Recently, Gree Electric confirmed that the company has indeed wholly acquired Hefei Jinghong Electric Appliance Co., Ltd. (Jinghong Electric Appliance). Gree Electric played down the acquisition without explaining the reasons or disclosing the amount of the acquisition. Gree, which has proposed transformation since 2014, seems to be very enthusiastic about the acquisition in recent years. Moreover, in addition to the main business of traditional household appliances, it is becoming more and more "doing nothing".
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The main business is profitable, and Gree wants to transform.
On the evening of October 8th, Gree Electric released the performance forecast for the first three quarters of 2018. According to the report, Gree Electric is expected to achieve a total operating income of 149.051 billion yuan to 150.855 billion yuan in the first three quarters of 2018, compared with 112.027 billion yuan in the same period last year, which is close to the level of 2017. Gree Electric said that the home appliance industry performed well in the first three quarters, and the company achieved higher growth than the industry by virtue of its brand, technology and channel advantages.
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According to insiders, although this year’s performance is promising, Gree Electric’s positive transformation is also well aware of its weak comprehensive strength and the limitations of the air-conditioning market. In the first half of 2018, the air-conditioning industry continued to usher in high growth. According to statistics, in the first half of 2018, the total sales volume of household air conditioners increased by 14.3% year-on-year, which was the only one in all electronic industries to maintain a high double-digit growth. However, during the peak season from July to August, the air-conditioning market turned sharply. During the 27th to 34th week of 2018, the retail volume and retail sales growth rate of the offline air-conditioning market were -26.3% and -24.3% respectively. Online retail volume and retail sales were -12.7% and -13.3% respectively. In last year’s boom, but from the medium-term growth trend, the growth rate of household air-conditioning industry has slowed down, and the pressure on air-conditioning enterprises will also increase. Gree Electric’s transition layout in advance can effectively reduce the risk impact.
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The State Grid understands that Gree Electric has been actively expanding other businesses in recent years, in addition to continuing to make efforts in air conditioning business. In the field of intelligent equipment, Gree has mastered the research and development capabilities of high-end equipment and core components inside robots; In the field of new energy vehicles, Gree Electric acquired Zhuhai Yinlong and actively laid out the automobile market. In addition, Gree Electric also started the chip business this year. Its wholly-owned subsidiary Zhuhai Zero Boundary Integrated Circuit Co., Ltd. was established in August, and its business scope covers the design and sales of semiconductors, integrated circuits, chips, electronic components and electronic products.
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Gerry’s mobile phone with a bad start
In 2013, Gree officially announced that it would make a mobile phone. At that time, people thought that this meant provoking Lei Jun and publicly declaring war. But in fact, Dong Mingzhu uses mobile phones as the entry carrier for competing for smart homes for strategic reasons. In the final analysis, it is mainly based on household appliances.
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Looking back at the process of making mobile phones in Dong Mingzhu over the years, it is not only not smooth but also very sad.
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At the beginning, Dong Mingzhu was full of confidence. He once said "I believe that selling 50 million units is not a problem in the future", "This phone is even better than Apple’s iPhone 6s" and "Gree phones are all very good, but the only regret is the high price". However, the first generation of Gree mobile phones, the second generation of Gree mobile phones and the color mobile phones sold in the end were not well sold.
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The appearance of the first generation of Gree mobile phone is mediocre, and the configuration is too low, which is controversial because the boot screen is a photo of Dong Mingzhu. Gree’s second-generation mobile phone configuration has been greatly improved, and it takes a boutique route for the high-end market. The price has doubled to 3599 yuan, and netizens don’t buy it. The price of the color mobile phone is 3200 yuan, and it is equipped with Xiaolong 820 processor (the mainstream of the market is Xiaolong 835). The configuration is outdated, and finally it is caught in the storm of brushing. It is said that Dong Mingzhu makes mobile phones, and his heart is higher than the sky. After successive waterloo, Gao Xin should have a rest, but she didn’t.
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On the website of the Ministry of Industry and Information Technology, a new Gree mobile phone appeared, model G0345D, equipped with a 5.99-inch 18: 9 full screen. Equipped with Opteron processor, built-in 4GB+64GB memory combination and 3160mAh battery, this should be the third generation of Gree mobile phone.
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Gree mobile phone is obviously backed by a big tree, but it still can’t play with the mobile phone market, not only because of the fierce competition in the mobile phone market itself. It is also because Gree mobile phones lack technical advantages, alternative marketing and shortage of human resources. Dong Mingzhu paid three years’ tuition on the road to making mobile phones, and now it’s time to accept the results. In this five-year gamble deadline, will the third generation of Gree mobile phone be Dong Mingzhu’s last blow to Lei Jun or his last failure?
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Gree automobile has many difficulties.
Looking back on the sensational Dong Mingzhu’s outburst at the shareholders’ meeting in 2016, it was actually caused by Gree’s acquisition of Yinlong. Gree Electric planned for nearly half a year to acquire Yinlong, but the result was that it failed under the opposition of small and medium shareholders. However, Dong Mingzhu did not give up and said that he was "willing to invest all my assets in Yinlong". He invested in Yinlong not because Gree’s acquisition was unsuccessful, but because he was optimistic about Yinlong’s lithium titanate technology.
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Since then, Dong Mingzhu has brought in Wang Jianlin, Liu Qiangdong and other big bosses, increased capital by 3 billion, and acquired 22.388% equity of Zhuhai Yinlong. Later, in 2017, Dong Mingzhu increased its holdings of Yinlong again, with the individual shareholding ratio exceeding 17%, becoming the second largest shareholder of Yinlong New Energy.
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What once made Yinlong a hit was two things that happened in 2014. The antique "Dangdang Car" of the Beijing Sightseeing Line was put into operation in September, and it was highly sought after because of its retro style and unconventional temperament. In November, Yinlong pure electric bus became the official designated car of APEC Summit, which completely started the name of Yinlong.
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Since then, the development of Yinlong has been really good. At the beginning of 2016, Yinlong New Energy achieved the production and sales of 3,189 pure electric buses, with a cumulative increase of 22.28%, with a market share of 3.6%, ranking seventh in the country in terms of annual sales.
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So why did Yinlong, which seems to have a bright future, suddenly go downhill? In fact, many technologies of Yinlong have been questioned in the industry for a long time, and the biggest problem is the lithium titanate battery, which is the main focus in its battery field, which is what Dong Mingzhu is most optimistic about, but the market seems to think otherwise. It is widely believed that lithium titanate battery has low energy density, short cruising range and high price, so it does not have much advantage in market competition.
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The foreshadowing of overcapacity may be the battery technology adopted by Yinlong. Lithium titanate battery is actually a technology that has been eliminated by Japan and the United States.
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The actual situation seems to be exactly the same. Guangtong Automobile, a wholly-owned subsidiary of Zhuhai Yinlong, uses lithium titanate batteries to charge buses every 30 kilometers, which has serious battery life problems. It is precisely because of this inconvenience that Wu ‘an City, Hebei Province has changed some electric buses that run villages and towns back to fuel buses.
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At present, Yinlong mainly produces pure electric buses, most of which are purchased by local governments. Once there is a problem in this market, Yinlong has not really opened a new market, and it is easy to fall into a passive position and reduce production.
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Although the concept of electric vehicle has been put forward for several years, Tesla has been mass-produced abroad, and Geely and other enterprises in China have achieved mass production. However, compared with these companies that have built cars and scientific and technological foundations, Gree is still a little immature, and Yinlong, as a new energy company, even if the battery technology passes, the production of other parts of the car is also a big problem.
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After Dong Mingzhu and Lei Jun made a bet, Miss Dong seemed to have a new impetus, and she expanded the layout of Gree a lot, from smart phones to smart homes and automobile chips, and almost all the hot scientific and technological fields in recent years have Gree’s shadow.
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Although this kind of cross-border transformation is said that many enterprises have done this in recent years, the actual effect is mixed. Take Xiaomi, who bet with Gree, as an example, this year Xiaomi launched a Mijia air conditioner across the border. It was well received, and some media said that this was Xiaomi’s challenge to Gree. 1.5 horses, the millet air conditioner with intelligent control of frequency conversion is only 2100 yuan, and the price of Gree air conditioner with the same configuration has reached more than 3000 yuan, which is considered as Xiaomi’s cross-border to Gree.
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The transformation of Gree is not very satisfactory. The sales volume of Gree mobile phones in our home is almost a fraction of that of Xiaomi. Moreover, on the basis of one Gree employee, Miss Dong’s way of forcing employees to buy mobile phones is also slightly unpopular. Gree’s proposed research and development of chips can’t see the actual action. Even if the chips are really developed, the economic pressure is great for Gree.
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Gree’s transformation can be said to be very forward-looking, but from the field of electrical appliances that has been deeply cultivated for many years to the field of intelligence, Gree may face the competition from enterprises with smart home networks such as Xiaomi and Huawei. As for the automobile field, Jia Yueting is a good negative example, and the research and development of automobiles is also a bottomless pit of funds. I wonder if Gree’s shareholders are willing to burn money.
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Miss Dong’s ambition is great, but the road has to go step by step. Even Gree, an electrical giant, will fall down if she is not careful.
