Before 1998, most of the acquired businesses operated independent R&D, procurement,
production, and sales departments. Haier replaced the numerous service departments with four new
Group-wide “Development Divisions” — Capital Flow (Finance), Commerce Flow (Sales), Material
Flow (Logistics), and Overseas (Global Operations)—whose heads reported directly to the Haier
Group president. These new businesses operated as independent profit centers that competed with
third-party service providers for Haier’s business and could sell services to external clients as well.
Human Resources, R&D, and Customer Relations were also joined into group-wide business centers
and sold their services on a fee basis to Haier Divisions. Similarly, Total Planning Management, Total
Quality Management, and Total Equipment Management centers were formed by combining these
functions across divisions. In 2000, Haier added an e-commerce company serving businesses and
individual customers.