The three major domestic home appliance companies have all announced their 2020 performance. Among them, the home appliance duo Midea and Gree’s air-conditioning dominance is particularly concerned. The performance shows that Midea’s air-conditioning business revenue has surpassed Gree. This is Gree’s first annual air-conditioning revenue. The aspect was lost to Midea.
Midea and Gree are ebb and flow
Midea’s published results show that in 2020, revenue will be 285.71 billion yuan, a year-on-year increase of 2.27%; net profit attributable to the parent will increase 12.44% year-on-year to 27.223 billion yuan. Under the influence of the epidemic, Midea's revenue and net profit have both increased, proving its resilience under adversity.
Compared with Midea, Gree is too much inferior. Gree’s published results showed that revenue fell by 1.497% year-on-year to 170.497 billion yuan, and net profit attributable to the parent fell by 10.21% year-on-year. Both revenue and net profit declined, causing the gap between it and the United States to widen. .
Among them, the air-conditioning business that has attracted much attention. In 2020, Midea’s HVAC business achieved 12.215 billion yuan, an increase of 1.34% year-on-year; Gree’s air-conditioning product revenue was approximately 117.882 billion yuan, a year-on-year decrease of 14.99%. Midea surpassed Gree for the first time in terms of air-conditioning business revenue.
The decline in Gree's air-conditioning business revenue is related to the overall domestic market environment. Due to the impact of the epidemic, the sales of air-conditioners in the Chinese market in 2020 will decline by 6.1% year-on-year. Gree, whose main business is air-conditioning, will naturally be hit hard, but the above data can It can be seen that Gree's air-conditioning business revenue has fallen more than China's overall air-conditioning market, which makes people worry about Gree, why this is the case?
Midea’s business remained stable because its overseas revenue accounted for a relatively high proportion. Data in 2018 showed that among the three major home appliance companies, Haier had the highest overseas revenue share, followed by Midea, with their overseas revenue accounting for 42. %, 40%, and Gree’s overseas revenue accounted for only 17%.
According to data released by the customs in 2020, China’s exports are 17.93 trillion yuan, an increase of 4%, making it the only country in the world that has achieved export growth. China’s export growth is due to the fact that China is the only country in the world that has successfully controlled the epidemic. The manufacturing industry has returned to normal in a timely manner, while other countries’ manufacturing industries have been hit. Demand for Chinese manufacturing has increased, and Midea’s overseas revenue accounted for a relatively high proportion of its performance. Important reason.
Midea's future development is more stable than Gree
Compared to Midea and Gree, the difference between the two companies is mainly
in business diversification. Midea has diversified its business early. At present, consumer appliances and HVAC have become Midea’s two pillar businesses. In 2020, these two businesses will account for 42.4% and 39.9% of its revenue respectively. Midea is in washing machines. , Refrigerators, small household appliances and other industries are at the forefront of the industry.Gree has always focused on the air-conditioning business. It has only realized the importance of business diversification in recent years, but from the performance in 2020, it can be seen that its business diversification can hardly be successful. The performance in 2020 shows that the air-conditioning business still accounts for 69% of Gree’s revenue; the household appliances and smart equipment it is trying to develop have fallen sharply, down 18.91% and 63.06% respectively year-on-year, accounting for the total revenue. The proportions are only 2.7% and 0.5% respectively.
Gree’s over-reliance on the air-conditioning business caused it to suffer as early as the air-conditioning price war launched in 2014. In 2014, due to high air-conditioning inventory, Gree launched its first air-conditioning price war since its establishment. As a result, Gree’s revenue plummeted by 28.17%; net profit fell by 11.46% year-on-year.
Midea relies on the support of the consumer electronics business, and also fights back Gree with price wars in the air-conditioning market. As a result, Midea's revenue fell by only 2.28% in 2015, but its net profit increased by 20.99% year-on-year. It was that price war that allowed Gree to realize the importance of business diversification and began to promote business diversification.
However, Gree is obviously too late to promote business diversification. At that time, various industries in China have formed a stable industry pattern. At this time, if Gree wants to quickly open up the situation, it may promote mergers and acquisitions, but it insists on independent development. Midea, which has succeeded in business diversification, has instead adopted an M&A model. In 2018, Midea acquired Little Swan, the second largest washing machine company in China. Previously, Midea was only ranked fifth and Little Swan ranked second in the domestic washing machine market. After the successful acquisition of Little Swan, Midea has a 25% market share in the domestic washing machine market, second only to Haier's 40%.
The domestic air-conditioning market has already reached its ceiling. The growth of the air-conditioning market sales depends on the weather. In the case of extremely hot weather, air-conditioning sales can increase substantially, while the air-conditioning sales of Tiangong will stagnate if it is not beautiful. Gree, which is highly dependent on the air-conditioning business, can only follow the ups and downs of the air-conditioning market; Midea, which has succeeded in business diversification, has more room for change. Boming Technology believes that Midea is obviously more promising.