Hai'er CEO on Korean Conglomerates

Hai'er's (海尔) CEO Zhang Ruimin (张瑞敏, pictured) once remarked that the "Hangang Miracle" created by South Korean conglomerates was something that Chinese firms can and should learn from.

That comment came in the aftermath of the Asian Financial Crisis (AFC) that had badly affected South Korea's economy, and led to questions about the country's model of economic development.

Despite the AFC, Zhang was quoted as saying: "So what if we had just witnessed the fall of a giant? Does that mean that we can simply refuse to grow and develop?" (21世纪,21大话题, or 21st Century, 21 Major Topics, Zhonghua Gongshang Lianhe Publishing Press, 2000)

According to Zhang, the temporary failure of Korean conglomerates was not due to their high debt equity. Neither was it due to their rapid expansion. Rather, it was due to what he called the inability to set aside "the face problem of Orientals" (放不下"东方人的面子问题").

Zhang noted that because of the overwhelming presence of "face", some Korea conglomerates were forced to absorb and take in unprofitable enterprises.

Based in Qingdao (青岛) in Shandong province (山东省), Hai'er is a top Chinese producer of household appliances. It reported sales of over $12 billion in 2005.