The home appliance giant has decided to sell nearly half of its fast-growing Indian arm to accelerate its drive for greater localization
Key Takeaways:
- Haier is reportedly considering a plan to sell 49% of its India business, which brought in more than $1 billion in revenue last year, to a local partner
- Haier India plans to allocate 2% of its shares to the company’s employees and could launch an IPO within the next two years, according to media reports
Haier Smart Home Co. Ltd. (6690.HK; 600690.SH) HRSHF has stood out from its domestic peers as one of China’s few home appliance makers that has localized in emerging markets. So, many were likely surprised when media reports this week said such an exemplary case of Chinese manufacturing expanding abroad was seeking a local partner to buy up to half of its Indian business, which earned more than $1 billion last year.
Such a move could reflect the difficulties Chinese companies face as they move abroad, and also underscores the importance of local partners who can help those companies navigate such foreign terrain.
According to reports by media including the Business Standard and Reuters, the family office of Sunil Mittal, founder of Bharti Airtel (BRTI.NS), is joining hands with the U.S. private equity firm Warburg Pincus in a proposal to buy 49% of Haier Appliances India Pvt Ltd. for 60 billion rupees ($720 million). The deal is still being evaluated by Haier, the reports said.
A Bloomberg story in May also raised the same potential deal, but at a price of around $2 billion for the stake. That would mean the latest bid represents a 64% discount to the initial forecast. Reuters attributed the steep downgrade to high fees charged by Haier Group to its Indian subsidiary, which might erode the latter’s profitability in the future.
Overseas manufacturing pioneer
Haier is one of the earliest Chinese companies to venture beyond its home market by shipping its products abroad, starting with refrigerators and later expanding to other areas like washing machines, air conditioners, kitchen appliances and TVs. It has also acquired international brands such as GE Appliances and Candy along the way, becoming a leader in the global smart appliance space. The company has been the world’s top home appliance maker for 15 consecutive years, with overseas revenue now accounting for about half of its total.
Haier’s India foray dates back as early as 2004. It opened its first factory in the city of Pune three years later to produce refrigerators and washing machines and built a second complex in the city of Greater Noida in 2017. It had nearly 3,000 employees in India by the end of last year, with technical and R&D personnel making up more than 25% of those. Its local operation covers everything from product development, to manufacturing, sales and post-sales services.
Haier’s latest annual financial statement shows its revenue in India exceeded $1 billion for the first time in 2024, up more than 30% year-on-year, as it targets $2 billion in 2027. India has become a star performer in the company’s overseas operations, helping Haier to achieve record highs in both revenue and profits last year.
Haier’s revenue in South Asia, which comes mostly from India, rose more than 30% year-on-year in the first quarter of 2025, with its market share in terms of retail sales value and volume up by 0.6 and 0.7 percentage points, respectively. Its share of the country’s market for side-by-side refrigerators is especially strong at an impressive 21%.
Such strong performance would typically lead a company to invest even more in such a promising unit to expand its production. Given that situation, why would Haier shift gears and seek to sell nearly half of the venture to a local partner?
A necessary compromise
The answer lies at least partly in geopolitics. New Delhi has been subjecting local Chinese investments to greater scrutiny since a series of border clashes between China and India in 2020. All proposed investments from countries bordering India must now be reviewed by the government on a case-by-case basis instead of taking a more automatic route. Haier’s application to invest 10 billion rupees to expand its Indian operation in 2023 had still failed to go through by the end of 2024.
India has been trying to establish itself as a global manufacturing hub since Prime Minister Narendra Modi outlined a “Made in India” initiative in 2014. Modi also wants to reduce the country’s reliance on foreign investment, especially in sensitive sectors such as home appliances, telecoms and semiconductors. Accordingly, foreign businesses aiming to curry government favor and attain greater market access often need to bring in local partners and achieve greater localization of their supply chains to attain such support. Those factors are almost certainly a major component of Haier’s decision to dilute its control of its India business.
While Haier will maintain control of the unit under the deal being considered, it can still show it is pursuing a strategy of diversified governance and indirect localization by selling 49% of its shares to a local Indian business and Western backer. That could help to lower the risk of falling victim to government policies targeting foreign firms. Thus, the proposed sale gives the company more policy wiggle room without losing actual control of its India unit.
This type of yielding shares without yielding control may be a necessary compromise that Chinese companies will increasingly need to make in the current geopolitical climate as they continue to expand abroad.
The Reuters report also points out that Haier India plans to allocate 2% of its shares to employees and could launch an IPO within the next two years. Such moves will also further localize its brand, as it tries to convince Indian regulators that its governance structure is well-aligned with local interests. Haier will still receive plenty of upside from its remaining 51% stake, as the India unit is likely to not only grow in value but will also continue to provide its Chinese parent with usage and royalty fees.Â
But the shares sale could also bring greater regulatory scrutiny to the parent Haier and tighter restrictions over its return on capital. What’s more, the high brand usage and royalty fees Haier charges its Indian unit, if they remain at current levels, could dent the subsidiary’s profitability and dampen its valuation if it makes an eventual IPO. Meanwhile, the deal would also complicate governance matters, since the new partners will inevitably want some say in how the company is run, despite their minority status. Despite all that, the planned reconfiguration still looks worthwhile given the current political climate.
