Dong Mingzhu smashed her phone but failed to break the future of Gree mobile phones

At the recently held Second China Manufacturing Summit Forum, Dong Mingzhu, the head of Gree Group, made another shocking move. During a discussion session at a conference, Dong Mingzhu threw a Gree mobile phone on the ground on the stage and asked the audience: "Do you dare to throw it?" Dong Mingzhu's move once again triggered a debate in the industry about Gree's entry into the smartphone industry.

According to the 2015 financial report released by Gree Electric Appliances, Gree's operating income last year was 97.745 billion yuan, a year-on-year decrease of 29.04%; net profit was 12.532 billion yuan, a year-on-year decrease of 11.46%. In 2012, Gree Electric Appliances announced its annual report, with revenue reaching 93.1 billion yuan that year. At that time, Dong Mingzhu, the head of Gree, proposed a bold "plan": to create another Gree in the next five years, and Gree's revenue will reach 200 billion yuan in five years. In the following 2013 and 2014, Gree's revenue grew steadily at an annual rate of 20 billion. Through Gree's own goals and the actual performance of its financial reports, it is easy for the industry to understand why Gree entered the smartphone industry with the Gree 1 generation mobile phone last year, that is, to find new growth points for the decline of Gree's traditional electrical appliance business and future established goals. So the question is, can smartphones really become a new growth point for Gree's revenue and profits?

First of all, from the development of the entire smartphone industry, let’s not talk about the Gree 1st generation last year or the Gree 2nd generation this year. From the time when Gree entered the smartphone industry, it cannot be said to be late, but at least it has missed the rapid growth period of the industry. According to the latest global smartphone market share statistics report for the second quarter of 2016 released by market research firm Strategy Analytics, the global smartphone shipments in the last quarter were only 340 million units, a year-on-year increase of less than 1 percentage point compared with the same period last year. It can be said that the smartphone industry has almost zero growth. Under this situation, the threshold for entering the smartphone industry has not only not been lowered, but has been raised in disguise. Of course, this increase means that it hopes to obtain a shipment volume that can stand in the smartphone industry while also obtaining revenue and profits, at least for Gree. Then the next question is, in this case where the entry threshold has not been lowered but has risen, what are the advantages of Gree mobile phones?

From last year's Gree 1 to this year's Gree 2, the industry has seen that apart from the so-called hardware that is no different from other manufacturers, it is more about the personal marketing or "showmanship" of Dong Mingzhu, the head of Gree Group. This is mainly manifested in the occasional criticism of competitors' products, or the recent "smashing of mobile phones" to prove the differentiation of Gree mobile phones. But as long as we observe a little, we will find that this marketing method has long been a trick left by competitors, that is to say, even in marketing and "showmanship", Gree has fallen behind. In fact, Dong Mingzhu's marketing itself has indirectly exposed her weakness in the smartphone industry.

Judging from the manufacturers in the current smartphone industry, such as Huawei and OPPO, which are in the first camp in the domestic and global smartphone markets, the reason why they have achieved today's position is crucial to the accumulation and innovation of mobile phones or mobile phone-related industries. For example, Huawei's background as a global telecommunications equipment manufacturer allows it to extend its innovation to the smartphone industry (learning and re-innovation); OPPO has devoted many years of research and development to the pain points of user needs in the smartphone market (such as flash charging technology, etc.). From this, it can be seen that in order to gain a foothold in the smartphone industry with real innovation, accumulation (which takes time) rather than overnight success is required, which is something that Gree mobile phones do not have. Especially after the smartphone industry entered a period of slow growth, even if Gree wanted to concentrate on research and development and innovation, the time window has closed.

In addition to innovation, it is also crucial to understand and control the industrial chain in the smartphone industry. The fall of the Hammer smartphone, which was once popular for selling "feelings", was due to its superficial understanding of the industrial chain. Xiaomi's Lei Jun recently returned to the front line to directly take charge of the management of the Xiaomi mobile phone industrial chain, which also proves from the side that the industrial chain is not only important, but even manufacturers who have been working hard in the smartphone market for many years may be subject to many factors such as the coordination and management of the industrial chain. In comparison, Gree mobile phones are almost at the starting line in this regard, just like innovation. Not to mention being familiar with the rules of the smartphone industrial chain, it will be difficult to get started. It should be noted that although Gree has a deep accumulation in the industrial chain in the field of home appliances, just like Lenovo, the leader in the PC industry, mistakenly thought that its advantages in the PC industrial chain could be learned by mobile phones when it first entered the mobile phone industry, but it was ultimately fruitless. Due to different industrial characteristics and needs, there are considerable differences between industrial chains. In other words, Gree's advantages in the home appliance industrial chain and some of the industry insiders say that Gree will not bring extra points to its smartphone industrial chain.

When the above-mentioned weaknesses of Gree in entering the smartphone industry are impossible or there is no time to change these weaknesses, then is it feasible to use the remaining money to break a foothold? From a global perspective, Microsoft's investment of US$7.2 billion failed to save Nokia. From a domestic perspective, Alibaba's investment of US$1.5 billion in Meizu only exchanged for Meizu's expected shipment of 25 million units this year (the industry generally believes that the survival line of the current smartphone industry is an annual shipment of 40 million units). Of course, don't consider how much revenue and profit can be obtained from it. We cite these two examples here to illustrate that in the current situation of the smartphone industry going down and Gree's own weaknesses, even if you use money to smash, it is difficult to break a foothold in the smartphone market. It is more likely to be a bottomless pit. Not to mention becoming a new growth point for Gree, it is more likely to drag down Gree's core business, which is already declining. The so-called stealing chicken fails, but loses the rice.

To sum up, we believe that Gree's strategy of entering the smartphone industry to find new growth points for Gree's future has lost all possible support points, and it will be difficult to obtain these support points in the future. Coupled with the recent poor marketing and market positioning (such as breaking phones and pricing at high-end prices above 3,000 yuan), Gree phones will not only not become Gree's new growth point in the future, but may be a disaster.

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.