On April 25, Whirlpool (China) Co.Ltd(600983) ( Whirlpool (China) Co.Ltd(600983) ) caused a shock in the household appliance circle Whirlpool (China) Co.Ltd(600983) announced that the company decided to terminate the business cooperation with Gome from the date of announcement due to the long-term delay in the payment of goods by Gome and its affiliated companies.
In response, Gome issued a statement on the morning of April 26, saying that the company did not delay the payment of goods, but Whirlpool (China) Co.Ltd(600983) failed to perform its obligations according to the contract for a long time. Gome also pointed out that the Whirlpool (China) Co.Ltd(600983) behavior was created by its major shareholder Lanshi, “because Galanz invested resources inconsistent with its business ability in the process of cooperation with the company, resulting in an embarrassing situation. Galanz intended to solve the problem by Whirlpool (China) Co.Ltd(600983) manufacturing an incident in order to force the company to subsidize unreasonable expenses.”
On the morning of April 26, the reporter of securities times · e company contacted Whirlpool (China) Co.Ltd(600983) Director Secretary Zhao Lin by telephone. He said that the company had paid attention to Gome’s statement and would respond to it, but it was inconvenient to disclose the specific details.
On April 26, Whirlpool (China) Co.Ltd(600983) closed down 5.28%, a new low since the last year; Gome retail (00493. HK) fell 10.39% and its share price has been at an all-time low since its listing.
Whirlpool (China) Co.Ltd(600983) : Gome owed more than 80 million yuan
Whirlpool (China) Co.Ltd(600983) pointed out in the announcement that since April 2022, Gome’s payment for goods has continued to deteriorate, coupled with the recent fluctuations in the capital market, resulting in significant changes in the company’s management’s judgment on Gome’s future solvency.
In order to prevent the risk from expanding, on April 24, the company sent a letter to Gome asking it to pay the due payment immediately. On the same day, Gome replied, but there was no clear commitment to pay the due payment; On April 25, the company sent a letter to Gome again to reiterate the company’s proposition. On the same day, Gome replied again and still made no arrangement for the payment of the due payment.
According to the announcement, as of March 31, 2022, Whirlpool (China) Co.Ltd(600983) the total balance of accounts receivable from GOME was 87.104 million yuan, and the net receivable after deducting the accrued discount (subject to the actual agreement of both parties) was 82.358 million yuan.
Gome is a long-term cooperative customer of Whirlpool (China) Co.Ltd(600983) in the Chinese market. In the past three years (20192021) Whirlpool (China) Co.Ltd(600983) to Gome, the sales amount was 152 million yuan, 981211 million yuan and 795841 million yuan respectively, accounting for 2.87%, 1.98% and 1.61% respectively, showing a downward trend year by year. Judging from the fact that the balance of accounts receivable from Whirlpool (China) Co.Ltd(600983) to Gome has exceeded the total sales amount in 2021, Gome may have owed more than one year.
Whirlpool (China) Co.Ltd(600983) said that it would actively negotiate with Gome to deal with relevant affairs after the termination of business cooperation, and take corresponding measures to safeguard its legitimate rights and interests. At present, the company’s production and operation are normal, and the above matters have not affected the company’s production and operation. Although the company has withdrawn the bad debt provision for the above accounts receivable in accordance with the requirements of the accounting standards for business enterprises and the provisions of the company’s accounting policies, if Gome is unable to perform its debts, it may make up the bad debt provision for the insufficient part.
According to a person close to Whirlpool (China) Co.Ltd(600983) , the focus of Whirlpool (China) Co.Ltd(600983) current business is still in the foreign market, with overseas business accounting for nearly 75% in 2021; In the Chinese market, Whirlpool (China) Co.Ltd(600983) does not rely on Gome as a channel; At the same time, Gome is quite harsh on the terms of payment for goods, which will also have a certain impact on the company’s operating cash flow.
Gome: Whirlpool (China) Co.Ltd(600983) breach of contract still owes 30 million yuan
after the disclosure of Whirlpool (China) Co.Ltd(600983) announcement, Gome responded quickly and issued a statement in the morning of April 26. In this statement, Gome pointed out that the situation stated in Whirlpool (China) Co.Ltd(600983) announcement is seriously inconsistent with the facts of both parties. The company does not delay the payment of goods, but Whirlpool (China) Co.Ltd(600983) management is chaotic and fails to perform its due obligations according to the contract for a long time Whirlpool (China) Co.Ltd(600983) there are many violations in the cooperation between the two parties, and they shall bear all the responsibilities arising therefrom.
The statement said that the payables proposed by Whirlpool (China) Co.Ltd(600983) did not deduct various arrears payable to the company as agreed in the contract.
Up to now, Whirlpool (China) Co.Ltd(600983) still owes the company about 10 million yuan in various expenses, and the unsalable defective products exceed 20 million yuan Whirlpool (China) Co.Ltd(600983) neglecting to fulfill responsibilities and obligations and dealing with affairs, individuals go their own way, which reflects that their management does not manage the whole business closed loop well and takes the contract out of context, resulting in long-lasting problems and effectively affecting the cooperation with the company. In view of this, Gome believes that there is no case that the company does not settle the payment unilaterally, and Whirlpool (China) Co.Ltd(600983) reconciliation and settlement are welcome at any time.
Securities Times · e company noted that in the Whirlpool (China) Co.Ltd(600983) announcement, it also mentioned the balance of accounts receivable totaling 87.104 million yuan, and the net receivable after deducting the accrued discount (subject to the actual agreement of both parties) is 82.358 million yuan. Based on this calculation, Whirlpool (China) Co.Ltd(600983) believes that the amount of accrued discount is 4.746 million yuan, which is very different from the expense figure of more than 30 million yuan given by Gome.
Gome also said that Whirlpool (China) Co.Ltd(600983) has not fulfilled its marketing and promotion responsibilities according to the contract and the set plan for a long time: according to the contract, Whirlpool (China) Co.Ltd(600983) should ensure that the store booth, promotion personnel and prototype wait for the booth, and carry out promotion and promotion according to the set plan; However, since 2021, the Whirlpool (China) Co.Ltd(600983) management has been chaotic, the management of sales personnel has been lax, the vacancy phenomenon is serious, the resource investment is wasted, and the service reputation has decreased, resulting in the decline of sales.
The statement also mentioned that the data given by Whirlpool (China) Co.Ltd(600983) had contradictory statements. On April 24, Gome repeatedly urged Whirlpool (China) Co.Ltd(600983) to conduct reconciliation. Without a positive response, Whirlpool (China) Co.Ltd(600983) suddenly sent a unilateral letter asking Gome to immediately pay 855187 million yuan for goods. However, in the announcement, the amount of arrears claimed by Whirlpool (China) Co.Ltd(600983) was 87.104 million yuan. “It can be seen from this that Whirlpool (China) Co.Ltd(600983) internal management is not rigorous and the accounts are chaotic and unclear.”
The statement also pointed out that since 2019, Whirlpool (China) Co.Ltd(600983) personnel have changed frequently, product quality control is not strict, problems occur frequently, and consumers complain repeatedly, which also increases the maintenance cost of Gome in selling its products and has a negative impact on Gome’s reputation.
“Although Whirlpool (China) Co.Ltd(600983) ‘s practice is unacceptable, the company still actively communicates with it and responds on the basis of contract and facts. On the contrary, Whirlpool (China) Co.Ltd(600983) violates the facts, unilaterally slanders the company’s reputation and unilaterally terminates the contract. This behavior seriously violates the basic business cooperation rules and the due spirit of contract.” Gome said.
Pull out Galanz, the major shareholder of Whirlpool (China) Co.Ltd(600983) company
In addition to the response of Whirlpool (China) Co.Ltd(600983) in terms of cooperation, Gome also pointed the spearhead of the incident at Galanz, the major shareholder of Whirlpool (China) Co.Ltd(600983) .
Whirlpool (China) Co.Ltd(600983) , formerly known as Hefei Sanyo, was later acquired by whirlpool Corporation, an American home appliance giant, as the successor of Whirlpool (China) Co.Ltd(600983) this century old international brand in China. In the first half of 2021, Galanz launched a tender offer for Whirlpool (China) Co.Ltd(600983) and acquired 51.10% of Whirlpool (China) Co.Ltd(600983) shares. Since then Whirlpool (China) Co.Ltd(600983) has entered the “Galanz era”. According to the latest quarterly report of 2022 released by Whirlpool (China) Co.Ltd(600983) by the end of March 2022, Galanz held Whirlpool (China) Co.Ltd(600983) 438 million shares in total, accounting for 57.11% of the total share capital.
Gome pointed out that Whirlpool (China) Co.Ltd(600983) this action is actually to solve the problem of Galanz. “Because Galanz invested resources inconsistent with its business ability in the process of cooperation with the company, it caused an embarrassing situation; Galanz intended to solve the problem by Whirlpool (China) Co.Ltd(600983) making trouble in order to force the company to subsidize unreasonable expenses. This Whirlpool (China) Co.Ltd(600983) behavior fully shows that all the problems were made by Galanz, the major shareholder.”
Gome also urged Whirlpool (China) Co.Ltd(600983) , Galanz to correct their mistakes and clarify the facts in time, fulfill the contract, actively reconcile and properly deal with the remaining problems, so as to create opportunities for possible further cooperation between the two sides. Gome will actively deal with the inventory and prepare for the termination of cooperation before the two sides reach an agreement; If it fails to solve the problem properly, Gome will completely terminate its cooperation with Whirlpool (China) Co.Ltd(600983) and Galanz, and take legal measures to safeguard its legitimate rights and interests.
Statistics show that Galanz is one of the few large unlisted home appliance enterprises in China. It has maintained the first position in the global microwave oven industry for more than 20 years. According to the report on China’s top 500 private enterprises in 2021, Galanz ranked 464 with an operating revenue of 24.646 billion yuan, up 24 places from the previous year.
In 2021, Galanz completed the tender offer for Whirlpool (China) Co.Ltd(600983) and was regarded by the market as a powerful move to develop the white power business and realize the layout of the whole household appliances and the whole industrial chain. After the acquisition, the management of Whirlpool (China) Co.Ltd(600983) immediately ushered in a reshuffle. Galanz chairman Liang Zhaoxian personally served as Whirlpool (China) Co.Ltd(600983) chairman, and Liang Huiqiang, the son of Liang Zhaoxian, served as Whirlpool (China) Co.Ltd(600983) president.
Liang Zhaoxian said at that time that Whirlpool (China) Co.Ltd(600983) is an international, global, comprehensive and leading enterprise for a century. Galanz, as one of the top three suppliers of finished products in Whirlpool (China) Co.Ltd(600983) world, has conducted more in-depth discussions with Whirlpool (China) Co.Ltd(600983) in recent years around complementary advantages and strengthening cooperation. Galanz’s tender offer to acquire Whirlpool (China) Co.Ltd(600983) (China) is based on full confidence in the future. Galanz will empower Whirlpool (China) Co.Ltd(600983) with the “made in China” with global efficiency leadership, give full play to the advantages of all categories, all channel resources and independent and controllable whole industry chain, and deepen the cooperative relationship with Whirlpool (China) Co.Ltd(600983) .
Recently, Whirlpool (China) Co.Ltd(600983) disclosed the first annual report of entering the “Galanz era”. In 2021, the revenue reached 4.931 billion yuan, a year-on-year decrease of 0.26%; The net profit loss was 589 million yuan. In fact, Whirlpool (China) Co.Ltd(600983) lost 323 million yuan and 150 million yuan in 2019 and 2020 respectively, and the loss in 2021 was further amplified.
According to the annual report, in view of the company’s losses for two consecutive years in 2019 and 2020 and the signs of impairment of fixed assets, the company tested the impairment provision for fixed assets and made a provision for impairment of fixed assets of 256 million yuan. In addition, the provision for inventory impairment based on the principle of prudence of 130 million yuan led to a significant increase in losses in 2021.
Whirlpool (China) Co.Ltd(600983) at the same time, he admitted that China’s home appliance market has entered an era of “slow growth” under the superposition of many factors, such as the depletion of real estate dividends, the approaching bottleneck of penetration, low-frequency consumption and weak cyclical attributes, and the weakening of residents’ willingness to consume.
industry shrinking zero supply contradiction rising
“In the home appliance industry, it is very common for channel dealers to default on the sales payment of suppliers, especially offline stores such as Gome and Suning, which is almost the industry practice. In this case, it is generally settled through negotiation, and it is rare to publicly announce the termination of cooperation on this ground.” A person engaged in the household appliance distribution industry analyzed the reasons behind the incident to the reporter of the securities times · e company, saying that it could not be ruled out that it was the outbreak of long-standing resentment between the two sides, or that one party was not optimistic about the prospect of cooperation with the other party.
Liu buchen, a senior observer of the home appliance industry, said in an interview with the reporter of the securities times · e company that the group of data disclosed in the Whirlpool (China) Co.Ltd(600983) announcement can be regarded as one of the reasons for the “break” between the two sides, that is, the sales amount of Whirlpool (China) Co.Ltd(600983) to Gome has decreased year by year in recent three years, less than 80 million yuan in 2021, accounting for only 1.61% of the sales proportion of Whirlpool (China) Co.Ltd(600983) in 2021.
\u3000\u3000 “From this data, the cooperation amount accounts for a small proportion of both sides, and it is declining every year, which also means that the importance of both sides continues to decline. Coupled with the discord between the two sides during the cooperation, the explosion became an open event after the accumulation of friction. From the wording of the statements of both sides, we can see that the tone of both sides is relatively tough, there is not much willingness to maintain cooperation, and there is not much room for mutual trust.” Liu buchen predicted that the possibility of “recovery” cooperation between the two sides is unlikely.
Just one year ago, on May 9, 2021, Gome founder Huang Guangyu and his wife Du Juan appeared in Galanz in Shunde, Foshan. At that time, shortly after Huang Guangyu was released from prison, Galanz chairman Liang Zhaoxian accompanied him to visit and exchange. According to the relevant person in charge of Galanz, the senior leaders of the two sides have reached a consensus on several projects and will continue to strengthen strategic cooperation and promote high-quality development around the new development pattern.
The two parties who used to be close friends have now come to the point of public tearing. According to Liu buchen’s analysis, both Whirlpool (China) Co.Ltd(600983) and Gome have shown a “downward trend” at present. In terms of performance, the two companies have suffered continuous losses in recent years. From the perspective of operation, neither the return of Gome’s founder nor the Whirlpool (China) Co.Ltd(600983) change of ownership of Galanz has brought significant improvement to the operation of the enterprise.
“If one of the two enterprises is still on the rise, the other will try to recover the cooperation as much as possible. However, the current situation is that both sides regard each other as’ chicken ribs’, so it is of little significance to continue the cooperation. Not only the cooperation between Whirlpool (China) Co.Ltd(600983) and Gome, but also the cooperation between Galanz and Gome will be affected.
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Liang Zhenpeng, an analyst of home appliance / it / Internet industry, said in an interview with the reporter of securities times · e company that at present, Whirlpool (China) Co.Ltd(600983) and Gome hold their own opinions in the statement, and it is difficult for the outside world to draw a conclusion about who is right and who is wrong. However, this contradiction reflects the situation that the contradiction between suppliers and retailers gradually emerges due to the overall shrinkage of the market under the background of the depression of the household appliance industry. The contradiction between supply and sales will become more prominent in the future.
Huang Guangyu’s “return” 14 months, Gome’s market position recovered less than expected
“Strive to use the next 18 months to restore Gome’s original market position.” At the Gome retail global investor conference call a year ago, Huang Guangyu’s statement was still in his ear.
On February 16, 2021, Gome founder Huang Guangyu was officially released, which also brought strong expectations to the capital market. On February 26, 2021, Gome’s retail share price once rose to HK $2.550/share, a new high for many years, and its total market value once reached HK $86 billion.
However, as of April 26, Gome’s retail share price was only HK $0.34/share, down more than 86% from the high, less than the fraction at that time, and the total market value evaporated by more than 70 billion yuan. Huang Guangyu’s 18 month “deadline” is only four months away. Can he realize his “bold words” at that time? Capital markets seem to be voting with real gold and silver.
market position no longer
“The direct contradiction between Whirlpool (China) Co.Ltd(600983) and Gome this time also reflects the serious decline of Gome’s position in the overall pattern of home appliance sales.” Liu buchen told reporters that more than a decade ago, offline channels were the king, and hypermarkets represented by Gome and Suning had an absolute strong voice. As suppliers, they not only had to endure the long-term capital occupation of hypermarkets, but also needed to pay a series of costs such as entry fee, location selection fee, promotion fee and so on.
In 2004, Gome lowered the price of Gree air conditioner without notice and consent, and asked local branches to clean up the inventory and business of Gree air conditioner. This practice triggered strong dissatisfaction of Gree Electric Appliances Inc.Of Zhuhai(000651) and once terminated the cooperation with Gome. Dong Mingzhu once recalled, “Huang Guangyu hit the market with a low price and wanted to eliminate all the small dealers in our channel. Our people are very nervous and can’t offend him. Dalian lock is so powerful!”
“The ‘breakup’ between Gree and Gome in those years was mainly caused by the sharp price reduction of Gome, and Gree was only forced to ‘fight’. This Whirlpool (China) Co.Ltd(600983) is the first to put forward the ‘breakup’, which also shows that Gome is now significantly less important to suppliers.” Liu buchen pointed out.
According to the report on China’s home appliance market in 2021, in terms of home appliance sales channels, JD ranked first with 32.5% market share, Suning and tmall ranked second and third with 16.3% and 14.8% respectively, and Gome was only 5.12%, less than 1 / 3 of Suning According to the data of the annual report, from 2017 to 2021, Gome’s net profit returned to its parent continued to suffer losses of – 450 million yuan, – 4887 million yuan, – 2.590 billion yuan, – 6.994 billion yuan and – 4.402 billion yuan respectively, with a cumulative loss of more than 19 billion yuan in the past five years.
In fact, a few days before the Whirlpool (China) Co.Ltd(600983) incident, Gome also caused friction with another supplier Midea Group Co.Ltd(000333) . On April 19, an official letter signed Midea Group Co.Ltd(000333) China was swiped online. According to the official letter, Midea will withdraw the whole category from GOME Jinan Branch, withdraw all Gome Jinan branches from Midea Group Co.Ltd(000333) China, and suspend the delivery of the whole category to Gome Jinan Branch. The incident was caused by the unreasonable beating of employees of Jinan Gome branch to employees in Midea Group Co.Ltd(000333) China on April 15.
In this regard, Gome issued a statement on the evening of April 21, saying that the incident eventually developed into physical conflict due to differences in the compliance of the display of publicity materials in the United States. Gome acknowledged that Jinan Gome branch did not implement the strict management of business order and employee behavior, and leaders at all levels did not properly control differences and solve problems at the first time after the incident, so they had unshirkable management responsibility.
In addition, Gome headquarters seriously dealt with the relevant principals and asked the leaders of Jinan Branch to express condolences to the employees of Gome. The statement said bluntly: “I hope to turn bad things into good things and promote the further deepening and upgrading of bilateral cooperation.”
The attitude of Gome is in great contrast with several zero supply conflicts before and after. Liu buchen believes that this is also the embodiment of Gome’s status no longer. “In the face of the United States, Gome chose to ‘put out the fire’ and express condolences at the first time, and made an attitude of trying to recover the cooperation between the two sides. The reason behind this is that Gome is difficult to accept the losses caused by the loss of the United States, and the United States has become a relatively strong party.”
Liang Zhenpeng also pointed out that in the glorious era of offline physical stores, Gome was once the overlord of the retail industry. But now the growth point of the retail industry mainly depends on online e-commerce channels. Gome’s advantages, which originally spread over thousands of home appliance retail stores in China, have become disadvantages in the era of e-commerce. The high rent, labor and operating costs behind each store, coupled with the continuous diversion of the floor efficiency of physical stores by e-commerce channels, have made the development of physical stores very difficult, and losses have become a common phenomenon. At present, it is difficult to realize the slogan of restoring market position in 18 months.
online business not as expected
In fact, Huang Guangyu does not pay little attention to online. On January 23, 2021, as a prelude to Huang Guangyu’s official release from prison, Gome announced that it would update “Gome online” to “true happiness” app, which undertakes Gome’s two ambitions of local life and e-commerce. According to Gome employees, Huang Guangyu has high hopes for “true happiness” and hopes to refresh the Gome brand.
In the application market, “true happiness” is positioned as “entertainment and social shopping app”. Some media summarized the app as a combination of all functions of JD (self support) + Taobao (platform) + Social Networking (Little Red Book) + Tiktok (short video and live broadcast).
As the heavyweight pen of Huang Guangyu’s return, what are the achievements of “really happy” now? The annual report disclosed that in 2021, the annual active buyers of “really happy” were 16.83 million. In contrast, JD’s annual active buyers in 2021 reached 570 million, 34 times that of “true happiness”, and pinduoduo reached 870 million, 51 times that of “true happiness”.
In Liu buchen’s view, the positioning of true happiness is very embarrassing. “If you are a user, what is your pain point? It is either service, or cheap, or fun. However, in these aspects, service can not do JD, cost-effective, and entertainment can not compare with Tiktok and Kwai. It is difficult to give users a reason to choose it.”
Liang Zhenpeng was also puzzled by Gome’s choice to enable “true happiness” and give up the “Gome” signboard. “Giving up the gold lettered signboard of” Gome “is equivalent to playing billions of advertisements on” true happiness “, which may be known by consumers. Moreover, Gome doesn’t have the money to play so many advertisements now.”
