In recent days, rumors of Midea Group Co.Ltd(000333) high proportion of “layoffs” have made a lot of noise on relevant social platforms. The internal comments of an old Midea employee after being “optimized” (layoffs) have also attracted the attention of the industry and public sentiment. In response, Midea Group Co.Ltd(000333) chairman and president Fang Hongbo responded.
“layoffs” 50%? Make something out of nothing
On the afternoon of May 20, Midea Group Co.Ltd(000333) headquarters conference room on the fifth floor Midea Group Co.Ltd(000333) 2021 annual general meeting of shareholders, Fang Hongbo directly communicated with investors and responded to various rumors about the company recently.
“Some people say that 50% of the layoffs in the United States are completely groundless.” Fang Hongbo said.
However, a new round of contraction of beauty gradually surfaced. Fang Hongbo said frankly that based on his judgment of the future, Meimei feels that it needs to shrink a little at present
On the previous day, Midea Group Co.Ltd(000333) also responded that this year, in view of the judgment of the internal and external environment, the company orderly contracted non core business, suspended non operating investment, and took multiple measures to further consolidate growth potential and improve operating performance.
Introduction to the core business of home appliances, pet appliances, etc; To B business, the core business of “four big and four small” will be retained, and other businesses will be closed down and transferred simultaneously. To C business needs transformation and upgrading, structural optimization and strengthening overseas. At the same time, we should firmly transform to to B business and increase investment. The more difficult it is, the more determined it is. “Four major businesses” refer to Siasun Robot&Automation Co.Ltd(300024) and industrial automation, building technology, new energy auto parts and energy storage; “Four small businesses” refer to Beijing Wandong Medical Technology Co.Ltd(600055) , ander Zhilian, Meiyun Zhishu and Meizhi optoelectronics.
” Midea only shrinks and optimizes its personnel in non core business, while others do not move. ” Fang Hongbo said, “Midea maintains strategic consistency and strategic agility according to the external environment.”
According to the annual report of Midea Group Co.Ltd(000333) 2021, by the end of last year, the total number of employees in the company was 165800, and the number of employees in the parent company was 2351.
Another reporter learned that if a large enterprise layoffs reach a certain proportion, it needs to go to the relevant government departments for filing procedures.
hard choices, deeply ashamed
Recently, an Midea Group Co.Ltd(000333) employee “optimized” left a paragraph of “regret is long, only meaning is difficult to calm, do not spit is not smooth” in Midea’s internal community, which attracted Fang Hongbo’s attention.
Seeing the words of the laid-off old employee, Fang Hongbo was also “somewhat sad and deeply ashamed”. He left a message of nearly 500 words late at night.
Fang Hongbo said:
When I read it carefully, I felt sad and ashamed. The simple words flow with nostalgia, deep feelings, helpless regrets and expectations for the future, which move people’s hearts and inspire me!
In the torrent of the times, we will suddenly realize the irresistible fate at a certain moment; Just as we fear the darkness, the night will come as scheduled. The development of every enterprise and everyone’s life are the same. There will be ups and downs in how to go; At this moment, we are experiencing such ups and downs. In the face of environmental changes, Midea must respond, shut down non core businesses, tighten non core categories, optimize agility, streamline organization, curb investment and control costs. The management and I made these decisions with great pain, hesitation and hesitation.
After the outbreak in 2020, no matter what challenges and difficulties we face, we have not taken any tightening and optimization actions, but this time we do face greater pressure and impact. After 1-2 months of repeated discussion with the management, we made difficult choices in the struggle!
Thank you for your generosity and understanding. Thank you for your efforts and unknown contributions to Midea for so many years! If your family is facing difficulties in the future, please contact us. Midea will provide support and help as much as possible!
To borrow a sentence from Zhang Ailing many years ago: work hard as if there will be no tomorrow, and dream as if there will be a dream tomorrow.
Let’s face the uncertain life and future firmly with a cavity of solitary courage! Wish you all the best!
“three years of cold winter”? Self judgment
At the beginning of May this year, Midea Group Co.Ltd(000333) a telephone conference was exposed on the Internet, which is for the reference of relevant investors.
According to the contents of the telephone conference, Fang Hongbo said: “the industry will face great difficulties in the next three years, which is an unprecedented cold winter.” Based on this, Midea’s response strategy is to change 2C on the one hand and transform to 2b on the other hand to create a second growth curve.
For the prediction of “the cold winter of the industry in the next three years”, Fang Hongbo responded at the shareholders’ meeting that this is only the judgment made by Midea itself. Midea has developed in the market competition and experienced many market cycles, including peaks and valleys. It has a strong sense of crisis and urgency and is sensitive to external reactions.
“There are many factors in the external environment. In terms of real estate, the purchase of household appliances is related to real estate. The impact of real estate on household appliances generally lags behind by 8-12 months. In the first half of this year, China’s real estate market fell precipitously, not to mention other external factors.” Fang Hongbo said. Everything has two sides. It’s a good thing for beauty. The more difficult it is, the more it can reflect the resilience of the beauty team.
Fang Hongbo said that in 2013, Midea also had a strategic contraction and its revenue fell the next year. Without the adjustment of that year, Midea could not have reached 340 billion yuan of revenue last year. “Now the strategic contraction is for the continuous profit in the next three or five years. The contraction of the fist is to better fight out.”
Financial data show that in 2021, Midea Group Co.Ltd(000333) revenue exceeded 300 billion yuan for the first time, reaching 341.2 billion yuan, with a year-on-year growth rate of 20%. However, the company achieved a net profit of 28.6 billion yuan, a year-on-year increase of 5%, which was far lower than the growth rate of revenue, and hit a new low in recent years.
In the first quarter of this year, Midea Group Co.Ltd(000333) achieved a revenue of about 90.381 billion yuan, a year-on-year increase of 9.55%; The net profit was about 7.178 billion yuan, a year-on-year increase of 10.97%.
subtract first and then add
Midea’s current practice seems to let people see a scene ten years ago.
On August 25, 2012, he Hengjian, 70, officially resigned from the post of Midea Group Co.Ltd(000333) chairman, and Fang Hongbo officially took over Midea’s “Scepter”.
Fang Hongbo said that when he took over, it was Midea Group Co.Ltd(000333) the most difficult moment. In the year before taking over, Fang Hongbo put forward the idea of “subtraction first and then addition”.
Midea’s 2011 financial report shows that as of the end of 2011, the total number of employees of Midea was 66497, a decrease of 32179 compared with the end of 2010, and the layoff ratio exceeded 30%
Under the aggressive contraction strategy, Fang Hongbo slashed Midea’s product line, sold all the assets not related to the main business, and cut more than two-thirds of more than 2000 models. At the same time, Midea also stopped investment in all production factors “across the board”. During this period, it also returned more than 7000 mu of land given by local governments, and was once ridiculed by the outside world as “a fool’s job”.
However, the current industry background is very different from now. Before 2012, Midea achieved rapid growth in revenue and profits through its “large-scale + low-cost” advantage with the help of the east wind of the policy dividend of household appliances and the increase of household appliance ownership. However, this development model quickly shows its disadvantages when the dividend subsides and the new demand decreases. The advantages formed by terminal price competition and cost control are gradually becoming the disadvantages of Midea’s lack of brand strength.
Later, facts proved that Fang Hongbo’s idea of “subtraction before addition” and the three transformations of “leading products, efficiency driven and global operation” are effective and wise.
It is precisely because of this contraction that Midea has had a decade of reconstruction and quickly walked out of the “most difficult moment”. Since then, Midea has established its leading position in the industry.
Today, the pattern of China’s home appliance industry is basically qualitative, and the market has long been saturated. Scientific and technological innovation has become a new major variable in the market. At the same time, China’s economy is facing the triple pressure of shrinking demand, supply shock and weakening expectation. There are more and more complex factors in the market environment.
“The more the downturn, the more excellent and great enterprises can be brewed.” More than a year ago, Fang Hongbo said in an interview with reporters that looking at the world, any outstanding enterprise has grown up through the cycle of rise and fall.
