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21:44, 03-Dec-2017
Win with China: Midea survives through industrial transformation
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Midea Group is China's only household appliances manufacturer to appear on this year's Fortune Global 500 list, thanks to annual revenues exceeding 24 billion US dollars.
But commercial success never comes easy. The white appliances giant was hit with a big drop in business five years ago. It is reviving itself through industrial transformation and intelligent manufacturing.
Fang Zhen calls himself "a crazy cook." For over 10 years, he has worked daily on developing rice cookers and testing them. Fang is an engineer with Midea, a renowned Chinese home appliances-maker based in Guangdong province.
Midea Group is China's only household appliances manufacturer to appear on this year's Fortune Global 500 list, thanks to annual revenues exceeding 24 billion US dollars. /VCG Photo
Midea Group is China's only household appliances manufacturer to appear on this year's Fortune Global 500 list, thanks to annual revenues exceeding 24 billion US dollars. /VCG Photo
“We cook rice over a dozen times a day and taste it. Hundreds of tons of rice are used every year in our tests. Different kinds of rice require different cooking times and techniques. Our goal is to make cooking rice easy for consumers,” Fang said.
The engineers' efforts led to big sales. In 2011, the Midea group's revenues exceeded 130 billion yuan, but then dropped by 30 percent the next year following shrinking global demand. The firm's leaders saw an urgent need to change its business mode.
“We realized we could no longer rely on scale-driven growth or labor intensive manufacturing, but had to reform our products structure and invest more in technological innovation. It was like slamming on the brakes and making a sudden U-turn on a highway,” said Fang Hongbo, chairman and president of Midea Group.
VCG Photo
VCG Photo
Instead of enlarging production, Midea shut down 16 industrial parks across China. The enterprise then invested 15 billion yuan in tech research and development, despite the pressure of decreasing profits and redundancies.
Now the brand has become a world leader in smart home appliances, and entered the Fortune Global 500 list. “Our revenue in the first half of 2017 equals that for the whole year of 2012, and profits are nearly double. That proves our transformation was justified,” Fang stressed.
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