Gree Electric Dong Mingzhu is still at the helm.

On February 19th, Gree Group’s "coaching change" went on a hot search, and many netizens asked where Dong Mingzhu had gone. In fact, as the former controlling shareholder of Gree Electric, Gree Group’s relationship with Gree Electric has been greatly weakened after the transfer of shares, and this personnel change has basically nothing to do with Gree Electric. For more than ten years, Gree Electric, a giant with a market value of over 200 billion yuan, has been "at the helm" by Dong Mingzhu. After its record high in 2023, Gree Electric’s future has become the focus of market attention.

Dong Mingzhu is still here.

Recently, official website of Gree Group showed that Kang Hong would be the new party secretary and chairman of Gree Group, and Dong Mingzhu’s name did not appear in the information, which puzzled many people. In fact, as the former controlling shareholder of Gree Electric, Gree Group’s relationship with Gree Electric has been greatly weakened after the transfer of shares, and this personnel change has basically nothing to do with Gree Electric.

Today, the relationship between Gree Group and Gree Electric has faded. Although Dong Mingzhu and Gree always appear at the same time in news reports, Dong Mingzhu has long since ceased to hold an important position in Gree Group, but he is in charge of Gree Electric with peace of mind. In terms of business relationship, Gree Electric is no longer among the core members of Gree Group. At present, Gree Group’s business covers industrial investment, construction investment, urban renewal, construction and installation, service operation and other fields, and home appliances are not its main direction.

There is only a connection in equity between the two business entities. By the third quarter of 2023, Gree Group held only 3.44% of the shares in Gree Electric, ranking fourth among the top ten shareholders.

A similar Oolong incident was staged once as early as 2016. In October of that year, Zhuhai SASAC issued a notice to the board of directors of Gree Group: "The post of chairman, director and legal representative of Comrade Dong Mingzhu Zhuhai Gree Group Co., Ltd. was removed." It was also in 2016 that Gree Electric’s intention to acquire Zhuhai Yinlong caused a heated discussion. Due to different opinions, Dong Mingzhu clashed with some shareholders at the Gree Electric Extraordinary General Meeting. At that time, there was a voice in the market that interpreted Dong Mingzhu’s dismissal as Gree Group’s opposition to the acquisition.

However, not long after, the State-owned Assets Supervision and Administration Commission of Zhuhai responded and clarified some rumors, saying: According to the regulations, the chairman of a listed company and its affiliated group can’t serve concurrently, which is a normal personnel adjustment and will not affect the operation of Gree Electric.

Now Kang Hong, the new chairman of Gree Group, has little contact with Gree Electric. According to public information, Kang Hong, born in 1976, is a native of Peng ‘an, Sichuan, which is the first time that Gree Group has welcomed the "top leader" after 70 years.

Beijing business today reporter interviewed Gree Group on related issues, but no reply was received as of press time.

Whose Gree Electric?

It is precisely because of the fermentation of Gree Group’s coaching change that many netizens are concerned about who Gree Electric, whose current market value has broken 200 billion yuan, belongs to.

Although Dong Mingzhu has been leading the development of Gree Electric with a strong attitude, from the perspective of shareholding structure, as of October 30, 2023, Dong Mingzhu ranked seventh among the top ten shareholders, holding about 54.49 million shares, accounting for 0.97%. The largest shareholder is Zhuhai Mingjun Investment Partnership (Limited Partnership), holding about 900 million shares, accounting for 16.02%.

Standing behind Zhuhai Mingjun is Gaoling Capital. In December 2019, Gree Group and Zhuhai Mingjun, a subsidiary of Gaoling, signed the Share Transfer Agreement, stipulating that Zhuhai Mingjun would receive 902 million shares of Gree Electric held by Gree Group at a price of 46.17 yuan per share, accounting for 15% of the total share capital of Gree Electric, with a total transfer price of 41.662 billion yuan. After the registration of share transfer, Gree Electric has no controlling shareholder or actual controller.

Although Zhuhai Mingjun is the largest shareholder at present, it does not have a strong sense of presence in Gree Electric’s operation. In fact, one of the important reasons why Gaoyu Capital was able to enter Gree Electric in those years was that it trusted the management team of Gree Electric and did not interfere in the operation excessively. At that time, there was more than one company that wanted to enter Gree, and a bidding war was launched between Gaoyu Capital and Houpu Capital. For the final winning reason, Gaoyu Capital’s reply was:

In addition, it is worth noting that among the top ten shareholders in Gree Electric, Jinghai Internet Technology Development Co., Ltd. (hereinafter referred to as Jinghai Internet), which ranks third, is also closely related to Dong Mingzhu. At present, the company holds about 380 million shares, accounting for about 6.8%. As early as 2006, ten local sales companies in Gree Electric cooperated to form Jinghai Guarantee Investment Co., Ltd., which is the predecessor of Jinghai Internet. Although Jinghai Interconnect has reduced its holdings of Gree Electric shares for many times, and the love-hate disputes between Gree Electric and its dealers are long-lasting, Jinghai Interconnect has been in the list of the top ten shareholders in Gree Electric for many years.

How to diversify and transform

According to the market view, since Zhu Jianghong, the former head of Gree Electric, retired in 2012, the company has entered the "Dong Mingzhu era", and Dong Mingzhu has also led Gree Electric to the peak with strong and courageous leadership style. According to Gree Electric’s performance forecast, the total operating income is expected to be between 205 billion and 210 billion yuan in 2023, with a year-on-year increase of 7.8%-10.4%. It is estimated that the net profit will be between 27 billion and 29.3 billion yuan, with a year-on-year increase of 10.2%-19.6%.

Dong Mingzhu said that 2023 was one of the best achievements made by Gree Electric in the past 33 years, and the company created a record high tax revenue. She expressed the hope that Gree Electric’s national tax revenue will exceed 20 billion yuan in 2024.

However, Gree Electric, which is famous for its air conditioners, is not without rivals. Among the "White Power Big Three", Midea is also betting on air conditioners. As for who is the king of air conditioners, both sides also hold their own words. From the financial report in 2022, Midea said in the financial report that according to the data of Aowei Cloud, Midea’s household air conditioners rank first in the domestic online and offline market share. According to the 2022 annual data of Industry Online, Midea’s central air conditioners also maintain the first domestic market share. According to the Gree Financial Report, according to the domestic sales data of household air conditioners in Industry Online in 2022, Gree Air Conditioning ranked first in the industry with a share of 33.9%.

However, it is undeniable that Midea Group’s business is more diversified and balanced. According to the mid-year report in 2023, except for air conditioners, consumer appliances and robots account for 34.6% and 8.8% of Midea Group’s revenue respectively, while over 70% of Gree Electric’s revenue comes from air conditioners, and the proportion of household appliances is only 2.2%. Many investors are eagerly looking forward to Gree Electric’s obvious diversified transformation.

Perhaps in Gree Electric’s view, the transformation also needs to be based on the existing technical strength in order to be more stable. Gree Electric once told beijing business today in an interview that the company’s industry covers two major fields: household consumer goods and industrial equipment, and the industrial chain extends upstream to compressors, motors, chips, enameled wires, copper rods, capacitors, etc., and downstream to the green recycling, treatment and recycling of used household appliances, and cuts into the industrial chain of new energy vehicles, energy storage and battery manufacturing equipment through acquisitions.

In the opinion of industry experts, Gree Electric’s channel reform has gradually shown results, which has become a factor that can’t be ignored in its performance growth in 2023. Liang Zhenpeng, a senior industrial economic observer, told beijing business today that in 2023, Gree Electric’s performance growth was mainly the result of recovery growth and diversification strategy promotion. The turnover exceeded the historical peak. Gree used to rely mainly on offline physical stores. In the past two years, it has been promoting a series of measures such as flat reform of sales channels and transformation to e-commerce.

Beijing business today reporter Tao Feng Wang Zhuli