Midea, Evolving from Home Appliance Company to Data-Driven Technology Group

Midea was founded in 1968 led by Mr. He Xiangjian in Shunde. In 1980s, seizing the opportunities Created by Reform and Open-up Policy, Midea started to make electronic fans, AC and entered the home appliance industry.  In 1993, Midea went through shareholding reform and was listed on Shenzhen Stock Exchange, becoming the first township company in China with a modern management system. In 2000s, Midea further diversifed its product portfolio by carring out a series mergers and acquisitions. It expanded its business to refrigerator, washing machine and other white goods. In 2010s, Midea acquires most equity of Toshiba Lifestyle Products & Service Corporation, Clivet and Kuka, entering the robotics and automation industry. 

In the time being, Midea, Haier, and GREE are the most successful home appliance in China, especially in White goods area. However, comparing with peers, Midea has transformed itself from traditional home appliance company to a leading data-driven technology company specializing in Robotics, Industrial Automation, HVAC Systems, Consumer Appliances and Smart Logistics.

Midea has put a lot of efforts to become data-driven technology company, and has achieved numerous fruits from it. 

Midea has put forward a user experience-oriented strategic objective of “Comprehensive Digitalization and Comprehensive Intellectualization”. On one hand, it promotes deep integration of the digital technology and business in the whole value chain, with the view to becoming an icon in digitalization. On the other hand, with foresight, it plans for whole new products, services and business models centering on smart technologies, products and scenes, so as to outcompete Internet companies. 

I will put forward two examples how Midea digitalization success in different areas:

Upon years of a digitalized reform characterized by “One Midea, One System, One Standard”, Midea has successfully materialized operations driven by software and data through its value chain, connecting end to end and covering R&D, PO, scheduling, flexible manufacturing, procurement, follow-up of product quality, logistics, installation & post-sale services, etc. The Group’s cloud platform has made come true C2M flexible manufacturing, platform-based and modularized R&D, digitalized production techniques and simulation, intelligent logistics, digital marketing, digital customer service, etc. “M.IoT”, the Midea IIOT Platform, has become China’s first complete IIOT platform provider covering industrial knowledge, software and hardware.In addition to applying these IIOT platform solutions to its manufacturing bases across the world and various products, Midea has also provided these solutions for over 200 customers in different industries.

Making full use of the digital technology, Annto Logistics Technology Co., Ltd. (Annto), a subsidiary of Midea, refines its offline logistics network through the big data technology to build a smart and digital distribution platform. Relying on nearly 140 urban distribution centers nationwide, Annto concentrates its resources on urban distribution. It is able to provide fully visualized direct distribution services covering every town and village of the country. It can finish the delivery to 19,692 (or 46%) towns and villages within 24 hours and to 35,944 (or around 85%) towns and villages within 48 hours in the country. Additionally, Annto works closely with Midea’s post-sale service network to provide one-stop services of delivery and installation, which has effectively improved user experience.

With the accumulation of digitalization efforts, Midea has bulit deep moat and advantages:

First, as one of the leaders among the global household appliance makers and a dominator in the major appliance sectors, Midea Group provides high-quality, one-stop home solutions through its wide product range, complete with full specifications.

According to data from AVC, Midea’s major home appliances all took up a larger share in the domestic market 2019. 

The table below shows the offline market shares and rankings of the Company’s primary home appliance products (by retail sales) in 2019.

The table below shows the online market shares and rankings of the Company’s primary home appliance products (by retail sales) in 2019:

Second, broad channel networks and a well-established smart supply chain system ensuring the steady growth of Midea’s online and off-line sales.

By virtue of years of development and investments, Midea Group has formed an all-dimensional market coverage. In the mature first and second-tier markets, Midea has developed and maintained good partnerships with large home appliance retail chains. While in the broad third and fourth-tier markets, the Company uses flagship stores, specialty shops, traditional channels and new channels as effective supplements. Currently, the Company has already covered the markets at all tiers. Additionally, the Company’s dominance in branding, products, offline channels and logistics distribution have also created powerful guarantees for the Company’s rapid expansion of its e-commerce business and channels. Achieving the highest online sales among China’s household appliance manufacturers, Midea’s online retail sales were close to RMB70 billion in 2019, up by over 30% YoY, maintaining the highest sales on China’s mainstream e-commerce platforms such as JD, Tmall and Suning in various home appliance categories.

Third, a strong network of global operations developed and designed with Midea’s continual global resource allocation and investments, globally-advanced manufacturing capabilities and advantage of scale. 

The success of a series of global acquisitions and new business expansion moves has further solidified Midea’s global operations and leading advantages in robotics and automation. With the world’s leading production capacity and experience, and a wide variety of products as well as its production bases all over the world, the Group has been able to expand rapidly into the emerging overseas markets and is becoming a stronger competitor in those mature overseas markets. Overseas sales of the Group accounts for more than 40% of the total sales revenue. Its products have been exported to over 200 countries and regions, and it owns 17 overseas manufacturing bases and 24 overseas operating agencies. Midea’s global operations system has been further improved through the reform of international business organizations changing from a platform unit to a business entity. It also increases investments in overseas business operations, focuses on the needs of the local customers and enhances product competitiveness in a bid to promote growth in its Own Branding & Manufacturing (OBM) business. In addition, with a deep knowledge and understanding on product characteristics and product demands in overseas market, Midea is promoting worldwide branding and expansion through global collaboration and cooperation. In this way, the global competitiveness of Midea is increasing steadily.

With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your Future” as its mission, and “Embrace what’s next – Aspiration、Dedication、Collaboration、Innovation” as its values, Midea integrates global resources and promotes technological innovation to create a better life for over 400 million users, major customers and strategic partners in different areas worldwide every year with satisfying products and services.

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