Dong Mingzhu accelerates the layout of smart equipment, Gree is said to be losing its position as the leader in air conditioners

After its cross-border expansion into mobile phones and automobiles was questioned, Dong Mingzhu led Gree to accelerate its expansion into the field of smart equipment.

Recently, Gree announced that its new "high-precision" CNC machine tools have been launched. At present, Gree can use basic equipment to manufacture CNC machine tools, and the precision is not inferior to the international level.

An insider of Gree Electric Appliances said in an interview with reporters: "The intelligent equipment industry is one of Gree's main directions for future development. It is currently in an expansion trend. Gree is increasing its investment in this field and plans to build 2,500 robots next year."

Recently, Dong Mingzhu also told the outside world that Gree has never been absent from "smart" manufacturing. Since the start of Gree's intelligent equipment in 2013, Gree has produced more than 5,500 sets of automated equipment with a cumulative output value of more than 2 billion yuan.

While cross-border expansion into industries such as mobile phones and automobiles has yet to bear fruit, Gree's main air-conditioning business is being rapidly overtaken by its competitors, and smart equipment is seen by Gree as an important incremental market in the future.

Plans to build 2,500 robots next year

Recently, Gree has launched a number of intelligent equipment, and its industrial layout in the field of intelligent manufacturing has surfaced.

Dong Mingzhu said earlier that Gree Electric will focus on the two major areas of robots and precision machine tools in the future, and the intelligent equipment industry has become an important direction for Gree's layout. Although Gree has only been in this field for four years, it has achieved initial results. In recent years, the status of this industry has been rapidly improved within Gree.

According to the 2017 interim report released by Gree Electric Appliances, in the first half of this year, Gree Electric Appliances' intelligent equipment business achieved revenue of 962 million yuan, a year-on-year increase of 2765.27%.

Some industry insiders believe that "Gree's efforts in the intelligent equipment industry are mainly due to its broad market development prospects, and Gree's advantages are manufacturing and R&D. Chinese home appliance companies are also in urgent need of transformation and upgrading to intelligent manufacturing."

Statistics show that in 2017, the scale of my country's robot market may reach US$6.28 billion, of which industrial robots will account for US$4.22 billion.

Gree, which has been trying to expand in multiple fields, started to layout the intelligent equipment market very early and established four R&D and production bases in Zhuhai and Wuhan. Its products have covered more than 10 fields including servo manipulators, industrial robots, and CNC machine tools.

Gree said that in four years, Gree has completed the automation of its internal production lines. In 2016, Gree increased its overall production efficiency by 10.5% through its independently developed and manufactured intelligent equipment.

"Although 70% of the industrial robots currently produced are consumed internally by Gree Electric, the overall market demand is still very large," a Gree insider revealed to reporters.

According to the reporter, this is only a small goal of Gree. In fact, Dong Mingzhu has great ambitions in the field of intelligent manufacturing.

Previously, according to the draft for soliciting opinions on promoting the development of the intelligent manufacturing industry released by Zhuhai City, by 2017, Zhuhai will initially build two major robot bases, Gree International Intelligent Manufacturing Base and ABB Robotics Industrial Park in the High-tech Zone, with 10 backbone intelligent manufacturing enterprises with an annual output value of over 100 million yuan, the output value of robots and related supporting industries exceeding 10 billion yuan, and the output value of intelligent equipment industries exceeding 50 billion yuan. The robot and intelligent equipment system industries represented by Gree and ABB are the focus of Zhuhai's intelligent manufacturing industry development.

Liu Buchen, an observer of the home appliance industry, said: "It is wise for Gree Electric to focus on smart devices, as this is a market with many opportunities. However, from the current perspective, the substantial contribution of smart devices to Gree Electric is still relatively small, and the proportion will increase significantly in the future."

It is said that the status of the leader in air conditioners is no longer secure

After Gree Electric Appliances released its semi-annual report, rumors spread throughout the industry that Gree might "fall to the second tier and lose its position as the leader in air conditioners."

In this regard, an insider of Gree Electric Appliances told reporters: "Gree has always focused on R&D and manufacturing, and does not need to pay attention to external comments. However, Gree's sales in the air-conditioning field have always been at the forefront. The contribution of Gree's non-air-conditioning business to its performance will increase year by year. Gree is currently adjusting its internal business structure, which will take some time."

According to the semi-annual report released by Gree Electric Appliances, in the first half of this year, the company achieved a total operating income of 70 billion yuan, a year-on-year increase of 40%; and achieved a net profit attributable to shareholders of listed companies of 9.45 billion yuan, a year-on-year increase of 48%. The air-conditioning business achieved a revenue of 54.6 billion yuan, a year-on-year increase of 30%. It still maintains the first position in the domestic household air-conditioning market share, and Gree central air-conditioning also ranks first with a market share of 18%.

Although Gree's performance is good, its revenue is only half of Midea's, and its total profit is also less than Midea's. At the same time, looking at the air-conditioning business alone, Gree was only 4.6 billion yuan ahead of Midea in the first half of the year, and Midea's air-conditioning growth rate was also relatively high year-on-year, and the gap between the two is narrowing.

In this regard, a person close to Gree said: "We cannot draw the conclusion that Gree's leading position in air conditioning is no longer secure. We can only say that Gree's advantages are weakening. In the first half of this year, the revenue gap between Midea and Gree has narrowed to less than 5 billion yuan, which is what President Dong (Dong Mingzhu) is very worried about."

When the main business that Gree relies on for survival hits the ceiling, it must diversify to achieve scale expansion. In the past two years, Dong Mingzhu has invested heavily to lead Gree to diversify in small household appliances, smart phones, new energy vehicles and other fields. However, Gree's small household appliances industry is currently tepid, and mobile phones and cars are still in the stage of large-scale investment, which is difficult to contribute a lot of profits to Gree in the short term. Can intelligent manufacturing support Gree's future growth?

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.