Whirlpool’s English name refers to a “whirlpool” or “vortex” of water.
The Whirlpool Group, headquartered in Benton Harbor, Michigan, USA was founded in 1911 and employs 92,000 staff around the world at 65 production sites, R&D and design centers with a focus on various products including refrigerators, washing machines, clothes dryers, kitchen appliances, small household appliances, and so forth. Whirlpool Group commanded a global revenue of approximately $21 billion USD in 2018.
A well-established, century-old brand, Whirlpool has comfortably dominated the white goods market of the United States for some time. A stable market leader in the North and South American markets, Whirlpool is also the second most dominant brand in Europe, the Middle East, and Africa, making it an undeniable leader in its industry.
So then how did the world-class company’s entry into the Chinese market go?
How does one overcome the challenges of localization?
The Whirlpool Appliance Group entered the Chinese market in 1994. China’s home appliance market was then also providing Changhong, Philips, and Panasonic color TVs and Haier, Siemens and Royalstar washing machines that year. Whirlpool may have jumped in with a highly qualified splash, but has nonetheless remained a somewhat unfamiliar name to the majority of Chinese consumers.
Whirlpool entered into joint ventures with various local enterprises including Beijing Snowflake, Shanghai Narcissus, Guangdong Xianhua, and Shenzhen Blue Wave in a bid to localize itself more fully. However, the world’s biggest, and a truly global, large-scale major domestic appliances manufacturer has seen neither particularly outstanding nor poor growth results in China for the last 20 years – and that is far from ideal.
A turning point in the narrative may have occurred 2 years ago.
Many Chinese companies expanded abroad in 2017 as market demand gradually reached saturation and Whirlpool’s Asia-Pacific region found itself in need of urgent change. Wu Shengbo also joined Whirlpool Group’s Global Executive Committee as Executive Vice President, President of Whirlpool Asia and Chairman of Whirlpool (China) Co., Ltd. in the same year after 16 years at GE, 4 years at Honeywell, and 5 years at Siemens; he is also partial to the hobbies of cooking and swimming and has earned some recognition as the workplace’s resident “firefighter”.
Gloria Ai: We’ve noticed an interesting phenomenon in the manufacturing industry: foreign brands are trying to get into the Chinese market while Chinese brands are looking to expand abroad. How do you view that?
Wu Shengbo: First of all, I take great pride in it. I feel the fact our Chinese companies have developed to the point where they can now expand to the rest of the world is something about which I’m really very proud.
Secondly, I’ve also seen a lot of companies take their successful experiences in the domestic Chinese market overseas, but this is not necessarily a recipe for success, just as with the many foreign companies who find they cannot quite get acclimatized in China. It is something the company leadership needs to be aware of – how should we handle our branding? And channels? How should we handle our products? Our services? How can we best adapt to the local culture? Should we just flatly apply our Chinese template abroad or try to “do in Rome as the Romans do”? It may sound easy, but it is very complicated in practice.
Gloria Ai: The challenge facing Whirlpool is: China’s home appliance industry is a sophisticated arena filled with competitors. What unique strategies have you put in place to achieve your target of making Whirlpool the first among foreign appliance brands in China?
Wu Shengbo: From the consumer’s point-of-view, it is not just about home appliances, but there are other categories too. It’s always going to be a pyramid model. Looking inside the pyramid, particularly at product upgrades and replacements, what do we value more?
One is brand, another performance.
Wu Shengbo spoke of Whirlpool’s “Chinese dream” last year, declaring very confidently that: ”Whirlpool’s brand position in the United States has always been at the medium-to-high end, and we are going to open up the competition with Bosch in China to get a very wide range of consumers to enjoy the use of our products. Currently, we are in an era of “upgraded consumption”, which presents a rare opportunity for the company.”
A year later and Wu Shengbo still vows: ”Whirlpool is going to do its upmost to become the top foreign home appliance brand in China”. It is readily apparent that, whether on a shorter time frame of 2 years or a longer of 25, that Whirlpool has yet to achieve its “Chinese dream”.
As of 2010, the level of market share taken by foreign home appliance brands versus domestic brands stood at 49% and 51% respectively. As of the first quarter of 2019, this figures now stands at 39% and 61%. It also means that Whirlpool not only faces stiff competition from other world-class foreign companies in entering the Chinese market, but also the rising stars of local enterprise.
It marks an era different to any “has been”. An increasingly strong domestic presence includes industry leaders Haier, Midea, and Gree as well as those of various subsectors with Fotile, Supor, AUX and others also enjoying upward momentum. The amount of market space left for foreign brands in China could be described as a “little lacking”.
Having plunged into the competitive arena of China’s home appliance market, what is the basis upon which Wu Shengbo, Whirlpool’s newer arrival, can be so optimistic?
Wu Shengbo does not believe that China’s home appliance market will be 100% dominated by domestically-funded companies, but that some space will certainly be left for consumers interested in differentiated products. It is exactly analogous to Whirlpool itself which, despite its strong level of success in the North American market, has yet to develop into a “monopoly”.
Perhaps we will see just what Wu Shengbo remarked: people’s choices tend toward what is rational in every segment of the market. Nor is the North American market limited to only one or two local brands, but features European and Asian brands as well. As long as you have a good brand, good products, good quality, and good service, you’ll always be able to find your niche.
From whence do users’ frustrations arise?
”Build it and they will come” does not necessarily work in the Chinese market.
As Wu Shengbo puts it: the brand comes first; performance second. It doesn’t matter how good your performance is if no one knows about your brand. However, what exactly does “handling” your brand involve? Is it about increasing visibility?
Of course, one’s brand is not just about one’s marketing.
From Wu Shengbo’s perspective, his aim when investing in and improving the brand is ultimately to help persuade consumers to purchase their products. Hence, it is more important that they present a clear explanation of what the brand represents when “branding”.
为了解放人的双手，惠而浦发明了洗衣机，到今天，我们的洗衣机能够自动检测出是什么样的污渍，自动决定放多少洗涤剂，自动决定水温，达到最好的洗涤效果，洗完拿出来就可以穿在身上。”吴胜波说，这就是为什么惠而浦的Slogan是 “Every Day, Care”，100多年时间，惠而浦始终在用工匠精神服务用户。
Whirlpool invented the washing machine to set our hands free. Now our washing machines can automatically check what kind of stains there are, decide automatically how much cleaning agent to use and at what temperature to set it for the best clean so you can just take it out and wear it afterwards. Wu Shengbo remarks that is why Whirlpool’s slogan is “Every Day, Care”. Whirlpool has been consistently serving customers with a craftsman-like focus for over a century.
Gloria Ai: A hundred-year-old company needs to innovate constantly. How is this innovativeness maintained?
吴胜波：你要不断去了解消费者生活当中的痛点是什么。为什么以前人们收入低的时候没有家电，条件稍微有改善了就去买家电？因为家电能够解放他们的时间。所以很简单，不断创新的来源是什么？Know your consumer, Know your life. 去解决他们生活当中的痛点。
Wu Shengbo: You have to be always going and trying to understand what the frustrations are for consumers in terms of their everyday lives. Why is it that people did not have home appliances before when incomes were low, but then went out to purchase them when their financial situations improved? Because home appliances can free up their time. So it’s very simple. What is the source of continual innovation? ”Know your consumer, Know your life”. Go and understand: what are the frustrations in people’s everyday lives?
Gloria Ai: What other stratagems will you be using?
Wu Shengbo: Whirlpool demands we achieve two things: the first is, do we use it? Do we know what the frustrations are within? The second is, would we happily recommend this product to our moms?
Gloria Ai: Why recommend it to your mom?
吴胜波：妈妈是最挑剔的，如果你没有信心把这款产品推荐给你的母亲，something is wrong！所以我们要不断用这种战战兢兢的精神去做产品。产品不是为了赚钱，产品是什么？是让我的母亲愿意去用，她用得开心。
Wu Shengbo: Moms are the pickiest consumers. If you don’t have the confidence to recommend this product to your mum, something is wrong! So we will always adopt a very cautious and diligent attitude when it comes to our products. Our products are not about making money. What are they? They are what my mom will be happy to use – easily and joyfully.
Wu Shengbo never shies from praise or the idea of a “mother’s trust” whenever the ‘revolutionary’ innovations of one of his company’s products comes up in the course of our conversation, his eyes conveying a sense of satisfaction behind his glasses.
Apart from the identity of Whirlpool’s Asia President, as a member of consumer in the home appliance market, Wu Shengbo, who has lived in the U.S. over a decade, can’t believe that such an outstanding brand which dominates in the U.S. could find a lukewarm reception in China after so many years.
“Firefighter” Wu Shengbo clearly has a passion for his products and the great “Chinese dream” of this century-old brand.
Wu Shengbo’s arrival at his current position was quickly followed by the launch of some major initiatives just as a”new broom sweeps clean”. Whirlpool completed its Hefei smart factory in November 2017 and their China-based development now encompasses a three-in-one innovative platform support featuring an Industry 4.0 smart factory, global R&D center and Chinese headquarters. The global R&D center and Chinese headquarters in Hefei, Anhui officially opened in May 2018.
The transformations and improvements led by Wu Shengbo have begun to extend Whirlpool more towards China’s high-end home appliances market. Whirlpool China’s net profits experienced significant growth over 2018 compared with the year prior, with total sales revenue reaching 6.29 billion RMB with 260 million RMB of net profit attributable to shareholders of the listed company, a recovery into profitability for the year.
Wu Shengbo’s summary is that Whirlpool has just needed to do four things right for the past century, and it is these four tasks that have well and truly established Whirlpool as an appliance leader around the world. The first is brand leadership, the second is product leadership, the third is excellent operations, and the fourth is good personnel development systems.
The implication here is that the achievement of these four tasks is enough to propel the company onwards to continual progress. Wu Shengbo states frankly that: ”I don’t have the ability to invent a fifth thing. I just need to make sure these four tasks are done solidly in a good, careful, and precise manner.”
Wu Shengbo is quite open and straightforward, not only in his precise business analysis, but also in the way he always tries to put himself in the position of a consumer rather than EVP on Whirlpool Group’s Global Executive Committee. As he says: ”We’re all consumers. We’re all a part of society.” All the pressure and motivation must make for a powerful combo, but it is something Wu Shengbo has never regretted from the middle of Whirlpool’s “whirlpool”.