Midea, Haier, Gree: Who's the King of White Appliances?
Here is the translation of the provided text into English: Who is the "King of White Appliances" in China?
Recently, the "trade-in" feast has begun, and Midea, Haier, and Gree are coinciding with the "mid-term exam" score comparison, and the "three-way competition" pattern is surging again.
The semi-annual report shows that the revenue of the three white appliance giants, Midea Group, Haier Smart Home, and Gree Electric Appliances, in the first half of 2024 is 217.2 billion, 135.6 billion, and 99.7 billion yuan respectively; the net profit attributable to the parent company is 20.8 billion, 10.4 billion, and 14.1 billion yuan respectively.
In summary, among the three giants of home appliances, one dominates, one is catching up, and the other is still diversifying!
In the white appliance track, real changes are often silent!
Ten years ago, Gree, with a revenue of over 100 billion, was considered the number one home appliance in China; 12 years later, Midea is the undisputed overlord; Haier is more like the second child of the family who "goes out to work", although not as famous as the eldest, but has already taken its own path.
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This "Three Kingdoms Kill" is estimated to continue for a long time, which one do you favor?
Nowadays, the automobile market is fiercely competitive, but it is unknown that in the home appliance field, it has already been as hot as a fire.
Recently, the three white appliance giants, Midea Group, Haier Smart Home, and Gree Electric Appliances, have successively disclosed their semi-annual reports.
Who is the real "King of Chinese White Appliances"?
Finally, it can be seen.
The financial report shows that the revenue of Midea, Haier, and Gree in the first half of 2024 is 217.274 billion yuan, 135.623 billion yuan, and 99.783 billion yuan, respectively, with a year-on-year increase of 10.3%, 3.03%, and 0.55%; the net profit attributable to the parent company is 20.804 billion yuan, 10.42 billion yuan, and 14.136 billion yuan, respectively, with a year-on-year increase of 14.11%, 16.26%, and 11.54%.
Comparing the data of the three companies, it can be seen that Midea is leading in both scale and growth rate, not only did the semi-annual revenue break through 200 billion for the first time, but the growth rate also reached double digits, and the gap with the other two companies is getting bigger and bigger; it has to be said that under the trend of slowing domestic home appliance market growth, going overseas and diversification have become the necessary development trends for home appliance enterprises.
Midea Group, which has performed well in both diversification and overseas expansion, has achieved better performance than the overall home appliance market.
Haier earned the least, but the increase is the highest, and it is also the only company among the three giants in the past three years to maintain double-digit growth in net profit attributable to the parent company; Haier Smart Home, through high-end and globalization strategies, not only achieved stable growth in the domestic market but also achieved significant breakthroughs in overseas markets.
Relatively speaking, Gree Electric Appliances, which has not yet achieved significant results in diversification and has a low proportion of overseas markets, is facing more and more growth constraints.
The revenue growth of Gree Electric Appliances is about to stagnate, and the net profit increase is also the lowest among the three giants.
Looking at the compound growth rate over the past three years, the revenue compound growth rate of Midea is the highest at 8.98%, Gree Electric Appliances is the lowest at 2.05%, and Haier Smart Home is in the middle at 5.49%; the profit compound growth rate of Haier Smart Home is the highest at 14.49%, Midea Group is in the middle at 14.05%, and Gree Electric Appliances is the lowest at 11.03%.
Overall data, Midea Group, with its diversified business layout and strong market competitiveness, leads the three giants, Haier Smart Home is also in a gradual rise stage, and Gree Electric Appliances has entered a plateau period.
In fact, after a company has developed to a certain scale, it is difficult to continue to achieve high growth.
Data shows that in the first half of 2024, the retail sales of white appliances were 231.9 billion yuan, a year-on-year decline of 7%, and the retail volume was 77.74 million units, a year-on-year decline of 3.6%; the retail volume of kitchen and bathroom large appliances was 41.49 million units, a year-on-year increase of 0.5%, and the retail sales were 77.1 billion yuan, a year-on-year decline of 2.3%; the retail volume of air conditioning market across all channels was 33.15 million units, a year-on-year decline of 11%, and the retail sales were 111.4 billion yuan, a year-on-year decline of 14.5%.
The air conditioning business is the most fiercely competitive battlefield among the three, and it has shown a "Three Kingdoms" situation, but now the gap seems to be getting bigger and bigger.
The revenue of Midea's heating, ventilation, and air conditioning business reached 101.46 billion yuan, a year-on-year increase of 10.3%.
Gree's air conditioning business revenue was 77.96 billion yuan, a year-on-year increase of 11.4%.
Haier's air conditioning business was 29.01 billion yuan, a year-on-year increase of 3.6%.
It can be seen that in the air conditioning industry, Midea occupies the throne of China's air conditioning sales, and it is truly deserved!
However, the proportion of Midea's heating, ventilation, and air conditioning revenue to total revenue is 46.7%, Gree's air conditioning revenue accounts for 78.14% of total revenue, and Haier's air conditioning revenue accounts for only 21.4% of total revenue, which is no longer the main business.
Haier's refrigerator revenue was 40.86 billion yuan, accounting for more than 30% of total revenue.
It is worth mentioning that even with a revenue of over 100 billion yuan, Midea's air conditioning business did not account for half of the territory.
Consumer appliances refer to the category of home appliances including refrigerators, washing machines, and small appliances, with revenue reaching 75.14 billion yuan, accounting for 34.6%.
Robots, automation systems, and other manufacturing industries have a revenue of 18.3 billion yuan, accounting for 8.4%.
It can be seen that Midea is undoubtedly more successful in the diversification of home appliance categories.
Although Gree has been increasing its investment in diversification, the situation of Gree's air conditioning business being the dominant one is still very obvious, and other categories have not yet formed a climate, and are still facing greater breakthrough pressure.
Overall, in the first half of the year, the "Three Kingdoms Kill" of home appliance giants, Midea once again dominates, Haier is desperately catching up, and Gree urgently needs diversification.
Who is the real "King of Chinese White Appliances"?
It remains to be seen, because the Chinese home appliance industry is always changing.
The home appliance industry is deeply bound to the real estate market.
In the distant golden age of the real estate market, giants such as Midea, Gree, and Haier enjoyed huge dividends.
Taking Midea as an example, from 2009 to 2019, within 10 years, its annual revenue soared from 69 billion yuan to 279.3 billion yuan, and net profit soared from 1.6 billion yuan to 24.2 billion yuan.
The peak market value of Midea Group once exceeded 770 billion yuan, a dazzling star stock!
In contrast, the peak market value of Gree Electric Appliances was nearly 350 billion yuan, and the peak market value of Haier Smart Home was only more than 300 billion yuan.
I believe everyone knows the situation in the following years, the home appliance industry inevitably went into decline.
Midea's performance growth has been unable to continue, and the profit growth rate in 2022 was the lowest in nearly 10 years.
After the saturation of the domestic home appliance industry, the most direct response strategy is to raise prices and go overseas, which is the high-end and globalization described by home appliance companies.
In fact, as early as 2015, Gree and Midea realized that change was urgent.
That year, the white appliance was low, and the revenue of Midea Group, Haier Smart Home, and Gree Electric Appliances all declined.
At the moment of choice, Gree took the cross-border road, and the mobile phone, chip, new energy car, and other hot things were all tossed around, while Midea chose the route of home appliance diversification and internationalization.
Different choices lead to different endings.
From 2017 to 2020, Gree's net profit was 22.4 billion, 26.2 billion, 24.7 billion, and 22.1 billion, and there was no high growth.
During the same period, Midea's net profit was 17.2 billion, 20 billion, 24.2 billion, and 27.2 billion, and the profit growth was obviously better than Gree.
The gap between the two sides widened rapidly in 2020, but although Gree's market value has always been less than that of Midea Group, it has been able to firmly suppress Haier Smart Home before; but the capital market is unpredictable, who could have thought that Gree's market value would fall all the way after reaching its peak in 2020, and Haier's situation is gradually reversing.
As of the end of 2022, Gree's market value has fallen to 77% of Haier's, and at the end of 2019, this proportion was 259%.
Haier not only completed the surpassing of Gree in market value but also did not give in to Gree in revenue, gradually completing a comprehensive surpassing of Gree, second only to Midea Group.
Looking back over the past three years, Haier Smart Home's growth rate has been the best.
From the first quarter of 2022 to the first quarter of 2024, the profit growth rate of Haier Smart Home was 15.44%, 12.6%, and 20.2%.
With a compound profit growth rate of 16.3%, it exceeded the 11.8% of Midea Group and the 8.07% of Gree Electric Appliances.
Why?
Relying on its strategic vision, it took the lead in seizing the opportunity to go overseas.
To break through, it can only rely on going overseas.
And Haier Smart Home is the earliest among the three giants to lay out overseas, starting from the 1990s to actively explore the overseas market of independent brands.
In the early stage, it went through a lot of difficulties and could only enter the developed country market through small freezers and other marginalized products at low prices.
Later, Haier explored a way to combine the acquisition of overseas brands with localized product technology, which brought a breakthrough.
In 2011, it acquired the washing machine business of Sanyo, obtaining the Japanese market; in 2012, it acquired Fisher & Paykel, obtaining the Australian and New Zealand markets; in 2016, it acquired GE's home appliance business, obtaining the American market; in 2018, it acquired the Italian Candy, obtaining the European market.
It is precisely by relying on these four key acquisitions that Haier completely opened up the developed country market.
As of 2023, Haier Smart Home's overseas revenue reached 99.3 billion yuan, accounting for 52%, which is the highest among the three giants.
Speaking of going overseas, the second place is Midea Group.
Midea's overseas revenue accounted for 40% in 2023, although not as good as Haier, but the overseas revenue reached 150.9 billion yuan, and the scale has surpassed Haier.
To this day, Gree Electric Appliances still relies on a single product of air conditioning to dominate the world, and it is also the slowest to go overseas, with an export ratio of only 12% in 2023.
In the end, the capital market will vote with its feet and embrace the one with better performance.
Now, Midea's market value is nearly 500 billion yuan, and it is the undisputed number one in home appliances in China, while Gree's market value is only about 230 billion yuan, which is not only unable to be compared with Midea, but also slightly lower than Haier Smart Home's more than 250 billion yuan.
It is worth mentioning that not long ago, the largest IPO in the Hong Kong stock market in the past three years (the net fundraising amount was 30.668 billion Hong Kong dollars), Midea Group officially went public, becoming the second domestic home appliance giant to go public in both "A+H" dual main bodies after Haier Smart Home.However, as a consumer enterprise focused on the C-end market, Midea Group's aggressive transformation towards B-end business development, such as automobiles, medical, new energy, and so on, which are very different from its main business, lacks synergy.
The probability of success for such a wide-ranging diversification is very small, and it is more likely to become a cash-draining beast that drags down profits.
There are many roads to Rome.
When a company's cash flow is tight, it is correct to focus on its main business.
But for a company to thrive for a long time, in addition to having a highly competitive main business, diversification and intelligence are undoubtedly a "heaven-reaching" path.
In recent years, Gree has been making cars and smartphones, Xiaomi has been making cars and home appliances... All major giants are crossing over into each other's fields, and the core is to control more intelligent terminals and expand their ecosystem.
In the imagination of the tech world, in the future, smartphones, smart cars, smart homes, and smart wearable devices will all be interconnected.
Whoever controls more intelligent terminals will be able to win in the era of the Internet of Everything.
At that time, a strong ecosystem will be the company's moat.
Continuing to fight alone by selling smartphones, cars, and home appliances will inevitably lead to a loss of voice.
In your opinion, who will be the "King of White Appliances" in China in the future?
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