Dong Mingzhu: Technology is the foundation of the road to diversification

In the past two years, Dong Mingzhu has been the "topic queen" of the Chinese business community. Regardless of the recent "Gree returns to Suning", Dong Mingzhu and Suning Chairman Zhang Jindong's "Handshake and Harmony"; or Dong Mingzhu and Xiaomi Chairman Lei Jun's "1 billion gambling contract" last year; and this year's National Conference, Dong Mingzhu Photographs with unexpected encounters by Lei Jun; these have become the focus of discussion among Chinese netizens.
Gree Electric is indeed a "topic enterprise" in the Chinese manufacturing industry. Recently, Gree Electric's announcement shows that the company plans to acquire a new energy car company - Zhuhai Yinlong. This news quickly became a hot topic, and the industry began to discuss whether Gree would become "Foxconn in the automotive industry"? Not long ago, Gree entered the mobile phone industry, which is also a hot news of national concern.
In addition to the well-known main business of Gree air-conditioning, Gree's tentacles have extended to refrigerators, home appliances, mobile phones, robots, smart equipment, new energy vehicles and many other fields. In this context, Dong Mingzhu, Chairman and President of Gree Electric Appliances, who is participating in the 2016 National Two Conferences in Beijing, accepted an exclusive interview with the reporter of China Business News at the Capital Hotel in Guangdong on the evening of March 6. The outside world elaborated on the diversified layout, intelligent transformation, international vision of Gree Electric Appliances, and the "grace and resentment" with Lei Jun and Zhang Jindong. Diversification: New business must also be the first
If a country stipulates that the market share reaches 60% as a monopoly, then our goal is to achieve 59%.

"China Business News": Gree's main business is air-conditioning, but in addition to the main business of air-conditioning, it has created two brands, Dasong Small Appliances and Jinghong Refrigerator. What are the considerations?
Dong Mingzhu : Because the quality of Gree air conditioner is very good, many people say that if our refrigerator is labeled with Gree, it will be better sold. With the brand of Gree Life Appliance, everyone will trust immediately, but I am not standing in order to make money. From the perspective of the problem, more is to cultivate China's own brand, let Chinese brands go to the world, this is the main reason at that time determined not to let the refrigerator and life appliances to the Gree brand.
If one day, consumers can buy Dasong's series of products all over the world, and say, this is China; if one day, everyone buys Jinghong's series of products, it is also said that this is China. That means that we can promote three brands, and if we can achieve world-class, it will obviously be greater than the value of a Gree.
For the user, we provide the end product, and should put the quality and quality first, so I would rather have a process of cultivating the brand, and not a brand of Gree.

"China Business News": Gree has entered the mobile phone field and has caused widespread concern in the industry. When will the Gree mobile phone be listed? Recently, you have disclosed to the outside world that customers have already purchased Gree's robots. Gree has also entered the field of industrial automation. Can you talk about the diversified layout of Gree?
Dong Mingzhu : The mobile phone belongs to a kind of consumables and fast-moving products. Someone told me that the quality of the mobile phone is not important. The key is to have a stylish appearance. However, we believe that quality is the first priority, and our mobile phones must at least be used for three or four years. Our first generation of products are not open for sale, because the storage capacity of the first generation of mobile phones is too small for young users, which is not satisfactory to me. The first generation of mobile phones arrived in the hands of ordinary consumers. We broke all of them and there was no concept of maintenance. Regarding the second generation of products, it will probably be listed at the end of April this year.
As for the number of Gree mobile phones to sell, it will depend on several factors: First, the quality of the products, second, consumer recognition is not recognized, third, consumers can afford, I hope that the quality of my products is the best. The price is the most real.
I said that Gree is not doing money in the mobile phone business, nor is it to fight price wars with other people, to disrupt the market of others, but to lay out the overall industrial configuration needs. For example, the Gree mobile phone can be used as a remote control. In the future, the upgrade of all kinds of electrical products will be integrated into the mobile phone.
We have also entered the equipment manufacturing industry. In addition to the robots you mentioned, we have also entered the fields of industrial automation, CNC machine tools, automatic inspection equipment, automatic logistics equipment, etc., and have achieved comprehensive coverage of these business segments.
There are two situations in which a company can diversify. One is that the industry is not working, and the other industry is good, so it is diversified. The other is because I have technology and can enter another field for technology sharing. . I believe that the latter diversification is more valuable.
In addition, in Gree's management model, it is always a professional management. Now, we have a series of business segments such as air conditioners, refrigerators, home appliances, smart equipment, motors, etc., but each sector is independent. Whether it is technology research or production, it is independent, with special company management, Operate the corresponding business sector. We adhere to professional management, professional research and development, and professional manufacturing.

"China Business News": In the planning of Gree, what proportion of the air-conditioning business should occupy in the future business map? How large is the new business to be done?
Dong Mingzhu : Gree air-conditioning has a 40% to 50% share in the Chinese market, and will work towards this goal in overseas markets. But I don't think it's possible to generalize, but to determine the target based on the extent to which products and technologies are recognized in the market. As for the new business, we certainly hope to be the first in China and the first in the world. I can only say that we should not monopolize. If a country stipulates that the market share is 60% as a monopoly, then our goal is to achieve 59%.

Intelligent: The Internet is a tool for transformation and upgrading
When the Internet leaves the manufacturing industry, there is no value. For example, we do not do air conditioning today, can the Internet be used as an air conditioner?

"China Business News": China has formulated the "Made in China 2025" strategy, and you have repeatedly mentioned the issue of intelligent transformation on different occasions. We believe that for Gree, the intelligent transformation may contain two levels of meaning: First, Gree produces smart home appliances, and second, Gree's production process is intelligently transformed. Can you talk about the challenges of Gree's intelligent transformation at two levels?
Dong Mingzhu : For Gree, intelligent transformation has two meanings. First, the products we manufacture are more humanized, which can bring convenience, energy saving and environmental protection to people. The other is to better control costs in the production process. Let our efficiency and effectiveness change. In both respects, we are all prepared. We have a large number of R&D personnel. As a manufacturing company, one-tenth of our employees are engaged in technology research and development. In terms of efficiency and efficiency improvement, we have also achieved good results. When Gree Electric’s operating income was 80 billion yuan, we have more than 90,000 employees close to 100,000. Now we are more than 140 billion yuan, but only More than 60,000 employees are less than 70,000, which is a change in efficiency.
I believe that "Made in China 2025" is an overall national policy of China. As a corporate citizen, we should focus on this national policy and carry out our own layout. Now, Gree Electric is not just an air-conditioning company, we have independent research and development technology in many fields, which will help our intelligent transformation.

China Business News: What are your expectations for Gree's new business segment in the intelligent transformation process?
Dong Mingzhu : I think that it is not how much you want to expect, you can achieve much expectation, and ultimately depends on whether your product can satisfy users and make the market recognize. This is the real expectation. If the user is satisfied, the market share can lead.
Another important factor for new business is whether there is core technology. If you don’t rely on your own core technology, you can buy everything, the products are assembled, and everything must be attached to others. Then, the products are produced. It is difficult to ensure customer satisfaction. Chinese companies have been cooking rice cookers for decades, why not win the trust of users? Why do so many Chinese go abroad to buy rice cookers? This fully reveals that some Chinese companies have long been attached to others, using other people's technology, and it is a good imitation to say that it is ugly, that is, plagiarism, stealing others, so in the end, they failed to make products that satisfy Chinese users. This phenomenon that I think is very abnormal will occur.

"China Business News": In the process of intelligent transformation, will Gree have more connections and cooperation with Internet companies?
Dong Mingzhu : The Internet is a change of the times. Today, who can leave the phone? This is a tool for the Internet that brings about a radical change in the way we live and work. Since Gree has to do smart equipment, including air-conditioning production, there must be Internet tools in it. This is not to say that the Internet and the manufacturing industry are guiding people. If the Internet leaves the manufacturing industry, there is no value. For example, we do not do air conditioning today, can the Internet be used as an air conditioner? Without the mobile phone manufacturing industry, can the Internet have a platform for hosting? But the manufacturing industry has the Internet, and it is even more powerful. The "Government Work Report" also mentions "Made in China + Internet", which means using the Internet as a tool to accelerate the transformation and upgrading of manufacturing.

Internationalization: Changing the image of overseas manufacturing in China
But in turn, Chinese companies should really review that in the past, most Chinese companies have dependencies.

"China Business News": Recently, you talked about the internationalization and put forward that "China is a part of the international market. If there is a market, we should go, it is only a matter of time progress." In the industry, there are actually similar views. For example, some people think that internationalization will play an important role in the development of a company from 100 billion yuan to 200 billion yuan. As for the practice of Gree internationalization, what experiences and lessons can you share with the industry?
Dong Mingzhu: General Secretary Xi Jinping put forward the "One Belt, One Road" strategy, which is a good opportunity for the world to understand China. What is our “Belt and Road” strategy and “going out”? Going out is the culture of China, the technology of China, and the service of China. Only by adhering to the philosophy of serving the world can we become an international enterprise.
"China Business News": We learned that when Gree entered the Middle East market, local agents once suggested that we should not put "Made in China" on the products, but rather "Made in Thailand". How did you deal with it?
Dong Mingzhu: Gree's market share in the Middle East is very high, but agents still believe that consumers have certain doubts about Chinese manufacturing, so although Gree does a good job, if you don't play "Made in China", hit "Made" In Thailand, agents will think that they are not made in China, so consumers will accept more. However, of course we still insist on "Made in China".
Through this phenomenon, we have become more determined to follow the path of Chinese manufacturing. We must use our real products to change the views of others on Chinese manufacturing, rather than compromise for immediate interests. But in turn, Chinese companies should really review that in the past, most Chinese companies have dependencies. So in today's supply-side reform era, I believe that Chinese companies should become more creative and innovative.

"China Business News": For the air-conditioning industry, everyone feels that 2016 is a "cold year." What do you think about the problem of destocking in the air-conditioning industry?
Dong Mingzhu : I think it is normal. A person can not sleep 24 hours a day, and does not sleep 24 hours the next day, and may need to rest on the third day. The same is true for the air-conditioning industry, and it is not surprising that normal sleep is not a problem. I think the key question is how to transform and upgrade enterprises in this state. If your products, your manufacturing, can't keep up with the times, you can't meet the needs of users, you have to be eliminated.
I think the problem of destocking is relative. Chinese people buying rice cookers abroad have spent one or two billion yuan. If China’s one or two billion yuan rice cookers are sold, is there a problem with destocking? Therefore, it is not an inventory problem, but ultimately it is a quality issue.

"China Business News": At present, the internal entrepreneurship of large enterprises is very popular. We have seen many companies in the home appliance industry are also engaged in internal entrepreneurship platforms to encourage internal entrepreneurship. Does Gree have a similar plan, treating itself as an incubator, giving insiders some opportunities to incubate more projects through internal startups?
Dong Mingzhu : I think it is just a name to call the incubator. Some people may think that the incubator is a new term, but I think the more important question is whether or not to cultivate talents. As for Gree, the R&D team of more than 8,000 people is now recruited from college graduates. Greg has grown up step by step and cultivated one by one. I think this is the real incubator, although we are not called incubators. But the result is the result of the incubator.

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