Haier’s all-cash $5.4 billion purchase of GE’s appliance unit is not bad for a company that started as the Qingdao Refrigerator Co. in 1984. The Chinese appliance giant’s purchase of the GE division is the largest ever by a Chinese company. The acquisition comes just days after Chinese firm Dalian Wanda Group committed around $3.5 billion for Hollywood film firm Legendary Entertainment. (In 2013, Wanda paid $2.6 billion for the US AMC theater chain.)
Haier became an appliance giant thanks to China’s economic awakening in the 1980s, when the “three most wanteds” for a family switched from watch, bicycle and sewing machine to TV, washing machine and refrigerator. At the time, Haier supplied those families with millions and millions of cheap, Barbie-like refrigerators.
But as purchasing power expanded in China, so did Haier’s offerings. All the while, the brand built a reputation for high quality at low expense, following a value chain manufacturing trajectory well established by South Korea and Japan. In this regard, Haier established a unique corporate culture within the world of China’s low-cost manufacturers. Soon Haier was exporting refrigerators, air conditioners and other appliances worldwide.
Interestingly, the brand name Haier is derived from another brand name. In its early days as Qingdao Refrigerator Co., the company brought in manufacturing expertise from German appliance maker Liebherr. The Manadrin name for Liebherr, 利勃海尔, is pronounced lìbó hǎiěr. Haier simply chopped off the last two characters of the Liebherr name 海尔 (hǎiěr) and the Haier brand was born. Haier now has the largest share of China’s appliance market and has more than 80,000 employees.
Haier’s desire to own GE is clear. The brand is already international—Target and Walmart both sell Haier-branded products—but adding a GE line will diversify its offerings while also gaining efficiencies. Haier’s purchase may be the biggest by a Chinese company but it’s just the latest in a growing catalog of American brands bought by growing Chinese companies.
In 2015, China’s Tsinghua paid $3.78 billion for Western Digital. In 2014, Lenovo Group Ltd paid $2.8 billion to acquire Motorola Mobility Group. Lenovo itself paid $1.25 billion for IBM’s computer business in 2005. And then there were Wanda’s acquisitions in the entertainment space, noted above. In a first of its kind, the US market will soon see a “Made in China” hybrid Cadillac.
Meanwhile, less welcome Chinese buyers are the flooding the high-end US real estate market. It’s suspected that some of these purchases are being made to hide illicit money and the US Treasury Department recently announced it would begin tracking these secret buyers.
“Is a Japanese company buying the landmark Sears Tower in Chicago, the world’s tallest skyscraper?” asked a 1989 Los Angeles Times report. That same year, Sony bought Columbia Pictures for $3.4 billion. A year earlier, Sony had acquired CBS Records. And a year later, a Japanese real estate company bought the iconic Pebble Beach golf course after buying Rockefeller Center. Japanese companies also bought consumer goods companies like tire-maker Firestone.
Thirty years ago, Japan’s takeover of US companies inspired a wave of Japan fear, a fear reflected in American entertainment. Movies like Back to the Future 2, Gung Ho and Rising Sun displayed the Japanese as financially dominant overlords. The fear of a Japanese takeover also manifest itself in Hollywood with the rise of good guy American law enforcers taking on the Yakuza in movies like Black Rain, Showdown in Little Tokyo and No Way Back. The peak of fear of Japan in American pop culture probably came with 1993’s Robocop 3, the plot of which revolved around the plan of a Japanese corporation to buy up and clean out Detroit undesirables with the help of android ninjas.
There’s reason to believe China’s expansion into the US will not trigger similar pop culture reactions. When the remake of Red Dawn was revealed to feature a Chinese invasion of the US, the studio digitally changed the invaders to North Koreans. From the 2013 Iron Man 3 to the 2015 The Martian, China has been depicted as a global ally. Part of this is because China will soon be the largest film market in the world and a key to profitability for Hollywood. But it’s also because the world is more globalized than it was 30 years ago, with a better understanding that allies and adversaries are defined by more than borders on a map.