronics, has a reputation for being even more difficult.

Eager to work for a major Chinese company, almost every multinational agency network has passed through Haier's doors over the past decade, including Draftfcb, Saatchi & Saatchi, Dentsu, Grey Group and Young & Rubicam, but many of those relationships were short.

Haier, like most of China's state-run companies, treats marketing as a function of its sales department. The company works with dozens of agencies at a time, mostly local graphic design shops, on a short-term project basis.

The company also suffers intense political infighting between departments handling product lines as diverse as washing machines, flat-screen TV sets and laptop computers that refuse to work together.

"What frightens me about Haier is not what I see when I look closely at it. What frightens me is that it is all far, far more common in China than any of us want to believe," said David Wolf, president-CEO of Wolf Group, a Beijing-based communications advisory firm, who has spent several years in China working with local as well as international companies.

Mr. Rinaldi hoped to install a more systematic and transparent approach to branding that would let the company capitalize on its Olympic sponsorship at home and transform its image from Chinese knockoff to high-tech global brand.

"I've made a whole series of appointments that are very important for us. We needed the whole nine yards--PR, advertising, hospitality, an exhibition center, brand strategy...all of that. We're finally getting this whole thing straightened out," he told Advertising Age last month, sounding both optimistic and frustrated.
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