Qingdao Haier, the listed unit of China's biggest appliance maker, said that net profit for the first half of 2002 was down by 45 per cent year-on-year to just Yn219m. The company blamed the late arrival of China's hot season, the peak period for air conditioner sales, forcing it to rely on lower-priced exports. In addition, heavier finance charges for loans to finance new refrigerator and air conditioner projects in Dalian, Liaoning province, had also eaten into profits, the company said.
Haier has become the subject of intense media scrutiny, which has cast doubt on the correctness both of its expansion strategy and of the turnover figures in its annual reports, Business Weekly said. A securities analyst at Southwest Securities questioned the wisdom of Haier expanding into new sectors, including mobile phones, which are already crowded with domestic manufacturers and dominated by foreign brands, and into financial services. Haier dropped a lawsuit against the analyst, Chen Yicong, after he apologised for the critical report.
Another attack was published in the domestic China publication South Wind Window. An article alleged that Haier's reported 50 per cent growth in turnover last year was the result of internal buying and selling and that the real figure was only half that amount. It also criticised the company for rapid expansion of production capacity, pointing out that Haier had seven production lines for air conditioners in 1998 but more than 20 now, with several more under construction in Haier Wuhan Industrial Park. Haier issued a formal statement assuring domestic investors that the allegations against it were groundless.