2016.06 1
Corporate Snapshot 美的集团管理模式分享 2
Corporate History Established Brand registered 1985 IPO Organization restructuring Acquisition of compressor Liguang Aircon MBO completed 1993 1998 2000 JV with Toshiba Carrier Acquisition of Royalstar, Chunhua Acquisition of Little Swan; Increase stake in Royalstar Acquire Hualing, CQ General Industry, JV with Qinghua Acquisition of Miraco, Guiya Lighting Management Handover Strategic Transformation Xiaomi Invested in Midea Listing as a whole JV with Carrier,, SIIX Yaskawa Strategic Partnership with Toshiba 968 1980 1992 1997 2001 2004 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 Electric Fan Residential AC Electric Motor Rice Cooker 1998: Compressor 1999: Commercial AC Microwave Oven Induction Cooker Water Dispenser 2000: Dish Washer 2001: Water Heater, Water Purifier 2002: Refrigerator 2003: ATW Heat Pump 2004: Wash Machine 2005: Vacuum Cleaner, Pressure Cooker 2006: Oven 2007: Air Purifier, Humidifier 2009: Lighting Smart Home Robotics Three Listed Companies: Midea Group (SZ.000333), Little Swan (SZ.000418), Welling (HK.00382) Multi-Brands: 3
Product Categories Widest range home appliances product categories, plus motors, logistics, financial services, etc. Residential AC Commercial AC Refrigerator Wash Machine Compressor / Motor Oven / Microwave Hoods / Stove Rice Cooker Dishwasher Water Heater Small Appliances Lighting Logistics Water Purifier Air Purifier Complete Kitchen Smart Home Every Year About 300mn Midea new products entering into over 100mn households 4
Turnover Composition #1 online retail sales No.1 in home appliance industry 2015 Turnover Composition Unit: RMB yuan Source: 2015 Annual Report 5
Market Share No.1 No.2 No.1 No.1 No.1 No.1 No.2 No.2 No.3 No.3 No.4 No.3 No.4 Source: China Market Monitor2015.1-12 (sales amount) 6
Awards Over 100 Industrial Design Awards IF Design Award (Germany), Red Dot Design Award (Germany), IDEA Design Award (US) 7
Rankings & Ratings #32,Fortune China Top 500 #436,Forbes Global Top 2000 #13,China non-state owned Company Top 500 #38,China Manufacturing Company Top 500 First Chinese home appliance manufacturer assigned ratings by International Rating Agencies A - / Stable A 3 / Stable A - / Stable #6,Ruifu Global Ranking Top 100 8
Manufacturing Footprint (China) China Hefei, Wuhu: Residential AC, Commercial AC, Refrigerator, Hoods, Heater, Compressor, Motor Chongqing: Residential AC, Commercial AC Wuhan, Jingzhou:] Residential AC Handan: Residential AC Wuxi, Suzhou, Huaian, Changzhou: Washer, Vacuum Cleaner, Heater, Motor Guixi: Lighting 14 Shunde, Guangzhou, Zhongshan: Residential AC, Commercial AC, Refrigerator, Microwave Oven, Gas Stove, Oven, Sterilizer, Small Appliances, Compressor, Motor, Lighting 9
Manufacturing Footprint (Global) Belarus Microwave Oven, Stoves Overseas 7 China All Categories Vietnam Brazil Residential AC, Commercial AC Argentina Egypt Residential AC, Commercial AC Saudi Arabia India Residential AC Residential AC, Refrigerator, Induction Cooker, Rice Cooker Residential AC 10
Residential AC Refrigerator Laundry Commercial AC Kitchen Appliances Living Appliances Environmental Appliances Water Heater Parts & Components Organization Chart E-Commerce Platform Midea Group International Business Platform Supply Chain Platform Logistics Platform Service Platform 9 Product Divisions Treasury Platform Consolidate business support to 6 platforms to create synergies 11
Governance - Annual cash dividend: 1/3 of distributable profits Strategic Investors 14% Senior Executives 5% Cash Dividend - In 2015: DPS 1.2 yuan; Transfer of Capital reserve: 5 shares per 10 shares; cash dividend amount: 5.1bn yuan; accumulated cash dividend amount: 12.7bn yuan Controlling Shareholders 36% Midea Others 45% Share Options Three terms of share option scheme for employees. Group Partners Program Two terms of Partners programs (ESOP) for key senior management. Dated: 31 March 2016 12
Strategic Directions 13
Vision Third Three Year Second Three Year First Three Year Vision: Leader in Chinese home appliance industry; Top 3 in worldwide white goods industry Goal: To be a consumer-oriented innovative company 14
Strategic 战略主轴 Focuses Leading Products Consumer-oriented products; improved productivity More investment in R&D; innovation; improved product mix Spin off loss-making categories; reduce product models Efficiency Driven Launch 632 IT project to standardize process Invest on automation of the factory Promote T+3 model production planning based on orders Consolidate business support to 6 platforms to create synergies Global Operation Set up International Business Platform Business model from OEM to OBM Joint Ventures with Carrier, Bosch, Toshiba, etc. M&A 15
Home Appliances Manufacturer System Integration Solution Provider Business 产业框架 Framework Business Strategy Internet Strategy M-SMART M-Smart Globalization Strategy 6 platforms to support business development 16
Platforms Logistics platform: End-to-end systematic solutions Service Platform: Fast, Efficient & full-service Covering 9.6mm km2 & 100cities; delivery within 24hrs Founded as service sharing platform To meet users demand To meet customers demand Consolidate logistics of Midea products divisions 3rd & 4th tier markets development Improve efficiency, reduce costs Customeroriented (cross brands) Upgrade information Usersoriented (cross industries) Diversification of delivery methods & products; Expand non-midea customers Convenient Life Installation and repairing, recycling of home appliances; Technicians O2O Digitalized life I.O.T; Personalized services Sharing Life Multi-brand services; industry service To meet company s demand Companyoriented (Midea products) Resources consolidation system Fast growth Delivery to home; last kilometer Healthy Life Cleaning of home appliances; Water and air quality test, etc. Charity Life Industry standard; orphan brand; Social welfare 17
Product Strategies Focusing on consumer-oriented research & characterized product features, to achieve differentiated competitive advantages. Comfort Star AC No wind feeling Energy-saving silent Smart light reaction Child Star AC No child sleeping curves Angel protection mode Fast cooling technology 3 color healthy filter Further investment on product R&D, to build a globally competitive R&D scheme and improve innovation capability. Twin Screen Smart Fridge Food management Twin screen Internet connected Beverly Washing Dryer Diamond cutting crafts Accurate detergent adding Innovative water flow Concentrate on research and innovation of fundamental and core technologies, smart home technologies. Smart Rice Cooker Titanium pot IH big fire Two direction 720 degree boiling M2 Water Purifier No installation needed Easy filter change RO+, cold and hot water WiFi smart management 18
R&D Strategies R&D investment: Set up Central Research Institute, Smart-Home Institute (Global Innovation Center) Invested RMB 3bn, to build largest home appliance R&D center in Asia R&Ds center worldwide Four Tier R&D Scheme Divisions Product development Individual technology research Central Institute Common technology research Fundamental & subversive research Innovation Projects: Start from Scratch Projects: new platform development on existing product categories Second Track Projects: new product R&D in new fields such as health, smart, beauty, nutrition, environmental protection 19
Twin Smart Strategy Automated (Smart) Manufacturing M- Twin Smart Strategy SMART Yaskawa Automation 1000 robots in use RMB 5bn used in factory automation Joint Ventures with YASKAWA (Japan) Invested in ANHUI EFORT (17.8%) Increased shareholding in KUKA (Germany) > 10% Efort KUKA 20
Twin Smart Strategy Chip & Module Open Smart Home: M-Smart E- commerce Open Open platform for building smart home Connection Open Over 80 smart product categories on market Completed the development of WIFI Module, Midea Cloud and core SDK of system Finished protocol matching with JD, Alibaba, Xiaomi, Wechat Cloud Service Open Protocol Open Established protocol matching with Homekit Allseen Thread WIFI ZIGBEE Alliance Established matching with Router company (Huawei, Xiaomi), mobile internet platforms (Wechat, Baidu), smart hardware (ROKID robot), 3 rd - party application (IFLYTEK, Moji Weather) M-SMART Bubble Products: Bubble Robot Bubble M-Box Bubble Box Bubble Smart plaster Bubble Router 21
Globalization Business Mode: Brand Image: OEM Direct export OBM Local Production Functional Brand Emotional Brand Aspirational Brand Operation Mode: Joint Ventures, M&A: HQ Globalization Subsidiaries Localization Global standardization Local Differentiation 22
Business Update 美的集团管理模式分享 23
Revenue & Margin Revenue dropped due to active channel destocking; both gross and net profit margin increase 24
Cash & Cash Flow Abundant cash-in-hand; healthy cash flow generated from operating activities 25
Financial Liquidity & Leverage Strong balance sheet with improved liquidity and reduced financial leverage ratio 26
Inventory & Inventory Turnover YoY inventory further reduced; inventory turnover days reduced 27
Market Cap & Dividend Steadily increased market cap & Stable dividend distribution RMB Bn From Sept. 2013 to end 2015, market cap has increased 97%. Cumulated dividend payment from 2013 to 2015 amounts to RMB 12.7Billion. 28
Backup - Financials 美的集团管理模式分享 29
Key Financial Analysis Stable turnover growth; improving margin Improving Gross Margin; stable SG&A&Fin Costs RMB Bn Net asset largely increased; ROE largely improved Sufficient cash; stable cash inflow RMB Bn 30
By Products & Regions AC inventory Reduced; other categories grow rapidly Both inside and outside China market grow steadily 31
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