Gree’s revenue in the year of 2023 is 600 billion. How likely is it to achieve it?

According to media reports, Gree Electric Chairman Dong Mingzhu proposed a new goal at an internal meeting not long ago - by 2023, the sales target is 600 billion yuan.

The reporter asked the Gree official about this news and did not get a clear answer.

Some people close to Gree Electric confirmed the proposal of the target to the International Finance News.

Prior to this, Dong Mingzhu had set a goal for Gree Electric to hit 200 billion yuan in 2018.

Gree Electric's revenue in 2017 was 148.286 billion yuan, a year-on-year increase of 37%. Dong Mingzhu's goal of 600 billion yuan means that Gree Electric will triple its revenue within 6 years.

Why did Dong Mingzhu propose this goal that is considered impossible? Can Gree’s performance be as high as Dong Mingzhu’s expectations?

1

Why put the words again?

Cailian·Interface reported that Dong Mingzhu pointed out that “we need a wolf culture under the market economy. In the work, we must remember the word “preemption” anytime and anywhere, and dare to fight so that we can adapt to the unpredictable market, to achieve 2023 The goal of 600 billion in the year is to expand the territory and contribute strength."

Many home appliance industry experts told the International Finance News that this goal is impossible to complete.

Dong Mingzhu, who has been engaged in the air-conditioning industry for nearly 30 years, will not be unclear about the possibility of reaching the 600 billion sales target.

Industrial observer Hong Shibin believes that Zhu Minglong, who invested in Dong Mingzhu recently, has encountered a series of negative reports and doubts. Dong Mingzhu proposed that the goal of 600 billion yuan is to release signals to the outside world, return to the core business, and pass on confidence to the outside world. Too high, too exaggerated.

According to public information, Dong Mingzhu is the second largest shareholder of Yinlong New Energy Co., Ltd. (hereinafter referred to as “Zhuhai Yinlong”), with a shareholding ratio of 17.46%. Although Zhuhai Yinlong's largest shareholder is founder Wei Yincang, but with the adjustment of Yinlong executives, Gree is fully involved. In the outside world, Dong Mingzhu is the real controller of Zhuhai Yinlong.

Since 2018, Zhuhai Yinlong has suffered negative news such as arrears, work stoppages and layoffs. On July 18, the Jiangsu Higher People's Court seized the new energy commercial vehicle real estate project in Nanjing Yinlong. However, the project was unsealed on July 22.

Some insiders revealed to the International Finance News that the reelection of the Gree Board of Directors was delayed because the Zhuhai Municipal Government and Gree still have concerns about the dual status of Dong Mingzhu as the chairman of Gree Electric and the actual controller of Zhuhai Yinlong.

On August 2, Gree Electric said on the investor interaction platform: “The company did not make equity investment in Zhuhai Yinlong” and said that Dong Mingzhu’s investment behavior against Yinlong was an individual act and did not violate the relevant provisions of laws and regulations.

The above-mentioned person said that Dong Mingzhu’s sales target of 600 billion yuan at this time may also be a call to Gree, and his focus is still on Gree Electric.

2

600 billion can be achieved

Gree Electric's 2017 annual report shows that in the revenue of 148.286 billion yuan, air-conditioning revenue was 123.41 billion, accounting for 83.22%, and the proportion of household appliances, smart equipment and other main businesses were 1.55%, 1.43% and 2.94% respectively.

From the perspective of revenue structure, Gree Electric is still an air-conditioning enterprise. If Gree Electric Appliances wants to reach 600 billion yuan in revenue, the air-conditioning business must first raise the banner.

Hong Shibin said that the development of the air-conditioning industry to a certain high scale will enter a stagflation period, after which the growth will become more and more difficult, and the air-conditioning market will not be eaten by the Gree family.

According to Liu Buchen, Gree Electric's possibility of achieving 200 billion yuan revenue in 2018 is less than 30%. He said that China is strictly implementing real estate regulation and control, and the development of the air-conditioning industry will be constrained. In addition, China's air-conditioning industry will soon enter the new market, and it is even more impossible for Gree to achieve 600 billion revenues in 2023.

The top three brands in China's air-conditioning industry, Gree, Midea and Haier, have an air-conditioning market share of around 70%. The three companies' air-conditioning business revenues in 2017 were 123.41 billion yuan, 95.35 billion yuan and 28.74 billion yuan respectively. 2475 billion yuan.

This also means that the 600 billion target set by Dong Mingzhu is nearly double the market size of the entire Chinese air-conditioning industry.

In addition to the core air-conditioning business, can Gree Electric help cultivate new industries and help Dong Mingzhu achieve its great goal of 600 billion yuan in revenue?

The data released by Gree Electric's 2017 annual report shows that the revenue generated by living appliances, smart equipment and other main businesses adds up to less than 10 billion. Gree Electric said in its annual report that it will achieve diversified expansion in the fields of intelligent equipment, smart home and new energy. However, the above-mentioned industry experts are not optimistic about the development of these businesses in the past five years.

3

Dealers will bear the pressure

Liu Buchen told reporters that this year's air-conditioning industry did not develop well last year. However, many air-conditioning manufacturers announced that their revenues have increased. The actual situation is that dealers get goods from manufacturers, and manufacturers have received payment, but the goods are all pressed. In the dealer warehouse, it seems that sales growth, but the current air-conditioning inventory is larger than at any time in history.

If Gree really wants to triple its revenue in six years, it means that Gree's dealers will be under greater pressure.

"International Finance News" reporter had previously reported on the operation of Hangzhou Gree dealers. At that time, Gree had said that the dealer had suffered losses due to poor personal management and lost money, which led to the loss of consumer interests.

Hong Shibin said that the excessive growth target means that dealers will take greater pressure, and the goal of 600 billion yuan will be borne by dealers nationwide.

Liu Buchen said that if Dong Mingzhu is willing to go his own way, it is not a case for dealers to run.

For Dong Mingzhu’s 600 billion target, some investors laughed, although Dong Mingzhu and Xiaomi founder Lei Jun (the industry laughed at it as Rebs) did not expire this year, but did they consider opening another game?