Gree Electric, once hailed as a superstar in China’s white goods industry, is showing signs of slowing growth. Recent data indicates that competitors like Xiaomi and Midea are gaining ground, while Gree’s revenue and market share are under pressure. What led to this decline, and can Gree reclaim its former glory? This article delves into the challenges facing the former white goods champion and explores its future prospects. Market Share Erosion and Competitive Pressure Gree Electric’s position in the air conditioning market, once unassailable, is now being challenged on multiple fronts. According to AVC Research, Xiaomi’s air conditioner online market share reached 16.71% in July, surpassing Gree’s 15.22%. While Gree disputed these figures, claiming a 16.41% share, the intense competition is undeniable. The rise of competitors like Xiaomi and the recent listing of Aux Group on the Hong Kong Stock Exchange after a decade-long copyright dispute with Gree further highlight the shifting landscape. Gree’s stock price plummeted following its half-year report, wiping out over RMB 20 billion in market capitalization. As of September 5, Gree’s market value stood at just over RMB 230 billion, trailing behind Haier’s RMB 240 billion and ranking third among white goods giants. With Midea and Haier leading the pack and Xiaomi and Aux closing in, Gree’s ability to compete is under scrutiny. Financial Performance and Dividend Cuts Gree’s financial performance in the first half of the year further underscores its struggles. While the broader home appliance market grew by 9.2%, thanks to government subsidies, Gree’s revenue declined year-over-year. In the second quarter, both revenue and profits fell sharply, with net profit attributable to shareholders dropping by 10.07% to RMB 8.508 billion. Notably, Gree, known for its generous dividends, announced no cash dividends, no bonus shares, and no capital reserve conversions this time—a stark contrast to last year’s ’10 shares for RMB 10′ payout. The primary reason for Gree’s slowdown is the poor performance of its consumer appliance business, which accounts for nearly 80% of its revenue and saw a 5.09% decline. Distribution Challenges and Online Sales Gree’s traditional distribution system, once a key strength, has become a liability in the era of online sales. The company’s reliance on offline dealers has hindered its ability to adapt to changing consumer preferences. While Gree’s air conditioner sales remain strong, the benefits are not fully reflected in its financials due to inventory controls and reduced dealer willingness to stock up. This disconnect between terminal sales and reported performance highlights the internal pressures Gree faces. In contrast, competitors like Midea have leveraged online channels to overtake Gree. Midea’s agile distribution strategy and focus e-commerce have allowed it to capture market share more effectively. Gree’s insistence on maintaining its offline-centric approach risks further erosion of its competitive position. Pricing Strategy and Market Positioning Gree’s refusal to engage in price wars has protected its profit margins but cost it market share. In July, the average selling price of Gree air conditioners was RMB 3,353, nearly RMB 400 higher than Midea’s and well above the industry average of RMB 2,631. This premium pricing strategy has helped Gree maintain profitability—with profits rising 1.95% to RMB 14.412 billion in the first half—but has also led to a decline in market share to around 18%. While this approach preserves short-term profits, it may not be sustainable in the long run as competitors aggressively target cost-conscious consumers. Diversification and Overseas Expansion Gree’s overreliance on air conditioners and the domestic market has left it vulnerable to industry shifts. While Midea and Haier have diversified into other home appliance categories and expanded overseas, Gree’s non-air conditioner businesses and international operations remain underdeveloped. In the first half of the year, air conditioners still accounted for nearly 80% of Gree’s revenue, while overseas sales made up only about 15% of its total—far below Midea and Haier’s 40–50% overseas contribution. Gree attributes its slow overseas progress to its refusal to use OEM partnerships, but this stance has limited its global reach. ‘Dong Mingzhu Health Home’ Rebranding In February, Gree launched its new strategic brand, ‘Dong Mingzhu Health Home,’ renaming its专卖店 (specialty stores) to align with this vision. The rebranding aims to transform Gree from an air conditioner manufacturer into a full-range home appliance brand focused on health services. Dong Mingzhu (董明珠) herself stated that the move was a personal pledge to shift from product manufacturing to health services and build stronger emotional connections with consumers. By June, over 800 stores had been upgraded to ‘Dong Mingzhu Health Home.’ However, the strategy has faced uncertainty. In August, the official公众号 (public account) briefly changed its name to ‘Gree Good Guide’ before reverting to ‘Dong Mingzhu Health Home,’ signaling internal hesitation about tying the brand too closely to Dong Mingzhu’s personal image. Leadership and Brand Identity Dong Mingzhu’s leadership has been both a strength and a weakness for Gree. Her ‘iron lady’ image once resonated with consumers and helped build Gree into a market leader. However, as she enters her seventies, her traditional and assertive style may not appeal to younger demographics. Yet, Gree relies heavily on her personal brand for marketing, from live-streaming sales to advertisements. The dilemma is clear: without Dong Mingzhu, Gree risks losing its core audience; with her, it may struggle to attract new generations. In contrast, Xiaomi’s Lei Jun (雷军) has successfully built a modern, relatable brand identity that resonates globally. The famous 2013 bet between Dong Mingzhu and Lei Jun—where Dong pledged RMB 1 billion if Xiaomi’s revenue surpassed Gree’s within five years—symbolized their rivalry. While Gree won the bet in 2018, Xiaomi overtook Gree in revenue the following year. Today, Xiaomi’s diversified portfolio spanning smartphones, EVs, and home appliances far outshines Gree’s efforts to expand beyond air conditioners. Future Prospects and Strategic Imperatives Gree’s current valuation of just 7 times earnings and a dividend yield exceeding 7% reflect investor skepticism about its future. While the company’s strong cash flow and seasonal rebate policies provide short-term stability, its long-term prospects depend on addressing fundamental challenges. The former white goods champion must modernize its distribution channels, diversify its product offerings, and revitalize its brand to stay relevant. Embracing online sales, expanding overseas, and reducing reliance on Dong Mingzhu’s personal brand are critical steps. Gree’s journey serves as a cautionary tale for traditional manufacturers in rapidly evolving markets. As competition intensifies and consumer preferences shift, adaptability and innovation are key to survival. For Gree, the path forward requires bold strategic changes and a willingness to learn from competitors like Xiaomi and Midea. The question remains: Can Gree Electric reinvent itself and reclaim its throne, or will it continue to fade into obsolescence? Only time will tell, but one thing is clear—the era of relying solely on past glory is over.
Gree Electric’s Decline: Can the Former White Goods Champion Regain Its Throne?
