Hisense Group

Excellence in quality and innovation, and commitment to social responsibilities.

Wednesday 10 October 2012, by ElsieWang, Kathy Wu, miranda

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A. The main facts about the activities of the company.

Hisense Group, one of the biggest electronics corporations, has been successfully operating more than 40 years since they founded in 1969. Hisense Electronics, its subordinate company, has been listed in Shanghai Stock Exchange 15 years ago. After acquiring Kelon, a famous electronics company listed in both Shenzhen and Hongkong stock exchanges, Hisense has been establishing complementary product lines in home appliance segment and further strengthening market penetrations in 2006. They are awarded as “Number 1 in 500 most competitive enterprises in China” with portfolio covering Home appliances, Communication, Intelligent information systems, Multi-media, etc.

Hisense generated sales revenue of RMB71.6 billion in 2011 with considerable profit for its shareholders and tax contribution with y-o-y sustainable growth. It is the only corporation with 3 famous brands (Hisense, Kelon and Ronshen) in China home appliance industry. Hisense has production facilities in China, South Africa, Algeria and Egypt and worldwide sales branches with market covering more than 130 countries.

Hisense employs more than 15,000 staffs nowadays with more than 2,500 R&D scientists and engineers, among which there is more than 80 doctors and 500 masters. Annual expenditure in R&D accounts for 5% of Hisense sales revenue which is of significance. Hisense holds National corporate science center, National 863 project industrialization base, etc. Hisense sets up R&D centers in America and Germany in addition to its R&D headquarter located in Qingdao city with more than 60,000m2 land. Hisense has been granted for thousands of patents through its innovation efforts. It is also key leading member of many China industrial standards.

B. The Ethical challenges this company is addressing.

Thanks to rapid development of China market and increasing export markets, Hisense enjoys significant growth in the past decades, which could continue along with urbanization and welfare improvements. However, there are increasingly serious environmental problems as well-known white pollution caused by plastics and toxic heavy metal inside electronic appliance. This puts on table of Hisense: how to solve this as a social responsible corporate citizen? Hisense has signed some contracts with some recycling companies to collect old household appliances for disassembling and reuse of components. But it is challenging for them to guarantee the contractors’ social responsibilities and to ensure coverage of such recycling. Clearly, need of establishing sustainable recycling policy, regulations and systems are becoming urgent, where companies like Hisense must take exemplary activities continuously for such recycling and support government and industry to enact formal laws enforcing this.

Hisense has high standards for its employees’ safety, health and working environment. However, they have lots of vendors and OEMs. There is more concern how to ensure those companies to adopt similar SHE standards, and definitely Hisense needs to take this up by requesting and inspecting such companies to follow strictly.

C. What makes you believe this company is really ethical and why you trust it?

Hisense puts lots of effort to exemplify itself as faithful and credible company to their consumers, model for competitors, top employer and reputable corporate citizen.

First of all, Hisense Electronics and Kelon Electronics under Hisense group are listed in stock exchanges with the most advanced manufacturing capabilities and leading market share in its home appliances portfolio especially LCD/LED TV segment. We have solid reasons and proofs to believe Hisense is a healthy company with sustainable profitability and sound integrity of its finance and management.

Secondly, as the most famous brand of house appliance in China, you can rarely see Hisense advertisements in public media, which is very different from other electronic companies such as Hair, LG, Panasonic, etc. Hisense gives their priority to endeavor in continuous innovation and quality of products and services, just as their service principle and commitment ‘Customers comes first, service impartial’ and ‘Once promised, forever honored’.

Thirdly, Hisense pays high attention to employees’ safety & health and social responsibilities. With the rapid growth, they have created more than 15,000 job opportunities. Hisense has been investing significantly in improving SHE standards (safety, health and environment) of all their production sites and collaborating with disease control centers to ensure job safety and health. United Nations Environment Programme (UNEP) and Hisense Group representatives signed a cooperative agreement at UNEP’s headquarters in Nairobi, Kenya last Feb. Under the agreement, Hisense becomes the world’s first corporate partner of UNEP’s SEED Award.

Hisense is well acknowledged in China for its public welfare programs including philanthropy, donation, education and promotion of sciences. Hisense has been funding more than RMB40 million in supporting educations including Hope Schools in China since 1998. And they also donated more than RMB100 million for Shandong charity with focus on old people. Hisense was awarded as “the most social responsible listed company of China” in 2011 by Daily Economic News.

D.The possible challenges facing the company in the future and how you think this company may improve.

The competition of household appliances industry is very fierce including those famous global brands from Japan, Germany and America. We are glad to see increasing recognition on Hisense these years in China market. However, perception of Hisense branding image especially in NA and EU seems to be still weak. As next step, Hisense needs to set up and implement its branding strategy globally especially in aboard countries to enhance its market influence.

With rapid technical evolution of electronic products including home appliances by engaging more smart and intelligent technologies, there are increasing challenges for conventional companies how to adapt and embed such state-of-the-art technologies into their solutions. Hisense makes lots of R&D efforts in many ‘traditional’ fields. However, how to proactively cope with above challenges and take advantage of new technologies? More open innovation, partnership and long term technical strategy are necessary for Hisense to ensure its leading position in home appliance industry.

Location: Qingdao (China)

Sector: Manufacturing

Official website: http://www.hisense.com

Key figures:

Annual revenue in 2011: rmb71.6 billion
Net profit rate: about 10%
R&D expenditure: 5% of annual revenue
Number of employees: 15,700
Countries of production: China, South Africa, Algeria and Egypt

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