Renhandeyi is the fundamental organising philosophy of the Haier Business Model.
By breaking the monolithic corporation into a network of over 4,700 small, agile, and autonomous units, Haier has created an internal ecosystem of businesses, each with the mandate to create value directly for users.
In this series, I break down the Haier business and provide insights into what it means to be an ecosystem organisation.
- Part 1 – The RenHanDeyi approach
- Part 2 – The Haier Business Model (this article)
- Part 3 – How Haier Delivers Scenarios: Smart Solutions (coming soon)
- Part 4 – The Orchestration Engine of Haier (coming soon)
- Part 5 – Culture, Purpose and Strategy (coming soon)
- Part 6 – How Haier Harnesses AI (coming soon)
- Part 7 – How To Transform To Ecosystem Organizing (coming soon)
- Part 8 – Strategies and Tools For Ecosystem Organizing (coming soon)
But how is the Haier Business Model structure?
To understand the Haier Business Model, we need to move beyond frameworks like the Business Model Canvas. The business model canvas (BMC), while useful, is firm-centric—in other words, the BMC doesn’t consider how value is created, delivered, and captured in an ecosystem context.
Table of Contents
Haier Business Model
The Haier business model collapsed the traditional corporate hierarchy specifically to achieve zero distance to customers. In practice, this means that every employee or microenterprise can interface directly with users without layers of managerial approval or functional silos in between.
Salespeople, developers, product managers, and even back-office staff are encouraged to interact with consumers and gather insights firsthand.
By flattening into a dynamic ecosystem, the Haier business model ensures that information flows from users to makers in real time. For example, user feedback communities (often facilitated via Haier’s mobile apps and IoT platforms) connect end consumers with R&D microenterprises so that product iterations or new features are co-created at the source.
Haier Business Model: The Scenario Method
Imagine opening your refrigerator and finding that it already knows what you have, what is running low, and what your family likes to eat. The system suggests recipes, orders missing ingredients, and adjusts your oven automatically. In the Smart Kitchen scenario, every device collaborates to make cooking effortless and personal.
In Haier’s business model, a scenario represents a living user context in which many products, services, and digital tools work together to address a complete need. Haier does not sell single appliances or one-off services. It sells scenarios that fit naturally into people’s lives, creating seamless experiences such as a home that cleans itself or a kitchen that plans meals and saves energy.
Why Scenarios Matter
The world has moved from the Internet of Things to the internet of experiences. People no longer want a device; they want an outcome. They expect a connected life that anticipates their needs and simplifies daily routines. Haier built its strategy around this shift. It calls it scenario thinking—a move from competing in a product economy or platform economy to thriving in an ecosystem economy.
A scenario transfers the centre of value from the factory to the user’s life. When a scenario delivers a real benefit, everyone involved gains: the user enjoys convenience, and every participant in the ecosystem—from micro enterprises to partners—shares in the value created. As one Haier analysis describes it, “Users sit at the centre of the ecosystem, while solution and experience EMCs orbit around them like planets around the sun.”
This logic also changes the economics. Because scenarios deliver full solutions rather than isolated products, they command higher average spending and deeper loyalty. In China, Haier’s scenario brand, Three Winged Bird, for example, achieves average sales per household of over RMB 220,000—several times the value of a single appliance purchase.
- Experience EMCs define the scenario with users.
- Solution EMCs deliver the scenario that was defined.
- Industry platforms scale the scenario by providing shared tools, data, and partner access, enabling many teams and external firms to replicate, adapt, and extend it.
Ecosystem Organizing
The Haier business model consists of four interlocking layers. Micro-Enterprises (MEs) form the entrepreneurial core. Ecosystem Micro-Communities (EMCs) are the collaborative arenas where MEs and partners come together to address user scenarios. Shared Service Platforms (SSPs) provide the infrastructure that allows thousands of autonomous units to operate seamlessly. Industry Platforms extend this system beyond Haier’s walls, connecting external innovators into the same ecosystem logic.
The Anatomy of The Haier Business Model
Micro Enterprises
Every element of Haier’s system begins with the Micro-Enterprise.
An ME is a self-organising team of 10–50 people who act as entrepreneurs rather than employees. Each operates with its own profit-and-loss responsibility, its own contracts, and the freedom to choose partners or leave the ecosystem entirely.
The power of this ecosystem model lies in the level of autonomy it provides while maintaining strong governance and an orchestration system that drives collaboration between MEs. But not all MEs are the same. Haier recognises two fundamental types that together mirror the dual logic of any market: those who serve the customer directly, and those who enable others to do so.
User MEs: Where the Market Lives
User MEs are the visible face of Haier’s ecosystem. They interact with end users, identify emerging needs, and design offerings that translate those insights into real-world value. Their responsibility is simple yet radical: to maintain zero distance from the user.
A User ME is both a business and a learning system. It discovers patterns of user demand, tests new concepts in real time, and works with other MEs to bring them to market. Success is measured not by internal efficiency but by value created, e.g., revenue growth, customer satisfaction, and the strength of community engagement.
A User ME produces tangible market offerings — a new smart refrigerator, a connected air-purification service, or an app-based repair model. Each is the visible proof of user-driven innovation: something people wanted, co-created, and refined in real time.
Real-World Example
The Zhisheng Refrigerator ME was formed by a small team targeting young urban customers. Rather than inheriting a brief from headquarters, it observed how small apartments limited kitchen design and created compact, energy-efficient refrigerators tailored to that lifestyle. Within months, its sales validated a new market category that other teams could build upon.
Comparison to Traditional Companies
In a traditional firm, this would be a product division executing management’s strategy. At Haier, it is the opposite: the User ME defines strategy from the edge, and the organisation learns from the market through it.
Node MEs: The Invisible Infrastructure
If User MEs are Haier’s sensory system, then Node MEs are its muscles and bones.
They provide the components, technologies, and specialist capabilities that enable others to serve users quickly and efficiently. Node MEs do not face the customer directly. Their clients are other MEs inside the ecosystem and, increasingly, partners outside it.
Each Node ME operates as a supplier in a transparent internal market. They compete on price, quality, and speed just like any external vendor. The difference is that they share the same digital infrastructure and contractual discipline that keeps the system coherent.
A Node ME delivers enablers: a compressor module, an AI analytics tool, a logistics service, or a data layer. Their contribution is invisible but indispensable. They ensure modular interoperability across Haier’s ecosystem.
Organizationally, Haier created Experience MEs as the frontline units that engage users, discover their needs, and feed those insights straight to Solution MEs, which can act on them.
Real-World Example
The Compressor Node ME supplies refrigeration units to multiple product MEs within Haier and to third-party manufacturers. It has transformed what was once a cost centre into a competitive business, continuously improving technology through direct exposure to market signals.
Comparison to Traditional Companies
In a conventional organisation, these functions would sit in centralised, siloed departments, managed through routine management budgets and constraints. Haier instead turns them into entrepreneurial ventures measured by service performance and customer satisfaction.
Ecosystem Micro-Communities (EMCs): The Arena of Co-Creation
Micro Enterprises in Haier rarely work in isolation. When challenges grow complex, such as creating a smart kitchen or designing a healthier living environment, they join forces in temporary alliances called Ecosystem Micro Communities, or EMCs.
An EMC is a living network of MEs and external partners united around a shared user scenario. There is no hierarchy and no chain of command. Instead, EMCs operate through market contracts, open data, and shared performance goals. Each participant earns rewards that depend on the value they help create for users.
Haier defines two main kinds of EMCs. Experience EMCs uncover what users truly want, while Solution EMCs figure out how to deliver it. Together they turn user insight into real-world results.
In Haier’s ecosystem, EMCs are not projects or departments. They are markets of collaboration, where every participant acts like an entrepreneur, every contract is tied to user value, and every success story begins with a simple question: what will make life better for the user?
Experience EMCs: Seeing Through the User’s Eyes
An Experience EMC begins where every good business should begin: with the user. It brings together User MEs, families, designers, and external partners to explore what people actually need and why. The group’s purpose is not to design a product but to shape the experience that will create lasting value.
The output of an Experience EMC is a scenario blueprint—a clear definition of what the user values most. It might describe what a “healthy home,” an “efficient workspace,” or a “sustainable kitchen” feels like in daily life. This blueprint becomes the foundation for the Solution EMCs that follow.
Solution EMCs: Turning Insight into Reality
Once the Experience EMC defines what users want, the Solution EMC makes it real. It assembles Product MEs, Node MEs, and external partners into a focused, results-driven network. Each participant signs a contract that links rewards to both financial and user outcomes.
The Solution EMC works like an agile task force that builds and scales the scenario defined by the Experience EMC. When the goal is reached, the group disbands or reforms around the next opportunity.
The result is not a collection of disconnected products but a fully integrated product and service system that works as one. In practical terms, a Solution EMC can turn a vision like the smart kitchen into a living ecosystem where appliances, apps, and services cooperate effortlessly.
Shared Service Platforms: The Enabling Infrastructure
Every ecosystem needs a backbone, and in Haier that role belongs to the Shared Service Platforms, or SSPs. They form the invisible infrastructure that allows thousands of autonomous micro enterprises to operate with precision and confidence.
SSPs deliver essential functions such as finance, human resources, IT, legal, and branding. Yet they do not behave like traditional support departments. Each one runs as a market-facing business with its own customers, pricing, and performance metrics. Their clients are other MEs, and they must earn their trust by providing value that is measurable and competitive.
What makes SSPs powerful is that they follow the same principles as any entrepreneurial unit in Haier: autonomy, open competition, and accountability to users. They exist to serve, not to control, and every transaction reinforces transparency.
A unifying digital thread
Think of SSPs as the digital thread that stitches thousands of autonomous units into one operating system. Three elements create that thread:
- Contract data layer that mirrors the external market inside the firm. ME to platform transactions are contractual, portable, and comparable on price, quality, and time.
- Talent and organisation graph owned by the HR platform. It maintains the talent pool, supports entrepreneurial moves between units, and exposes skills and openings as market objects rather than line assignments.
- Financial and risk rails provided by the Finance platform. It standardises billing, credit, treasury, and performance reporting so every ME can run a clean profit and loss without central approvals.
What SSPs actually do
- Provision core services as APIs and shared tools for HR, finance, legal, IT, and brand, so any ME can recruit, contract, pay, and protect IP with minimal friction.
- Instrument performance with fine grained telemetry at unit and project level. Targets and progress are visible daily to each contributor, which enables rapid course correction and zero distance governance.
- Expose choice and competition. If an SSP underperforms, an ME is free to buy outside. This maintains market discipline inside the firm.
Industry Platforms: The Engine of the Ecosystem
Haier’s industry platforms represent a new organisational logic for the digital economy. They show how a company can evolve from producing goods to enabling entire ecosystems of value creation.
While Haier’s industry platforms share some similarities with cloud infrastructures such as Amazon AWS or Google Cloud, they operate at a completely different level of purpose and design. AWS and Google Cloud provide computational infrastructure. Haier’s platforms provide collaboration infrastructure.
Industry Platforms are the bridges that connect Haier’s internal ecosystem to the outside world, linking thousands of partners, users, and entrepreneurs into shared spaces. If micro enterprises are the cells of the organisation and SSPs are its connective tissue, then the industry platforms are the circulatory system that keeps innovation and value flowing across industries.
Haier’s industry platforms are not digital storefronts or data utilities. They are living marketplaces where multiple enterprises come together to co-design, co-produce, and co-commercialise complete user scenarios. These platforms transform Haier’s internal capabilities into an open infrastructure that others can use to build and scale new ventures.
Each platform combines technology, data, and organisational logic. The goal is simple but ambitious: to make Haier’s ecosystem a space where anyone—from a start-up to a global manufacturer—can develop customer-centric innovations.
Example: COSMOPlat: The Industrial Internet Platform
Haier’s flagship industry platform is COSMOPlat, one of the largest industrial internet systems in the world. It redefines how manufacturing operates by turning production into a fully collaborative process.
On COSMOPlat, users can co-design products online, customise features, and follow production in real time. Manufacturers then adjust processes instantly to meet that demand. The platform covers more than 15 industries, including construction, agriculture, and apparel, and serves over 400,000 industrial users.
COSMOPlat’s power lies in its ability to turn mass production into mass customisation. What once required scale economies can now adapt to the preferences of a single customer. A small furniture maker can access the same advanced manufacturing resources as a large enterprise, while Haier earns revenue through shared data services, process optimisation, and performance contracts.
COSMOPlat acts as both a digital platform and an organisational ecosystem. It integrates hardware, software, and human expertise into a single, transparent system that turns industrial capacity into a service available to everyone.
Haier Business Model: Anatomy of Haier’s Organising System
| Layer | Entity / Component | Function (What They Do) |
|---|---|---|
| Strategic | Headquarters (HQ) | Serves as the cultural and strategic centre of Haier’s ecosystem. HQ defines the purpose, values, and long-term vision of the organisation and ensures coherence across thousands of autonomous entities. It shapes the entrepreneurial culture through the RenDanHeYi philosophy, which aligns every employee’s goals with user value creation. HQ acts as an architect of platforms and rules, not a controller of operations. It establishes the investment mechanisms, digital standards, and value-sharing systems that allow distributed entrepreneurship to thrive. |
| Entrepreneurial | User Micro Enterprise (User ME) | Market-facing business units that identify user needs, design products or services, and create direct connections with customers. User MEs embody the principle of “zero distance to the user.” They form the Experience side of EMCs and own profit and loss responsibility for specific markets or product lines. Their goal is to sense demand early and translate it into innovative scenarios that deliver measurable user value. |
| Node Micro Enterprise (Node ME) | Specialist internal suppliers that provide technical modules, data capabilities, logistics, or other reusable components. They enable the system to scale efficiently by supplying modular solutions to multiple MEs and EMCs. Node MEs compete on price, speed, and quality with external providers, ensuring market discipline and innovation inside the ecosystem. | |
| Ecosystem Micro Community (EMC) | Temporary ecosystems formed around a user scenario. Each EMC brings together User MEs, Node MEs, and external partners to co-create solutions that meet specific user needs. There are two main types: Experience EMCs, which define what users want, and Solution EMCs, which deliver those outcomes. EMCs replace departments with market-based collaboration and dissolve or reform as opportunities change. | |
| Enabling | Shared Service Platforms (SSPs) | Provide the digital and operational backbone for the ecosystem. SSPs deliver essential services such as finance, HR, IT, legal, and branding to all MEs and EMCs. They function as internal digital businesses offering contract-based services, real-time data, and transparent pricing. SSPs form the unifying digital thread that connects every ME and ensures that a decentralised organisation can run with precision, trust, and scale. |
| Industry Platforms (for example COSMOPlat and Three Winged Bird) | Serve as the external growth engines that connect Haier’s ecosystem with users, partners, and enterprises across industries. Industry platforms transform Haier’s internal capabilities into open infrastructure for co-design, manufacturing, and scenario development. COSMOPlat enables mass customisation across industries, while Three Winged Bird integrates home and lifestyle scenarios into connected, data-driven ecosystems. | |
| Orchestration | Methods and Tools (for example VAM, WWVS, ZEUS, ROUE) | Provide the mechanisms that coordinate, align, and motivate the ecosystem without hierarchy. VAM (Value Added Management) measures performance milestones and value creation for each unit. WWVS (Win Win Value Added System) links compensation to shared user outcomes. ZEUS is the digital collaboration environment that manages contracts, data, and performance visibility. ROUE supports rapid evaluation and continuous learning. Together, these tools sustain coherence through data, incentives, and transparent accountability rather than command. |
Summary of Haier Business Model
- Headquarters defines the cultural DNA, strategic direction, and governance principles that enable distributed entrepreneurship.
- Micro Enterprises and EMCs form the entrepreneurial core where user value is discovered, created, and delivered.
- Shared Service and Industry Platforms act as the enabling infrastructure that connects and scales autonomous activity.
- Orchestration systems such as VAM, WWVS, and ZEUS replace managerial control with transparent contracts, data, and incentives.
References
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Hamel, G. and Zanini, M. (2018) ‘The End of Bureaucracy: How a Chinese appliance maker is reinventing management for the digital age’, Harvard Business Review, November–December 2018. Available at: https://hbr.org/2018/11/the-end-of-bureaucracy
Krumwiede, K., Lawson, R. and Luo, L. (2019) ‘Haier’s Win-Win Value Added Approach’, Strategic Finance, 100(8), pp. 24–31 (February 2019). Available at: https://sfmagazine.com/articles/2019/february/haiers-win-win-value-added-approach/
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Steiber, A. and Alvarez, D. (2024) ‘AI-driven digital business ecosystems: a study of Haier’s EMCs’, European Journal of Innovation Management, (ahead-of-print, published 17 September 2024). DOI: 10.1108/EJIM-01-2024-0076 (Available at: https://doi.org/10.1108/EJIM-01-2024-0076)
Zhang, R. (2021) ‘Shattering the status quo: A conversation with Haier’s Zhang Ruimin’ (Interview by A. De Smet, R. Steele and H. Zhang), McKinsey Quarterly, 27 July 2021. Available at: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/shattering-the-status-quo-a-conversation-with-haiers-zhang-ruimin
