On July 15, at the 2020 mid-year meeting of Midea, which was attended by all senior executives of Midea, the future of Midea's globalization became a focus topic. In the face of the epidemic and the complex international situation, everyone has their own opinions. Midea's steadfast implementation of the eight-year "global management" strategy seems to have come to a crossroads.
What has the "global management" strategy brought to Midea after eight years of implementation?
As one of the three main strategic axes, "global management" was proposed in 2012 during the transformation of Midea, and it has been 8 years since then. But in fact, Midea's way of thinking about global management has long been deeply rooted in the bone marrow, and in 2012, "global management" was regarded as one of the three main strategic axes, and it did not come out of thin air. As early as 1981, Midea became the first home appliance enterprise in Guangdong Province with foreign trade qualifications. In 1997, Midea began to hold press conferences overseas. In 2007, Midea built a factory in Vietnam, which is Midea's first factory outside of China. In 2012, Midea put forward the three strategic axes of "product leadership, efficiency driven, and global operation".
In the past eight years, Midea has identified "global management" as the three main strategic axes, what changes have taken place in Midea's overseas markets? Specifically, before 2012, Midea only exported overseas, and after determining the three strategic axes, Midea began to deploy overseas in the whole chain of R&D, manufacturing, branding, and operation.
Wang Jianguo, vice president of Midea Group, described the panorama with a few simple numbers. He told the reporter of "Electrical Appliances" that at present, Midea has 17 factories outside China - this number is the same as the number of Midea's production bases in China; There are 18 R&D centers overseas; The sales network covers more than 200 countries and regions around the world; In terms of brands, it has also formed a brand matrix such as Midea, COLMO, Toshiba, Arctic King, Master Kitchen, and Eureka. In 2019, Midea's overseas business accounted for 42% of Midea's entire business.
The new crown epidemic that will spread around the world in 2020 is more like a big test for the globalization of Midea in the layout. mentioned the past six months, Wang Jianguo said 8 words: ups and downs, thrilling. What makes Wang Jianguo a little relieved is that in the first half of 2020, although the process was full of ups and downs, the performance of Midea's overseas business was unexpected. In the face of the new crown epidemic test, Midea's "global operation" has undoubtedly handed over a qualified answer sheet.
In Wang Jianguo's view, the "17+17" layout of Midea's manufacturing base is the most basic guarantee for Midea to successfully resist the impact of the epidemic in overseas markets in the first half of this year. "In February and March, the resumption of work in China was slow, and our 17 overseas production bases ensured the supply to overseas markets. Since late March, the epidemic has spread overseas, but 17 domestic production bases have fully resumed work and are still operating at full capacity. Wang Jianguo told the reporter of "Electrical Appliances".
From the perspective of R&D, Midea's 18 overseas R&D centers have become tentacles to achieve insight into local users. They docked with the product R&D platform of Midea headquarters, integrated local user needs, and developed innovative products with great competitiveness in the local market, which achieved great success. "Taking the North American market as an example, our R&D center in Louisville, USA, cooperated with the R&D system of Midea's headquarters to develop a U-shaped window air conditioner." For example, Wang Jianguo said, "This new type of window machine allows users to freely open and close the windows and control the sound of the air conditioner running outdoors, which greatly improves the user experience." Although the price is higher than other window machines in the North American market, it is still very popular. "The U-shaped window machine is just one example. In Wang Jianguo's words, in 2020, Midea's innovative products launched into overseas markets under its own brand are "all categories are in full bloom". What's more worth mentioning is that the launch of Midea's innovative products on the market has allowed Midea's products to enter some mainstream channels abroad. "In this market, Chinese brands like Midea are latecomers. Only with innovative products can we be recognized by mainstream channels. Wang Jianguo said. The introduction of innovative products also played a key role in recovering the market share and profitability of the Toshiba brand across the board. "For the Toshiba brand, we adopted a three-step strategy." Wang Jianguo told the reporter of "Electrical Appliances", "The first step is to integrate into the whole industrial chain of Midea and tap the cost advantage; The second step is to change the value chain of Japanese companies and strengthen the combat effectiveness of the team. The third step is to introduce innovative products. At present, the Toshiba brand is growing in the Japanese market across the board in all product categories. ”
Of course, for different markets, Midea has laid out its marketing network in more than 200 overseas countries and regions, and has also quickly grasped the local market characteristics and carried out marketing methods adapted to local conditions.
With the support of a strong system, when the market gradually recovered, Midea's strong marketing system quickly seized the opportunity. From the perspective of market performance, in the first quarter of 2020, Midea's export orders increased by 26% compared with the same period last year; Since mid-May, except for the Indian market, which is still relatively difficult, other overseas markets have begun to recover significantly. In the face of the upcoming August and September, Wang Jianguo showed obvious self-confidence. "In the second half of 2020, we still face all kinds of possible changes, but we are confident." He said. Obviously, years of accumulation and layout have allowed Midea to remain resilient and adapt in the face of emergencies such as the epidemic, and seize opportunities for growth.
Be prepared for danger in times of peace, what changes will be made to Midea's "global management" strategy?
In the first half of 2020, the excellent performance of Midea's overseas operations did not make Midea take the future of globalization lightly. On the contrary, as mentioned at the beginning of this article, in the face of the complex international situation and the increasingly obvious trend of de-globalization, the future of Midea's "global management" has become the focus of Midea's internal discussions.
"Fortunately, everyone quickly reached a consensus." Wang Jianguo said, "Overseas business has accounted for 42% of Midea's entire business, and we have no reason to return it, and we have no chance to return it." Continued resolute implementation of the globalization strategy is the only option. ”
Of course, continuing the globalization strategy does not mean that nothing remains the same. For this rather pragmatic company, tactical adjustments are the only way to go, while the main axis of the "global operation" strategy remains unchanged.
"First of all, we need to reconsider the layout of overseas manufacturing bases." Wang Jianguo mentioned these "tactical adjustments" in a firm tone and clear thinking. He said that before 2020, Midea's manufacturing base layout pursued the "most efficient way", that is, "the Chinese base is mainly for the world, supplemented by overseas bases for the local market area". At present, the proportion of Midea's products delivered overseas is made in China. "In the future, Midea will strengthen its overseas bases to supply the local market." Wang Jianguo said, "It is necessary to strengthen the capacity center in each market area, build a whole industrial chain that can be integrated into the local small cycle, and fully integrate into the local economy." Under this line of thinking, Midea is preparing to start construction of the "18th" overseas production base in Egypt, and at present, the site selection has been completed. At the same time, Midea is also actively looking for a suitable place to build a North American production base. "In the face of the new situation, this is the most stable and relatively cost-competitive tactical adjustment." Wang Jianguo emphasized.
The second point emphasized by Wang Jianguo is overseas brand building. At present, in more than 200 countries and regions exported to the United States, Midea's overseas OEM business firmly occupies the "top three" position in the world, and has formed a scale advantage. However, the sensitive Midea has been aware of the risks that exist in the OEM business. "Brand building must be strengthened." Wang Jianguo said. He said that at present, Midea's global brand matrix has taken shape, and Midea has the ability to promote a brand or a combination of multiple brands for different markets.
Despite this, Wang Jianguo still emphasized the principle of being pragmatic in brand investment. Wang Jianguo said: "For Midea, a very pragmatic enterprise, Midea's overseas operation wants profitable growth. Therefore, the