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Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Tech 2024-09-28 18:39:22 Source: Network

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Gree Air Conditioning: From Dominance to Challenger, The Rise of MideaAs urbanization deepens, air conditioners have become an indispensable part of modern life. In the air conditioning market, Gree has long held a dominant position with its leading technology and exceptional quality

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

As urbanization deepens, air conditioners have become an indispensable part of modern life. In the air conditioning market, Gree has long held a dominant position with its leading technology and exceptional quality. However, in recent years, Midea air conditioning has risen strongly, shaking Gree's dominance. This article will delve into the historical development trajectories of both Gree and Midea, analyze how Midea has transformed from a pursuer to an industry leader, and reveal the evolving trends in China's air conditioning market.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

I. Gree Air Conditioning's Glory: From Reform to Industry Leader

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

In the last century, China's air conditioning market was almost monopolized by foreign brands. Gree, being a small brand at the time, faced enormous challenges. However, under the leadership of Dong Mingzhu, Gree underwent internal reforms, changing its operating model. Through its robust quality and continuously expanding sales channels, it achieved rapid growth. In 2005, Gree air conditioner sales exceeded 10 million units, and the company established factories overseas, entering a glorious period.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Gree's success is inseparable from its mature development in the air conditioning market and its complete industrial chain. To meet the needs of different consumers, Gree has launched a variety of professional air conditioners. It even developed air conditioners that can cool in temperatures as high as 65 degrees Celsius, expanding its sales market significantly. At the same time, Gree continues to pursue a comfortable experience, innovating and developing distributed air distribution technology, effectively resolving the discomfort caused by direct airflow from air conditioners.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

In terms of technology, Gree has always maintained a leading position. Dong Mingzhu has confidently claimed that Gree air conditioners are the best in the world. However, everything has its own development laws. With the impact of the pandemic, Gree's traditional offline sales have been severely affected, leading to a decline in air conditioner sales. Meanwhile, Midea, with its flexible market strategies and diversified development models, has witnessed a strong rise.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

II. Midea's Legendary Rise: From Electric Fan Manufacturer to Diversified Development

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

In its early stages, Midea did not produce air conditioners but plastic bottle caps. Later, it gradually transitioned to producing automotive parts and other industrial products. In 1980, Midea launched its first electric fan, setting the stage for its growth. However, electric fans have low technical content, and Midea needed to seek new directions for development. Air conditioning became their target.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Initially, Midea lacked air conditioning production technology and relied on outsourcing. Recognizing the importance of talent, He Xiangjian, the person in charge, hired a large number of technology professionals and learned advanced technology and equipment from abroad. Midea began independent operations in specific areas, laying the foundation for its later diversified development.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

However, Midea's diversified development also drew criticism. It was considered that Midea's quality could not match companies solely focused on air conditioners. Facing public pressure, Midea underwent reforms, eliminating loss-making industries and concentrating on technological research and development. To demonstrate its commitment to reform, Midea invested 3 billion yuan in research and development in 2013, eventually achieving technological parity with Gree.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Midea uses digital construction as its foundation, constantly upgrading its group. Years of accumulation have led to numerous breakthroughs. Today, Midea is one of the Fortune 500 companies, ranking first in China's home appliance industry, and has surpassed Gree in the air conditioner market, becoming the industry leader.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

III. Midea Air Conditioning Surpasses Gree: A Comeback Amidst Market Changes

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Data shows that in the first half of 2020, Midea's revenue exceeded 64 billion yuan, while Gree's revenue was only 41.3 billion yuan. Midea surpassed Gree in sales volume. Although Dong Mingzhu still expresses confidence, there is a sense of unease among Gree's senior executives. Midea's rise was not without warning.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

As early as 2017, media reports suggested that Gree's leading position was no longer secure and that Midea had the potential to surpass it. After establishing a strong position in the air conditioner industry, Gree sought to expand into other electrical appliance domains, but it performed poorly in those areas, neglecting Midea's rise. In 2017, Midea's air conditioning revenue was comparable to Gree's, but Dong Mingzhu was not concerned. Ultimately, Midea delivered results exceeding expectations.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Professional research institutions indicate that in 2019, Midea's shipment share exceeded Gree's. Midea engaged in a price war, rapidly capturing market share, while Gree held onto its position as the leader for many years. As a result, Gree still slightly outperformed in revenue in 2019. However, since then, Gree's leading position has become precarious.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Compared to Gree, Midea embraced digital transformation earlier, while Gree relied primarily on offline sales. The sudden changes in the situation provided an opportunity for Midea to surpass Gree.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

In terms of technology, industry insiders believe Midea's air conditioning technology is not superior to Gree's. Both Gree and Midea are at the forefront in terms of product quality and industrial chain, but Midea's success lies in its more successful diversified development. Gree embraced diversification after achieving dominance in the air conditioner market, while Midea pursued diversification from the beginning, producing a range of home appliances, including microwave ovens, refrigerators, and other products, alongside its air conditioning business. This diversified layout has enabled Midea to surpass Gree in the air conditioning business.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Financial reports show that besides its air conditioner business, Gree's total revenue from green energy, home appliances, and other segments accounts for only 10%. In contrast, Midea's air conditioner business accounts for half of its total revenue, and consumer appliances are also a major source of revenue. From the current situation, Gree's product structure is relatively simple.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

Conclusion: Future Competition Will Be More Intense

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

While Midea is ahead of Gree in terms of data, this does not imply that Gree is not making money. Its net profit margin remains the leading one among its peers. The air conditioning industry is a traditional manufacturing industry where success is not determined by momentary achievements. Gree still has the potential to surpass Midea, and Midea will continue to pursue diversified development while persisting in technology research and development. The future competition will be more intense, and only the company that achieves a real technological breakthrough will be able to lead in terms of revenue.

Gree Air Conditioning: From Dominance to Challenger, The Rise of Midea

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