#18 1985 · Haier (Zhang Ruimin) · Home appliancescostly-signal
Haier's new director had workers smash 76 flawed fridges instead of quietly selling them as seconds
the problem
Quality complaints kept coming and warnings weren't changing factory behavior
background
Zhang Ruimin took over a collectively owned Qingdao refrigerator factory in December 1984 that was, by his own later account, close to closing — debt-ridden, its product barely distinguishable from a dozen other struggling local brands. Quality was a known problem the plant had absorbed for years the ordinary way: defective units got sold at a discount as seconds, quietly, so the material cost wasn't a total loss and nobody had to have an uncomfortable conversation about it.
A customer complaint in mid-1985 sent Zhang into the warehouse himself, where he found 76 refrigerators with real defects. He did not fire anyone or issue a memo. He had the workers who had built the units carry them into the yard and destroy them with hammers, while the rest of the workforce watched — turning an abstract inspection report into a loss everyone in the room had just felt happen to something they'd made with their own hands.
the move
Months into running a near-bankrupt Qingdao refrigerator collective, Zhang Ruimin took a customer's complaint seriously enough to inspect the warehouse and found 76 refrigerators with quality defects — roughly a fifth of a batch. Rather than discount them as seconds, the normal practice at a time when refrigerators were still a scarce, expensive good in China, he had the workers who built them line the units up in the factory yard and personally smash them with sledgehammers, in front of the entire workforce.
the payoff
Haier reached profitability the following year, won China's first national quality gold award for refrigerators in 1988, and grew from a collective factory on the edge of closure into one of the world's largest appliance makers; one of the original sledgehammers is preserved as a museum artifact. Each destroyed fridge was reportedly worth what an ordinary factory worker could not easily earn back in a year or more — a loss the near-broke plant felt directly.
what came after
The incident is now one of the most retold stories in Chinese management history, cited in business-school teaching and Haier's own corporate retrospectives as the moment the company's quality culture was founded — not through a new inspection process, but through a single irreversible, witnessed act.
filed under
references
- [1]张瑞敏的1985Haier Group, 2021haier.com
- [2]Zhang Ruimin's Haier PowerTime, 2014time.com