The two major domestic air-conditioning companies Midea and Gree have both announced their performance. The performance shows that Gree has clearly stabilized, but it still lags behind Midea. It seems that it is no longer possible to surpass the United States. Only Dong Mingzhu’s live broadcast from time to time can still bring goods. It just attracts the eye.
Midea’s announced results are far more eye-catching than Gree. Since the third quarter, its net profit has increased by 32% year-on-year to 8.09 billion yuan, while Gree’s net profit has fallen 12.32% year-on-year to 7.337 billion yuan. Gree’s net profit once again lags behind Midea.
The performance of the first three quarters of this year showed a huge gap between the two. Midea’s revenue in the first three quarters was 216.76 billion yuan, and its net profit was 22.018 billion yuan; Gree’s revenue in the same period was 125.889 billion yuan, and its net profit was 13.699 billion yuan.
The primary reason for Gree’s performance decline was its failure in the air-conditioning market. Since 1994, it has been the leader of the Chinese air-conditioning market. However, the data in the first half of this year shows that it has fallen behind Midea. This is the first time it has been in the air-conditioning market in so many years. The market loses.
Faced with the failure of the air-conditioning market, Gree has radically reformed offline retail channels this year. Gree Electric’s chairman Dong Mingzhu personally went to the battle to carry out live broadcast of goods. Although the sales of live broadcasts of goods are astonishing billions, but in the domestic air-conditioning market , Online and offline retail channels are the focus. It’s live broadcast to bring goods damages the interests of its dominant offline retail channels, but it lags behind Midea, Oaks and other companies in e-commerce channels, which ultimately leads to its further lagging in the air-conditioning market .
In contrast to Gree, Midea recognized the importance of the online air-conditioning market as early as last year, and was the first to join the price war in the online air-conditioning market. Then it quickly defeated Aux in the online air-conditioning market and took the first place in the online air-conditioning market.
Midea has achieved a leading advantage in the online air-conditioning market, but has not ignored the offline air-conditioning market, ensuring the interests of offline channel dealers. When the media interviewed retailers, they even found that some retailers had switched from Gree to Midea. Midea, which held its position in both e-commerce and offline retail channels, quickly defeated Gree.
Midea's daring to participate in the air-conditioning price war also lies in its success in business diversification. Non-air-conditioning business accounts for more than 50% of its revenue. The profit provided by non-air-conditioning business supports it to initiate a price war in the air-conditioning market; and Gree, which has few achievements in business diversification, lacks such confidence, causing it to shrink back in the air-conditioning price war.
At present, Gree has realized the importance of business diversification. In the past two years, it has vigorously developed ice washing, small household appliances and other businesses. In order to develop the refrigerator business, it even acquired Jinghong Refrigerator. It has always emphasized the need to rely on independent rolling development to grow its business. However, a stable market pattern has been formed in these industries. How easy is it for Gree as a latecomer to break through?
Baiming Technology believes that Gree’s main source of income is the air-conditioning business. No matter how urgent it is to diversify its business, it must first stabilize its air-conditioning business. If its share in the air-conditioning market further declines, everything else will become empty, but it is left to Dong Mingzhu’s time is running out. Dong Mingzhu probably doesn’t have this patience. Gree may have to rely on Dong Mingzhu’s successor to stand up!
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