with ceo paul fang, the world's largest appliance company transforms its business - home appliances manufacturers in china
The chief executive of the world's largest appliance company came from China to Augsburg, Germany, to stand in front of a difficult crowd.
About 3,000 robot employees
The manufacturer Kuka has come together to meet their new boss.
Paul Fang, who runs the Midea Group, finalized $3 for the group a few days ago.
9 billion acquisition of proud German company.
The deal sparked controversy from the workshop to the highest level in the EU.
Will he shut down the German factory, lay off all the workers, and leave with the technology independently developed by KUKA?
Was it wise for Germany to sell such advanced technology to China?
Fang's task at the town hall meeting on January was to appease these fears.
As thousands of skeptical eyes gaze at him, he tries to sell the acquisition in a "win-win" manner
Both companies won.
In a short speech, he told the audience: "We will jointly develop the market and help Kuka develop . ".
"Is there any problem with that?
"Back at its headquarters in Foshan, southern China, a more relaxed Fang Zhouzi is still not sure if he has convinced those who are skeptical.
"When I stand on stage, I am very clear that most of these people may not be willing to accept the current situation," he told Forbes Asia . ".
"I try to think about how they feel from their perspective.
This is not a problem that a meeting can solve.
"But the problem must be solved. -
Not only for the future of the United States, but also for the entire Chinese economy.
China's miraculous growth over the past 30 years has been largely driven by low-cost, attracting all the factories that produce clothing, toys and electronics on the shelves of the world's stores.
However, with the growth of economic wealth, wages have risen sharply, weakening industrial competition.
At the same time, local markets are maturing and slowing as growth and opportunities grow.
This leaves only one way forward for Chinese enterprises ---
Become more innovative and produce more
Advanced products and competition worldwide.
Fang stood on the front line of this big change. With $23.
Sales of $9 billion.
Last year, with a net profit of 2 billion, Midea was already one of the most famous companies in China, ranking first.
Forbes ranked 335 in the world's top 2000.
Sales of consumer appliances increased last year-
From air conditioning to rice cookers--
More than any other company.
Its global market share is 5.
Last year, 5% was from 3.
According to research firm Euromonitor International, 9% years ago.
In fact, you may have a beautiful product in your home. you don't even know it.
The Chinese company produces microwave ovens and other products for well-known brands and has established a number of joint ventures with operators to manufacture air conditioners.
However, Fang Zhouzi knows that this is not enough.
Committed to the upgrading of the product line of the United States, the promotion of brand image and international expansion.
Although he has achieved some success-
The transaction of Kuka, one-
The experience of the United States also illustrates the challenges Chinese companies face in their efforts to become global competitors of top American companies. S.
And European companies.
"The direction is very, very clear.
We must change from Labor.
Attach great importance to innovation
A company that is oriented, "he said.
"We want to be a global company.
There is still a long way to go.
"Beauty has come a long way.
The company was established in 1968, when He Xiangjian received 5,000 yuan--
The equivalent of $725 today. -
Together with 23 villagers, a small factory was opened to produce plastic and glass bottles.
Later, after forming a commune, the company turned to other products: auto parts, engines, fans, and air conditioning in 1984.
The 74-year-old retired in 2012 and handed control over to Fang.
The founder still owns a 34% stake in the listed company, and Forbes Asia estimates his net worth of $13. 4 billion.
Fang, 50, came from a more humble origin. Born in a ten-
In a mountainous family village in central China's impoverished Anhui province, he spent his childhood taking water from the well and cutting firewood.
He was saved by his ingenuity, performed well in China's difficult college entrance examination, and was eligible for admission to Shanghai East China Normal University, where he studied history.
After graduation, he got a job in a state.
The factory, which produces cars and trucks, found the atmosphere suffocating.
Inspired by the 1992 tour of the southern part of the country-
Deng Xiaoping, the top leader carefully planned to push for a new round of economic reform, resigned his job and moved to that area in search of opportunities.
He found one in Midea, where Midea hired him to edit the company newsletter.
Fang said that the beauty he joined was a "small village enterprise", but he felt that the environment was more exciting.
"In private enterprises, the spirit of entrepreneurs is very different from that of the state --
"We have factories," he recalls.
"There's a lot to do and I don't have time to do everything I want.
"Beauty has not remained small for a long time.
With the rapid growth of China's economy, the United States is also moving forward.
As household income increases, ordinary Chinese families have cash to buy refrigerators, washing machines and other modern amenities.
More than one population.
3 billion, there is no shortage of kitchen and living room in need.
Midea's sales today are about 400 times that of those who joined the company 25 years ago.
But the market has become harder as Chinese families become richer.
Appliances, once thought to be luxury goods, are now a necessity, so nine out of ten families have refrigerators.
For example, more than three refrigerators
Four people have air conditioning.
That means growth is slowing.
Euromonitor expects sales of home appliances in China to triple.
6% from one year to 2021, far less than 6.
5% annual clips from 2011 to 2016.
Consumers are also increasingly demanding.
Because a lot of people are changing old appliances now, they are looking for an upgrade in performance and quality.
On a global scale, the industry is also changing, to Wi-Fi-
"The market is growing very fast," said Dinesh Kithany, chief analyst at the company --
Home appliance industry in London
Consulting firm IHS Markit.
"Businesses need to differentiate their products, which can only be achieved through innovation.
"Fang has been given the task of navigating beauty in these new realities.
The executives described him as a veteran.
Type, who left nitty-
His top deputy is focused on big details.
Hu zach Rui, president of Midea Enterprise Research Center, said that in the past few years, Fang has only been to his office twice and trusted him for a day --to-
The daily management of his department.
"Instead of listening to a group of experts, he will try to solve the problem himself and determine the direction of the company . ". "He is forward-thinking.
Even at a good time, we begin to think about the risks we face in the future and what changes we should make.
"Hu is a key part of these changes.
Five years ago, he was attracted to the United States by Samsung Electronics, and now he is leading the company to create more effective research --and-
Since 2012, the number of R & D personnel in the United States has more than doubled to 10,000 (
Out of 120,000 employees).
In April, Midea opened a research center in San Jose, California, and plans to invest $0. 25 billion in the next five years.
But Mr. Hu warned that more resources alone could not translate into innovation immediately.
Like many manufacturing companies, Midea focuses on improving efficiency and quick returns, which is the focus of management attention, he explained.
It is suitable for cultivating creativity.
"If you are trying to drive the product ahead, you have to invest in it for a long time," he said . ".
"This is not how the company culture is designed. They built up [R&D]
But they don't do much.
The company has to have an idea-
Set up changes to deal with it risks.
This is a huge challenge for us internally.
Hu began slowly.
Instead of assigning new employees to ambitious work, he first told them to find and solve the problem of the beautiful product line.
For example, his engineers made the washing machine quieter, more durable, larger in size, and easier --to-
Use a detergent dispenser.
This enhanced design adds a particularly wide range of beauty-
A range of products and strong online distribution have helped boost the company's share of the country's major home appliance market ---
Washing machines and refrigerators, for example-
From 13% in 2016.
According to Euromonitor, 7% years ago.
Hu then pressed his team to create new products.
The results include a combination of a lightweight multi-functional fan and a rice cooker and a microwave.
Still, Hu believes that beauty still has a long way to go before inventing something completely original.
Try to have a revolutionary product-
We haven't arrived yet.
We are still at the beginning of our journey to the ultimate goal.
"So is the international expansion of the United States.
The company's global earnings benefit from key, high-
Growth in emerging markets such as Vietnam and Indonesia.
The company currently invests $0. 16 billion in India;
It is planned to open a new factory there by the end of next year.
Andy Gu, vice president of the United States, said the goal is to attract young middle class.
"They don't have a pre-concept of the brand and they need quality products," he said . ".
"This is the real message.
"The United States has also achieved growth through acquisitions.
Last year, Fang Zhouzi bought a majority stake in Japan's Toshiba electronics business for $0. 5 billion and Italian airlines.
Conditioner manufacturers take the risk for an undisclosed amount and pick up Eureka vacuum-
Clean brand of Electrolux.
US sales outside China grew nearly 30% last year, compared with only 5% in China.
But the United States is facing serious constraints in building a global brand.
Midea is wary of launching its own product line in a competitive market to annoy partners.
The management is also very clear about the bad image of China --
Among many consumers, the manufacture of goods has caused electrical appliances.
Rival Haier and other well-known Chinese companies are struggling in many markets.
"We are very careful about our brand --
"Construction initiatives," Gu said.
"You have all these small and medium-sized enterprises --
The size of Chinese companies exporting bad products.
It takes time to overcome this feeling.
"By far, the most ambitious global business in the United States is the acquisition of Kuka.
Midea's management team gained the idea of getting into the robot from the hassle of getting the factory to run at home.
Even if wages rise sharply, hire enough staff to fill the gap --
In an economy full of opportunities, front-line work has become a serious challenge.
So the United States has to rely more and more on automation.
A factory in the central Chinese city of Wuhan since the beginning of last year, Midea has invested $70 million in automation and information technology, more than double the output of each worker.
"We found it more and more difficult for people to work for us," Gu said . ".
"We think there is a huge need for automation in China, and we find that very few Chinese companies are able to provide that capability.
We must find a way to fill this gap.
"This leads to interest in selling robots needed by Chinese factories ---
Kuka in Germany.
Ark and his executives believe that their knowledge of China can help the top officials of Kuka --
The growth of Chinese demand is more from the field of industrial robots.
"They can grow, but we can help them grow faster," Gu said . "
Some politicians in Europe worry about high sales
Technology companies like Kuka will weaken the region's economy.
So, Gunther odinger
In an interview with a German newspaper last year, the European Commissioner for Digital Economy and Society Kuka said that Kuka is "a successful company in the strategic field and is crucial to the digital future of European industry ", and called on Europe, its existing shareholder, to strengthen and prevent it from falling into the hands of China.
German Deputy Prime Minister Sigmar Gabriel has publicly criticized China for failing to respond to free trade.
It is reported that the opening of Western markets is trying to organize such alternative bids.
The party tried to alleviate this concern by agreeing to keep Kuka's factories and workers in Germany until 2023.
He also maintains management and intends to operate the robotics company as a separate unit.
Although Mr. Gu is now the chairman of the Board of Supervisors of Kuka, he only visits once a month, and Midea does not have a formal Chinese employee.
It's time for Augsburg.
"It's a very different environment, a different culture," he said . "
"We let them run the business on their own.
Even so, the managers of the United States realize that they still have many bridges to build.
"There was a Chinese monster who came to your country and took your job ---
That view still exists, "Gu said.
"You can't do it overnight.
Fang Zhouzi is also very clear that the experience of the United States in Germany is part of a bigger and more arduous task for a Chinese company with global ambitions: the rise of economic nationalism.
But he believes the mood will eventually pass.
"There are anti-global trends right now, but you have to look at it in the long run
In the long run, "he said.
"Globalization is a big trend that no individual, no country can stop.
This gives us confidence in the future of the United States. -and China.
"Chinese companies are going global, and this trend will not change," he said.
Reported by Wang Yue.