Author | Zhao Lei
Editor | Rao Xiafei
On September 3, Gree Group signed a strategic cooperation agreement with Xiaomi Group and China CITIC Bank. The three parties agreed to Carry out in-depth cooperation in industrial funds, financial services, industrial investment, project cooperation, resource sharing and other aspects.
Perhaps the concept of "Dong Mingzhu is Gree, and Gree is Dong Mingzhu" is so deeply rooted in the hearts of the people that many people mistakenly believe that this is Dong Mingzhu and Lei Jun joining forces.
In fact, this cooperation has nothing to do with Dong Mingzhu. Dong Mingzhu is the chairman of Gree Electric Appliances, and there is another chairman of Gree Group. Gree Electric Appliances and Gree Group have a deep relationship, but they are not the same family.
Anyone who knows Gree and Dong Mingzhu knows that Gree Group should be regarded as Dong Mingzhu's "rival", and the relationship between Lei Jun and Dong Mingzhu is also an "rival" element Mostly, this means that Dong Mingzhu's "enemies" have joined forces.
Ordinarily, the fact that Gree Group and Xiaomi Group come together has nothing to do with Dong Mingzhu, but what they want to do makes Dong Mingzhu very concerned.
According to the agreement, Gree Group invested 3.545 billion yuan to participate in the investment and management of the Xiaomi Industry Fund initiated by Xiaomi Group, focusing on integrated circuits, artificial intelligence, industrial Internet, core equipment, cutting-edge Xiaomi's ecological chain and high-quality suppliers in technology and other fields have made in-depth arrangements to help Zhuhai accelerate the creation of an intelligent manufacturing industry cluster.
These are exactly what Dong Mingzhu has been doing in the past 10 years: the mold business, the controversial mobile phone, the rumored chip business, and I want to build smart equipment as a “second main business”.
In these fields, Gree Group chose to join forces with others. From the perspective of the industry, it is equivalent to negating Dong Mingzhu’s past efforts.
What makes Dong Mingzhu uncomfortable is that this other person is Xiaomi - a company that she believes has "quality management problems."
There are worse things. Since 2005, Gree has occupied the number one position in household air conditioners. In an interview in 2018, Dong Mingzhu said, "In another five years, no one will be able to surpass Gree air conditioners." However, this year, Gree air conditioners are undefeated. The myth is busted.
The just-announced semi-annual report shows that Midea, the “thief” company Dong Mingzhu talks about, has surpassed Gree in its air-conditioning product revenue.
At the same time, the market values ??of Midea and Gree have also further increased. At the end of 2019, the difference in market value between the two was no more than 10 billion yuan. As of the close, Gree Electric's total market value was 329.8 billion yuan, while Midea Group's market value was 483 billion yuan, a difference of more than 150 billion yuan.
In the field of smart manufacturing that Dong Mingzhu cares most about, Xiaomi Group, which she once looked down upon, has taken over; in terms of revenue from air-conditioning products, which Dong Mingzhu is most proud of, she is almost The beauty of the lifelong rival has surpassed her, which makes people wonder, is Dong Mingzhu’s era about to pass?
At the signing ceremony, the representative of Gree Group was Chairman Zhou Lewei. He was once a "young cadre trained by the municipal government". In November 2016, Zhou Lewei took over the Gree Group Chairman, the predecessor is Dong Mingzhu.
Dong Mingzhu’s current position is the chairman of Gree Electric Appliances.
Founded in 1985, Gree Group is the first state-owned capital investment and operation platform in Zhuhai and is 100% owned by the Zhuhai State-owned Assets Supervision and Administration Commission.
In 1991, Gree Group invested 30 million yuan to establish Gree Electric Appliances.
After Gree Electric went public in 1996, Gree Group’s shareholding ratio continued to decline.
It was 55.35% at the end of 1998, dropped to 29.74% in May 2007, and dropped to 18.22% in September 2016, but it is still the largest shareholder.
In the second half of last year, Gree Electric Appliances carried out mixed ownership reform, and Gree Group transferred 15% of its equity to Zhuhai Mingjun Investment Partnership (limited partnership) for 41.66 billion yuan. This is where Hillhouse Capital comes into play.
Currently, Gree Group only owns 3.22% of Gree Electric Appliances' equity. It seems that the two companies used to have a "father-son relationship", but now they have a shareholder relationship.
In fact, the relationship between Gree Group and Gree Electric Appliances has always been very subtle. Most of the time, Gree Group plays the role of Dong Mingzhu’s “enemy”. Sometimes, they are still "dead enemies".
According to the "Shanghai Securities News", Dong Mingzhu once dissed Gree Group, saying, "Gree Group has not had any good projects or assets, only a very good company." A listed company (Gree Electric), as a group, cannot rely solely on one of its listed companies for development. Therefore, it needs to introduce strategic investors, find new projects, and optimize the industry, and ultimately have its own hematopoietic function. ”
Dong Mingzhu also publicly "complained" about the Zhuhai government and the State-owned Assets Supervision and Administration Commission: "When Gree encountered difficulties, it went to the State-owned Assets Supervision and Administration Commission, but the State-owned Assets Supervision and Administration Commission ignored us and asked us to solve it ourselves. But when we encountered problems of interest, At that time, the Zhuhai government stretched its arms very far, and I was ready to fight against them at any time, and I must stick to my principles."
< p> The most intense battle between Dong Mingzhu and the Zhuhai government, with the most impressive results, occurred in 2004. At that time, the Zhuhai government planned to sell Gree to the U.S. Carrier for US$900 million. But Dong Mingzhu firmly disagreed and tried every means to stop the transaction.
Many years later, Dong Mingzhu said in an interview: The market value of Gree Electric is now more than 90 billion, and the value of state-owned shares is close to 20 billion. At that time (almost) 9 Sold for 100 million dollars. We have now earned more than 30 billion for the country.
In 2012, Dong Mingzhu became the chairman of Gree Group, and the relationship with the Zhuhai State-owned Assets Supervision and Administration Commission has always been tense. After resigning in 2016, Dong Mingzhu is no longer a leader of state-owned enterprises. , they are just professional managers of listed companies.
The representative of Xiaomi Group is President Wang Xiang, who is one of the four new partners of Xiaomi announced on August 16. Information shows that Wang Xiang joined Xiaomi in June 2015 as senior vice president, and was later promoted to president of Xiaomi in November 2019. In April 2020, he succeeded Zhou Shouzi as the CFO of Xiaomi. Before joining Xiaomi, Wang Xiang was senior vice president and president of Greater China at Qualcomm.
The appearance of Wang Xiang means that this is a cooperation that Lei Jun attaches great importance to.
The most famous relationship between Dong Mingzhu and Lei Jun is the "1 billion" bet, which was born at the China Economic Figure of the Year Selection Awards Ceremony on December 12, 2013. At that time, Lei Jun believed that within 5 years , Xiaomi’s total revenue can surpass Gree, and they are willing to bet 1 yuan. Dong Mingzhu thought it was impossible and said that if she wanted to bet, she would bet 1 billion.
According to the 2018 financial report, Xiaomi’s total revenue was 174.9 billion yuan, while Gree’s total revenue was 198.1 billion yuan. “1 billion” bet, Dong Mingzhu A narrow victory.
On August 28 last year, Dong Mingzhu said in Beijing that the 1 billion bet with Lei Jun had ended, and everyone knew the result. "I don't want 1 billion anymore. I want to bet with Lei Jun for another five years." Lei Jun responded: "I think I can give it a try."
On August 11, at Xiaomi's 10th anniversary press conference, Lei Jun admitted that his bet with Dong Mingzhu was a bit blindly confident and "later regretted it."
Two days later, in the CCTV News Relativity program, Dong Mingzhu responded, "Gree has core technology in the field of air conditioning and is now in a leading position. Gree must keep its main business unchanged and let Chinese equipment The world is shouting! Please put forward the goals of your industry.”
On April 27, Dong participated in CCTV’s “News 1+1” program with Lei Jun. Mingzhu said, "Lei Jun and I are very familiar and we are friends." Although the relationship between the two seems good now, in the past, the relationship between the two was more of "enemies."
In December 2014, Xiaomi Technology invested 1.266 billion yuan in Midea Group. Dong Mingzhu commented in a public speech that this cooperation was "two thieves together, a group of thieves."
Dong Mingzhu called Midea a thief, because Midea had previously sold a certain Several air conditioners infringed on Gree's patents, so the court ordered it to compensate Gree for economic losses of 2 million yuan; and saying that Xiaomi is a liar refers to the fact that Xiaomi was publicly sued by Ericsson in New Delhi, India, for infringing on Ericsson's technology patents, which resulted in the loss of Xiaomi mobile phones It was once banned in India.
Since then, Dong Mingzhu has repeatedly criticized Xiaomi, saying, "Xiaomi is not a great company, and Xiaomi mobile phones are not quality products." She also said, "Everyone chooses not to use Xiaomi mobile phones." It’s because Xiaomi’s quality is not good, and no one would say it’s because Xiaomi is too expensive.” He also said that Xiaomi is an OEM manufacturer, and so on.
Of course, Dong Mingzhu’s real crisis is not with the “enemies” outside, but within Gree.
Data show that in 2019, the size of China's home appliance market was 803.2 billion yuan, which was lower than 810.4 billion yuan in 2018. This means that the domestic air-conditioning industry has entered an era of inventory competition, and the fight between Gree and Midea will become even more brutal.
For the air-conditioning industry that has suffered heavy losses under the impact of the epidemic, whoever can withstand the risks and reduce the losses as much as possible will be able to recover faster after the epidemic is over. Recover and even reshape the industry.
On August 30, the "old rivals" Gree and Midea released their semi-annual reports at the same time. This time, Gree, which has always been strong, lost to Midea. In the first half of 2020, Gree's air conditioning business revenue was 41.333 billion yuan, while Midea's air conditioning business revenue was 64.03 billion yuan. Judging from the semi-annual report, this is the first time in many years that Midea has surpassed Gree in the air conditioning business.
What is even more obvious is the decline in the overall revenue of the two companies. Midea’s revenue was 139.7 billion yuan, a year-on-year decrease of 9.47%; net profit attributable to the parent company was 13.9 billion yuan, a year-on-year decrease. 8.29%. However, Gree's revenue was only 70.6 billion yuan, and its net profit attributable to the parent company was only 6.362 billion yuan, a decline of 28.21% and 53.73% respectively. Specific to the air-conditioning business, Midea only fell by 10.37%, but Gree fell sharply by 47.89%.
Dong Mingzhu was probably very unhappy when she lost to the "thief" company that she despised.
Dong Mingzhu, who claims that her greatest pleasure is "selling air conditioners," has actually always wanted to change the fact that 70% to 80% of Gree's income comes from air conditioners.
The biggest risk of having a single main business is that if it fails in the air-conditioning business, it will be difficult for Gree to have a chance to make a comeback. Although Midea’s challenge to Gree is only a small victory , but Gree was very nervous because this was his "lifeblood." From 2018 to now, Gree air conditioner revenue has long accounted for more than 70% of total revenue. It has declined in the first half of this year. This is also because air conditioners cannot be sold due to the serious impact of the epidemic, and the proportion of other businesses has increased.
The most important thing is that the air-conditioning business is the main source of Gree's profits. Its gross profit margin has remained around 35% for a long time. In the first half of this year, it fell to 32.05%. This was also due to the poor market conditions and price reduction. Although the gross profit margins of other manufacturing businesses such as household appliances and smart equipment are relatively high, they are almost negligible due to their small proportion.
You must know that Gree Air Conditioning’s revenue was basically the same in 2018 and 2019. From a market perspective, the total industry output increased by 1.21% year-on-year in 2019, but overall sales A year-on-year decrease of 0.74%, the industry's total export volume decreased by 0.82% year-on-year, and the industry's total domestic sales decreased by 0.69% year-on-year. The entire air-conditioning industry is facing tremendous pressure. In 2019, Gree accounted for 36.83% of the retail sales of China's household air-conditioning offline market. , it is very difficult to further improve.
Overseas, Gree is not as competitive as Haier. Among the three white goods giants, Gree is the most dependent on the local market, and its overseas market contribution rate has been low for a long time. At 15%, it only reached 17% in the first half of this year, while the overseas market contribution rates of Midea and Haier are close to 50%.
Gree can indeed remain relevant for a long time in the field of air conditioners, but in addition to air conditioners, what new stories can Gree tell? This determines how long Dong Mingzhu's era can last.
At the 2018 cadre work meeting, Dong Mingzhu expressed that he would make smart equipment the "second main business" of Gree Electric. In 2013, it was just an automation equipment manufacturing department. In 2015, Intelligent Equipment Co., Ltd. was established and operated independently.
Around 2017, Gree split its original smart equipment business into three parts. The Nanshui factory mainly produces robots, and the Beiling Machinery Institute focuses on automated production lines. The old factory building located at Jinan University mainly conducts research and development of upstream technologies.
Currently, Gree claims to have key technologies in the fields of industrial robots, CNC machine tools, intelligent logistics and warehousing, intelligent detection, and automation integration. According to reports, Gree’s business not only serves its own automation transformation and upgrading, but also mainly promotes smart manufacturing upgrading and transformation solutions to other B-end companies. However, having been deeply involved in the 2C light industry field for many years does not mean that it can quickly develop in the 2B heavy industry field. This requires a long period of technical accumulation and verification. As can be seen from the revenue ratio, it can truly become the "second main business". , there is still a long way to go.
2B is not easy to do. Gree has not established a firm foothold in consumer businesses such as household appliances and mobile phones where the technology is mature. It is only in rice cookers, water purifiers, and air conditioners. Some popular products have been launched in the field of small home appliances such as purifiers, but in large appliances such as refrigerators and washing machines, there is still a big gap between them and traditional powerhouses such as Midea and Haier.
What worries Dong Mingzhu is that although Gree has always been the leader in the air-conditioning industry, market competition has become increasingly fierce. In the past, there was the transformation and upgrading of traditional manufacturing industries, and later there were Internet companies such as Xiaomi. The upstart enters the market with a high profile. Will Gree become the second "Chunlan air conditioner" in her hands? You know, this former air-conditioning overlord fell on the road of diversified expansion.
In fact, whether it is smart equipment, household appliances, or other businesses including chip business and mobile phone business, it is "big thunder but little rain". We have won a lot of patents and awards, but there is no obvious improvement in commercialization.
Under the epidemic, the more severe the trauma Gree suffered, the more it means that his physical fitness is not up to standard. The core is that Gree has not found its second growth curve. In the end, it is smart equipment. , new energy, mobile phones and chips, whether it will become the next pillar of Gree, no one knows, including Dong Mingzhu herself.
*The title picture comes from Visual China.