There is no time when the outside world pays more attention to Gree's successor issue than it is now!
In mid-2020, the Secretary of the Board Wang Jingdong's resignation once triggered discussions on Gree's successor; on February 21, CEO Huang Hui resigned and once again brought Gree's successor issue to the public.
Gree reacted surprisingly to the controversy caused by the resignation of the two executives and their departure. When Wang Jingdong’s "naked resignation", Dong Mingzhu, chairman and president of Gree Electric (000651.SZ), responded, "It turned out that it was not his successor." When Huang Hui left this time, an "informed person" once again said, "He Never been a successor."
Compared with Haier, which was handed over to a team of professional managers for management early, and advocated that everyone is CEO, Gree seems to be centralized in Dong Mingzhu. In recent years, Miss Dong, who has been strongly active in front of the public, has become a well-deserved spokesperson for Gree.
Dong Mingzhu, who was born in 1954, is already 67 years old. Such an age in a state-owned enterprise means retirement. For Gree, who has completed the mixed reform, such an age is not a problem, but it is indeed a problem.
Gree Electric, established in 1991, has entered its first year. For it, which has challenges both inside and outside, it is destined to be difficult. Offline channels, "manufacturing" labels and even Dong Mingzhu personally, which once brought light to Gree, are now becoming its burden.
Dong Mingzhu is slow
The year 2020 that has just passed should be a fleeting disadvantage for Gree.
In the face of the epidemic, Gree's decline is obvious. In the first half of 2020, the revenue of air-conditioning is surpassed by the United States for the first time. This is unacceptable for Gree, which has dominated the list for many years.
The financial report shows that Gree Electric’s air-conditioning revenue in the first half of the year was 41.333 billion yuan, accounting for 59.48%, a decrease of 47.89% compared to the same period last year; Midea’s air-conditioning business revenue in the first half of the year was 64.03 billion yuan, a year-on-year decrease of 10.37%, accounting for 46%.
In the home appliance industry, users, channels, and brands can be described as the three elements. China's home appliance industry has always been channel king. The birth and development of channel giants such as Suning, Gome, and JD depend on this. "Good air-conditioning, made by Gree" Gree, while emphasizing its own technology and product strength, its strong channels have also become its magic weapon.
Dong Mingzhu herself is a sales background. In 1992, when Dong Mingzhu joined Gree for two years, her sales accounted for one-eighth of the company, and the proportion rose to one-sixth the following year. Dong Mingzhu's background has injected sales genes into Gree Electric.
In the past 30 years, the structure of China's air-conditioning industry has undergone three adjustments. Chunlan and others have fallen behind. Gree and Midea have come to the fore and have faintly formed a situation where Gree dominates. In the previous adjustments, price wars and active market expansion were the main factors of competition. Gree's ability to win from a large number of brands also relied on its own strong channel sales system.
The secret of Gree's channel lies in supporting local sales companies to form a regional strength. In 1997, Gree established the "Hubei Gree Air Conditioning Sales Company" with local agents to unify the sales and service network of Hubei Province, and then set up joint sales companies in distributors across the country.
Since then, Gree has strengthened its binding with the sales company. In 2001, Gree began to increase its shareholding in the sales company. In 2007, Gree Electric introduced the sales shareholding.
Home appliances, unlike other retail such as daily chemical products, clothing, mobile phones, etc., offline play not only sales, but also service and installation roles, which makes Gree's channel system tied to local sales companies highly competitive. It can be said that The current 30,000 specialty stores have contributed to Gree's development and growth.
It's just that things change easily. Advantages in business may not be permanent, and even at some point, advantages will evolve into disadvantages due to changes in time. With the advent of the Internet era and the rise of online channels, Gree's offline channel advantages have been reduced, and even become a constraint to its transformation.
According to data from Aowei Cloud Network, in 2019, the online retail sales of home appliances accounted for 35.5% of the total retail scale of home appliances; the arrival of the epidemic in 2020 accelerated the online transformation of home appliances: as of July of that year, air conditioners, refrigerators, and washing machines were sold online. Retail sales accounted for 53%, 63%, and 64%, respectively, and retail sales accounted for 45%, 45%, and 46%.
Among the three major white goods, although air conditioners are more dependent on offline due to their installation attributes, and the proportion of online is low, the general trend of online is irreversible.
| Wind, Gree’s 10-year year-on-year change in air-conditioning revenue
Although overall sales surpass Gree, Midea disclosed in its semi-annual report that in the first half of 2020, the market share of household air conditioners in China's domestic offline channels will still rank second. It can be seen that Gree is pulling down online channels, and Midea’s strength is online channels. Data shows that Midea has accelerated its channel changes in recent years, and its online sales accounted for 35% in 2019.
Gree also recognizes its own channel dilemma. In May last year, Dong Mingzhu said frankly at Gree’s performance briefing: “Gree is really slow in channel reform.” Therefore, Dong Mingzhu, who once said that live broadcasting was a flicker, joined the live broadcasting army and took this as a breakthrough. Speed up Gree's channel reform.
On June 1, 2020, Dong Mingzhu began to broadcast live on six platforms including Douyin, Kuaishou, JD, and 30,000 offline stores. In July, Gree opened its first national live broadcast event in Ganzhou, Jiangxi, and then held it in Luoyang, Guilin, Dezhou, Linyi, Macau, Nanjing, Zhuhai and other places. Since then, there have been 13 live broadcasts, with a total sales of 47.6 billion yuan. The single-game sales of 618 even exceeded 10 billion on that day. Miss Dong became one of the most active entrepreneurs in the live broadcast.
At the end of last year, Gree Electric’s official account released a piece of news, counting the 14 major events of Gree in 2020, among which “tour live broadcast, accelerating the upgrade of marketing services”.
Redefine offline
Each reform will touch the original interest groups, and so will Gree's late channel reform. The significance of live broadcast for Gree's channel transformation lies in the combination of online and offline, and further bringing sales leadership and users into Gree's hands.
Consumers mainly watch the live broadcast and scan the QR code to enter the "Gree Dong Mingzhu Store" on Tmall, JD.com, and WeChat to place an order. The air conditioner price is 20-10% off. After the order is placed, Gree will distribute the goods to the nearest store for delivery and installation. While Dong Mingzhu’s live broadcast, Gree encourages 30,000 specialty stores across the country to live broadcast simultaneously to divert shoppers to the “Gree Dong Mingzhu Store”.
At the Gree 2019 Annual Shareholders' Meeting held in June last year, Dong Mingzhu mentioned the channel transformation and said that in the future, Gree will turn the offline into an experience store, and make the offline a place for leisure, communication and experience. "Our offline 30,000 stores can become 30,000 warehouses, ushering in an era of new retail. New retail is unstoppable, and no one can stop it."
As early as 2016, Jack Ma proposed the "new retail". Lei Jun, who once bet with Dong Mingzhu, also mentioned in 2016 that Xiaomi is exploring new retail, and since then began large-scale online and offline new retail at the same price. Retail exploration. It can be said that Gree's "new retail era" is not very new, but it is indeed a new proposition for Gree.
Compared with Internet companies such as Ali and Xiaomi that have no offline foundation, Gree's new retail is obviously difficult. On the one hand, there is offline resistance. For Gree, which has 30,000 offline stores, channel changes must take into account the interests of offline channels. Therefore, Dong Mingzhu has repeatedly emphasized that for offline stores, “live broadcast is not an impact. It's an auxiliary, it's a marketing method."
But in fact, this kind of change will inevitably have an impact on offline channels. It turned out that Gree’s local distributors operated independently and were responsible for revenue, marketing, installation, etc. In the future, Gree’s offline stores will weaken their business attributes and strengthen their service attributes.
At present, the greater role of the "Gree Dong Mingzhu Store" is to divert the flow to the online, and the online to offline feedback is minimal. A store clerk said in an interview with the media that online users are greatly affected by price, and Gree, which is positioned at mid-to-high end, is not price competitive, and it is "difficult to sell live"...
In the longer term, offline concerns go far beyond this. When offline functions are simplified to warehouses and service outlets, how to maintain profitability in stores and whether Gree’s attractiveness to these dealers can be maintained becomes more important issues. .
Become a user company
For Gree, this channel change itself is positive.
The Bank of China Securities Research Report shows that after the channel reform, the gap in online sales share between Gree and Midea has narrowed. The rapid development of online channels has not only brought about changes in the form of channels, but also a series of changes in subsequent product prices, research and development, and user operations. Gree will improve its competitiveness in terms of price, research and development, and user operations while carrying out new retail reforms.
A consensus in the retail industry is that the more sales levels, the more severe the price increase, the higher the terminal sales price, and the compression of brand profits. The low prices, product development and user operations of Xiaomi and other Internet manufacturers in the mobile phone, home appliances and other industries are precisely related to them. Naturally related to online channels.
With the advancement of new retail, Gree has further flattened its channels, releasing a certain amount of room for price adjustments. The Bank of China Securities report shows that since the channel reform, the price difference between Gree and Midea's online retail has narrowed from around 25% in 2019 to around 15%.
Gree’s previous diversified channel system has supported dealers, compressed its own profit margins, and distanced itself from users. The deeper meaning of Gree’s new retail reform is to strengthen Gree’s connection with users and enhance users. Operational capability.
Dong Mingzhu once interpreted Gree’s “new retail” in this way: the combination of offline stores and online allows users to become life-long customers. Once you go to the store, you may not go to the store for the next purchase. You can place an order even at two or three o’clock at night. Consumers are more convenient.
In recent years, Gree has been emphasizing that it is a manufacturing company. Dong Mingzhu also bluntly said that he is an industrialist, not a businessman. In the process of China's transformation from a manufacturing power to a manufacturing power, her ideals and Gree's "Made in China" label are both worthy of respect. As a result, Gree has entered the equipment, medical equipment and other industries.
But Gree and Dong Mingzhu need to be aware that the times have changed. This is no longer an era in which you can reap the rewards by immersing yourself in hard work, but more importantly, looking up and observing your surroundings and adapting to the environment.
While Gree is strengthening its own label manufacturing, the manufacturing industry has begun to be servicing and customizing. Selling a product is no longer the only purpose. The purpose is to serve a user well and serve it for a long time.
At the moment when consumer demand is changing rapidly, and is actively or passively affecting enterprise R&D, production, and operation, Gree needs to become a user company in addition to a manufacturing company.
In the original channel system, Gree’s products and services have to go through a multi-level sales system to reach users. Although users have knowledge of Gree’s brand, they are not closely connected to Gree.
Some home appliance companies solve this problem with product intelligence and service. For example, users are required to download APPs during appliance installation and provide users with e-commerce and social services. Gree is also slow in terminal digitization and process digitization. .
On the one hand, it is product digitization. Although Gree is currently exploring smart homes while exploring multiple categories of home appliances, the results are slow; on the other hand, due to the influence of offline channels, Gree also has shortcomings in terminal store digitization and logistics digitization.
Essence Securities emphasized in the research report: "Currently, Gree's digital system (information support system, ERP system) is still incomplete and needs to be improved and optimized." "The logistics system corresponding to the new retail is still under construction."
Conclusion
There is an old saying that "the good wanderer drowns, the good rider falls, and each uses his own good, but he does evil for himself." In the business world, there are countless cases of this kind. One of the reasons why Nokia, which is too hard to break can not be broken, is ultimately behind the times because of its strong hardware and neglect of software development.
Gree is also currently facing such a dilemma. The air-conditioning dominates while other categories are not developing well. The offline channel is strong and the new retail transformation is lagging behind. The user is ignored because of the enhanced manufacturing label. The successor is dim because of Dong Mingzhu's dazzling brilliance...
Now it is time for Gree to have to make various transformations and various repairs: the rapid development of air conditioners benefiting from real estate has now entered the era of stock, and even began to shrink; channel changes are imminent, and the relationship between enterprises and users has also changed. Ten years ago, Dong Mingzhu could say "I'm just a seller of air conditioners." Ten years later, "selling" "air conditioners" is no longer enough.
Sometimes a company is defeated, not because of itself, but because of the times.