1. Ranked among the richest list, with a net worth of 10 billion
When Zong Fuli took over the burden of the family business one by one, the second generation of small and medium-sized factories started their boss lives one after another, and an intergenerational change of management rights was quietly underway. The founding generation, who once worked hard in the business world, is getting older, and their descendants are often the first people to succeed them.
According to the "Report on the Development of Chinese Family Enterprises" and the sample survey of China's private enterprises, it is estimated that family enterprises account for more than 80% of the total number of private enterprises in China.
Judging from the "2024 Hurun Global Rich List", among the top 20 domestic billionaires, in addition to Huang Zheng, Ma Huateng, Zhang Yiming, Ding Lei and other corporate founders in their prime, more than half of the rich will choose to hand over the country they have laid over to their descendants.
However, the He Xiangjian family of Midea Group on the list is an alternative, which has opened up a unique path for the founder to take over the company by professional managers, known as the "niche of the niche".
In 2012, He Xiangjian announced his retirement and was succeeded by Fang Hongbo, who was only 45 years old, and Midea Group began to enter the Fang Hongbo era. Fang Hongbo has also transformed into the "strongest worker" with an annual salary of more than 10 million yuan and a net worth of 10 billion, and has a place on the global rich list, and he has also become another soul ruler of beauty after He Xiangjian.
(He Xiangjian on the left, Fang Hongbo on the right)
This title is well-deserved, from 2012 to 2023, Midea Group's revenue in the hands of Fang Hongbo has tripled from 102.7 billion yuan to 373.7 billion yuan, and the net profit attributable to the parent company has directly increased tenfold, from the original 3.2 billion yuan to 33.7 billion yuan.
(Midea Group's 2004 to the present, changes in net profit attributable to the parent company, source: Choice data)
In 2012, when Fang Hongbo just took over, Midea Group's revenue was comparable to that of Gree Electric, both of which were hundreds of billions of dollars, and the revenue of the two companies was comparable in the next two years, and they were steadily increasing until 2015, when variables began to appear.
In that year, affected by the sluggish market environment, the revenue of Gree Electric Appliances fell by 28.17%, while Midea Group only fell slightly by 2.08%, and this year, Midea Group's revenue was 38.783 billion yuan higher than that of Gree Electric Appliances.
Since then, the revenue gap between the two has widened.
In 2016, Midea Group's revenue exceeded 150 billion yuan for the first time, and it sold nearly 50 billion yuan more than Gree Electric Appliances. In 2017, Midea Group's revenue approached 250 billion yuan, and the gap between the two widened to 91.8 billion. In the following two years, the revenue gap between the two companies narrowed for a while, but in 2020, it suddenly expanded to 115.2 billion yuan. This year, Midea is approaching the new goal of 300 billion yuan, and Gree Electric Appliances was beaten back after finally breaking through 200 billion yuan, with an annual revenue of only 170.4 billion yuan.
In 2021 and 2022, Gree Electric is struggling to return to the 200 billion yuan camp, but Midea Group's revenue has reached 340 billion yuan.
In the early morning of April 30, the 2023 report card released by Gree Electric showed that the revenue was 205.018 billion yuan, which means that the revenue gap between the two has expanded from 2.6 billion yuan in 2012 to 168.692 billion yuan last year, and the revenue gap has directly increased by 64 times.
In the first quarter of this year, the gap between the two was even more huge, with Midea's single-quarter revenue exceeding 100 billion yuan for the first time, reaching 106.483 billion yuan, a year-on-year increase of 10.19%, while Gree Electric's revenue was only 36.596 billion yuan, an increase of only 2.53% year-on-year.
When Fang Hongbo first became chairman, his annual salary was 6.8 million yuan and the number of shares held was 36 million shares, and in 2023, his annual salary has risen to 13.54 million yuan, and his shareholding has reached 117 million shares. According to the stock price of 69.78 yuan on April 30, the book value of Fang Hongbo's shares exceeded 8 billion yuan. According to the "2024 Hurun Global Rich List", Fang Hongbo has a wealth of 10 billion yuan, ranking 2418th in the world.
Not to mention Fang Hongbo's net worth, taking the annual salary of 10 million yuan as an example, it is enough to envy countless workers, which is also far ahead in the A-share executive salary ranking. Judging from the "China Entrepreneur Value Report (2023)", this level of compensation is far ahead of the ranking of A-share executives. According to the report, Guo Chunying, chairman of Ruifeng New Materials, ranked 20th, has a salary of 13.62 million yuan. In 2022, the average annual salary of executives of listed companies in China is only 1.71 million yuan.
2. From a scholar to an iron-blooded leader
Fang Hongbo is a native of Tongling, Anhui Province, born in 1967, only 57 years old this year, unlike many business tycoons from science and engineering, he graduated from the History Department of East China Normal University He is very literate.
In the 2023 annual report submitted by Midea Group on March 27, there was a letter to shareholders, which was written by Fang Hongbo.
"Midea's letters to shareholders over the years have been very good, and they are the best letters to shareholders I have ever read. He is worthy of being a top student of China Normal University, low-key and powerful. Some old shareholders told the "City Boundary".
In this shareholder letter of more than 2,000 words, not only quotes literary and artistic works such as "Game of Thrones" and "Flowers", but also often comes out with golden sentences: "At present, the operation of the enterprise is like surfing, wave after wave, turbulent and uncertain", "There is no so-called long future, what I hear the most is the sudden departure", "There is no so-called pessimism and optimism in this world, only realism", "There is no friend of time, only a friend of trend", "The end of an era will also be the beginning of another era".
After graduating from university, he worked at Dongfeng Motor Factory for five years before joining Midea Group as an in-house editor in 1992. In the second year of joining the company, he published an article titled "He Xiangjian: The Captain of the "Midea" on the front page of "Nanfang Daily", which was quickly appreciated by He Xiangjian, the founder of Midea.
Since then, Fang Hongbo's tenure in Midea Group can be said to have skyrocketed. From the editor of the internal magazine, the head of the marketing department to the general manager of the core business of the air conditioning division, and then to the CEO of the refrigeration and household appliances department, Fang Hongbo only spent 11 years.
In 2012, when He Xiangjian announced his retirement, China's home appliance industry is facing severe challenges after years of staking land, under the influence of factors such as the withdrawal of stimulus policies and the continuous regulation of real estate, market demand has weakened significantly, and the retail sales of core categories such as refrigerators, washing machines, and air conditioners have fallen by more than 10%. Midea is no exception, the annual revenue fell by 23.41%, and if it fell a little more, it fell off the Iron Throne of 100 billion revenue, and its net profit also fell by 6.14%.
At that time, an article titled "The Danger of the Prosperous Age of Beauty" caused an uproar, pointing to the hidden huge crisis of beauty. "At that time, Midea's diversification was very large, and many products were rushed to market without market competitiveness." Liu Buchen, a senior analyst in the home appliance industry, told "City Boundary".
When Fang Hongbo took over, Midea could be said to be a giant steamer full of groceries and pressed to the waterline of the load, which looked precarious, as Wang Shi said, "Many private enterprises make mistakes when they are hundreds of billions of dollars."
Fang Hongbo, who was appointed in a critical situation, was well aware of this, and after taking office, he carried out a drastic reform. "Fang Hongbo mainly did two things at that time, one was to make a major adjustment in the product organizational structure and cut many redundant product lines, and the other was to make a major adjustment to the company's structure and lay off many large agents," Liu Buchen said.
This move that touched the interests of many parties made Fang Hongbo feel more pressured, and for this reason, he specially consulted He Xiangjian, who completely delegated power, who trusted him and told him to "do what you want".
You must know that for a leading company in the industry, the transfer of power after the departure of the first generation of prestigious soul founders is often a difficult hurdle to overcome. If the successor is not as good as the previous generation in terms of ability and prestige, and is not related to the founder, he or she is often unable to maintain and connect with the company's executives and employees, especially the old employees who have experienced the founding generation.
Before Fang Hongbo took over, the home appliance industry experienced such an equity war. In 2008, Huang Guangyu, the founder of Gome, was imprisoned, and Chen Xiao, a professional manager, was ordered to put Gome on the right track. Three years later, fierce conflicts broke out between the two sides over the equity competition, and finally ended with Chen Xiao leaving, which also cast a shadow on the company that was succeeded by professional managers.
"If 2012 hadn't been so radically transformed, Midea might not be what it is today. If there was no transformation in 2012, it may not be possible to turn around today, and there is no such ability", in a later media interview, Fang Hongbo had palpitations.
This reform has laid a good foundation for the development of Midea, and since then, Midea has been transforming from low-end to high-end, focusing on quality technology innovation, fully embracing intelligence, digitalization, and scenario-based, and its revenue has successively exceeded 200 billion yuan and 300 billion yuan, and last year's revenue is approaching 400 billion yuan, far ahead of its peers, and it has been sitting firmly on the throne of the leader of household appliances for many years.
3. Generously distributed 20 billion to shareholders
Today, in the capital market, Midea is also a giant with a market value of nearly 500 billion, and what makes 280,000 shareholders happiest is that Midea is very generous and known for its high dividends.
In March, Midea Group released its 2023 financial report, and the dividend plan mentioned that it would distribute 30 yuan in cash to all shareholders for every 10 shares, with a total dividend of 20.761 billion yuan, highlighting 20 billion yuan for the first time, accounting for more than 60% of the net profit attributable to the parent company that year, making it the year with the highest dividend ratio in the past 10 years.
"I bought two leading stocks in total, bought 1,500 shares of Midea, earned 10 points in a year, and lost 10 points," said a shareholder.
As a company that has always been known for its high dividends, Midea's performance in the past year has not disappointed shareholders. In addition to high dividends, Midea's share price has risen 27.73% this year, with a market value of 486.49 billion yuan, more than twice that of Gree Electric.
Behind the high dividends and rising stock prices are its good performance. According to the financial report, in 2023, Midea Group's revenue will be 373.71 billion yuan, a year-on-year increase of 8.1%, and the net profit attributable to the parent company will be 33.72 billion yuan, a year-on-year increase of 14.1%.
In terms of business composition, Midea Group has HVAC, consumer appliances and robots, automation systems, and other manufacturing industries. As a key business in recent years, robots, automation systems and other manufacturing industries have the fastest growth rate, with a total revenue of 37.25 billion yuan, a year-on-year increase of 24.49%, accounting for 10% of total revenue.
The revenue of the other two major businesses, HVAC and consumer appliances, was 161.1 billion yuan and 134.7 billion yuan respectively, with a growth rate of 6.95% and 7.51% respectively, accounting for 43.31% and 36.2% of the total revenue respectively.
Midea Group, which was once again absent from the China Home Appliances and Consumer Electronics Expo (AWE) this year, is no longer a simple home appliance company, and all signs show that Midea has great ambitions for the transformation to the B-end. Fang Hongbo also said at the 2024 annual meeting of operation and management that Midea will resolutely promote product upgrading, business model upgrading and industrial upgrading, taking into account the development of To C business and To B business, which also means that Fang Hongbo will promote Midea's third major transformation.
When the home appliance industry enters a downward cycle, leading companies are trying to find a second growth curve. Midea's B-end business is extensive, and it can be called a rare case in the industry. Not only the acquisition of the industrial robot company Kuka, but also in Wandong Medical, Kelu Electronics, Hekang New Energy and other industries involving medical, electronics, new energy and other industries to achieve holdings, "Midea in the comprehensive manufacturing industry on the road to go farther and farther", some industry insiders analyzed.
Not long ago, Fang Hongbo and Li Bin, the founder of Weilai Automobile, shared the stage in Anqing, Anhui Province, and jointly stood on the platform for their cooperation projects.
In the financial report, Midea also revealed that the proportion of its commercial and industrial solutions business revenue in total revenue increased from 8.5% in 2020 to more than 26% in 2023, and its revenue in 2023 will be close to 100 billion yuan. ”
This is also the reason why Midea's revenue can be far ahead, it not only has a second growth curve, but also synchronously lays out the third, fourth, fifth and other growth curves, and the current revenue composition is very diversified.
However, Midea is not restless, "whether it is in the B-end or C-end field, Midea Group has not had a major breakthrough in technological products in recent years", Liu Buchen said, "In terms of overseas business, it is also facing related bottlenecks such as the lack of high-end brand creation." ”
If you want to successfully continue to write a legend, Fang Hongbo can't lie down yet, and you have to continue to work hard.
Author | Zhang Jikang
Edit | Chen Fang
Operations | Zhang Daxing