# RenDanHeYi 2.0 – Micro-enterprises In 2012, intending to resolve the tensions inherent in RenDanHeYi 1.0, Haier restructured the 2,000 independent units into 4,000 micro-enterprises, which initiated the second iteration of the RenDanHeYi model. As a result, micro-enterprises were given even more decision-making power and started to **act as mini start-ups with their own balance sheet, P&L statement, and lifespan**.
The micro-enterprises **hired their own staff**, distributed **their own profits**, set their own **strategic directions**, and decided which other micro-enterprises to **contract and transact** with. Micro-enterprises were even free to go beyond their organisational borders and contract with **external partners** when they thought it to be in their best interest.
RenDanHeYi 2.0 enabled Haier to reproduce the competitive dynamics of a marketplace in their firm. However, micro-enterprises were only rewarded based on their own performance—not on the performance of the partners they collaborated with. Over time, this started to create tension, especially with the rise of the Internet of Things (IoT), which resulted in customers demanding ‘smart’ products and services that required new levels of **intense collaboration amongst micro-enterprises and their external partners**.