Midea takes smart route to suc­cess

Com­pany fo­cuses on in­tel­li­gent tech as it trans­forms busi­ness from man­u­fac­tur­ing

China Daily (Canada) - - BUSINESS - By QI­UQUAN­LIN in Shang­hai qi­uquan­lin@chi­nadaily.com.cn

Smart so­lu­tions will be a key fac­tor to drive fu­ture growth for China’s home ap­pli­ance mak­ers, amid a mar­ket slow­down due to over­sup­ply, said an in­dus­try in­sider.

Fang Hongbo, chair­man of the board ofMidea Group, said the com­pany has been on a process of trans­form­ing its busi­ness from in­ten­sive man­u­fac­tur­ing to the in­tro­duc­tion of more smart so­lu­tions to home ap­pli­ance prod­ucts.

“By fo­cus­ing on in­tel­li­gent tech­nolo­gies, we are pro­vid­ing com­pet­i­tive home prod­ucts with more added-value for our global cus­tomers,” said Fang.

Midea, based in Guang­dong prov­ince, has un­veiled more than 30 cat­e­gories of smart prod­ucts, from elec­tric cookers to air con­di­tion­ers, since it an­nounced an “M-Smart” strat­egy, which fo­cused on re­search and de­vel­op­ment of smart home ap­pli­ances, in 2014.

The com­pany’s newly in­tro­duced re­frig­er­a­tor, be­ing dis­played at the Ap­pli­ance & Elec­tron­ics World Expo, which opened on Wed­nes­day in Shang­hai, in­te­grates so­lu­tions for food, health and drug-stor­ing man­age­ment by be­ing equipped with smart im­agere­cog­ni­tion and la­bel-scan­ning tech­nolo­gies.

Ac­cord­ing to the com­pany, its smart ser­vices for home ap­pli­ances will be put into op­er­a­tion by 2017, af­ter open­ing a smart ser­vice plat­form to so­lu­tions providers.

A num­ber of do­mes­tic and in­ter­na­tional so­lu­tion providers, in­clud­ing Huawei Tech­nolo­gies Co, Xiaomi Corp and IBM Corp, have signed co­op­er­a­tion agree­ments with Midea to fa­cil­i­tate the com­pany’s smart ser­vices.

“The home ap­pli­ance mar­ket has been over­sup­plied in the past few years, re­sult­ing in fierce com­pe­ti­tion, with many providers cut­ting their prices to ex­pand their mar­ket share,” said Fang.

Ac­cord­ing to Re­search and Mar­kets, a mar­ket re­search or­ga­ni­za­tion, the global smart home ap­pli­ances and ser­vice in­dus­try will grow quickly in the five years ahead, with the mar­ket value to hit $68 bil­lion by 2018.

Midea’s ef­forts to in­tro­duce smart so­lu­tions are in line with the China’s new re­form pro­gram, ac­cord­ing to Fang.

China has out­lined a sup­ply-side struc­tural re­form plan, with the Govern­ment Work Re­port, which was de­liv­ered by Premier Li Ke­qiang at the on­go­ing an­nual na­tional leg­isla­tive meet­ing, em­pha­siz­ing the coun­try’s de­ter­mi­na­tion to cut lowend sup­ply while in­creas­ing high-end sup­ply and pub­lic prod­ucts and ser­vices.

“By boost­ing pro­duc­tion ef­fi­ciency over the pre­vi­ous years, we are more able to pro­vide high-end prod­ucts with ad­vanced tech­nolo­gies to meet cus­tomers’ de­mand, help­ing us make a prof­itable busi­ness,” said Fang.

Ac­cord­ing to Fang, Midea has cut its pro­duc­tion ca­pac­ity, with­out adding any new pro­duc­tion lines and fac­to­ries, while in­tro­duc­ing more ad­vanced equip­ments in its pro­cess­ing fa­cil­i­ties over the past four years.

“Cut­ting over­ca­pac­ity, de-stock­ing and re­duc­ing la­bor costs, while in­creas­ing pro­duc­tion ef­fi­ciency will be­come part of the ma­jor ef­forts for the com­pany’s fu­ture de­vel­op­ment,” said Fang.

The com­pany re­al­ized a net profit of more than 10 bil­lion yuan ($1.53 bil­lion) in 2015, ex­port­ing its prod­ucts to more than 200 coun­tries and re­gions.

Midea, which was es­tab­lished in 1968 in the then-agri­cul­tural town­ship of Shunde in Guang­dong, se­cured more than $8 bil­lion in ex­ports in 2015, ac­cord­ing to the com­pany.

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