Gree's Vice President Wang Jingdong: Air Conditioning Industry Faces Consolidation

Wang Jingdong joined Gree Electric in November 2002 and has served as Minister of Finance, Director of Purchasing, and Director of Audit. In April 2006, he was the assistant to President of Gree Electric. In January 2008, he was responsible for Gree Electric Finance. In July 2009, he served as Secretary of the board of directors of Gree Electric. In October 2009, Wang Jingdong was appointed vice president of the company. In 2011, the air-conditioning industry encountered many “variables”: changes in exchange rates, rising costs, and depressed real estate, coupled with the official end of the subsidy policy for air-conditioning and energy-saving benefits in June, and the first batch of home appliances to rural areas in the pilot area in November expired. The air-conditioning industry has become more urgent. By the third quarter, the overall growth of the air-conditioning industry showed single digits. Under this circumstance, Wang Jingdong, vice president of Gree, believes that the air-conditioning industry still has a lot of room for development.

Air-conditioning industry will further integrate

Beijing News: The air-conditioning industry has entered a new cold year, and this year's industry growth is lower than everyone's expectations, showing a single-digit growth. What do you think?

Wang Jingdong: In the third quarter of this year, the growth of the air-conditioning industry was single-digit. Below the expectations of many people, performance in the market, including performance in the capital market, is not high for the stock index of the home appliance sector and is currently in a state of concern.

However, we believe that there is still a lot of space for the industry. From the perspective of these years of development, the air-conditioning market has grown rapidly. There are several factors. One is that the income level of the Chinese people has indeed increased, and now the income level of many families is one month. The salary can buy an air conditioner. Second, the rigid demand for air conditioners has become stronger. The third level of urbanization in China is continuously improving, which supports the growth of the past few years, including the stimulatory role of national policies.

The growth rate of the industry is a single digit, indicating that the industry may face adjustments. For a competitive enterprise, it is an opportunity. I think the industry will further integrate. Therefore, from the industry point of view, the single-digit growth is not a particularly pessimistic thing.

Beijing News: Gree has occupied a high market share. Where is GREE's growth in the future?

Wang Jingdong: We are constantly questioning whether Gree Electric Appliances is a single, specialized air-conditioning company and will not encounter bottlenecks in its growth. We believe that there is still market space. We have a share of 50% of the market in some markets, but some regions only account for 20% or 30% of the market. This provides us with some room.

Real estate downturn and the impact of home appliances to the countryside will not be affected. Beijing News: This year's real estate market downturn, the cancellation of subsidies for home appliances to the countryside policy, how to affect you?

Wang Jingdong: In order to stimulate the market, the state launched the policy of home appliances to the countryside and the trade-in policy in order to stimulate the market during the financial crisis in 2008. This policy has catalyzed and nurtured the market after the launch of the policy. When the policy was introduced in 2009, market sales were 3 million units, 6 million units in 2010, and 9 million units in January-October this year, indicating that the 3rd and 4th markets have started. I think that the withdrawal of this policy will not have much impact. After the consumption level of air-conditioning has reached a certain level, this rigid demand will not have a big impact, and the penetration rate of the tertiary and tertiary markets is still very low. There is still this current market environment, the scale of urbanization is constantly expanding the air conditioning market is also an impetus.

As for the cyclical impact of real estate, there are many real estate investment real estate, this kind of investment real estate is not a big pull on the market, low-rent housing, the rise of economic security housing on the market started very large, Shanghai recently 5000 sets The Gree air-conditioner used in the protection room is very promising. The consumption habits will not change easily after it is formed.

The aftermath of overseas mergers and acquisitions is very large

Beijing News: Are there any goals in overseas markets?

Wang Jingdong: At present, our products have entered more than 190 countries around the world. The following is the issue of how the brand can further expand in the world. This requires a gradual process. We have taken measures to gradually strengthen the foundation. I do not think that overseas markets can be aimed at expansion, but should aim at a solid foundation. Both TCL and Lenovo have taken the overseas M&A route. Judging from the past M&A experience, overseas mergers and acquisitions have an immediate effect, but the aftereffects are also very large. The current integration capabilities of Chinese companies still have certain restrictions. This approach is adopted in mergers and acquisitions. The blessing is not yet a conclusion. We focus on solidifying the foundation, first there is a factory after the market, and the brand gradually penetrates.

Beijing News: What is Gree's sales and proportion in overseas markets?

Wang Jingdong: Sales of more than 10 billion, our mid-term statement is about 12 billion, accounting for 24% of sales.

Beijing News: What is the ratio of overseas OEMs and their own brands?

Wang Jingdong: 30% of independent brands.

Arbitrary price reduction in the store is unfavorable to the manufacturer

Beijing News: What is the number of Gree stores in the country?

Wang Jingdong: The store is 15,000.

The Beijing News: Why does Gree choose such a channel as a store, and the big chains of home appliances like Gome (microblogging) and Suning are not your first choice?

Wang Jingdong: The characteristics of air conditioners are not the same as those of other home appliances. Air conditioners need to be installed. Dimensions are required and specialized services are required.

The store is closer to the consumers, and the shopping mall environment is not very good. It is dazzling. It also feels that there are more shopping guides than customers and they are constantly introducing them next. He says that he is good and I say that I am good. From the perspective of service consumers, we believe that self-built channels are better.

Store channels can maintain the independence of Gree channels and are not subject to hypermarkets. We all know that the characteristics of hypermarkets, we must also reduce profits to ensure profits, and reduce your price at will. This is detrimental to the development of the company. We have a channel for specialty stores. We can have the courage and have the confidence to say no to hypermarkets.

At present, the number of units sold in supermarkets adds up to less than 10%. Our reporter Liu Lanlan â–  links

This year's increase in air-conditioning prices According to media reports, the data show that the average annual prices of the 2011 frozen air-conditioning market showed a year-on-year rise. Compared with the 2010 freezing year, the overall average price level increased by 13.38% year-on-year, of which the inverter air conditioner increased by 4.91% year-on-year. The year-on-year increase was 11.17%.

The analysis of the reasons for price reversion, three major factors of policy adjustment, product structure adjustment, and rising of various comprehensive costs are important reasons for pushing up the price of air-conditioning in this cold year.

After the air-conditioning energy-saving and benefit-subsidy measures that played an important role in the sales growth of enterprises were formally completed in June 2011, the price level of high-efficiency fixed-frequency air-conditioning was greatly affected.

Despite the fact that companies do not have a large impact on market share, they have absorbed potential from internal sources and digested the cost increase caused by the cancellation of subsidies. However, they are still reflected in the price level and the price of energy-efficient air conditioners has risen significantly.

Execution of air-conditioning energy-saving and people-friendly policies, the proportion of energy-efficient air-conditioning products has increased rapidly. Leading companies spared no effort in promoting inverter air conditioners, which led to an increase in the proportion of inverter air conditioners, and the sales share was close to 40%. Two factors have led to greater changes in the overall air-conditioning product mix in this freezing year. The change in the average retail price level brought about by this product mix adjustment has finally become one of the factors that influence the price increase in the cold weather.

The cost is a particular concern for companies beginning in the cold year of 2011. The impact of cost-based inflation on the domestic air-conditioning industry is very obvious. The cost of raw materials, labor costs, logistics costs, and sales costs have generally risen. The rising cost of compressors caused by the sharp rise in rare earth prices has been rapidly reflected in the sales of terminals.