Acquisitions continued throughout the 1990s, sometimes under government pressure to take over
poorly performing firms. In 1995, the Qingdao Municipal Government pushed the nearly bankrupt
Red Star washing machine company onto Haier with the obligation to take on the firm’s employees
and RMB 132 million in debt, the equivalent of Haier’s 1993 profits. Within 18 months, however,
Haier had turned Red Star into the top-ranked washing machine manufacturer in China. Haier
added televisions and telecommunications equipment to its product mix with the 1997 acquisition of
Yellow Mountain Electronics located in Anhui province. By 1997, Haier had taken over 15 companies
in accordance with Haier’s acquisition strategy. “We buy only those firms that have markets and
good products but bad management,” Zhang said. “Then we introduce our own management and
quality control to turn them around.”