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.