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Advances Newsletter, April, 2015

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Vol. 5, #3, April 2015, No. 47

M-Smart in Action

Visitors to The Canton Fair could control 33 product categories with a phone


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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: [email protected]

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


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.


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


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


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


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


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


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


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.


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


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


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


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


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


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.


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.


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.


19

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