Midea Group Headquarters

 On August 10, Fortune announced the 2020 Fortune Global 500 list, and Midea Group, headquartered in Shunde, Foshan, ranked first among China's home appliance companies for five consecutive years. Since its debut on the list in 2016, Midea Group has jumped 174 places from 481st to 307th.

The list reflects the horizontal comparison of Midea's performance growth in the world. Last year, Midea Group's revenue was 279.4 billion yuan and net profit was 25.3 billion yuan, while revenue increased by 6.7%, while the profit attributable to the parent company increased by 19.7%, and the cash dividend ratio continued to increase. Since 2020, although Midea has been affected by the epidemic, its market value has recently exceeded 500 billion yuan, creating a new history in China's home appliance industry.

It seems that the situation is "very good", but Midea has accelerated the "second important transformation" in more than 50 years of entrepreneurship - promoting comprehensive digitalization and comprehensive intelligence. On August 7, Fang Hongbo, chairman of Midea Group, said frankly when participating in the 2020 Science and Technology Innovation Conference in Shunde District that Midea still has problems such as "insufficient technical content", and it is necessary to establish a world-leading technology group through transformation and innovation.

Compared with 2011, when the major strategic transformation of "product leadership, efficiency driven, and global operation" was launched, Midea is also full of a sense of crisis under the glamour. If Midea's first major strategic transformation has stepped on the wave of supply-side structural reform, what kind of waves will the new round of "two comprehensive" transformation set off?

Denial of beauty

From "hardware-based" to comprehensive digitalization and intelligence

In Fang Hongbo's view, entrepreneurship is to constantly subvert oneself and deny oneself. Almost every year, Fang Hongbo repeatedly emphasizes key words such as "change", "innovation" and "transformation" in his letter to shareholders. This year is different, for the first time, Midea Group added the word "comprehensive" before the transformation and defined it as its second major transformation.

In 2019, the manufacturing industry accounted for 91.4% of Midea's group revenue, and Midea is still a typical "hardware" company. Comprehensive digitalization and intelligence mean that the form of Midea's products and business value chain will undergo earth-shaking changes.

"It is necessary to use data to drive operational excellence across the entire value chain, from the traditional focus on hardware and functions to the use of software to drive hardware, plus content and services, to provide users with a new experience model." Zhang Xiaoyi, vice president and CIO of Midea Group and president of the IoT business unit, said. The IoT business unit is a new department established by Midea this year to promote transformation.

This revolution sprouted in the last major transformation of the United States. In 2011, in the face of problems such as low efficiency and high cost, Midea launched the transformation of "product leading, efficiency-driven, and global operation". Around 2013, Midea simultaneously launched the Digital 1.0 project, implementing "one beauty, one system, and one standard". In 2014, Midea put forward the dual-intelligence strategy of "smart home + intelligent manufacturing". By 2015, Midea Group's net profit increased by 106% and net cash flow increased by 551% compared with 2011, while revenue increased slightly and the number of employees decreased by 46%.

"2015 happened to be the era of the Internet and intelligent manufacturing, and Midea Group introduced big data, mobility, and intelligent manufacturing related technologies, and the efficiency of the entire enterprise has been improved to a certain extent." Zhou Xiaoling, IT director of Midea Group, said.

In 2016, Midea launched the Digital 2.0 project, hoping to build the entire Midea's data-driven C2M customer customization capabilities from the dimensions of digital marketing and flexible manufacturing. Since then, it has seized the opportunities of globalization and relevant national policies, acquired KUKA robots, built an open platform for the M.IoT industrial Internet, and a series of actions, which have become important supports for the three main axes of "product leadership, efficiency driven, and global operation".

The integrated development of digitalization, networking, and intelligence has also become a national trend. As the three main axes have become Midea's daily work and business language, the direction of a new round of transformation of "comprehensive digitalization and comprehensive intelligence" has gradually become clear, and the impact of the epidemic this year has accelerated this process.

In the first half of the year, the digital and intelligent transformation of the domestic manufacturing industry was significantly accelerated, and Midea became a part of it. "We are fully digitalizing the sub-projects that we are now promoting, excluding those that have been launched, there are as many as 71, the total number of tasks has been completed more than 70,000, and the entire group has invested more than 3,000 people, and the comprehensive intelligence is also accelerating." Zhang Xiaoyi said.

Fission beauty

Three "digital intelligence" innovation platforms support five major businesses

The direction of comprehensive digitalization and comprehensive intelligence has been determined, what is the implementation path? What will be the results for the industry? "In the future, Midea will focus on the establishment and development of three major innovation platforms: the IoT ecological platform, the Meiyun sales business platform and the all-weather industrial Internet platform." Fang Hongbo said.

On the basis of home appliance application scenarios in the era of the Internet of Things, Midea has created an IoT ecological platform. Midea not only has a direct connection with the daily life of end users through the platform, but also joins relevant partners. In 2019, Midea officially released the IoT open cloud platform, which provides standardized modules, standardized APIs, and data systems. As of July this year, more than 60 cooperative companies and more than 1,000 developers have registered hundreds of smart home appliances on it. Han Han, Director of Internet Brand and Ecology of Midea's IoT Division, said that after other companies join the Midea ecosystem, they will share traffic and channels to maximize business value.

The Meiyunpin business platform, which connects the upstream and downstream industrial chains, has become "popular" during the epidemic this year. Due to the obstruction of traditional supply chain channels such as offline ordering and store sales, Midea has carried out a number of "cloud ordering" and other activities through the Meiyun sales platform, and the sales amount of a single game has exceeded 1 billion yuan many times. Meiyunpin is not only a sales platform, but also a supply chain and value chain integration platform. "We have gathered the strength of the whole group to build this platform, and combined Midea's own business capabilities, logistics capabilities, customer service capabilities, and financial capabilities into a Meiyun sales platform, so that our partners, retailers, and users can work on it very easily." Zhang Xiaoyi said.

At present, the M.IoT industrial Internet platform has served more than 40 sub-industries, and is widely used in more than 200 industry-leading enterprises such as Dongfeng Group, Guangzhou Automobile Group, Vanke, and Huawei. On this basis, Midea Group also undertook the construction of a secondary node platform for the identification analysis of the national home appliance industry, which has become a new national infrastructure. On August 5th, the Foshan Industrial Internet Enterprise Exchange Conference specially walked into Midea Group to learn the benchmarking experience of Midea's industrial Internet.

With the continuous promotion of the "digital intelligence" strategy and the support of the three major platforms, Midea Group is becoming less and less like a simple "manufacturing enterprise". A traditional home appliance company, Midea, accelerates the "fission" into multiple Midea.

In 2016, Midea Group also defined itself as a home appliance company. In 2017, Midea became "a global technology group spanning consumer appliances, HVAC, robotics and automation systems". In 2018, Midea's business segment added the intelligent supply chain (logistics) sector. At the beginning of 2020, "digital business" replaced intelligent supply chain (logistics) to become the fourth largest business segment of Midea Group. On August 7, Fang Hongbo disclosed for the first time that the group's business layout has expanded to five: consumer electronics, HVAC and building systems, mechanical and electrical business group, robotics and automation, and digital innovation.

At present, in addition to home appliances, HVAC and other businesses are still the leading business, Midea's robot and automation annual output value of about 25 billion yuan, including chips and other industries of the electromechanical business group of about 30 billion yuan, Meizhi Optoelectronics and other enterprises are preparing to spin off and go public.

 "The underlying logic of the growth mode of the manufacturing industry has undergone profound changes, and in the future, Midea will continue to deepen its global R&D layout and independent innovation based on its comprehensive digitalization and comprehensive intelligence strategy. Fang Hongbo said.

• Reference source: Nanfang Daily https://epaper.southcn.com/m/ipaper/nfrb/html/2020-08/13/content_71360.htm