Industrial Equipment / RoboticsChina
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JOURNEY · DETAIL
Haier's Zhang Ruimin: Starting from smashing 76 refrigerators, from a loss-making small factory in Qingdao to the world's No. 1 major appliance maker
Founded: Zhang Ruimin · Haier Group (Haier Smart Home Co., Ltd.)
JOURNEY
Key Fields
FIELD STAMPSIndustryIndustrial Equipment / Robotics
RegionChina
ScaleGiant
ChannelOffline
Origin
In December 1984, 35-year-old Zhang Ruimin took over as director of the Qingdao Refrigerator General Factory under critical circumstances. At the time, the plant was losing 1.47 million RMB and on the verge of bankruptcy, with lax worker discipline and even workers relieving themselves anywhere in the workshop. Upon taking office, he first established 13 factory rules to straighten out discipline. Needing quality backing to import German Liebherr technology, after discovering that 76 refrigerators in inventory had quality issues in 1985, he took the lead in smashing them with hammers, using an extreme method to declare to the entire factory that the quality bottom line is non-negotiable.
Milestones
1984
Inception Turning Point
When Zhang Ruimin took over, the Qingdao Refrigerator General Factory lost 1.47 million RMB, having gone through three directors in one year. He first issued 13 factory rules to strictly enforce discipline and immediately turned losses into profits. In 1985, after discovering 76 defective refrigerators, he took the lead in smashing them. At the time, one refrigerator cost about 1,760 RMB, equivalent to two years of a worker's salary, and many veteran workers shed tears on the spot. Quality awareness was thus deeply ingrained in all employees, a phase lasting from 1984 to 1985.
1988
PMF PMF
Three years after smashing the refrigerators, Haier won China's first quality gold medal in the refrigerator industry, standing out from numerous refrigerator factories through its quality reputation during the transition from a planned economy to a market economy. The Qindao Liebherr brand opened up the national market, validating the brand strategy of winning through quality.
1991
Expansion Growth
Using the 'shocked fish therapy', Haier successively acquired 18 loss-making enterprises, injecting management models and corporate culture to activate stock assets, expanding from single refrigerators to a full category of major appliances including washing machines and air conditioners. By the late 1990s, sales revenue broke the 10-billion-RMB scale, making it China's top home appliance brand, a phase lasting from 1991 to 1998.
1999
Globalization Turning Point
Insisting on tackling the hardest markets first and entering the US market early, Zhang Ruimin built a factory in South Carolina in 1999, which industry insiders doubted would lead to certain death abroad. The US factory suffered long-term losses and setbacks in the early stages, but survived by tapping into the college dormitory market with localized mini-refrigerators, laying the foundation for subsequent global deployment, a phase lasting from 1999 to 2005.
2005
Organizational Transformation Transition
In 2005, Zhang Ruimin proposed the Rendanheyi model, splitting over 80,000 employees into thousands of independent micro-enterprises and cutting more than 10,000 middle managers. This caused massive internal controversy and short-term performance pressure, with critics slamming the elimination of middle management as a management gamble. However, the model later entered Harvard Business School's case library, a phase lasting from 2005 to 2012.
2016
M&A Growth
Haier acquired GE Appliances, the home appliance business of General Electric, for 5.58 billion USD, and transformed it to turn a profit through the Rendanheyi model. US employees went from resisting to accepting the micro-enterprise incentive mechanism, becoming a symbolic case of reverse output of Chinese management paradigms.
2021
Succession Growth
In November 2021, Zhang Ruimin stepped down and handed over leadership to Zhou Yunjie, completing the founder transition without causing turbulence. From 2024 to 2025, Haier Smart Home's revenue continued to grow, with the group's 2025 global revenue reaching approximately 4268 billion RMB. Rendanheyi continued to evolve during the IoT ecosystem brand stage, incubating micro-startup enterprises like Thunderobot, a phase lasting from 2021 to 2025.
Turning Points
- Smashing 76 defective refrigerators in 1985, turning quality from a slogan into a shared belief for all employees
- Acquiring 18 enterprises using the shocked fish therapy in the 1990s, transforming from a single-product factory into a home appliance group
- Proposing Rendanheyi in 2005, proactively dismantling the hierarchy to platformize the company
- Acquiring GE Appliances in 2016 and exporting China's management model to achieve profitability
Failures & Pitfalls
- Long-term losses during the early stages of building US factories in the late 1990s, with widespread industry skepticism that Chinese brands going global was a money-burning gamble
- The Rendanheyi reform cut over 10,000 middle management roles, triggering organizational turmoil and putting clear short-term pressure on the performance of some businesses
- During the diversification expansion period, Haier ventured into finance, computers, mobile phones, and other fields; most non-appliance businesses failed to succeed and were successively downsized
关键成功要素
- Using ritualistic events like smashing refrigerators to turn abstract values into muscle memory for all employees
- Putting the brand strategy first: rather smash products than the brand, earning trust before scale
- Reviving shocked fish through the export of management models rather than mere capital injection, focusing on cultural integration post-acquisition
- Letting employees face users directly for compensation via Rendanheyi, splitting large enterprises to combat big-company disease
Lessons
- Value reform requires tangible carriers; a perceptible cost event is better than a hundred internal speeches
- Quality issues are cheap to cut when scale is small; dragging it out until scale is large becomes a life-or-death issue
- Cross-border M&A succeeds through the ability to export management models; buying assets is easy, changing organizations is hard
- Organizational innovation goes through years of skepticism and performance volatility; founders must maintain strategic resolve
- Corporate succession relies on systems and culture rather than individual charisma; growth did not interrupt after Zhang Ruimin stepped down
Core Data
- 1984年接手时亏损额：1.47 million RMB (public data source, independent review not verified)
- 1985年砸毁缺陷冰箱：76 units (public data source, independent review not verified)
- 2025年全球营收：4268 billion RMB (public data source, independent review not verified)
- 并购亏损企业：18 enterprises (public data source, independent review not verified)
- 2016年收购通用家电对价：5.58 billion USD (public data source, independent review not verified)
- 人单合一改革砍掉中层管理岗：About 10,000 positions (public data source, independent review not verified)
Competitors / Peers
Among domestic peers of the same era, Midea caught up using a professional manager system and a full-category T+3 flexible supply chain, with 2024 revenue exceeding 4000 billion RMB to compete neck-and-neck with Haier; Gree focuses on the single-product technical route of air conditioners. Internationally, Whirlpool and Electrolux have seen their major appliance market shares suppressed by Haier for sixteen consecutive years. Haier has ranked first globally in large home appliance retail volume for many consecutive years since 2009, while Samsung and LG battle with Haier in the mid-to-high-end and smart segments.