Is it that Ms. Dong is unable to resolve Gree’s dilemma, or does she simply not want to resolve it?

For Gree shareholders, 2020 was a waste of time. On December 9, Gree's stock fell 4.65%, closing at only 62.61 yuan. This also means that after a year of hard work, Gree has finally brought its stock back to the same period in 2019.

In fact, it is not just Gree shareholders who have worked for nothing. Dong Mingzhu and her Gree have also worked for nothing this year.

Gree's fragile ability to withstand impact

Gree's stock price is stagnant, and there is indeed pressure from the objective environment. According to data from Aowei Cloud Network, China's air-conditioning market shipments in the first half of 2020 were 28.86 million units, down 14.3% year-on-year, and total retail sales were 83.1 billion yuan, down 26.9% year-on-year.

For this reason, in the first half of 2020, Gree's total operating revenue was only 70.602 billion yuan, a year-on-year decrease of 28.21%; the total profit was 7.696 billion yuan, a year-on-year decrease of 53.11%.

But this is not the fundamental reason why the capital market is pessimistic about Gree, because in comparison, although Gree’s two peers were also hit by the epidemic, they did not encounter investors’ abandonment.

Take Midea as an example. In the first half of 2020, the group's total revenue was 139.7 billion yuan, a year-on-year decrease of 9.47%; its net profit was as high as 13.9 billion yuan, a year-on-year decrease of 8.29%. However, Midea's overall share price in the secondary market is on the rise. As of December 10, Midea's share price was 85.10 yuan, more than ten yuan higher than during the epidemic period.

The main reason is that the epidemic has proved that Gree’s ability to withstand shocks is too weak.

Comparing the other two major competitors of China's "Big Three Whites" (Gree, Midea and Haier), from their revenue in the first half of 2020, it can be found that Gree's main air-conditioning business accounted for 59.47% of the total revenue, and its revenue structure was very simple. On the other hand, Midea's air-conditioning and consumer appliances business accounted for 46.04% and 38.14% of its revenue respectively; while Haier's air-conditioning business revenue accounted for only 17.85%, and the refrigerator business ranked first accounted for only 28.08%. From the data, the revenue structure of both is relatively diversified and healthy.

Not only does Gree rely heavily on the air-conditioning business, but it also lost its position as the number one air-conditioning company in China under the influence of the black swan of the epidemic.

In the first half of 2020, Midea's air conditioning business revenue was 64 billion yuan, while Gree's air conditioning business was 41.3 billion yuan. In addition, data from Aowei Cloud Network also showed that in the first half of 2020, in China's online channels, Midea's air conditioning retail share reached 36.5%, ranking first in the industry, while Gree's share was only 29.1%, ranking second.

For Gree, its stock price always fluctuates. The acceptance of the capital market is actually just a small matter. The most important thing is how to get rid of the dilemma of single profit-making means at this stage.

“Even if you don’t succeed, you have to invest in it”

As early as the beginning of 2017, Gree Chairman Dong Mingzhu had already realized this problem. She said: "I hope everyone can ride in Gree-made cars, use Gree mobile phones, control the temperature of the air conditioner at home, and enjoy the delicious food brought by Gree."

In other words, Dong Mingzhu hopes that Gree will develop in a diversified manner like Midea and Haier, and put its eggs in different baskets.

Judging from the trends, Gree's diversification strategy has been advanced in depth.

In 2015, Gree released its smartphone and announced its entry into the mobile phone market;

In 2016, Gree revealed plans to acquire 100% of Zhuhai Yinlong’s equity for RMB 13 billion;

In 2018, Gree quietly acquired Jinghong Electric Appliances...

However, unlike the perfect acquisition model of other giants, most of Gree’s diversified investments have largely been unreturned.

The financial report shows that in 2019, among Gree’s investment income, the income from associated companies was not only negative, but reached -20.98 million yuan, which means that Gree’s shareholding companies were generally losing money.

In contrast, just one year after acquiring the German robotics company Kuka, Midea increased the latter's total deliveries by 5.6% year-on-year; total sales increased by 18% year-on-year; and net income reached 88.2 million euros, an increase of 2.3% year-on-year.

The previous exploratory investment has not yet borne fruit. At the beginning of 2020, Dong Mingzhu revealed in a live broadcast: "Gree Electric will invest 1 billion yuan in the medical equipment field in the future, even if it is not successful."

"Invest even if it doesn't succeed" seems to have become the best annotation for Gree's exploration of diversification.

“We know each other well”

Traditional giants often invest continuously in businesses related to their own products in order to expand together. Why does Gree repeatedly invest across many completely different industries such as mobile phones, automobiles, and chips?

This situation is largely due to the all-round game between Dong Mingzhu and Gree.

In the general perception, people would think that Gree belongs to Dong Mingzhu personally. This is not the case. Looking at the equity structure, Dong Mingzhu only holds less than 1% of Gree shares, and the Zhuhai State-owned Assets Supervision and Administration Commission, which is "hidden in the city", is the actual controller of Gree.

As a result, an asymmetry between power and responsibility decisively triggers gaming behavior.

The biggest "legal basis" for Dong Mingzhu to control Gree, or the main reason why Dong Mingzhu has been in charge of Gree for more than ten years, is that under her leadership, Gree's revenue data has shown significant growth.

In 2012, Dong Mingzhu became the chairman of Gree Group. By the end of 2019, Gree's market value had grown from less than 100 billion yuan to nearly 400 billion yuan, making Gree one of the few companies in the A-share market that can rival Moutai.

Although Dong Mingzhu has been cultivating her own "power" of small and medium shareholders through high dividends, and further binding the "Dong Mingzhu" IP with Gree through endorsements, e-commerce live broadcasts, etc., in the final analysis, all of this is based on Gree's development. Once Gree encounters "mercury retrograde" and Dong Mingzhu has no way to turn the tide, the profit-seeking shareholders will definitely not show any past favors.

Judging from Gree’s current actions, Dong Mingzhu’s top priority is of course to revive Gree when Gree is in retrograde, but apart from that, Dong Mingzhu also has some other ideas hidden in her mind to a greater or lesser extent.

Previously, some media had revealed that the reason why Dong Mingzhu frequently supported Jinghong Electric was mainly because of the "unusual relationship behind her." When some media asked the major shareholder Meng Fanchang for confirmation, he did not directly deny this, but said meaningfully, "We are very familiar with each other."

Coincidentally, a letter to all shareholders issued by the major shareholder of Yinlong New Energy also stated: "Individual shareholders of Yinlong New Energy and actual controller Dong Mingzhu used the company to attack the major shareholder for personal gain. Their intentions are malicious and their methods are despicable. The major shareholder is very indignant about this."

What’s interesting is that although Dong Mingzhu has been making frequent moves, Gree’s stock price and the semiconductor, mobile phone and automobile industries related to Dong Mingzhu have not achieved any impressive results so far.

Gree's problems, Gree's stock price, and other issues are all on the table. How to solve them? I believe that Miss Dong, who is rushing around, knows it in her heart.

The world is bustling with people, all for profit; the world is bustling with people, all for profit. In the final analysis, Gree's biggest problem now and in the future is only one, that is, how to divide the cake?

The ultimate question is, Miss Dong has no say on how to divide Gree’s cake.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.