A statement from Gree's official Weibo shocked the market, and Gree claimed that the lawsuit with Xiaomi had been won.
According to the "Daily Economic News", "Shanghai Securities News", "China Securities Journal", "Red Star News" and other authoritative media reports, on the evening of July 9, Gree Wenchuan issued a document on official Weibo stating that Gree Electric received the [(2023) Supreme Law Zhi Min Zhong No. 1123] legal document issued by the Supreme People's Court on June 18, 2024, which requires that the infringing Mijia Xiaomi electric fan involved in this case shall not be manufactured and sold, and the infringer shall pay 1.85 million yuan to Gree Electric Appliances.
Judging from the information disclosed by Gree, the judgment of the court of first instance for the Guangzhou Intellectual Property Court [(2021) Yue 73 Zhi Min Chu No. 1399] is dated December 22, 2022, and the legal document [(2023) Supreme Law Zhi Min Zhong No. 1123] issued by the Supreme People's Court is dated June 18, 2024, a time difference of one and a half years, which may indicate that the defendant did not accept the judgment of the first instance and had appealed.
On the morning of July 10, Xiaomi responded: "After investigation, our company has not received any lawsuits related to environmental appliances. Xiaomi's response once made the "plot" have a tendency to reverse. At noon on the 10th, Gree Wenchuan once again issued a document saying that the product "Mijia Xiaomi Electric Fan BPTS01DM" sold by the "Xiaomi Official Flagship Store" infringes the relevant patents of our company, and the entrusting party of the infringing product is "Xiaomi Communication Technology Co., Ltd.", and the manufacturer is "Zhejiang Xingyue Electric Co., Ltd." The manufacturer has changed its name to "Dream Maker (Zhejiang) Technology Co., Ltd.", and the company has paid 1.85 million yuan to our company. Gree Wenchuan said that "Tianjin Jinxing Venture Capital Co., Ltd.", which is 100% controlled by "Xiaomi Technology Co., Ltd.", holds 8.0439% of the equity of "Dream Maker (Zhejiang) Technology Co., Ltd."
Tianyancha data shows that among the top ten shareholders of Dream Maker (Zhejiang) Technology Co., Ltd. are Tianjin Jinxing Venture Capital Co., Ltd., which is 100% controlled by Xiaomi Group, and Hangzhou Shunying Equity Investment Partnership (Limited Partnership) is the seventh largest shareholder, holding 5.6884% of the shares, and the affiliated institutions behind it are Shunwei Capital, and Lei Jun is the largest shareholder of Shunwei Capital, holding 51% of the shares. It seems that after Dong Mingzhu and Lei Jun's gambling contract of the century, they may still have "friendly exchanges".
Dong Mingzhu took the lead in "firing"
Dong Mingzhu and Lei Jun's "friendship" can be traced back to 11 years ago, in 2013, at CCTV's 14th China Economic Person of the Year Award Ceremony, the two made a bet of up to 1 billion yuan, the general content of the bet is that if Xiaomi's revenue exceeds Gree in 2018, Lei Jun wins, and Dong Mingzhu wins. At that time, Lei Jun didn't want to bet one billion, but wanted to bet 1 yuan. Dong Mingzhu raised the bet to one billion, because Dong Mingzhu thought he had the chance to win at that time.
In 2013, Dong Mingzhu was full of confidence, she believed that Gree was the real industry, and Xiaomi was just an emerging Internet technology company, and the revenue gap between the two was huge, Gree's revenue was 120 billion yuan, Xiaomi's revenue was 26.58 billion yuan, and Gree was 4.5 times that of Xiaomi. The gap is nearly 100 billion yuan, despite the rapid development of Xiaomi, Dong Mingzhu also firmly believes that Xiaomi will not be able to win Gree in 5 years.
It is true that Lei Jun lost in this gamble, in 2018, Xiaomi's revenue was 174.915 billion yuan, and the total revenue increased by 6.8 times, but it was still lower than Gree's 200.024 billion yuan, although Gree's revenue has increased by less than 1 time in the past 5 years, but its volume base is large, Xiaomi still let Lei Jun lose the bet under high growth. Even if Xiaomi's revenue has increased by 148.335 billion yuan in the past 5 years, while Gree has only increased by 80.024 billion yuan, Dong Mingzhu still won.
In 2019, Xiaomi's revenue was 205.8 billion yuan, Gree was only 200.5 billion yuan, Xiaomi achieved a reversal, Lei Jun's mistake was that the 5-year bet was about a year less, but fortunately, Dong Mingzhu didn't really go to Lei Jun to ask for a billion bets. But the "friendship" between the two has actually been concluded, especially in 2023, Xiaomi's revenue will be as high as 271 billion yuan, while Gree's revenue will only be 205 billion yuan, from 2018 to the present, Xiaomi's revenue has soared by nearly 100 billion yuan, while Gree's revenue has only increased by less than 5 billion yuan, or Dong Mingzhu has gradually put pressure on him.
Especially after Xiaomi entered the field of air conditioning, it formed a direct competition with Gree, and the discord between Xiaomi and Gree also happened from time to time. On June 28, 2024, at Gree's 2023 general meeting of shareholders, Dong Mingzhu took the lead in firing at Xiaomi, questioning the sales data of Xiaomi air conditioners. Dong Mingzhu asked, Xiaomi said that it is the first place in air conditioning, and it all depends on other manufacturers to make products, what is Xiaomi's technology? This is Dong Mingzhu's rare "gaffe" after a large number of articles and short videos on the Internet where the sales of Xiaomi air conditioners exceeded the sales of Gree air conditioners, and it also shows Dong Mingzhu's anxiety about the current situation of Gree air conditioners.
At the same time, Dong Mingzhu also denied that he deliberately became an Internet celebrity at the shareholders' meeting, insisting that Gree's products are deeply rooted in the hearts of the people, because the quality of the products is good, it is called an Internet celebrity, and Gree has strong technical support in order to win the market.
Gree's "follow-up" to Oakes
This is not the first time that Gree has litigated on patent issues, and Gree may have become a major player in patent litigation in the industry. Tianyancha data shows that there are as many as 2,882 judicial cases involving Gree, 130 court announcements (1,535 historical court announcements), and 10 judgment documents (1,787 historical judgment documents). Among them, 46.8% of the cases involved were trademark infringement disputes, 75.5% of the cases were plaintiffs, and 22.8% of the cases were defendants.
Among them, the famous case in which the identity of Gree has changed from the plaintiff to the defendant and then to the plaintiff is the mutual lawsuit between Gree and Oaks.
On July 16, 2023, the Guangzhou Intellectual Property Court issued an announcement that Gree Electric Appliances sued the defendant Oaks Air Conditioner. According to the announcement website of the people's court, the plaintiff Gree Electric appealed to the court and ordered the seven defendants, including Oaks Air Conditioning Co., Ltd., Ningbo Aosheng Trading Co., Ltd., and Shang Bin, to immediately stop infringing on the plaintiff's trade secrets, permanently delete the electronic data containing the plaintiff's trade secrets, destroy the air conditioner products, molds, technical drawings and other carriers manufactured using the plaintiff's trade secrets, and compensate for economic losses and reasonable rights protection costs of 99 million yuan. At the same time, it requested that Oaks be ordered to transfer 8 patent rights to the name of Gree Electric. The sky-high lawsuit of 99 million yuan attracted widespread attention at the time.
Previously, in the judgments of Zhejiang Ningbo Intermediate People's Court and Hangzhou Intermediate People's Court in December 2021 and August 2022, Gree was the defendant, and both times lost the case, and were sentenced to pay Oaks 160 million yuan and 55 million yuan respectively, and the total compensation of Gree exceeded 220 million yuan on both occasions.
The cause of the incident was that in December 2018, Oaks Air Conditioner sued Gree for infringement, and then Gree reported Oaks in 2019. The dispute between the two lasted for years. The fundamental reason is that there is a fierce competitive relationship between the two brands, which has gradually evolved into an all-round offensive and defensive battle at the level of patents, products, marketing, public relations, law, etc., and the ultimate goal of both parties is to hope that they have more competitive advantages than their opponents in the market. It may also highlight that the household appliance industry has entered the state of stock market, and enterprises have entered squeezing competition, and the competition will be more fierce in the future, and judicial litigation may be difficult to avoid.
The infringement lawsuit between Gree and Oaks will not reach a final end until the end of 2023. On December 7, 2023, the Supreme People's Court ruled that the compressor patent purchased by Oaks in 2018 did not meet the conditions for patent authorization and should be invalidated. On December 8, the Supreme People's Court made a ruling on the infringement case of Oaks suing Gree in Ningbo and Hangzhou, and found that Gree did not infringe. Gree's lawsuit against Xiaomi for infringement this time is almost a follow-up to Gree's lawsuit against Oaks, and it is also a direct reflection of the fierce market competition.
Why did Gree get on millet?
Gree has a strong sense of rights protection, but this lawsuit with Xiaomi has attracted a lot of criticism.
According to the (2023) Supreme Court Zhi Min Zhong No. 1123 Civil Mediation Statement, the plaintiff in the first instance is Zhuhai Gree Electric Appliance Co., Ltd., and the defendants in the first instance are Dream Maker (Zhejiang) Technology Co., Ltd. (formerly known as: Zhejiang Xingyue Electric Appliance Co., Ltd.) and Dongguan Jingdong Lisheng Trading Co., Ltd.
In other words, the defendant is not Xiaomi, although Xiaomi is a shareholder of Dream Maker (Zhejiang) Technology Co., Ltd., but it is not the subject of the lawsuit, and Dream Maker (Zhejiang) Technology Co., Ltd. is only a Xiaomi supplier and ecological chain enterprise at most through Tianyan Investigation's equity infiltration. However, the official document of Gree Wenchuan did not mention Dream Maker (Zhejiang) Technology Co., Ltd., but mentioned Xiaomi everywhere, and the last paragraph is "suing the infringing subject". This is also the reason why Xiaomi's official response said that it "has not received any lawsuits related to environmental appliances".
Media person Yang Qiang said in a short video that Gree was suspected of deliberately rubbing Xiaomi's popularity. The patent dispute is the behavior of Dream Maker (Zhejiang) Technology Co., Ltd., which is only Xiaomi's foundry, and Xiaomi is not the actual controller. In the announcement, Gree did not mention the name of the dream maker.
Gree's other defendant is Dongguan Jingdong Lisheng Trading Co., Ltd., which is fully owned by Beijing Jingdong Century Trading Co., Ltd. and belongs to Jingdong Group. Glewen's official Weibo post did not mention JD.com. According to 618 data, the Jingdong platform is one of the main online sales battlefields of Gree air conditioners.
Gree's "Mao" Xiaomi may be related to the strength of Xiaomi air conditioners. According to data from Aowei Cloud, an authoritative data agency in the home appliance industry, as of the 26th week of 2024, in the online air conditioning market, Xiaomi's cumulative sales this year increased by 68.83% year-on-year, and the sales market share was 14.18%, a year-on-year increase of 5.21%, making it the third largest online air conditioning brand. The sales volume of Gree air conditioners decreased by 9.39%, with a market share of 18.87% and a market share of 3.38%. The market share of Xiaomi air conditioners is already approaching Gree, no wonder Gree is so tight.
However, Gree still has a huge advantage offline, with an offline market share of up to 30%, and an offline market share of Xiaomi air conditioners of only 0.08%. In the case that consumers are accustomed to online shopping, Xiaomi air conditioners are popular online. Gree's performance in the first quarter of 2024 is mediocre, and the performance pressure is greater.
According to the financial report, in the first quarter of 2024, Gree Electric's revenue will be 36.6 billion yuan, a year-on-year increase of 2.53%; The net profit attributable to the parent company was 4.675 billion yuan, a year-on-year increase of 13.77%. It seems that the performance is not bad, but Haier Smart Home's revenue in the same period was 62.77 billion yuan, a year-on-year increase of 6.8%, and the net profit attributable to the parent company was 3.447 billion yuan, a year-on-year increase of 13.18%. Midea Group's revenue in the first quarter was 106.5 billion yuan, a year-on-year increase of 10.19%, and the net profit attributable to the parent company was 9.237 billion yuan, a year-on-year increase of 11.91%. The revenue growth rate of the two major competitors is higher than Gree's 2.53%, and the net profit growth rate, Gree only leads by a slight margin.
In 2023, Gree Electric's revenue will be 205 billion yuan, a year-on-year increase of 7.82%; The net profit attributable to the parent company was 29.02 billion yuan, a year-on-year increase of 18.41%. In the same period, Haier Smart Home's revenue was 261.4 billion yuan, a year-on-year increase of 7.33%; The net profit attributable to the parent company was 16.6 billion yuan, a year-on-year increase of 12.81%. Midea Group's revenue in the same period was 373.7 billion yuan, a year-on-year increase of 8.10%, and its net profit in the same period was 33.72 billion yuan, a year-on-year increase of 14.10%. The revenue scale of Gree Electric Appliances has ranked last among the top three home appliances.
In the first quarter of 2024, the gross profit margin of Gree Electric Appliances was 29.45% and the net profit margin was 12.76%, while the gross profit margin and net profit margin of Haier Smart Home were 28.95% and 7.04% in the same period, and the gross profit margin and net profit margin of Midea Group were 27.32% and 8.52%. On the whole, the difference in gross profit margin between the top three is not too big, but the gap in net profit margin is large, indicating that Gree is still the most profitable one.
Looking at the revenue history of Gree Electric Appliances, the revenue in 2023 is only less than 5 billion yuan more than in 2018. Objectively evaluated, Dong Mingzhu has brought great changes to Gree, but some decision-making mistakes in Gree's car manufacturing and mobile phone business have also dragged down the company's development. In the face of the menacing threat of many competitors, it was time for Gree to make some changes.
Author | Dream Shaw