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Advances Newsletter, April, 2015
1
Vol. 5, #3, April 2015, No. 47
M-Smart in Action
Visitors to The Canton Fair could control 33 product categories with a phone
Advances Newsletter, April, 2015
2
ADVANCES Newsletter
Contents
Midea Advances Newsletter is published monthly
by the International Strategy Department of
Midea Group. We welcome all comments,
suggestions and contribution of articles, as well as
requests for subscription to our newsletter. You
can reach us by email at: advances@midea.com
Address:
ADVANCES, International Strategy Department
Midea HQ
No. 6 Midea Road
Beijiao, Shunde, Foshan, Guangdong
P.R.C. 528311
Tel: +86-757-23270461
Web: www.midea.com/global
Managing Editor:
Kevin McGeary
Regular Correspondents:
Javier Romano
LS
Ma Yuexian
Yang Yalong
Zhang Mingming
Cindy Yang
NEWSLINE
Kentucky Governor Excited
by R & D Centre PAGES 4
Net Profit up 32% Year-on-
Year PAGE 3
LittleSwan Sees Steady
Growth in First Quarter PAGE 3
CAC Signs Joint Venture with
Bosch PAGE 4
www.midea.com
Zhou Wei: A Woman in a
Man‟s World PAGE 18
Big Picture
People
Idea
Idea of the Month:
Daydreaming PAGE 17
Smart Rice Cooker Rolled out
in Tokyo PAGE 7
How the Mighty Fall PAGE 16
Saudi Distributor Unveils
Mission Air Cons PAGE 7
Showtime for Smart
Technology PAGE 14
Canton Fair
CAC Obtains Third Straight
AHRI Certificate PAGE 6
Strategy Agreement with
Alibaba Renewed PAGE 6
JV Signed with Japanese Gi-
ant PAGE 5
M-Smart a Hit at Refrigeration
Expo PAGE 5
Midea, Carrier & CQME
Come Together PAGE 8
International Conference
Held at Art Factory PAGE 9
New Refrigerator in
Philippines PAGE 10
An Improvement on Gas
Cookers PAGE 10
CAC Factory Revamps Its
Cafeteria PAGE 11
Web Sales Grow 150% in
2014 PAGE 12
Photo Highlights PAGE 15
Pu Tiantao: The Soul of
Welling PAGE 18
Air Conditioners that Can Be
Controlled by Xiaomi
Bracelets PAGE 13
Advances Newsletter, April, 2015
3
Net Profit up 32% Year-on-Year
By Advances
M idea achieved revenue of US$6.87 billion in the
first quarter of 2015, a year-on-year increase of 10.5 percent,
according to the group’s
financial report which was
published on the evening of
April 28. The holding com-
pany saw net profit of
US$538 million, a year-on-
year increase of 32 percent.
Earnings per share
were at US$0.13, a year-on-
year increase of 32 percent.
The gross margin was at
26.8 percent, a year-on-year
increase of 1.5 percentage
points.
In 2012 and 2013,
Midea Group’s revenue experienced a decline due to corporate
consolidation costs, in combination with domestic government
policy changes, which impacted domestic sales. Since then the
company has been focusing on new strategies involving The
Internet of Things, online sales channels, building overseas
manufacturing and re-
search and development
bases and signing joint
ventures with giants such
as Bosch, Alibaba and
Siix.
This has paid dividends
as last year proved the
most lucrative in Midea
Group’s history. High-
lights of this quarter
include compressor
brand GMCC achieving
sales of 6 million units in
March, an all-time indus-
try high which comes after 20 years of consistent growth.
NEWSLINE
By Kevin McGeary
LittleSwan Sees Steady Growth in First
Quarter
M idea-owned washing machine
brand LittleSwan saw revenue of 3.29 bil-
lion Yuan (US$531 million) during the first
quarter, it was reported on April 21. This
represented year-on-year growth of 27.9
percent. Earnings per share were 0.38 Yuan,
a year-on-year growth of 40.7 percent.
During this period, LittleSwan ad-
vanced its profitability by upgrading its sales
channels. Its overall gross margin was 27.11
percent, an increase of 0.11 percentage
points. The net profit margin was 8.41 percent, an increase of
1.13 percentage points.
In the past year, LittleSwan has been increasing its invest-
ment in research and development. As a
sign of its commitment, the company
joined hands with e-commerce giant
Suning on April 20 to release a new line
in the Water Cube series.
The reported period also saw a decline
in operating costs. The expense ratio
during the first quarter of 2015 was
18.12 percent, down 0.59 percentage
points from last year.
The “five pillars” of LittleSwan’s strate-
gy include marketing, products, manufacturing, quality control
and supply chains.
Advances Newsletter, April, 2015
4
Kentucky Governor „Excited‟ by R & D
Centre By Advances
K entucky Governor Steve Beshear and Louisville
Mayor Greg Fischer announced March 26 that Midea America
Corporation plans to locate its first U.S. research and develop-
ment operation in Jefferson County, Kentucky. Midea will
create up to 25 new jobs and invest nearly US$2.7 million in
the project.
“This is a very exciting project on many levels,” said
Gov. Beshear. “Not only is Midea America creating new jobs,
but it also is increasing Kentucky’s international footprint and
elevating our status as one of the top research and develop-
ment locations in the country. I look forward to seeing the
impact of Midea America’s R&D center across the nation and
around the world.
“Having a global industry leader like Midea America
choose to locate its first U.S.based research and development
center in Louisville speaks to the strengths we have as a
worldwide leader in innovation, research and advanced manu-
facturing,” said Mayor Fischer.
“Midea’s investment in our city demonstrates the com-
pany’s confidence in our local and regional economy and our
ability to compete successfully on a global level.” The center
will work to bring value to Midea’s North American custom-
ers through product innovation and development.
The
compa-
ny will
also hire
a num-
ber of
U.S.
product
experts
to guide
the
compa-
ny’s
efforts.
Midea
America
is still determining the exact location of its Louisville facility,
but expects to start hiring employees in the coming months.
“Midea America is excited to work with the state of Kentucky
and local Jefferson County government to establish its North
American R&D center,” said Mark Wilson, Midea’s director of
U.S. Research and Development. “The area has a strong tech-
nology background, and Midea looks forward to better serving
its customers with a focused US product development effort.”
Midea has been serving North America with air condition-
ing, refrigeration, washing machines, dishwashers, floor care and
numerous small appliances for more than 10 years.
Kentucky is home to more than 430 internationally based
companies, including 170 from Asia and two with Chinese own-
ership. Last year, nearly a third of all new investment and 20
percent of jobs announced in the state was a result of foreign
direct investment. “It is exciting that Midea is locating its first
U.S. research and development facility in Jefferson County,”
said Sen. Morgan McGarvey, of Louisville. “The company’s
location in our great city will create new jobs and opportunities
for Kentuckians. Congratulations to Midea and welcome to
Louisville.”
Rep. Larry Clark of Louisville also welcomed Midea to
Jefferson County.
NEWSLINE
Governor Steve Beshear
Senator Morgan McGarvey
Advances Newsletter, April, 2015
5
JV Signed with Japanese Giant
By Advances
G roup Pres-
ident Paul Fang signed
on April 3 a joint ven-
ture agreement with
Shiro Murai, Chairman
of Japanese manufac-
turer Siix. One of the
world’s leading manu-
facturers of electronic
controls, Siix will coop-
erate with Midea in air
conditioning technolo-
gy. Deputy General
Manager of Midea
Commercial Air Condi-
tioning (CAC) Wu
Guanghui also attend-
ed the ceremony.
In recent years, the
Chinese market has matured, taking quality rather than quantity.
According to a press re-
lease, Siix decided to es-
tablish the joint venture
to reinforce their busi-
ness with the Chinese
market.
The first step will see Siix
manufacture electronic
circuit boards for CAC.
In the medium- and long-
term, the joint venture
plans to target manufac-
turing and assembly busi-
nesses for other markets.
Founded in 1957 and
headquartered in Osaka,
Siix’s current clients in-
clude Toshiba.
NEWSLINE
By Advances
M-Smart a Hit at Refrigeration Expo
M -Smart had its most
comprehensive exhibition yet at
the 26th International Refrigera-
tion Expo in Shanghai on April 7
-9. More than 1,000 companies
took part in the exhibition which
also involved air conditioning,
heating, ventilation and food
processing equipment.
Midea Commercial Air
Conditioning (CAC) demonstrat-
ed its direct current (DC) inverter
and how it fits into the overall
system. Engineers
were on hand to
demonstrate how M-
Smart worked when-
ever necessary.
As The Internet of
Things continues to
revolutionize the way
people live, M-Smart
continues to push its
competitive ad-
vantages such as its
enormous preexisting
product range.
The signing ceremony in Shunde
Advances Newsletter, April, 2015
6
Strategy Agreement with Alibaba Renewed
By Advances
A libaba re-
newed its comprehensive
strategy agreement with
Midea Group on April 3.
Alibaba’s Chief Opera-
tions Manager Zhang
Yong came to the group’s
global headquarters in
Shunde to sign the agree-
ment which covers both
internet and manufactur-
ing strategies.
In 2015, Midea aims
to sell 11 billion Yuan
(US$1.7 billion) worth of
products through Alibaba’s
online platform. The group
will also be able to use Alibaba’s data to better analyze consumer
behavior and subsequently improve its products and services.
In a speech earlier this
year, Chinese premier
Li Keqiang said that
the internet would be
central to Chinese
business over the next
decade. With its com-
prehensive O2O mod-
el, the cooperation is
at the crest of this
wave. On November
11 last year, Midea’s
Small Appliances Divi-
sion made 200 million
Yuan in online sales in
a day, mostly through
Alibaba’s Taobao plat-
form.
NEWSLINE
By Javier Romano
CAC Obtains 3rd Straight AHRI Certificate
M idea Central Air Condi-
tioning (CAC) won the Air-
Conditioning, Heating and Refriger-
ation Institute (AHRI) Certificate at
the third attempt in a row this win-
ter. The certificate covers small heat
pump type air conditioners and gas
furnaces and is one of the world’s
most authoritative certifications in
the HVAC industry. It is a mark of
high quality and competitiveness on
the international stage.
CAC obtained the AHRI certi-
fication for the first time in 2008. In the intervening years, hun-
dreds of heat pump air conditioners,
heat pump rooftop air conditioners,
gas furnaces, air/water cooled chillers
and VRF products have met the
standards of the certification. AHRI
certification with strict checking sys-
tem certifies product consistency and
performance; up to 20% of the units
are tested each year. Every one of
these products has tested positive for
three consecutive years, a testament to
Midea CAC’s place in the industry.
The signing ceremony in Shunde
Advances Newsletter, April, 2015
7
Smart Rice Cooker Rolled out in Tokyo
By PR Newswire
O n April 13, Midea unveiled its "tripod pot" with the
best interior chamber among electric cookers in Japan, a country
known for being ahead of the curve when it comes to the tech-
nology of home appliances. The Midea IH Smart Rice Cooker,
the first to be equipped with a
tripod pot interior chamber,
debuted in Tokyo, priced at
2,999 Yuan (US$482).
At the press conference
announcing the new product,
Midea Living Appliance Group
general manager Li Guolin told
the story behind the research
and development of the interi-
or chamber, heating and controlling technologies that are part
and of the design, demonstrating that China's home appliance
manufacturers have caught up with other leading makers in the
field.
China's long-established culinary traditions, vast territory
and abundant resources contribute to the country's unique food
culture. In the minds of the Chinese people, firewood-cooked
rice is the most savory. The cooker's interior chamber is the key
to satisfying the demand for fire-cooked rice. Leveraging its
knowledge of interior chamber technology, Midea innovatively
developed the unique multilayer composite material that is used
in the tripod pot, a reproduction based on ancient Chinese
cooking methods. The device is composed of 8 layers of materi-
al, 6 boiling rings, 108 honeycomb-patterned inner pots and
undulating curves at a finely tuned 62 degrees of arc, bringing
about remarkable improvements in the heating uniformity and
durability of the interior chamber.
The best way to cook rice is to cook it for an extended
period of time over a low flame. To bring out the desired flavor,
boil the rice over high heat, then switch to low heat and simmer
to fully bring out the flavor. Midea has patented its intelligent
control technology in Japan and South Korea. Through techno-
logical innovation, the Midea IH Smart Rice Cooker has suc-
cessfully produced the sought-after flavor of delicate stewed rice
through the process of refined boiling and slow simmering.
NEWSLINE
By MENAFN
Saudi Distributor Unveils Mission Air
Cons
A l-Hassan & Hussein Ghazi Shaker Co. Ltd. distribu-
tor of Midea air conditioners in Saudi Arabia announced the
launch of Mission air conditioners during the annual dealer con-
vention.
The convention was held in the three main cities of the
kingdom. The first took place in Jeddah on March 16 preceded
by a press conference on the same day. This was followed by a
convention in Riyadh on March 17 and another in Alkhobar on
March 18.
The newly launched Mission air conditioner is character-
ized by modern design, low noise, and high cooling capacity in
addition to other unique features like Wi-Fi control kit which
allows control of the air conditioning unit from outside the
home.
The event was attended by
Henry Cheng, general man-
ager of Residential Air
Conditioning (RAC) Mid-
dle East Midea brand. He
expressed his gratitude to
Hassan Shaker CEO Al-
Hassan & Hussein Ghazi
Shaker Co. Ltd.
Cheng added: 'Our new Mission in addition to its stylish design
adopts the highest and most advanced technology. The sales
figures are an important accomplishment for the year and they
could not have been achieved without the support and dedica-
tion of Al-Hassan & Hussein Ghazi Shaker Co. Ltd.'
The conference
Advances Newsletter, April, 2015
8
Midea, Carrier & CQME Come Together
A n international strategic platform has brought Midea
Group, Carrier Corporation and Chongqing Mechanical & Elec-
trical together in the field of commercial air conditioning.
Carrier has entered an existing joint venture between
Midea and CQME by acquiring 35% of the total share from
CQME for 170 million Yuan (US$27.4 million). Consequently,
the stock share is now 55% for Midea Group, 35% for Carrier
Corporation and 10% for CQME.
The
signing
ceremo-
ny
where
the
Presi-
dent and
CEO of
United
Tech-
nologies
(of which Carrier is a subsidiary) Geraud Darnis, the Chairman
and President of Midea Group, Paul Fang, and the General
Manager of CQME, Liu Zhongtang, represented the three par-
ties, was held on March 23 in Chongqing.
Attendees also included Deputy Mayor of Chongqing
Chen Luping, founder of Midea Group He Xiangjian, Deputy
General
Manager of
CQME Liu
Yonggang,
President of
HVAC&R
Sub-
Council of
China Ar-
chitectural
Society Xu
Wei, and
other representatives from local government and enterprises, as
well as investors, dealers and media.
Paul
Fang, empha-
sized that
Midea’s strat-
egy is to build
solid collabo-
rations that
strengthen the
company’s
international
reputation and help promote the brand worldwide. Carrier is the
most historic company in the HVAC industry, Willis Carrier
having invented the modern air conditioner in 1902. Midea
Group is greatly honored to collaborate with such a reputable
partner.
Geraud Darnis acknowledged Midea-Carrier’s past
achievements in Latin America, India, the Philippines and
Egypt. Carrier considers Midea an essential partner in China
because of its commitment to innovation and enormous market
share. “All of these advantages make the long-running and deep
cooperation possible,” he said.
Insiders pointed out that Midea has dwarfed most com-
petitors in the Chinese market through its independent R&D
team and introduction of foreign technology and thanks to its
efforts with Carrier and CQME, Midea is no-doubt going to see
a further development in both the domestic and overseas mar-
kets.
NEWSLINE
By Javier Romano
Geraud Darnis
Paul Fang
Advances Newsletter, April, 2015
9
By LS
International Conference Held at
Art Factory
F rom April 13-15, 162 people from 21 countries on
four continents gathered in Shunde to hold a meeting about
branding. At Guangzhou’s famous Redtory Art & Design Facto-
ry, there were four topics up for discussion among representa-
tives of Midea International Division (MID), many of whom
had flown in from around the world.
The meeting covered planning for both marketing and
products in 2015. Senior officials of both Midea and its joint
ventures and subsidiaries from the United States, Brazil, Chile,
Argentina, Russia, Belarus, Egypt, Mexico, Germany, India and
Southeast Asia were in attendance.
It was an evocative setting to hold such a meeting. One of
the four rooms in which it was held was a mock train station,
which had the front of a life-sized model train. The beginning of
the meeting was announced at 9:30 by the sound of a whistling
steam train. To get into the meeting, attendees had a free “train
ticket.”
The beginning was inspired by an internal Apple recording
of a now famous Steve Jobs speech. Host Arthur Huang dressed
like the late Apple boss to give the speech. He espoused MID’s
“three greats” (3G) tactic: great products, great distribution,
great marketing.
He went on to talk about the positioning of the Midea
brand in the wide variety of markets that his audience dealt in.
What is the nature of the products? What makes them unique?
How do they make people feel? How should they make people
feel? He also talked about the hoops that products had to jump
through to become available in certain markets.
The afternoon meeting was split into three locations. Ti-
tled “Mission Impossible”, the three phases tackled different
issues. For this session, Arthur Huang dressed as Ethan Hunt,
the main character in the “Mission Impossible” series. The vid-
eo which commenced the afternoon was an MI3 trailer in which
Huang’s head was pasted over Hunt’s.
The first phase, titled “The Art of Communication”, was
held in an art gallery. It emphasized product promotion and
communication with consumers. The need to stay at the cutting
edge of social media and marketing was also talked about.
The second phase, “Winning in Sell Out” was about the
creation of sales channels. It expressed the core need of identi-
fying and growing channels in various markets. There were also
mock product demonstrations, which are key to success in the
appliances business.
The final phase was “Research on Research.” The host
dressed like Harry Potter and told the crowd that the only way
to solve problems was to get to the bottom of them, not to
hope they just magic themselves away.
This was followed by the Brand House jigsaw competi-
tion, a team-building exercise for all officials, many of whom
were meeting each other for the first time. The following two
days’ meetings were held in the group headquarters in Shunde.
Product planning and regionally-sensitive promotion were the
order of the day.
NEWSLINE
The Redtory Art & Design Factory
The spirit of Steve Jobs lives on
Advances Newsletter, April, 2015
10
New Refrigerator in Philippines
By Manila Bulletin
T he heat is on, so Concepcion Midea Inc. is rolling out
three new refrigerator models in The Philippines with redefined
design, feel, and functions.
"The tastes and requirements of the modern man and
woman are quite different and demanding," says Phillip Trapaga,
General Manager of Concepcion Midea Inc. "In the digital age,
every piece of equipment is either smart or it becomes obsolete.
It must take into account the needs of its consumer and not just
provide for them, but actually "anticipate" them through an in-
telligent programming built into the design. Concepcion Midea
Inc. spares no expense in investing in cutting-edge research and
development that gains accurate insights into what our clients
need, and then infusing into our appliances the features needed
that can support them in the lifestyle they want."
First to come down the innovation pipeline is the Side by
Side Refrigerator that is with dispenser and a home bar. The
dispenser makes sure water is always available for those who like
their drinks cool or the home bar for their wine chilled. A home
bar is for parties and other home events, allowing the owner to
access drinks set at the right temperature at the right time and
serve them punctually and effortlessly. This refrigerator is also
very cost-effective and its usage cuts down electrical consump-
tion giving 54 percent savings.
The French Door Refrigerator is the crown jewel of the
Concepcion Midea Inc. line of appliances. High-moisture reten-
tion technology maintains a humidity level that keeps food fresh
for a longer period of time. The ultra violet light it emits pro-
motes photosynthesis and removes pesticides, ensuring the
cleanliness of the food.
The third and most basic model, the Side-by-Side Refrig-
erator Basic, has a multi-flow airflow facility that enables uni-
form cooling throughout the appliance, protecting the food
from sudden changes in temperature. A user-friendly electronic
control empowers the user to determine the temperature within
the appliance. This model is for those who live fast lives and
want easy access to their frozen food, cooking them in an in-
stant and without having to go through the trouble of finding
the particular meat or fish that they want.
NEWSLINE
An Improvement on Gas Cookers
By Manila Bulletin
W hich way of cooking is better: electricity or gas?
Midea offers its innovative electrical induction cooker as
the kitchen appliance that possesses all the beneficial aspects of
the gas stove while rising above its
usual limitations.
The modern gas stove is used
by many Filipinos for many reasons.
Cost is a major consideration. Cook-
ing using gas naturally does not incur
any increase in the household’s over-
all electric bills, and the purchase of LPGs is easier to budg-
et. Electric ranges take time to heat up or cool down after the
user lowers the temperature; the gas stove makes these changes
at faster rates, which makes it easier for the homemaker to finish
the dishes for that particular meal. Just by looking at the intensi-
ty of the flames burning, she can gauge whether the heat is right.
Midea’s induction cooker, though powered by electricity
rather than gas, offers all these functions but takes them a step
further. Homemakers need not worry about any rise in their
electric bills because this cooker is more efficient than the gas
stove. The Midea induction cooker is also 25 percent faster than
the average electric cooker.
Midea’s induction cooker provides a scientific way that
accurately measures the heat and guides the homemaker into
either increasing or decreasing its level. Its method of flameless
heating removes risky exposure and eliminates fire-related acci-
dents.
The Midea induction cooker heralds the new wave of
cooking that adapts to the needs of denizens of the digital age.
Advances Newsletter, April, 2015
11
CAC Factory Revamps Its Cafeteria
By Ma Yuexian
T he cafeteria at the Midea Commercial Air Condition-
ing (CAC) factory in Chongqing, southwest China, was refur-
bished in March. The ceiling and lighting were replaced to make
the place feel brighter and more spacious, which is ultimately
good for worker morale.
NEWSLINE
The newer, brighter, more spacious cafeteria
The pillars are decorated with works of art, this one portraying a silverware combination
A little flower makes a big difference
A sign espousing the importance of cleanliness
The VIP suite
Advances Newsletter, April, 2015
12
Web Sales Grow 150% in 2014
By Internet Retailer
M idea Group generated 10 billion Yuan ($1.6
billion) in web sales in 2014, up 150% from 4 billion Yu-
an ($64.5 million) a year earlier, according to its 2014 an-
nual report.
In 2014, Midea created a sub-company to streamline
its online businesses. Like some top consumer brands in
the Internet Retailer 2015 China 500, Midea doesn’t oper-
ate its own e-commerce site, instead selling through such
big online marketplaces as JD.com and Tmall.com. The
company also works with about 200 resellers that sell
Midea goods in marketplaces to reach more online con-
sumers.
JD.com is No.1 in the Internet Retailer 2015 China
500. Alibaba Group Holding Ltd., the operator of
Tmall.com, is not ranked in the China 500 because, like
eBay Inc., it is not a retailer but a platform that connects
merchants with consumers.
Midea attributes some of its e-commerce success to con-
necting its bricks-and-mortar stores with its online stores on
marketplaces. The company expanded its offline retail network
to 1,900 stores last year from about 500 stores in 2013 and re-
vamped its computer systems so that it could fulfill online or-
ders from those retail locations.
Midea and Chinese smartphone maker Xiaomi Inc. agreed
last year to work together to develop more Internet-connected
products.
“Appliance makers and consumers have become connect-
ed directly by the Internet, and consumers have become more
important in product development,” a compa-
ny spokesman says. “Also, the mobile Internet
enables home appliances to connect to the
web. Midea can’t build this online platform
alone, and we have to partner with other Inter-
net companies.”
Midea’s goal in 2015 is to sell about 16 billion
Yuan ($2.6 billion) worth of products online by
investing more in online data analysis, loyalty
programs and social media marketing.
Household appliance sales keep growing steadi-
ly in China. According to the Ministry of Com-
merce, appliance makers increased sales by
12.4% in January and February, compared with
7.3% in a year ago. The Ministry of Commerce
says the major market drivers are urbanization
and increasing demand for Internet-connected appliances.
Newsline
A brick and mortar Midea store
The joint venture that was signed in late 2014
Advances Newsletter, April, 2015
13
Air Conditioners that Can be Controlled by
Xiaomi Bracelets By Cindy Yang
S everal months ago, Midea released images of residen-
tial air conditioners in five colours and invited netizens to vote
on their favourites. The winners would be manufactured as the I
Youth series, the first air conditioners that can be controlled by
Xiaomi bracelets. The winning colours of aquamarine, pink and
emerald green went into mass production and on April 15, 1,000
went on sale on the online store T-mall.
On December 8 last year, Xiaomi CEO and recently-
crowned Forbes Asian Businessman of the Year Lei Jun brought
a delegation to the Midea Group Headquarters. A cooperation
agreement over air purifiers was announced yet there was much
gossip about
what else might
be in the pipe-
line between the
two companies.
A week
later it was an-
nounced that
Xiaomi had
bought 5.5 mil-
lion shares in
Midea at 23.01
Yuan each, a
deal worth
126.5 million
Yuan (US$20.41
million), a total
of 1.29 percent
of Midea group.
The companies
are set to cooperate over smart technology and the Internet of
Things.
A representative of Midea told reporters: “The I Youth
Series can be controlled with a Xiaomi bracelet using Cloud and
Bluetooth technology. In the long term, it will be controlled by
smart watches, smart glasses and other wearable tech.
The I Youth series is the first in the world of its kind. The
bracelet can be used to turn the air conditioners on or off and
the air conditioners can be controlled through an App. The
bracelet can also be used to monitor users’ sleeping habits and,
through smart technology, increase the pleasantness of their
sleep.
This is also part of Midea’s own M-Smart program. It has
all of the associated benefits such as control through a phone,
monitoring of power remaining, breakdown warnings, advanced
switching on and off, weather reports, and after-sales service. M
-Smart already includes smart air-conditioners, air purifiers,
fridges, washing machines and more.
When discussing the future of the smart home, Midea
President and CEO Paul Fang said: “Through internal reforms,
external cooperation, and development of both hardware and
software, we
will make the
smart home
central to
our future.”
The compa-
ny has been
putting its
money
where its
mouth is by
signing deals
with Xiaomi
and Jingdong
as well as
constructing
a Central
Research
Institute, M-
Smart Re-
search Institute, and a Global Innovation Centre.
The title of “I Youth” is the result of careful thought. It is
aimed at China’s Westernized and forward-looking “Generation
Y” who were born in the 1980s, the first generation to grow up
through reform and opening. By using the color-injection mold-
ing process, Midea has found a way of making air conditioners
that coincide with the rise of interior decoration in The People’s
Republic.
Newsline
Advances Newsletter, April, 2015
14
Showtime for Midea‟s Smart Technology
A s always, Midea Group offered a comprehensive
display of its latest products at China’s oldest and most famous
trade fair. One of the many highlights was a mock kitchen and
living room which displayed M-Smart in full.
The slogan for the company’s appearance at the 117th
Canton Fair was “It’s Midea’s showtime.” Visitors were particu-
larly impressed by the range of appliances that could be con-
trolled from a phone. He commented on how the Internet of
Things was revolutionizing the appliances business and the add-
ed conven-
ience of being
able to con-
trol one’s
home appli-
ances even
when not at
home.
On this occa-
sion, Midea
displayed an
unprecedent-
ed 33 interop-
erable
“smart”
products. The-
se included air
conditioners, fridges, washing machines, water heaters, micro-
waves and fans that could communicate with each other and be
controlled with a phone. The systems of “Smart Air,” “Smart
Water,” and “Smart Nutrition” all had the chance to come into
their own.
The current progress of the M-Smart App was demon-
strated in full. It was forecast that intelligent appliances would
account for 80 percent of sales by 2016.
Midea’s relationship with The Canton Fair is old and pro-
found. Midea has appeared at every session since the early days
and its stand gets sleeker every time.
The fair is a twice-yearly open season for attracting both
new and preexisting custom. Products with cutting-edge tech-
nology and design that were debuted at this fair included the
Children’s Series of air conditioners, the Super Silence vacuum
cleaner series (which at 61dBA is the quietest in the world), the
series
of in-
built
steam
ovens,
and
the IH
Smart
Rice
Cook-
er,
which
was
recent-
ly
launched in Tokyo.
In 2014, Midea turned over US$24 billion, a year-on-year
increase of 17%. Overseas sales
accounted for a third of turno-
ver, an increase of 10.4% on
the previous year. Since 2006,
Midea has been expanding its
influence overseas with pro-
duction bases in Vietnam,
Egypt, Belarus, Argentina, In-
dia, and Brazil.
Within a ten-day period in
March this year, Midea Com-
mercial Air Conditioning
(CAC) signed or renewed joint
ventures with American giant
Carrier, German giant Bosch,
and Japanese giant Siix. These
mutually beneficial deals will
help those brands expand in
China and help Midea expand
around the world.
Canton Fair
By Kevin McGeary
In-built steam microwaves which are endorsed by celebrity chef Joan Burgues
The world’s quietest vacuum cleaner
The Children’s range from Residential Air Conditioning
Advances Newsletter, April, 2015
15
M-Smart in Action
Photo Highlights
By Kevin McGeary
Canton Fair
Washing machines which come in various sizes as people in different markets have different-sized living quarters
Eric Kim (right), The Laundry Division’s Eastern Europe Sales Manager
The bustling shop floor
A noodle maker which is yet to become available outside China
Small kitchen appliances for a variety of markets
Advances Newsletter, April, 2015
16
By Advances
How the Mighty Fall
T wenty years ago, Britain's greatest industrial compa-
nies were ICI and GEC. A third, Rolls-Royce, secured from
hostile takeover by a government golden share, had a board that
was boringly committed to research and development and to
investing in its business. ICI and GEC, under pressure from
uncommitted shareholders to deliver high short-term profits,
tried to wheel and deal their way to success. Neither now exists.
Rolls Royce, free from concerns about hourly movements
in its share price, is now one of Britain’s few remaining great
industrial companies, according to Will Hutton, Principal of
Hertford College, Oxford University.
When you are at the top of the world, the most powerful
nation on Earth, the most successful company in your industry,
the best player in your game, your very power and success might
cover up the fact that
you're already on the path
of decline. How would
you know?
The above question,
asked by a corporate CEO
after a speech at West-
point, inspired the book
“How the Mighty Fall” by
Jim Collins.
This question has
been particularly pertinent
in recent weeks since
Tesco posted losses of
US$9.5 billion after a year
of accounting scandal, man-
agement turmoil and a
shrinking market. This marks a steep decline for a chain of
stores which in 2007 received one seventh of all money spent in
Britain.
The London Independent cited five reasons for this decline:
Tesco estimated the value of its property by over US$7 billion; it
is still smarting from being caught overestimating its profits by
US$396 million in October last year; new CEO Dave Lewis is
releasing as much bad news as possible now so he can look good
in the long term; the profit margin has dropped 3.9 percent to
just over 1 percent; it has been undercut in prices by Aldi and
Lidl, which offer less choice but cheaper goods.
The conservative-leaning Daily Telegraph published a piece
in January gloating over Tesco’s situation, describing it as a
“good old fashioned morality tale.” It looks back to the 1990s
when Tesco was the upstart and its rival Sainsbury’s was the
establishment. When it was up and coming, Tesco had the more
innovative and daring ideas and therefore took over. Yet when
it reached the top it became well known for bullying suppliers.
Maybe it is human nature to get complacent upon reach-
ing the top. The nimble challenger always becomes the bloated,
complacent incumbent.
What separates the Rolls Royce’s from the Tesco’s? A
great example can be seen in European football. In England,
most of the top clubs such as Manchester United, Manchester
City and Chelsea are
owned by disinterested
plutocrats with no con-
nection to the local
community, which is
reflected in the amount
of their vast fortunes
spent on the grass-
roots. Watching the
game either live or at
home is increasingly
the preserve of the well
off.
In Germany by con-
trast, investment in the
grassroots runs at a much
higher percentage of
earnings, ticket prices are lower, attendances are subsequently
higher and local talent is farmed with much more commitment.
This may well be related to Germany’s success at the World
Cup last year.
Then, maybe the German team will eventually go the same
way as Brazil and Spain. Franz Kafka was right, as always, when
he said: “Every revolution evaporates and leaves behind the
slime of a new bureaucracy.”
Big Picture
The Brazilian football team, which lived off its once-mighty reputation.
Advances Newsletter, April, 2015
17
IDEA
Idea of the Month: Daydreaming
By Kevin McGeary
C reativity is as important as literacy or numeracy, said
the educator Nick Robinson in a now-famous TED talk. For a
company to go from a manufacturer to a brand - as many Chi-
nese companies currently are - the buzz word that best applies
to their situation is “creativity.”
Schools are, in theory, a way of preparing people for soci-
ety: that is why there are uniforms, a designated home time and
a designated lunch time. However, by nature and design, both
schools and offices are enemies of the mother of creativity -
daydreaming.
The wealth of a country is
measured by GDP, the quality
of a school is measured by test
scores and the success of a
company is measured by turno-
ver, both of which are obsessed
with “productivity,” something
that goes against the value of
daydreaming.
A daydreaming mind may
make an association between
bits of information that the
person had never considered in
that particular way. It is there-
fore an indispensible way of
finding new solutions, according
to Eugenio Rothe, a psychiatrist
at Florida International Univer-
sity.
The brain operates in two
oppositional modes: “one is
when you’re directing the
thoughts, and the other is when
the thoughts take over and run themselves,” says Daniel
Levitin, McGill University psychology professor and author of
“The Organized Mind: Thinking Straight in the Age of Infor-
mation Overload.” Directing mode is the one that allows us to
get our work done, whether we’re an office worker, chef or tile
layer, but our minds can’t stay in one gear all day long.
In daydreaming mode, one thought melds into another
and they’re not particularly related. This acts as a neural reset
button and replenishes some of the glucose used up in staying
on a task.
How does it foster creativity? “The thoughts meander
from one to another, creating links between things we might
not have seen as linked before, and from that may come the
solutions to problems,” says Levitin.
David Rock, director of The Neuroleadership Institute
and author of “Your Brain at Work” is a believer in down
time. Zoning out can include any mundane or non-goal related
task such as sitting on a sofa. “This is allowing your mind to
wander and reflect,” says Rock. It will allow your brain time to
recover, and you’ll get an added
bonus: “You’re allowing space for
your unconscious connections to
come to the surface, to solve com-
plex problems,” he says.
Google is a company that comes
close to condoning daydreaming.
Their “20% of time” rule allows
employees to spend one fifth of
their working hours focusing on
their own projects, a move that
appears self-defeating in a highly
competitive market.
Yet according to Forbes, allowing
employees to focus their imagina-
tion and innovation on the compa-
ny’s strategic goals positions
Google on the verge of creating a
new internal company dynamic.
One that doesn’t just encourage
people to go off daydreaming, but
one that encourages them to drive
toward new ways of doing things
that can shift the entire company
in a new direction.
There are ways to discipline oneself to daydream more
effectively. These are “space out”: spend time allowing the
mind to wander; “hide out”: spend some time in solitude every
day; walk around: physical movement enables one to keep
thinking; look up: try to avoid spending too much time staring
at a screen, as boredom is essential to creativity.
Advances Newsletter, April, 2015
18
Zhou Wei: A Woman in a Man‟s World
By Yang Yalong
T hough Mao Zedong famously said “women hold up
half the sky,” in the seventh decade of his
revolution some professions remain stub-
bornly male-dominated. These include engi-
neering. Zhou Wei of Midea Washing Ma-
chine Division’s Research and Development
Centre is pioneering the breaking of this
particular boundary.
Since December 2010 when she joined
the center to specialize in rotary drums, she
has been responsible for design, evaluation,
testing, trials and production, rising to a
managerial level. In 2014, Zhou and her
team were responsible for twelve projects
for overseas sales and met 14 cost reduction
targets.
To meet deadlines and customer demand, Zhou and her
team routinely work overtime. Such a demanding job will give
anybody their share of war stories. When asked if she is any ex-
ception, she can’t stop talking.
“In 2013 during a project for A+/A++ energy efficiency,
the electronic control test shorthanded. To get
it right, we all had to do an all-nighter in the
laboratory. You could say this was my first ever
night shift,” she told an internal Midea publica-
tion.
Any research and development engineer will be
able to relate to such a story. “This kind of
experience provides a useful lesson in life.
Never give up and explore every avenue until
you succeed,” she said.
In her place of work, Zhou is physically very
active, often carrying heavy equipment be-
tween office and factory. This has earned her
the title of “tomboy” as she continues to play a
traditionally man’s game and win.
However, her hobbies are highly typical of a Chinese girl
born in the 1980s: karaoke, selfies and World of Warcraft. “I
want to improve myself, through everything I do.”
PEOPLE
Pu Tiantao: “The Soul of Welling”
By Zhang Mingming
S ince joining in 2012 as a
green graduate, Pu Tiantao has fast
become one of Midea-owned brand
Welling’s most important employ-
ees. After being thrust in at the deep
-end and getting off to a start that
would not have been out of place in
a fish-out-of-water comedy, Pu
quickly gained a foothold in the
world of motor manufacturing. He
is now a popular, chatty and enthu-
siastic colleague.
When he first joined, he was
responsible for improving manufacturing efficiency. Initially the
biggest challenge was improving efficiency while staying within
preexisting boundaries. Being new to the
working world, he rapidly learned a lot
about interpersonal politics as he had to
keep people with varying opinions and
interests onside.
In 2013 and 2014, he oversaw two record-
breakingly efficient projects. The first last-
ed from November 2013 to June 2014 and
saw a dramatic increase in efficiency over
the previous year. The second project last-
ed from July 2014 to January 2015 and
generated revenue of 20 million Yuan
(US$3.2 million). He was named in the top
30 Welling employees of last year in the “Soul of Welling” list.
Advances Newsletter, April, 2015
19
SNAPSHOT
MMM---Smart a hit at Smart a hit at Smart a hit at
Refrigeration ExpoRefrigeration ExpoRefrigeration Expo
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