Gree Electric’s revenue returned to 200 billion yuan last year, and its planned performance will double in the next five years.

Nancai Finance All-Media Reporter Feng Yuyi reports from Zhuhai.

On the evening of January 28th, Dong Mingzhu, wearing a pink embroidered silver-gray dress, appeared at the 10,000-person conference of "Gree 2024 Global Dream Festival", nearly six years after the Gree 2018 Dream Festival.

Dong Mingzhu, Chairman and President of Gree Electric, said at the meeting that night that 2023 was the best year for Gree since its establishment 33 years ago. It is estimated that the operating income will be 205 billion-210 billion yuan, the net profit will be 27 billion-29.3 billion yuan, the company’s tax contribution will be about 17.6 billion yuan, and the annual dividend in the past five years will average over 14.073 billion yuan. She mentioned that she hoped that Gree Electric’s tax revenue to the country would exceed 20 billion yuan in 2024 and strive to double its performance in the next five years. This is also the mark that Gree Electric’s revenue has returned to 200 billion yuan since 2019.

Behind the great increase in Gree’s performance

Looking back on 2023, the global air-conditioning sales market is quite positive. According to the PSI monitoring data of AVC, in 2023, the production of household air conditioners was 163.282 million units, up 12.3% year-on-year; Sales reached 156.946 million units, a year-on-year increase of 10.4%. Among them, 90.541 million units were shipped domestically, up 12.9% year-on-year; Exports reached 66.405 million units, a year-on-year increase of 7.3%.

The relevant person in charge of Gree Electric Marketing Department said in an interview with Southern Finance and Economics all-media reporter that with the recovery of the domestic consumer market in 2023, consumers’ demand for durable consumer goods such as air conditioners was released, and the air-conditioning production capacity was greatly expanded, superimposed with the ever-high temperature weather, and the global temperature rise made many European countries and regions that did not use air conditioners start to increase their demand, thus achieving the unexpected growth of the air-conditioning market.

According to industry online data, the cumulative shipments of Gree Electric in the first 11 months of 2023 increased by 1.5% year-on-year, of which domestic sales increased by 4% year-on-year, while exports decreased by 4.8% year-on-year. The growth rate was slightly weaker than that of the industry, and the market share of domestic and foreign exports declined slightly by 2.2pct and 1.8pct.

Compared with the full expansion of the domestic market, the above-mentioned person in charge said that for overseas markets, Gree has started to implement different overseas market development models, including self-owned brand model and OEM model, in addition to constantly seeking cooperation with world-renowned enterprises and establishing cooperative partnerships to realize resource sharing and complementarity, and at the same time, it has found distributors and partners in various places to form a differentiated development strategy.

According to the annual reports of Gree in 2020, 2021 and 2022, the total operating income in the three years was 170.497 billion yuan, 189.654 billion yuan and 190.151 billion yuan respectively. The outside world has been discussing that the revenue of 200 billion yuan is the "entry ticket" of the world’s top 500 companies in the past two years. It is worth looking forward to whether Gree can break through the top 500 companies with its performance in 2023.

Dong Mingzhu had previously responded by saying that she didn’t care about falling out of the world’s top 500. She said at the party on the 28th, "I still reiterate that Gree Electric doesn’t care about the stock price because we don’t live on it."

Industry insiders predict that in 2023, with the blessing of many favorable factors such as the right time, the right place and the right people, the domestic and foreign markets of China air conditioners will perform remarkably. However, in the current situation that the domestic air-conditioning demand is narrowing, and the overseas export market is always faced with uncertainties such as geopolitics and exchange rate fluctuations, it will be difficult to replicate the higher shipment scale in 2024.

The road to transformation is full of thorns

With air conditioning as the core category, air conditioning business in Gree Electric accounts for about 70% of the total revenue in the first three quarters of 2023. In order to reverse the single development model that relies heavily on air-conditioning business, Gree has been emphasizing diversified development in recent years, trying to show the world a multi-faceted and three-dimensional enterprise structure and competitive strength.

All-media reporters of Southern Finance and Economics combed Gree Electric’s financial reports in recent years and found that the diversified layout of Gree is not comprehensive. The logic is basically to extend the industrial chain through the upstream and downstream layout of household appliances, from smart equipment and precision molds in the vertical direction of the industrial chain to refrigerators, washing machines, water heaters and drinking fountains in the horizontal direction of products, and then to new energy vehicles, mobile phones and prefabricated vegetables, and so on, stepping on the tuyere of almost every industry.

Taking intelligent equipment as an example, intelligent equipment has always been a main line of Gree’s diversified business development. Tracing back to this main line so far, Gree has made great strides.

In 2013, Dong Mingzhu personally established the Automation Office, Automation Equipment Manufacturing Department, Automation Technology Research Institute and Intelligent Equipment Technology Research Institute, which defined the development direction of "independent innovation and independent creation" and opened Gree’s entry into the field of intelligent equipment.

In 2015, Gree Intelligent Equipment Manufacturing Division independently established Gree Intelligent Equipment Co., Ltd., and proposed industrial robots and high-end CNC machine tools as the company’s two major research fields in the future. The industrial robots independently developed by Gree also made their debut. At the same time, Midea and Yaskawa Electric set up a joint venture robot company, took a stake in KUKA for the first time, and officially announced their entry into the robot industry.

At the end of 2022, Gree established Zhuhai Gree Prefabricated Vegetable Equipment Technology Development Co., Ltd., and the Guangdong Prefabricated Vegetable Equipment Industry Development Federation, which was led by Gree in the following year, was officially unveiled, and a prefabricated vegetable smart factory was built to March into prefabricated vegetable equipment in an all-round way.

Yang Ce of china galaxy Securities Co., Ltd. believes that Gree Electric is better than sales in revenue growth, which is expected to benefit from the improvement of income diversification level after the company’s product structure optimization and business transformation.

However, judging from the revenue structure in the first half of 2023, Gree’s industrial products, smart equipment and green energy projects accounted for 5.53%, 0.25% and 2.94% of the revenue respectively. The "second growth curve" created by Gree still has a long way to go and faces many challenges.

Now, it has been four years since Gree put forward the reform of "new retail" mode, and Gree has continuously laid out new retail channels to reduce operating costs. According to the latest public information, starting this year, Gree will fully implement a new retail model in Shandong, Guangdong and other provinces, in which dealers directly sign contracts with the company’s Zhuhai headquarters and place orders from the cloud platform, so as to shorten the sales chain.

Regarding the marketing reform, Dong Mingzhu had previously responded to the media, saying, "The first thing to reform is to change your own life. Gree’s past marketing model was created by me, and it hasn’t changed much for more than 20 years. But the background of today’s era is completely different from that of that year. The arrival of the Internet era is indeed a huge challenge for Gree. "