How to take the call?
Someone else wants to get a share of the air-conditioning market. This time, it has been replaced by a Xiaomi ecological chain enterprise. How will Dong Mingzhu fight back?
On August 10, Zhimi Technology held a new product launch conference in Beijing and officially released its first new air conditioner, Zhimi Full DC Inverter Air Conditioning, priced at 4,399 yuan. The air conditioner model released this time is KFR-35GW/02ZM (M1), and the manufacturer is Sichuan Changhong Air Conditioning Co., Ltd., which directly refers to Gree’s main business.
Zhimi happens to be the ecological chain enterprise of Xiaomi, and now it is directly targeting Gree’s main business. This can’t help but make the outside world speculate that as Dong Mingzhu and Lei Jun 1 billion the deadline of the bet is getting closer and closer, the two seem to be becoming more and more hard, just like a master trick, the powerful tricks are often left to the end.
Interestingly, before the release of Zhimi Air Conditioning, Gree employees have been working overtime to insist on production, and Gree Electric Appliances will issue a high temperature subsidy of 1,000 yuan for all employees in the peak season. It is initially expected that Gree Electric Appliances will issue a total of over 80 million yuan in additional high temperature subsidies this time.
The Mystery of Zhimi’s Life Story
What is the relationship between Zhimi and Lei Jun? Let’s take a look at Xiaomi’s statement.
On the afternoon of August 10, Xiaomi employees gave the answer: Dear media bosses, the company that released new products such as air conditioners today is Zhimi, not Xiaomi. They are also a company with a valuation of 1 billion dollars…
Could it be that Zhimi is just an ecological chain enterprise of Xiaomi, and it is as simple as a cooperative relationship with Xiaomi rather than an affiliation? Xiaomi’s deliberate emphasis on ecological chain enterprises is to downplay that no matter what air conditioner is made, it has nothing to do with Dong Mingzhu and Lei Jun’s gambling game?
Went to pick up the development of Zhimi. Zhimi’s A round of financing was led by Lei Jun’s Shunwei Capital, and the company was valued at $250 million at that time. In 2016, Zhimi received a $50 million B round of financing led by GIC (Singapore Government Investment Corporation), and the valuation instantly soared to $1 billion.
It is worth noting that part of the sales of this air conditioner from Zhimi will still be included in Xiaomi’s revenue. Zhimi’s press conference mentioned that this air conditioner will be launched on the Mijia Youpin platform of Xiaomi’s boutique lifestyle e-commerce company. Xiaomi said that sales through Xiaomi channels will be included in Xiaomi’s revenue, but sales in other channels will not be included.
In addition, through the enterprise inquiry website, it can be found that there are currently only two shareholders of Zhimi Company, one is Su Jun, CEO of Zhimi Technology, who invests 5%. At the same time, Su Jun is also the person in charge of Xiaomi Air Purifier, and the other is Liu De, co-founder and vice president of Xiaomi Technology, who invests up to 95%.
The Xiaomi air purifier is the flagship of Xiaomi’s smart home products, and it is also the first product to detonate for home users. It has also been an important product at several Xiaomi conferences in the past.
Lei Jun was the first to enter Dong Mingzhu’s hinterland
Of course, regardless of the relationship between Zhimi and Xiaomi, many people choose this as another move between Lei Jun and Dong Mingzhu.
In 2013, at the CCTV Economic Person of the Year Awards Gala, Lei Jun made a bet to Dong Mingzhu, saying, "If Xiaomi can’t beat Gree in turnover within five years, it will lose to Dong Mingzhu by one dollar." Dong Mingzhu did not show weakness, directly contradicting Lei Jun’s views and implying that it is difficult for companies that only focus on marketing to thrive, and said, "Don’t mention it again for one dollar. If you want to bet, you can bet 1 billion yuan."
Lei Jun was the first to make a move. In December 2014, Midea Group announced that it had signed a strategic cooperation agreement with Xiaomi Technology. After the completion of the issuance of shares, Xiaomi Technology will hold 55 million shares of the company, accounting for 1.288% of the company’s total share capital after the issuance. Xiaomi can nominate one of its core senior management personnel as a director of Midea.
In fact, Xiaomi’s involvement in air conditioning is not just to gamble with Dong Mingzhu. The core of Xiaomi’s ecosystem is to control users’ end points through mobile phones and establish complete connections. Whether it is Xiaomi itself or the ecological chain enterprises, they are building a complete intelligent end point and service ecosystem around Xiaomi’s ecosystem in products and services.
"Big and complete" is Lei Jun’s desire and Xiaomi’s ultimate goal. From the current product line, Mijia products under Xiaomi’s ecological chain have covered all kinds of household appliances from kitchen to living room to bedroom. Air conditioners are still blank, but air conditioners are traditional household appliances, and the investment in production lines and personnel is far beyond what an Internet company can support. It is best to hand them over to ecological chain enterprises.
Investing in Midea was the first step to complete the product layout. Not long after the investment, on June 30, 2015, Xiaomi jointly held a media communication meeting with Midea and officially released the i Youth Smart Air Conditioning. However, the sales of this air conditioner were not as good as Lei Jun had imagined. It didn’t take long for the i Youth Smart Air Conditioning to be removed from the shelves of Xiaomi Mall.
At that time, when the media interviewed Dong Mingzhu, they asked about the cooperation between Xiaomi and Midea. She said: "I heard that Xiaomi and Midea have cooperated, and Dong Mingzhu is a little anxious. What am I anxious about? Midea’s patent court for stealing Gree ordered you to pay me two million. The two scammers are together, and they are a group of thieves. If one day you have more patents than me and your quality is better than mine, I’m really in a hurry. I have to change myself. I’m going to cheer."
In addition to the public opinion that Dong Mingzhu did not admit defeat, in terms of business, Gree began to move towards Xiaomi’s core mobile phone business.
Dong Mingzhu Gree mobile phone hits back at Xiaomi
In early January 2015, Dong Mingzhu said that "Gree makes mobile phones and destroys Xiaomi in minutes". Then in March, she said that Gree mobile phones will soon be listed. Until the shareholders’ meeting in June of that year, Dong Mingzhu also stressed that there should be no big problem in the future target 50 million department.
This scene made many people quite puzzled. What made the air conditioner maker run to make a mobile phone, and the mobile phone maker came to make an air conditioner instead?
When Gree mobile phone first came out, it attracted a lot of attention. As the leading player in the air-conditioning industry, it crossed the border into the red sea of competition for mobile phone manufacturers, and it was paired with Dong Mingzhu, a "fast-talking" Internet celebrity chairperson, who could be said to have attracted a lot of attention.
But for a long time after that, Gree mobile phones were limited to internal purchases, not only as an annual bonus for employees, but also as a reward for dealers.
In fact, Gree has released a total of 3 mobile phones, sales are not satisfactory. The first generation of Gree mobile phone sales are less than 100,000, the second generation of Gree mobile phone is still on sale has been listed for a year, online sales are only about 25,000, the third color world mobile phone listed this year, the official website sales show only about 8000.
In this way, the sales of Gree mobile phones are almost 2,000 times worse than Dong Mingzhu’s "small goal" of selling 50 million units a year. It seems that Dong Mingzhu wants to make mobile phones is not so easy.
Enter the air conditioner market for the second time with a makeover
I youth intelligent air conditioning did not let millet and Lei Jun give up, this time a makeover into the smart rice to enter the air conditioning market again, but allies replaced Changhong.
Why did Zhimi choose Changhong? It is reported that after the acquisition of Meiling, Changhong has a technical research and development team of more than 2,000 people, and has many patented technologies. For example, 0.1 degree subtle sensing technology, silent air duct technology, etc. Zhimi air conditioners find Changhong to OEM, at least to ensure that the technology is leading and the quality is guaranteed. Another important reason is that Changhong’s ranking in the field of air conditioners directly determines that Changhong will not abandon Zhimi like Midea did at the beginning.
On Changhong’s side, in 2015, Changhong’s financial report showed a huge loss of nearly 2 billion yuan, while the 2016 annual report showed that Changhong turned losses into profits and realized a net profit of 555 million yuan.
However, from the content of the annual report, it can be seen that the main reason for Changhong’s turnaround in 2016 was the operation of color TV, IT distribution, company operations, and capital. The annual report did not mention the air-conditioning business.
Simply put, what Zhimi needs is Changhong’s technical team, and Changhong needs the Xiaomi brand effect and Internet marketing thinking behind Zhimi. Neither of them means that anyone clings to each other, and the goal is to achieve a win-win situation.
Next, let’s see how Miss Dong takes the call.