November 21, 2014

Will GE’s Appliances Suffer Under a New Owner?

By now, GE’s upcoming sale of their popular appliance division is common knowledge and many people are wondering what will become of one of the most popular brands in the US when it is sold.  GE appliances rank highly with sources such as Consumer Reports.  When news that GE was considering a sale of the appliance arm, the magazine reported how various GE appliances stacked up against rivals. Most did pretty well.   GE had many highly rated (though a few poorly rated, including a ‘not acceptable’ in upright freezers ) models in many product categories and across price points.

According to the Wall Street Journal’s Deal Journal, for the most part, those considered to be potential bidders for the GE business–Sweden’s Electrolux, LG Electronics, BSH Bosch & Siemens Hausgerate of Germany, to name a few–match that. The outlier? Haier. Haier’s Genesis is No. 22, or fourth from the bottom in the rankings of top-loading washing machines and dead last in both large countertop microwave ovens (No. 15) and side-by-side refrigerators (No. 34).

The obvious question? Would a Haier-GE combination lead to an improvement in Haier’s own brand or would it pull down the reputation of the GE brand? Unfortunately, the question isn’t, well, academic. The folks at consumer-satisfaction surveyer J.D. Power & Associates said studying whether or how an acquisition of a high-quality brand by a lower-quality brand affected either brand would be nearly impossible, since it would be difficult to identify what was an effect of the deal or integration as compared with the myriad other issues that affect quality, like design, manufacturing, parts/raw materials.

Of course, Haier has has been down this road before, coming close to but ultimately failing to acquire another well-regarded U.S. brand, Maytag, in 2005. Then Haier’s plan was said to follow the Lenovo way, referring to the Chinese PC maker’s slow conversion of IBM Thinkpads to the Lenovo brand after it acquired the Big Blue business. For its part, Haier declines to confirm whether it was indeed bidding for the GE business or comment on how it would handle the integration should it comsumate a deal.

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