Where will the dispute between Zhu Jianghong and Dong Mingzhu lead Gree?

There are many good horses, but the competition between a good horse and a good horse trainer is rare.

Zhu Jianghong, the former chairman of Gree, who has always kept a low profile, recently made a high-profile appearance by publishing his autobiography, signing copies from Beijing to Guangdong. On July 23, the Gree Old Employees Club will organize a "Gree Fate" meeting for Zhu in Zhuhai. Zhu has a very strong mass base.

Zhu Jianghong's autobiography was first serialized in the magazine "Cold and Warm Business Information" and was officially published in 2017 under the planning of the HVAC Brand Committee chaired by Lao Zhu. Lao Zhu was worried about hype and did not want to publish the book, but finally decided to speak out publicly to set the record straight. It is said that this was also the request of some old Gree employees.

Zhu Jianghong, who rarely accepts media interviews, wrote down everything he wanted to say in his autobiography. The text is plain and objective, and it discloses a lot of little-known historical materials. However, on page 18 of the second chapter, the Sanlu incident was written as 1908. The editor was too careless.

In the last chapter, "Retire after Success", Lao Zhu wrote very directly: "Some media hyped that 'without Zhu Jianghong, there would be no Dong Mingzhu'. This statement may be true. Because of me, she took up leadership positions at all levels of the company and stood on the big stage of Gree, which gave her the opportunity to show her talents.

As for the last sentence "Without Dong Mingzhu, there would be no Gree", I am afraid it is worth discussing. No matter how great a person's ability is, it is limited after all. Running a business is not the work of one or two people but the power of a team.

Moreover, this statement does not conform to Gree’s historical facts. Every important historical node in Gree’s development is inseparable from the efforts of its employees. Without their hard work and dedication, Gree would not be what it is today.”

In 1996, which is often mentioned by the media, sales and profits also grew by double digits. 1996 was also the year when Gree Electric Appliances went public. I remember that on the day of listing, the company's stock price soared from more than 10 yuan to more than 50 yuan, and it was hailed as China's No. 1 stock. "

Two pictures still hanging in Gree's sales hall

Anyone with a discerning eye can see that Gree is on the verge of bankruptcy, which is one of Dong Mingzhu's statements. In 2015, Dong Mingzhu said at a CCTV forum: "If I hadn't come back to Gree, the company would have closed down in 1997."

In 2002, Zhu Jianghong led the company's technical backbone to Japan's Mitsubishi to negotiate technology transfer, but was rejected. After that, he decided to develop independently at all costs and successfully launched a one-to-four multi-link machine. He concluded in his autobiography: "The so-called technology transfer is mostly outdated technology, and cutting-edge technology is hard to buy even if you have money."

Dong Mingzhu has shared this story and experience many times, but the protagonist has now become herself.

In 2004, Gree Electric Appliances was almost sold to Gree Group. The buyers at that time included Carrier and Daikin. Carrier promised to pay Gree executives high salaries in order to stabilize the team. Zhu Jianghong said in his autobiography: "The media kept hyping up the annual salary of 80 million for corporate leaders, but I have never heard of it. I guess the president of Carrier doesn't get this kind of treatment."

The annual salary of 80 million yuan is what Dong Mingzhu mentioned many times in public interviews. Gree's profit at that time was only more than 400 million yuan, and 80 million yuan was equivalent to 20% of the company's annual profit.

Zhu Jianghong's autobiography immediately triggered a backlash. While Zhu was exposing himself through his autobiography, another voice appeared in the media: "Zhu Jianghong is common, but Dong Mingzhu is not common", "Dong Mingzhu's reform is the core of Gree's success".

If you can't face up to history, you can't open up the future. The industry has long reached a consensus on who the founder of Gree is. The more you try to express yourself, the more it shows that you are weak inside.

How to stay sober and resist self-aggrandizement after becoming the top leader? Zhu Jianghong built a firewall with his knowledge and cultivation, but Dong Mingzhu enjoyed the spotlight of Internet celebrities.

By checking Gree Electric's annual reports from 1996 to the present, it can be found that from 1996 to 2001, Gree Electric's revenue growth remained stable at double digits, and the growth rate of net profit was lower than the growth rate of revenue.

After Dong Mingzhu took over as general manager in 2001, Gree Electric's revenue and net profit both climbed, with the net profit growth rate exceeding the revenue growth rate. Only in 2008 and 2009 did it decline due to the impact of the financial crisis.

In 2012, Dong Mingzhu succeeded Zhu Jianghong as chairman of the board. At that time, Gree Electric's revenue was close to 100 billion yuan. Gree's net profit was 7.3 billion yuan in 2012 and 15.4 billion yuan in 2016, doubling in five years, and Dong Mingzhu played an indispensable role.

However, during the same period, the company's revenue and net profit growth rates began to decline, and experienced a roller coaster-like ups and downs in 2015.

Judging from the three indicators of return on equity, gross profit margin and net profit margin, Gree Electric's return on equity has remained stable at above 30% for the past ten years, with a slight decline in the past two years.

The gross profit margin increased from 18% to 32%, and the net profit margin increased from 3% to 14%, demonstrating the industry leader's strong pricing power and supply chain control.

When Gree Electric Appliances went public in 1996, its market value was 3.6 billion yuan. By 2006, its market value reached 40 billion yuan. In 2016, its market value reached 150 billion yuan. Its current market value is 240 billion yuan. Its market value has grown basically in sync with its performance.

Dong Mingzhu has brought Gree air conditioners to perfection, but has been weak in expanding markets beyond air conditioners.

Gree's revenue was 100 billion yuan in 2012 and 108.3 billion yuan in 2016, with an average annual growth of 1.7%, while Midea's average annual growth was 9%. In 2017, Midea will achieve 200 billion yuan in revenue, but Dong Mingzhu's 2012 goal of "rebuilding a Gree in five years" still seems far away.

In 2012, Gree's air conditioners accounted for 97% of its revenue, and this figure was 81% in 2016. During the same period, Midea's air conditioners accounted for 42% of its revenue, down from 81% in 2016. This is an important reason why Gree's scale was surpassed by Midea.

It is difficult to say to what extent Gree's diversification has been inspired by Midea. In the past two years, Gree has stepped up its efforts in small household appliances, refrigerators and washing machines, but judging from its performance, the contribution of products other than air conditioners is still very low.

Crossing over into the mobile phone industry is Gree's biggest risk in diversification. In 2016, Gree's mobile phone had already reached its second generation, but it was not available through mainstream channels, and its sales volume remained a mystery. Whether Dong Mingzhu admits it or not, Gree's mobile phone has failed.

Zhu Jianghong also commented on corporate diversification in his autobiography:

“Recklessly transferring human, material and financial resources to a completely unfamiliar industry will not help the company get out of trouble, but will increase the risk. Where is your technology? Where is your market network? Where is your manufacturing experience?

In order to transform and enter the solar photovoltaic industry, a large number of enterprises in Jiangsu and Zhejiang did not have their own core technologies, and their profits were eaten up by others. In the end, even the world's largest company, Wuxi Suntech, had to declare bankruptcy. Chunlan, the former leader in air conditioning, entered the automobile, motorcycle, and television industries at an inappropriate time, causing its main business to decline and lose its glory. The CEO of AUX also admitted to me that he made a mistake by entering the automobile industry and lost more than 10 billion yuan in vain.

After all, cases like Kodak are rare. For most companies, it is not the industry that is failing, but the company; it is not the market that is failing, but the technology; it is not the product that is failing, but the quality.”

Under Dong Mingzhu's leadership, Gree's net profit and dividends have doubled.

In the past decade, Gree Electric's dividends have been rising. Except for the fixed assets increase of 1.6 billion and 900 million in 2008 and 2010, the dividend rate has been above 30% in each year. After Dong Mingzhu became the chairman in 2012, the dividend rate soared from 40% to 70%, far exceeding the Zhu Jianghong era.

Even in 2015, when Gree Electric Appliances' revenue and net profit both declined for the first time since its listing, its dividend rate was still as high as 71%. This won Gree the enthusiastic pursuit of investors and also made Dong Mingzhu gain countless fans.

From 2007 to 2016, Dong Mingzhu received a total of 332 million yuan in dividends, and the total dividends in the last five years were 266 million yuan. Currently, Dong Mingzhu holds 44.44 million shares of Gree Electric, accounting for 0.74%, making her the ninth largest shareholder of the company. Based on the current share price of 41 yuan, the market value is 1.8 billion yuan.

In May 2012, Zhu Jianghong reduced his holdings of Gree by 9.1218 million shares after he stepped down as chairman, cashing out 180 million yuan. After the reduction, he still held 1.23 million shares of Gree. If Zhu had not reduced his holdings within five years, the current market value would be 50.43 million yuan.

Until his retirement, Zhu Jianghong was still the CEO of a state-owned enterprise and a professional manager, while Dong Mingzhu was already a shareholder of Gree. With the support of the second largest shareholder Dong Hai, her voice was second only to that of the largest shareholder, Gree Group.

Zhu Jianghong said that one of his regrets at Gree was internationalization. “We didn’t do it well then, and we haven’t done it well until now.”

In 2012, when Zhu retired, Gree's exports accounted for 15.9% of its revenue. In 2016, this proportion was 15%, a decline of 0.9 percentage points. The gross profit margin increased from 14% to 17.2%, both lagging behind Midea.

In 2016, Haier acquired GE Appliances for US$5.5 billion, and now owns several international brands including GE, Sanyo, and Fisher & Paykel. Midea spent 30 billion to acquire Toshiba white goods, Germany's Kuka, Israel's Eureka, and vacuum cleaner brand, crossing over from home appliances to the robotics field.

Midea and Haier are already several steps ahead of Gree in terms of their international brand presence. As China's leading air conditioner brand, Gree insists on its own brand overseas, but it has lost too much market share and may miss the window of opportunity to enter overseas markets.

Time was running out for Gree, but Dong Mingzhu bet her entire fortune on Yinlong. From 2016 to 2017, Dong Mingzhu made numerous appearances for Yinlong across the country. With Dong Mingzhu's personal example, Yinlong received 3 billion yuan in investment from the family and friends of the eldest sister, including the richest person, as well as a high exposure rate.

In 2016, Gree issued additional shares at a low price to acquire Yinlong, but the plan was rejected by shareholders because it was too ugly. Dong Mingzhu got angry at the shareholders' meeting and said, "I came in and there was no applause. This is the first time."

Although the merger failed, Dong Mingzhu still supported Yinlong in various ways, showing a bigger appetite than Jinghong, which piggybacked on Gree. The long-term silence of the major shareholder is even more puzzling.

Gree is increasingly looking like Dong Mingzhu's own private estate rather than a state-controlled public company.

With his industry-leading brand awareness, Zhu Jianghong spared no effort in laying a solid quality foundation for Gree.

As early as 1995, Zhu Jianghong proposed the quality strategy and set up a screening branch with more than 300 people. It neither produces nor assembles, but screens important parts one by one, and returns unqualified ones to the original factory. This industry initiative has been maintained until now, and like the "quality inspection team" that supervises middle and senior management, it has become one of the characteristics of Gree's quality management.

Dong Mingzhu inherited Zhu's obsessive pursuit of quality. There is no upper limit on R&D investment, and there is a huge space for technical personnel to display their talents. This is an important reason why Gree, with a general salary level, can attract talents.

With a deep-rooted engineering complex, Gree in Zhu Jianghong's era rarely engaged in large-scale marketing and rarely communicated with the media. Gree's brand awareness and reputation were completely inconsistent with its market position.

Dong Mingzhu changed this situation. She is a genius in brand marketing. She equated Gree with Made in China and turned Gree's new product launch into a Made in China Summit Forum, which accurately catered to the public sentiment and strengthened Gree's monopoly on consumer perception.

In the past two years, Dong Mingzhu's exposure rate is unmatched in the industry. CCTV and Guoshe have almost become Gree's exclusive agents. Dong Mingzhu has made herself a super IP. As an entrepreneur, Dong Mingzhu's personal brand is equal to or even greater than Gree.

Zhu Jianghong did not make any direct comments on the "Internet celebrity" Dong Mingzhu. Instead, it was Vice President Huang Hui who received high praise from him in his autobiography.

"Gree's corporate culture is to talk less and do more. Huang Hui is a relatively outstanding leader among the leaders.

He went from being an ordinary staff member to the head of the quality inspection department, to the vice president in charge of quality, and finally to the leader of the company's technical quality. He took every step firmly. All major scientific research projects of the company were completed under his organization and leadership, but he rarely appeared in public, so many people outside did not know who he was.

Behind the nostalgia for the ex is the dissatisfaction with the current one.

Dong Mingzhu has been the chairman for five years, but the employee stock ownership has not been implemented. Around 2015, many middle-level managers of Gree resigned and joined the "Gree Old Employees Club". The remaining employees are not completely unreserved about Dong. The biggest complaint is that Dong Mingzhu pioneered the year-end bonus in the form of physical goods.

The first of Zhu Jianghong's three farewell speeches in 2012 was to admit that he had made mistakes and "hope that everyone will understand and forgive him with a tolerant and generous spirit."

Dong Mingzhu said, I never make mistakes, "because my responsibility does not allow me to make mistakes." The lack of checks and balances has made Gree a one-man show. Despite the fact that neither the inside nor the outside world is optimistic about it, Gree's mobile phone has been able to produce the second generation.

Dong Mingzhu's strong style has always been controversial within the company, and Zhu Jianghong also mentioned this in his autobiography.

"In 1994, Dong Mingzhu was promoted to the head of the business department, and in 1997 she became the vice president of the sales company. There were major objections internally, but after my efforts to persuade and explain, she was finally approved. In 2001, because the chairman and general manager of a listed company could not be shouldered by the same person, I recommended Dong Mingzhu to take over as the general manager of Gree Electric."

Zhu Jianghong has a keen eye for talent and has spent 15 years nurturing Dong Mingzhu to the top. Less than a year before the 2018 chairman election, Dong Mingzhu's latest statement on the successor is "not considering a successor within five years."

Zhu Jianghong, who has always been low-key, suddenly became high-profile at this time. The launch ceremony of his autobiography in South China was held at the Zhuhai Municipal Party School. Is there any other meaning behind this?

Deifying Zhu Jianghong is like deifying Dong Mingzhu, which does not do Gree any good. The glory of the past belongs only to the past, and the future is the biggest variable for Gree.

Don't think about the past, don't fear the future.

It is better to forget each other than to support each other.

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.