Haier's CEO Zhou Yunjie explains how the company's innovative "RenDanHeYi" model empowers employees, drives global growth, and adapts to market changes....
From small factory in Qingdao to globally recognized leader, Haier Group’s 40-year history is a journey of continuous innovation and transformation.In 2005, Zhang Ruimin, the founder of Chinese electronics giant Haier, was worried that with more than 100 factories globally, the company was becoming too cumbersome, thwarting its ability to quickly respond to market shifts. His response? To start organizing teams around the “people, needs, connection” model. Put simply, the model empowers employees to create value by working directly in the market to address customers’ existing needs while anticipating their future ones. Eschewing the traditional ‘big business’ top-down hierarchy, Haier became a flat structure of self-organizing teams that were able to take advantage of a system of shared resources.
Zhou Yunjie says the model reflects Haier’s unwavering principle to maximize the value of its people to stimulate creativity. This, he says, underpins the organization’s ability to continuously transform over time. “Enterprise is people, culture is the soul. The most valuable resource and asset of an enterprise is people,” Yunjie emphasizes, highlighting the central role of human capital in Haier’s success story.
Zhou explains how each of the six major strategic transformations over Haier’s 40-year history accurately grasped the pulse of the times and led the industry’s development. At the heart of these transformations is the RenDanHeYi model, put forward by Zhang in 2005.
“It was revolutionary,” Zhou recounts. “This model essentially deals with challenges that are difficult to solve in traditional enterprise management, such as how to quickly respond to market demand after the expansion of the enterprise, and how to prevent the ‘big business disease’.”
To implement the model, Haier broke away from the traditional hierarchical organizational structure, instead adopting a flat, network-like structure. This allowed each employee to directly face the market and connect with users, creating self-value in the process of creating value for users.
Haier has recently evolved its model further with the development of "ecosystem micro-communities".
A key component of Haier’s model is its unified platform, through which it provides strong support for micro-enterprises. Zhou explains, “Micro-enterprises are not only able to start their own businesses on the platform but also enjoy the unified, synergistic support of the Group.” This platform solves a critical challenge: balancing the independent innovation of these enterprises with the overall strategy of the Group.
Haier has recently evolved its model further with the development of “ecosystem micro-communities” (EMC). These are networks of micro-enterprises, both internal and external to Haier, that come together to address specific sets of user needs. This new way of sharing value also shifts the focus from “post-event value-sharing” to “mid-event adjustment”. It sets up a fairer system for dividing profits, which encourages all partners to work together in creating long-term value.
Zhou details three key aspects of this approach. First, clear innovation guidelines. “All enterprises on the platform are closely centered on the Group’s clearly defined core tracks – Smart Home, Healthcare, and Industrial Internet – and together they are driving Haier’s sustainable development,” he explains. Second, a complex network of supply relationships. “Through an innovative mechanism, Haier quantifies and assigns corporate assets to each enterprise and allows them to possess and use these assets for a fee. When the team creates excess value – over and above agreed targets – they can distribute it on their own,” he says. Third, a value-added sharing mechanism. “This has greatly stimulated the innovation spirit and sense of ownership of employees,” he notes. “Haier allows more employees to participate in innovation and share the results.”
In 2019, for example, Haier formed an EMC between its refrigerator sales micro-enterprise in Zhengzhou and its refrigerator manufacturing micro-enterprise in Hefei. The two units agreed on a shared goal of delivering high-quality products on time, which they called the “zero-defect and zero-delay” product.
An incentive mechanism tied rewards to profit increases, with the joint unit receiving a value share of 140,000 RMB for a 20% profit increase and 230,000 RMB for a 30% increase. The team achieved the 30% goal, demonstrating the power of this collaborative approach.
Zhou acknowledges that implementing this model has not been without challenges. “Breaking the original orderly structure and establishing a new balance is not an easy task and requires time and patience,” he admits. However, the results speak for themselves. Since 2005, Haier has experienced 19 years of change and exploration, achieving remarkable results. The approach is particularly effective with younger generations of employees. “This model is very suitable for a new generation of employees,” Zhou observes. “They accept new things faster, their ability to use information technology is stronger, and their personalities are more open. These qualities are highly compatible with Haier’s RenDanHeYi model, better stimulating their vitality and vigor.”
Haier's RenDanHeYi model not only succeeded domestically in China but has also been successfully applied in overseas mergers and acquisitions.
Haier’s RenDanHeYi model not only succeeded domestically in China but has also been successfully applied in overseas mergers and acquisitions. Zhou likens Haier’s global application of the model to ‘salad-style’ cultural integration. “When Haier promotes this model overseas, it always insists on taking into account local cultural characteristics and humanistic backgrounds, adopting promotion strategies tailored to local conditions.” he explains. “Just like making a salad, Haier chooses different vegetables according to local tastes, and the RenDanHeYi model is the unifying ‘soul dressing’.”
He cites two notable examples. In the Sanyo Electric acquisition in 2011, “Haier achieved a turnaround in just eight months,” Zhou says. “Through continuous communication, we succeeded in making the team understand the importance of market orientation – retaining and rewarding those who can create value. This shift not only stimulated employee motivation and creativity but also quickly helped the company turn around its losses.”
In the General Electric Appliance Division (GEA) acquisition in 2016, “We emphasized that the US users drove the development of the enterprise,” Zhou recounts. “Under the impetus of our model, GEA’s sales have doubled. During that period, Haier also gradually changed GEA’s original fixed salary structure with the introduction of dynamic incentive mechanisms linked to market performance, which greatly stimulated the enthusiasm and creativity of the staff. “
Faced with a complex and volatile international situation, Zhou outlines three major strategies Haier is employing. The first is ‘localization drives globalization’. “Whether in the United States, Europe, or Asia, Haier has always been committed to deep integration into the local market, creating jobs and value for the local community,” Zhou states. The second is embracing new technologies. “In 2017, Haier set up the industrial Internet ‘COSMOPlat’, not only to promote our own digital and intelligent transformation but also to empower many small and medium-sized enterprises to achieve the leap of digital transformation,” Zhou explains. The third is focusing on healthcare where it has businesses in biotechnology, medical devices, and medical services: “Haier already owns three listed companies in the field of big health, showing excellent strategic foresight.”
Zhou sees his biggest challenge as how to keep pace with the times and successfully do the master designing and planning.
Having worked at Haier for 36 years, Zhou’s leadership style is deeply rooted in the company’s culture. “Passion for innovation and steadfast integrity are the cornerstones of my leadership,” he says. He sees his biggest challenge as how to keep pace with the times and successfully do the master designing and planning. “As the helmsman of the Haier Group, I not only have to efficiently run the current business well, but I must also have deep insight and a roadmap for future development in the next five or 10 years, or even longer term,” he explains. Founding Chairman Zhang Ruimin leaves us with a powerful thought: “There is no successful enterprise, only the enterprise of the times. In the future, Haier will continue to walk with the times, continuously innovate, embrace change, and in the process of practicing the RenDanHeYi model, continue to create greater value for more users.”
1. Haier’s RenDanHeYi model empowers employees to create value by working directly with customers, using a flat structure of self-organizing teams.
2. The model has evolved through six major strategic transformations, each aligned with market trends and leading industry development.
3. A common digital platform enables micro-enterprises to access Group resources while maintaining autonomy and innovation.
4. The model has been successfully adapted to diverse cultural contexts in Haier’s global operations, as demonstrated by acquisitions in Japan and the US.
5. Haier is addressing future challenges through localization, embracing new technologies, and strategic expansion into healthcare.
6. Zhou’s leadership philosophy emphasizes innovation, integrity, and creating an environment that stimulates employee potential.
7. The key to Haier’s success lies in its ability to continuously adapt to changing times while maintaining its core principle of maximizing human value.
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