#以书之名#
First of all, the gross profit margin - in 2003, "SARS" changed people's consumer demand for air conditioning, in addition to refrigeration, heating function, regulating air quality and other functions for the first time exceeded the price, quality, service, become the primary consideration for consumers to buy air conditioning
The demand for healthy air conditioners hit sales, so the price of ordinary air conditioners continued to fall, while on the other hand, the overall price increase of refrigeration raw materials such as steel plates, copper, and plastics caused the revenue of the entire industry to fall by 17%
The headwinds of overcapacity and rising raw material prices for air conditioners continued into 2006.
At the same time, the compressor industry, which was originally in short supply, has gradually saturated its production capacity, and its gross profit has been compressed, resulting in a decline in the overall gross profit margin. What to do with new challenges ahead?
Answer: M&A, asset integration, two steps.
Step 1: Divest the loss-making small household appliance business and focus on large white appliances.
In 2005, it divested its loss-making small household appliance business to its parent company, Midea Group
Taking 2004 as an example, the small household appliance business achieved a revenue of 5.878 billion yuan, but due to excessive expenses, the loss was 91.412 million yuan.
Step 2: Load new assets, expand categories, and open up markets.
At this stage, Midea expanded the white goods category through mergers and acquisitions, entered the refrigerator and washing machine track, and began to lay out overseas markets, specifically:
1) In December 2006, it acquired the equity of three companies in the ice washing business of Royalstar from its parent company, Midea Group, extending its main business horizontally to refrigerators and washing machine businesses, and planning to enter the top two in the washing machine market in 3-5 years.
2) In November 2007, it acquired Hefei Hualing (100%), China Refrigerator (95%), Guangzhou Valin (100%) and Chongqing General Motors (30%) at a parity price from its parent company Midea Group for 510 million yuan to increase the production capacity of refrigerators and air conditioners.
3) In 2008, it acquired 24.01% of the equity of Wuxi Little Swan and became the controlling shareholder, further developing its efforts in the field of washing machines.
4) In 2010, it acquired 32.5% shares of Egypt's Miraco Company (household air conditioning, central air conditioning and cold chain products) for 360 million yuan to lay out the African market.
5) In 2011, it acquired a 51% stake in Carrier Latin America Air Conditioning Company for 1.41 billion yuan and entered the South American market.
With the adjustment of product structure and the opening of new markets, its gross profit margin has rebounded year by year since 2007
Among them, the decline in gross profit margin in 2010 is due to the implementation of the business strategy of giving priority to scale and increasing market share, the price of some products has been reduced, and the cost of raw materials has risen
It is with the implementation of a number of mergers and acquisitions that Midea has more and more brands, and the categories are becoming more and more complex - however, strangely, its sales expense ratio has not increased but decreased, why is this?
This shows that the synergies of mergers and acquisitions and their brand management capabilities are gradually becoming prominent.
For example, from the perspective of cost savings, its M&A targets are all large white power businesses, with similar product attributes
In the early stage, Midea's large investment in sales expenses has laid a solid channel foundation, whether it is dealer channels, KA channels, or other marketing channels, they can actually be shared, so the synergy effect is enhanced and the cost is saved
Predict the follow-up and listen to the next breakdown
It does not constitute any investment advice, the stock market is risky, and you need to be cautious when entering the market