After the policy of promoting household appliances consumption such as home appliances to the countryside, trade-in replacement, etc. has been withdrawn, what is the survival status of the home appliance industry?
On March 9th, Dong Mingzhu, deputy to the National People's Congress and president of Gree Electric Appliances, said in an exclusive interview with this reporter that “The winter of household appliances industry did not appear, but everyone exaggerated this statement.
After the exit of the enterprise, the enterprise feels no competitiveness, even a loss. The fundamental reason is that the enterprise does not really grasp the core technology. The brand of this enterprise is also a brand that survives policy and is not a brand that consumers respect."
The annual performance report of Gree Electric (000651.SZ) announced on the previous day showed that Gree Electric Appliances achieved operating revenue of 83.595 billion yuan in 2011, a year-on-year increase of 37.48%; net profit was 5.245 billion yuan, an increase of 22.67% over the same period last year.
As the "star" representatives of the two associations, Dong Mingzhu was dubbed "a strong female entrepreneur" by Zhang Jindong, chairman of Suning Appliance. In this regard, Dong Mingzhu smiled and responded by saying, “said that he was also overbearing. In our cooperation, we still need mutual understanding.â€
Gree inventory is normal
"21st Century": Recalling Gree Electric's 2011 results, the first quarter increased by 68% year-on-year, the growth in the fourth quarter was only 18%, how to treat this change?
Dong Mingzhu: This change is related to factors such as policy changes and shipping arrangements. Actually, we should look at the overall business situation. We achieved more than 30% year-on-year growth in the year. In the third and fourth quarters of 2011, due to policy and industry reasons, the performance of many companies across the industry declined, but we achieved about 20 % year-on-year growth.
"21st Century": We have noticed that there are more than 20 million inventory data in the air-conditioning industry. Do you not know if this data is credible? What is Gree's situation?
Dong Mingzhu: I have also seen similar data, but in fact such data is difficult to count. For Gree, when we had the lowest inventory, there were only 200,000 units. 200,000 units of inventory means that we are actually out of stock in the channel. For the national market, we have 1 million stocks is the most appropriate.
I can tell you that our current stock situation is in a reasonable state. However, the existence of high inventory does affect the development of the company. Now many material prices are declining. This poses a problem of how the past products will be handled during the material price decline.
"21st Century": In order to digest inventory, many companies in the industry are also working together with terminal retailers to cut prices and promotions, do not know whether Gree will be involved in the price war?
Dong Mingzhu: The price war shouted year after year. In fact, manufacturers engage in price wars to hope that consumers will buy their own products. However, consumers are now smart. They will not only choose brands that are cheaper for three to five hundred yuan, but follow-up maintenance is very troublesome. The energy efficiency of air-conditioning products today is very different. Many consumers have realized that purchasing high-quality products will save more than three or five hundred yuan a year.
For so many years, Gree did not conduct a price war. However, we are also striving for product prices to satisfy consumers. The only means we have adopted is to rely on scale to reduce single-unit profits while overall profits can grow.
How to achieve 200 billion?
"21st Century": Gree put forward a goal of 200 billion. How is this goal set?
Dong Mingzhu: Gree’s data for 2011 was close to 84 billion yuan, an increase of more than 30% year-on-year. With this growth rate, Gree exceeded 100 billion in 2012 without suspense. In the next three years, which is the end of the “Twelfth Five-Year Plan†period, Gree will achieve its sales target of RMB 200 billion. This promise is a little earlier, but it must also be done for us. At the end of the “Twelfth Five-Year Plan†period, Gree will strive to achieve a profit of 10 billion yuan and a tax of 10 billion yuan, while the estimated goal of 200 billion yuan is no problem.
"21st Century": How Gree Can Achieve 200 Billion Yuan Through Air-Conditioned Single Products?
Dong Mingzhu: In 2006, the gap between us and the second place was 1.3 billion yuan. Now the gap between us is 25 billion yuan. These increments are provided by consumers. Our share in the home air-conditioning market is already 37%, and a new increase of more than 100 billion yuan is also the final say for consumers.
Of course, this space needs us to find it. Our principle is still to be professional, to fight our past and create new Gree. Gree is still a lot worse in commercial air-conditioning, in the next three years, to be a three-five billion yuan is no problem. In addition, orders for our centrifuge products are no longer available due to insufficient capacity. New orders must be available at least until January 2013.
"21st Century": There are comments that the air-conditioning industry has excess production capacity, the entire industry will not touch the ceiling?
Dong Mingzhu: For Gree, although we occupy the market's number one share, we do not feel excess capacity. Our current capacity of 40 million units a year is only able to meet our own needs. We are still expanding our production capacity in Hubei and Hebei. In addition, we wanted to enter the field of commercial air conditioning very early, but the most difficult to break through is its technology. Others will not sell, so the only way is to rely on ourselves to research and development.
International chess game
"21st Century": Many domestic companies go overseas to expand, using the merger and acquisition method to achieve, Gree has no plans in this regard?
Dong Mingzhu: Every company has a strategy for each company, so it cannot be said that I am the best for mergers. We also see TCL's merger and acquisition of Thomson Color TV business, but we haven't seen many success stories yet. Now that internationalization needs to change a concept, internationalization is to change human life, not to go out and be strong.
"21st Century": What are the challenges facing Gree Electric's internationalization?
Dong Mingzhu: There are still many challenges. One example we have is typical, that is, the Brazilian market. At first this market made us very painful. Because we think Gree is a brand that the locals like very much, so it eventually persisted.
This includes problems such as management issues, national conditions, related legal knowledge, management of expatriates (Brazilian corruption), and so on. Now that Brazil is very good, we have encountered many unpredictable and unimaginable problems in internationalization, but in the end we have to overcome them one by one.
On March 9th, Dong Mingzhu, deputy to the National People's Congress and president of Gree Electric Appliances, said in an exclusive interview with this reporter that “The winter of household appliances industry did not appear, but everyone exaggerated this statement.
After the exit of the enterprise, the enterprise feels no competitiveness, even a loss. The fundamental reason is that the enterprise does not really grasp the core technology. The brand of this enterprise is also a brand that survives policy and is not a brand that consumers respect."
The annual performance report of Gree Electric (000651.SZ) announced on the previous day showed that Gree Electric Appliances achieved operating revenue of 83.595 billion yuan in 2011, a year-on-year increase of 37.48%; net profit was 5.245 billion yuan, an increase of 22.67% over the same period last year.
As the "star" representatives of the two associations, Dong Mingzhu was dubbed "a strong female entrepreneur" by Zhang Jindong, chairman of Suning Appliance. In this regard, Dong Mingzhu smiled and responded by saying, “said that he was also overbearing. In our cooperation, we still need mutual understanding.â€
Gree inventory is normal
"21st Century": Recalling Gree Electric's 2011 results, the first quarter increased by 68% year-on-year, the growth in the fourth quarter was only 18%, how to treat this change?
Dong Mingzhu: This change is related to factors such as policy changes and shipping arrangements. Actually, we should look at the overall business situation. We achieved more than 30% year-on-year growth in the year. In the third and fourth quarters of 2011, due to policy and industry reasons, the performance of many companies across the industry declined, but we achieved about 20 % year-on-year growth.
"21st Century": We have noticed that there are more than 20 million inventory data in the air-conditioning industry. Do you not know if this data is credible? What is Gree's situation?
Dong Mingzhu: I have also seen similar data, but in fact such data is difficult to count. For Gree, when we had the lowest inventory, there were only 200,000 units. 200,000 units of inventory means that we are actually out of stock in the channel. For the national market, we have 1 million stocks is the most appropriate.
I can tell you that our current stock situation is in a reasonable state. However, the existence of high inventory does affect the development of the company. Now many material prices are declining. This poses a problem of how the past products will be handled during the material price decline.
"21st Century": In order to digest inventory, many companies in the industry are also working together with terminal retailers to cut prices and promotions, do not know whether Gree will be involved in the price war?
Dong Mingzhu: The price war shouted year after year. In fact, manufacturers engage in price wars to hope that consumers will buy their own products. However, consumers are now smart. They will not only choose brands that are cheaper for three to five hundred yuan, but follow-up maintenance is very troublesome. The energy efficiency of air-conditioning products today is very different. Many consumers have realized that purchasing high-quality products will save more than three or five hundred yuan a year.
For so many years, Gree did not conduct a price war. However, we are also striving for product prices to satisfy consumers. The only means we have adopted is to rely on scale to reduce single-unit profits while overall profits can grow.
How to achieve 200 billion?
"21st Century": Gree put forward a goal of 200 billion. How is this goal set?
Dong Mingzhu: Gree’s data for 2011 was close to 84 billion yuan, an increase of more than 30% year-on-year. With this growth rate, Gree exceeded 100 billion in 2012 without suspense. In the next three years, which is the end of the “Twelfth Five-Year Plan†period, Gree will achieve its sales target of RMB 200 billion. This promise is a little earlier, but it must also be done for us. At the end of the “Twelfth Five-Year Plan†period, Gree will strive to achieve a profit of 10 billion yuan and a tax of 10 billion yuan, while the estimated goal of 200 billion yuan is no problem.
"21st Century": How Gree Can Achieve 200 Billion Yuan Through Air-Conditioned Single Products?
Dong Mingzhu: In 2006, the gap between us and the second place was 1.3 billion yuan. Now the gap between us is 25 billion yuan. These increments are provided by consumers. Our share in the home air-conditioning market is already 37%, and a new increase of more than 100 billion yuan is also the final say for consumers.
Of course, this space needs us to find it. Our principle is still to be professional, to fight our past and create new Gree. Gree is still a lot worse in commercial air-conditioning, in the next three years, to be a three-five billion yuan is no problem. In addition, orders for our centrifuge products are no longer available due to insufficient capacity. New orders must be available at least until January 2013.
"21st Century": There are comments that the air-conditioning industry has excess production capacity, the entire industry will not touch the ceiling?
Dong Mingzhu: For Gree, although we occupy the market's number one share, we do not feel excess capacity. Our current capacity of 40 million units a year is only able to meet our own needs. We are still expanding our production capacity in Hubei and Hebei. In addition, we wanted to enter the field of commercial air conditioning very early, but the most difficult to break through is its technology. Others will not sell, so the only way is to rely on ourselves to research and development.
International chess game
"21st Century": Many domestic companies go overseas to expand, using the merger and acquisition method to achieve, Gree has no plans in this regard?
Dong Mingzhu: Every company has a strategy for each company, so it cannot be said that I am the best for mergers. We also see TCL's merger and acquisition of Thomson Color TV business, but we haven't seen many success stories yet. Now that internationalization needs to change a concept, internationalization is to change human life, not to go out and be strong.
"21st Century": What are the challenges facing Gree Electric's internationalization?
Dong Mingzhu: There are still many challenges. One example we have is typical, that is, the Brazilian market. At first this market made us very painful. Because we think Gree is a brand that the locals like very much, so it eventually persisted.
This includes problems such as management issues, national conditions, related legal knowledge, management of expatriates (Brazilian corruption), and so on. Now that Brazil is very good, we have encountered many unpredictable and unimaginable problems in internationalization, but in the end we have to overcome them one by one.
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