Midea Group Mid-year Business Review Conference was held just eight days after the 2017 Fortune Global 500 was announced. After finding out that Midea jumped 31 places to No. 450 on the list, it held its conference, whose theme came from a quote by ancient Chinese sage Xunzi： “Stride through every step.”
What steps did Midea take that made this rise up the Fortune 500 possible? Some answers may be found from Midea Group CEO Paul Fang’s speech at the conference.
To open the meeting, I would first like to thank all Midea employees on behalf of the executive committee. This includes those from KUKA and Servotronix who entered the Midea family this year and those from Toshiba Lifestyle Products &Services and Clivet who entered last year.
Thanks for all of your hard work. It was because of you all that Midea had a pleasing performance in the first half of 2017.
Among Chinese companies, Midea’s employees are well respected for their diligence and hard work. The fighting spirit of our teams is an inspiration to all members of the executive committee as we pursue higher goals and shoulder greater responsibilities.
Now I would like to show you a picture. It was taken in a home appliance store in Jining City, Shandong Province in North China, when I went there after Spring Festival this year. You can see a paper-folding swan was placed on top of a washing machine of the Midea-owned Little Swan brand. It was made by an ordinary but dedicated sales guide in her leisure time. It was really beautiful. This paper-folding swan not only shows her dedication but also her faith in the future of this company and its brand.
The future will be what we make of it. If we believe that Midea will go onto achieve even greater things, we need to keep our eye on the prize and keep moving forward.
The sales guide I mentioned is far from being the only selfless and dedicated member of the Midea family. On behalf of the management, I reiterate my true appreciation and respect to all the hard-working Midea employees around the world.
Midea’s operating data for the first half of 2017 was not bad. However, during good times like this, it is important that we stay vigilant.
This time last year our conference was titled “Be Vigilant, Be Visionary.” We need to stick to those principles, especially the latter part.
Five years ago, Midea went through some radical changes. These are what made today’s situation possible. At that time, those were a much-needed reaction to a challenging situation. However, just because times are good now, that is no reason not to keep challenging ourselves and making improvements.
This is a time in which we need to be brave and dare to make changes. As we transform, we will encounter new pressures and find new objectives. That is what the best companies do.
We need to understand that the biggest obstacle to overcome is ourselves. Franz Kafka once said, “I lack nothing. I only needed myself.” Only by finding ourselves can Midea reach a higher level.
Like a ship sailing in rough waters, we cannot be still, we cannot just look at what’s in front of us, we need to keep moving forward.
Midea’s business, not only reaches every corner of the world, but is also entering new industries, such as robotics and intelligent logistics.
Now as we enter deep waters, we need to build a strong footing to ride out the storm. This footing is represented by Midea’s capability on cash flow control, profitability and discipline (that is, values, execution and activity should be aligned.)
Midea’s goal, strategy and theory are always clear, but the point is ACTION!
Now what is needed is that Midea’s people should show their leadership in solving problems so as to explore a new world. Things are changing fast, I need to move quickly!I, and all the managers, our resolution shown today will manifest in P&L in 5 years. Midea’s operational performance still has much room for improvement.
In the second half of 2017, Midea needs to do five things.
First we need to grow organically. We must seize the rare opportunities we currently have to develop and use our scale to create effective advantages.
Second we shall continue to strive for product leadership. This will include continuing to invest in research and development. With confidence and patience, we can improve our products step-by-step.
Third, the continued operational excellence along the whole value chain can create new cost advantages. I think that the true meaning of innovation is to change the established way of doing things, and find new methods.
In Midea’s case, this means reorganizing our products, manufacturing and processes. It also means increasing efficiency, reducing costs. It also means that changes we make to our products and services will manifest themselves in the form of increased profit and revenue.
Midea already has the advantages needed to do this. Products themselves maybe easy to imitate, but Midea’s operational excellence and entire value chain should be impossible to replicate. That is our top priority for the next three years.
Fourth, step up integration and transformation of our recently acquired businesses such as TLSC. We need to turn it around and build a solid foundation for 2018.
Fifth, we will increase synergy with KUKA in the Chinese market and strengthen its position here. China’s robotics and automation business is unstoppable right now. We need to seize the opportunities presented to us.
In 2017, the overall revenue of Midea is expected to reach 220 billion RMB. Obviously, Midea has stood at the forefront of the times. 2018 is a critical time for Midea to seize opportunities and use advantages. The strongest will survive and grow stronger, that is a business route proved by European and American market.
We should be less impetuous, be more honest; be less short-sighted, be more forward-looking; less talk, more execution; less words, more action. Action makes Midea what it is and will determine its future.
Finally, I share two pictures of Mr. He Xiangjian. One was taken at the beginning of his career, while the other was taken a few days ago when he donated 6 billion RMB to charity. A lot of people started businesses at the same time as Mr. He, but few of them are left. Only with genuine heart, can we reach the great beyond.
Humans always forget their original aim when moving forward. Why was Mr. He successful? I think you have various answers for that. For me, the only reason is that he has always stayed genuine.
Therefore, what we need to do is also be genuine and let our hearts guide us. Only with that, can we ride out the storm when we enter deep waters and become a true global enterprise. We should keep our genuine heart to bring Midea to a new level.
