Reporter | Xu Shiqi
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Dong Mingzhu was once again re-elected chairman of Gree Electric Appliances at the age of 67. This is also her third re-election after 2015 and 2019.
On February 28, Gree Electric Held the First Extraordinary General Meeting of Shareholders of 2022 at its headquarters in Zhuhai, and elected the members of the 2022 Board of Directors. Later, the first board meeting of the year was held, and the directors unanimously passed the proposal of Dong Mingzhu as chairman and president, and a new three-year term of office began.
This is a result without much suspense.
The capital markets have also behaved rather calmly. On March 1, the stock price of Gree Electric Appliances opened higher, fell slightly during the session, and rose slightly by 0.16% as of the close, at 36.83 yuan / share. It was a relatively rare rally since the company's consecutive declines in February.
Dong Mingzhu has been the chairman of Gree Electric Appliances since 2012, and this re-election means that she will run the company for 13 years. She joined Gree Electric appliances as a salesman in 1990 and will spend at least 35 years in this company.
She has always been regarded by the outside world as the "Iron Lady" of the writer's circle, with a strong management style and often surprising words. Her unique style has boosted the attention of the outside world to her, making her a rare "net red" entrepreneur in the home appliance industry.
Looking forward to the new three years, the situation of Gree electrical appliances is not optimistic, the scale of the domestic home appliance market has declined year by year, and the old rival Midea has surpassed Gree in all aspects. Can Dong Mingzhu safely survive the new round of tenure and even lead Gree to turn the tables against the wind?
The aging of management and the contradictions of channel reform are prominent
"We must gradually cede management rights to young people, let the new generation of management in their 30s and 40s come to the forefront, and should not put all the spotlight on themselves." Liu Buchen, who has long observed Gree Electric Appliances, told Interface News that this is a major problem that Dong Mingzhu must solve during his tenure.
From the perspective of management age, according to the 2020 annual report of Gree Electric Appliances, its internal senior management is around 50 years old. According to the internal information obtained by Interface News, the company's leading cadres are mostly old employees who have been employed in Gree for many years.
But older employees don't necessarily have more management rights. In this board of directors, there are only 3 people from within Gree Electric Appliances: Dong Mingzhu, Deng Xiaobo, and Zhang Wei. Deng Xiaobo is a new face, who joined the company in December 2020 and took over the position of former Gree elder Wang Jingdong as the secretary of the chairman. According to public information, he was the chairman of Shaanxi Coal Industry Chemical Group Finance Co., Ltd. from July 2015 to November 2020. Another Zhang Wei, the party secretary of Gree, is a procurement background, and the public information does not indicate the specific business he is currently responsible for.
Non-independent directors except Dong Mingzhu, cartography: interface news
Huang Hui, who originally came from a technical background, and Wang Jingdong, who came from a financial background, both left office in the past year. Judging from the current board structure, Dong Mingzhu's voice is greater than ever.
It is worth mentioning the other two non-independent directors: Zhang Jundu and Guo Shuzhan, who are 61 and 65 years old respectively, and are the core personnel of Gree Electric Appliance Distribution Company. Zhang Jundu is the chairman of Zhejiang Chengtong, a provincial distribution company of Gree, and Guo Shuzhan is the general manager of Henan Provincial Distribution Company, and the chairman of Jinghai Internet Technology Development Co., Ltd. (hereinafter referred to as "Jinghai Internet").
Jinghai Internet is a company established in 2007 by Gree Electric Appliances to deeply bind the interests of dealers, which was established by 10 important dealers, when Gree acquired 10% of the company's equity, and Jinghai Internet also became the second largest shareholder of Gree Electric Appliances. As of September 30, 2021, Jinghai Internet held 8.20% of the company's shares, down to the third largest shareholder.
The two core dealers in the board of directors also reflect a major problem that Dong Mingzhu needs to face from the side: how to reconcile the contradiction between channel reform and dealer system.
The regional sales company pioneered by Gree Electric Appliances was once its ace of continuous profitability. According to the 2019 Huachuang Securities Research Report, the company's distribution system is roughly as follows: 26 regional sales companies - agents - dealers. The role of these regional sales companies, that is, "provincial agents", encircles their dealers to form a community of interests, balances and binds the interest relationship of dealers, thereby reducing the vicious competition in the distribution system and achieving a win-win situation between the company and dealers.
Source: 2019 Huachuang Securities Research Report
In addition, Gree Electric Appliances also encourages dealers to "hoard goods" through off-season rebates and other measures to reduce seasonal fluctuations in the company's production and sales.
The above-mentioned traditional distribution model is obviously difficult to avoid many problems such as hoarding pressure and easy to lead to corruption. Therefore, at the end of 2019, Dong Mingzhu began to plan channel reforms, and continuously touched the "cheese" of dealers by canceling provincial generations, lowering the threshold for opening stores, and reducing dealer inventory.
A representative example is that at the national live broadcast activity held by Gree Electric Appliances in 2020, the top ten orders are almost all "xx Dong Mingzhu stores" in various places, that is, dealers do not purchase goods through the province, but directly place orders from Zhuhai Gree headquarters. Previously, some dealers confirmed to Interface News that the price of the products when Gree live broadcast with goods was even lower than the previous purchase price. According to the "IT Times" quoted dealers as saying, Gree has gradually eliminated the role of "provincial generation" in many parts of the country.
The other side of the channel reform is the new retail advocated by Dong Mingzhu, whose specific measures such as the online "Gree Dong Mingzhu Store", Meng Yutong's Douyin live broadcast with goods and so on. It is foreseeable that Dong Mingzhu will still promote the development of new retail in the next three years, and at the same time, it is necessary to weigh the interest relationship with dealers.
Diversification of business, large-scale acquisitions, what is the color?
"If we are still (mainly) single air conditioning, it is likely to be a dead end." At the shareholders' meeting on February 28, Dong Mingzhu took the initiative to put forward this view.
At the meeting, she also put forward the company's two major confidences in the next few years, one is business diversification, and the other is Yinlong New Energy (now renamed "Gree Titanium").
In terms of business diversification, Dong said that the company has developed ice washing and living electrical products in addition to air conditioning, and diversification has "entered the harvest period".
Is this really the case?
According to the 2021 semi-annual report of Gree Electric Appliances, the company's air-conditioning business revenue in the first half of the year reached 67.194 billion yuan, accounting for 73.79% of the total revenue, and the gross profit margin reached 29.79%. Household appliances, intelligent equipment and other main businesses have declined to varying degrees, and the total revenue accounts for only 4.11% of the total revenue. These businesses are the focus of Gree's diversification strategy, but the overall gross profit margin is very low, only 3.45%.
The overall scale of the air conditioning market has narrowed year after year. According to the data of Aowei Cloud Network, the market volume of air conditioners in 2021 fell twice, and the annual retail sales of mainland air conditioners were 152.7 billion yuan, down 1.2% year-on-year, and the retail sales volume was 46.89 million units, down 8.7% year-on-year. At the same time, the old rival Midea Group has surpassed Gree Electric Appliances for many consecutive fiscal quarters in terms of air conditioning, and the current market value difference between the two has exceeded 250 billion yuan.
In terms of Gree Titanium, in August 2021, Gree Electric Appliances spent 1.8 billion yuan to acquire 30.47% of its equity, which has consolidated its statements, and the specific business data will be reflected in the annual report in April. Its energy storage technology and products can be applied to many scenarios such as electrical appliances and automobiles.
In addition, Gree Electric Appliances also acquired 38.78% of the shares of DunAn Environment for 3 billion yuan last year, which will become a holding subsidiary of Gree Electric Appliances. At present, the acquisition has passed the anti-monopoly review. DunAn Environment is a leading enterprise in the refrigeration components industry and belongs to the upstream supply chain company of Gree Electric Appliances. DunAn Environment's new energy thermal manager related products also cooperate with well-known domestic car companies.
Gree Electric Appliance said in the announcement that in addition to helping the company to ensure that the core components are controllable, it is also conducive to the company's entry into the new energy passenger car thermal management track.
Gree Titanium and DunAn Environment's two mergers and acquisitions will cost Gree Electric Appliances a total of 4.8 billion yuan, which is not a small number for the home appliance industry, which has a dismal market. The two mergers and acquisitions highlight Dong Mingzhu's ambitions, and are indeed conducive to accelerating the diversified business layout of Gree Electric Appliances.
But the industry is not all optimistic, observer Liu Buchen said: "Dong Mingzhu said that 'Gree electric appliance diversification into the harvest period', 'energy storage market space is large', there is not enough evidence to prove that it is a fact, more like Dong's wish." ”
Obviously, the pressure on Dong Mingzhu in the new term will only become greater, not only to catch up with the opponent, but also to effectively change the situation that the main business is too single, in this context, it is not easy to tell the new story of Gree.