In response to the above issues, let us first take a look at the risks that the market currently believes Gree has and is not worth investing in?

1. There is a ceiling for air conditioners, and the market share will be surpassed by Midea.

2. It is making mobile phones, investing in Yinlong Automobile, making chips, and making masks. The diversified transformation has failed.

3. Many people don’t like Dong Mingzhu, and his relationship with investors is not very good. In recent years, Gree has no longer paid high dividends and is no longer worth investing in.

1

First of all, regarding the first question, is there a ceiling in the air-conditioning industry? It will be surpassed by Midea in the future.

According to data from the National Bureau of Statistics, there are about 142 air conditioners per 100 urban residents in my country, and about 65 air conditioners per 100 rural residents. Based on my country's urbanization rate of about 60, it can be estimated that the number of air conditioners owned by 100 households nationwide is about 110. Compared with developed countries such as Japan, the number of air conditioners per 100 households is about 280, and there is still room for more than double the improvement. China's urbanization process still has a long way to go, and it is too early to tell the ceiling of the air conditioning industry.

Taking the average lifespan of air conditioners as an example of 12 years, air conditioners installed around 2008 have entered the replacement period. At present, my country’s demand for air conditioner replacement is about 25 million units/year. With the demand for upgrading and the new demand brought about by the growth of per capita GDP and urbanization rate, air conditioners will still have a lot of room for growth, but the growth rate will slow down.

Nagre has occupied the number one market share position in the field of home air conditioners for many years. The quality of its products is excellent and can stand the test. It is said that it has been surpassed by Midea. This is mainly due to channels. We know that Gree’s traditional sales model relies on a team of more than 30,000 offline dealers and provides rebates to dealers for purchasing goods. It has achieved rapid development in the past, but with the development of the Internet and e-commerce, the online sector has indeed There are huge challenges, and its online share was once surpassed by Oaks last year.

But management has also begun to pay attention to online channels. Through Dong Mingzhu's store and this year's live broadcast, channel reform is being carried out, a new retail model that integrates online and offline. The reform will definitely be painful and will infringe on the interests of some people, but at least the direction is correct.

Many shareholders of Midea and Gree like to criticize each other. In fact, there is no need. I have to admit that Midea is also a very good company. Many people say that Gree’s share will be surpassed by Midea. I am not worried about being surpassed. , but worried that an outside disruptor would suddenly come in, subvert the industry, and kill both companies, similar to how Apple came out and killed Nokia and Motorola. Gree has been number one all year round, so it is inevitable that there will be some arrogance. If the two companies compete in a healthy way, it would be good for both parties to make the market cake bigger. Of course, the victims must be those uncompetitive companies, such as Oaks, etc., and their lives will be even more difficult. Therefore, in the future, market concentration will definitely move closer to leading companies, and good money will drive out bad money.

2

Let’s talk about the second issue, Gree’s diversification.

Speaking of Gree’s diversification, you will actually find that whether it is making mobile phones, cars, or chips, they are all small-scale investments. Even if they fail, they will not be broken. And they are all developed around the main business. The purpose of making mobile phones is to serve as a terminal entrance for interconnecting household appliances; to make cars is to enter the field of automotive air conditioners; to make chips is to prevent the chips in air conditioners from being controlled by outsiders; to make masks is to fulfill corporate responsibilities.

As a manufacturing company, Gree has transformed from a traditional air-conditioning manufacturing company to an industry covering air-conditioning, high-end equipment, lifestyle categories, communication equipment and other fields. Many people say that Gree's diversification is a failure, and few are successful. The main reason is that these diversified products are all small-scale investments, and the revenue and profits they contribute are not large. There is no success, which makes people feel that there is no success. What movement.

As far as mobile phones are concerned, if Gree mobile phones can compete with Huawei, Xiaomi, OPPO, etc., I will worry that diversification will fail. Why, because this requires a lot of manpower, material resources, and financial resources. With Gree now When the competition in the air-conditioning field itself is fierce, if the human resources reserves are invested in the mobile phone industry, which is more competitive, it will be easy to be overturned just like the Chunlan air conditioner back then.

Gree is a company that works slowly and carefully, does not rely on external mergers and acquisitions, but relies on independent innovation and independent creation. It also takes one step at a time in its diversified transformation and moves forward cautiously and down-to-earth, so it may It's relatively slow, so we just need to give it more patience and time.