BEIJING--Eager to transform its brand image from cheap Chinese manufacturer to high-tech powerhouse--and step up its marketing around the 2008 Olympic Games--Haier Group has appointed six agencies in China and the U.S. in the past few weeks.
In its most significant decision so far, the Chinese company hired Omnicom Group's DDB Worldwide and Initiative Media this week to provide strategic planning, creative and media planning and buying that promotes Haier's sponsorship of the games.
DDB pitched against Interpublic Group's Draft/FCB, one of the company's roster agencies, while Initiative pitched against WPP Group's GroupM division Maxus. Previously, media planning and buying was handled in-house.
Haier, which spends $100 million annually on advertising just in China each year, also works with two Japanese agencies, Dentsu and ADK. Those three agencies will continue work for Haier on non-Olympic creative work.
New ads in six weeks
Since Haier is a national, not global, sponsor of the games, its upcoming campaign by DDB, expected to debut in about six weeks, will only run in China. But the creative will largely be developed in the U.S., at DDB, San Francisco, and adapted for the Chinese market.
Appointing a U.S. agency is a controversial decision that could draw fire from ad agencies within China. Multinational agencies are investing heavily in China, and paying high salaries to attract experienced staff. Even so, Chinese creative has been lackluster to date and with the Olympics just four months away, Haier can't afford to take risks.
“I wanted to bring in an international team that could produce world-class creative work. Omnicom really stepped up to the plate and put together a fantastic effort, and tried to be creative in how this business would be handled,” said Larry Rinaldi, who joined Haier in a new position, global chief brand officer, in November 2007.
“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.”
Six agencies appointed so far
Besides DDB and Initiative, Haier has appointed WPP's Burson-Marsteller following a pitch against Omnicon's Porter Novelli, WPP's Hill & Knowlton and the independent PR firm Edelman; Star Group, a Chinese exhibition and event company; and Sportsworld, a sports-specific hospitality and event company.
Together, these three agencies will help Haier entertain over 1,000 guests it has invited to the Olympics, including “big clients in the U.S. and Europe from customers like Wal-Mart, Target and Best Buy, all the big players,” said Mr. Rinaldi.
The company has also appointed Millward Brown to handle Haier's brand equity research, and is conducting the final pitch now, for a brand strategy agency, that has narrowed to WPP's Landor & Associates and Omnicom's Wolff Olins. A decision is expected in April.
Haier, which manufactures products such as air conditioners, refrigerators, flat-screen TV sets, laptop computers and mobile phones, is headquartered in a Chinese coastal city, Qingdao, but Mr. Rinaldi is based in Beijing, site of the upcoming 2008 Olympic Games, of which Haier is a national sponsor.
Several agencies have passed through Haier in recent years with assignments that touched on the Olympics, including Saatchi & Saatchi and Young & Rubicam, but none lasted very long. Haier, like most other state-run companies in China, has tended to treat marketing as a function of the sales department.
Haier's strategy based on Samsung model
Haier works with dozens of agencies at a time, mostly local shops specializing in graphic design rather than brand strategy, on a short-term project basis. Campaigns are built around tactical sales promotions rather than corporate branding efforts.
Until Mr. Rinaldi's appointment five months ago, the company lacked a strong marketing leader who could build Haier into a strong global brand the way South Korean rival Samsung has transformed its global image.
Although Haier's effort to capitalize on its Olympic sponsorship has been negligible so far compared with the massive programs carried out in China by other sponsors, such as Coca-Cola, Adidas, McDonald's and Chinese PC maker Lenovo, it has done more than just slap the Olympic logo on packaging.
The upcoming campaign “is the final piece of the puzzle,” said Mr. Rinaldi. Haier has done a lot already, like sponsor Olympic programming on CCTV, China's state-run national broadcaster, and a series of Olympic-related TV spots, he said. "But we've never had the steam to wrap it all together and get out our message until now.”
Haier's lack of a cohesive strategy is borne out in the latest wave of research conducted by R3, a Beijing-based consultancy that conducts Olympic-related research with TNS Group's CSM Media Research division in China.
Haier ranks 13th in Olympic brand survey
CSM and R3 conduct thousands of in-person interviews in ten key Chinese cities every three months to gauge the brand awareness and performance of major sponsors. Haier ranks 13th in the latest study, just behind the Bank of China.
“Their average performance is due to poor promotional recall,” said R3 principal Greg Paull. “Less than 2% of respondents mention their ads. Their scores are five times less than [Chinese dairy] Yili, nine times less than Coke. Yet their measured media spend in the last 18 months is $214 million, the same as Coke, and more than Adidas and Lenovo, all three of which perform better.”
Haier is not connected with any sports stars in China, Mr. Paull noted. “They either need better star connection, or better communication, to maximize their Olympic investment.”
Haier already has a global manufacturing presence, including a North American headquarters in New York and a plant in South Carolina. Its products are sold across the U.S. in chains such as Wal-Mart, as well as in Europe. Haier has also created some popular products, such as a mini-fridge sized to fit a six-pack of beer and a pizza box that has became a hit with college students.
A handful of good products and an international distribution network have helped Haier become a top contender in the race among Chinese companies to build global brands--but the company has struggled to break out as a major brand, at home and abroad. Besides the U.S., Haier has strong sales in India, Pakistan and other developing markets.
A $16 billion company
Even in China, where the company is well known, Haier knows its image suffers compared to foreign manufacturers and sales are made more on price than brand awareness.
“We're a $16 billion company,” said Mr. Rinaldi, of which $4.5-5 billion comes from sales outside China. The company is aiming for sales of $18 billion by the end of 2008, of which $6 billion will come from in overseas sales.
“We need to make people aware of Haier's international scope and the fact that we are Olympic sponsor and an international brand that operates in over 100 companies around the world. Even many Chinese consumer don't realize this is an international company.”
Sponsoring the Olympics is one of several moves the company is taking to raise its image. Hiring Mr. Rinaldi, a 52-year-old American, was another.
Before he joined Haier, he ran his own brand consultancy, O.N.A., in Beijing. He first moved to China in 1998, when he was appointed Ogilvy & Mather's vice chairman for greater China. Mr. Rinaldi joined WPP sibling Wunderman in 2000 in Europe, returning to Beijing in 2002 as that agency's president-Asia/Pacific, as well as chairman-greater China at Young & Rubicam. In 2003 he joined Motorola as Beijing-based VP-chief marketing officer, Asia.