About making mobile phones, Dong Mingzhu, chairman of Gree Electric, still doesn't admit that it's a failure Recently, in a wired program, when asked "the market thinks Dong Mingzhu is wrong to make a mobile phone, but Dong Mingzhu never admits it, but she is hard spoken", Dong Mingzhu responded that "success depends on. If Gree is gone because I make a mobile phone, it is really a big problem. But Gree has this ability to support, what's wrong with one more R & D project?"
Previously, when it comes to similar topics, Dong Mingzhu also said: "the manufacturing industry needs numbers to speak, and my general decision is not wrong. Even when it comes to making mobile phones, I think I'm right.".
However, this statement immediately raised the question of public opinion. Some netizens said, "the market is so saturated now, isn't it good to concentrate on the research and development of other projects", "if you don't concentrate on things, you will lose your bet".
As of the latest closing price, Gree's share price has fallen by more than 47% compared with the peak at the end of 2020, and its market value is almost halved.
7 years, can not achieve a "small goal"
In 2015, Dong Mingzhu entered the mobile phone industry with a high profile with the booming Gree Electric appliance.
However, unlike his peers who are trying to be the next jobs, sister Dong's mind is still focused on her old business. Dong Mingzhu hopes to take advantage of the mobile phone business to build and improve the isolated smart home ecosystem. In the company's annual report, Gree's description of the mobile phone business is also: "compete for the entrance of smart home first and become a platform to connect various household appliances and collect data."
Elder sister Dong shouted publicly, "Gree wants to do mobile phones every minute and achieve 100 million sales." According to the data of statistical institutions, the shipment volume of Chinese mobile phone manufacturers in that year was about 518 million. In other words, Dong Mingzhu hopes that the fledgling Gree mobile phone can instantly eat 20% of the market share.
However, the subsequent events were far from Dong Mingzhu's expectations.
Take Gree generation 1 as an example. It is equipped with a 4-core processor, a 5-inch 720p and a 2 million front camera. The price is 1600 yuan. At that time, the popular model Note2 used 8-core 64 bit, 5.5-inch 1080p, 13 million pixels and sold for only 799 yuan. Gree mobile phone has half the performance and twice the price of its peers.
The same problem also appeared on several mobile phones after Gree. Gree generation 2, equipped with Xiaolong 820 processor, costs 3300 yuan. For the same chip, Nubia and vivo are less than 3000 yuan for the same series, and Xiaomi 5 is less than 2000 yuan.
Digital blogger Mocha RQ once disclosed that the second generation of Gree mobile phones produced 300000 units in total. Because the price has no advantage, 10000 units can't be sold, and the remaining 290000 units can only be digested internally. In 2019, the third-generation Gree mobile phones were put on the official website of Gree. At that time, some netizens found that after the third-generation Gree mobile phones were put on the official website, the sales volume was only 16.
Until May 2021, Dong Mingzhu still said that she would continue to make mobile phones. "Our mobile phones can still get through to Tibet. We can also develop customized functions according to the needs of a certain unit," she said
However, after seven years of making mobile phones, Gree's most popular models are no more than 10000. I wonder if Gree can achieve the small target of 100 million sales in the next seven years.
The share price halved, and Gree increased its income without increasing its profit
In fact, in addition to the continuous downturn of mobile phone business, Gree's main business is also trapped in the dilemma of rising raw material prices.
According to the latest financial report data, Gree Electric Appliance achieved a revenue of 187.869 billion yuan in 2021, a year-on-year increase of 11.69%; The net profit was 23.064 billion yuan, a year-on-year increase of only 4.01%. The reason why this situation of increasing income without increasing profit is mainly that the price of raw materials continues to rise, which leads to the high operating cost of Gree and drags down the overall net profit performance.
In the raw materials of household appliances, metals such as copper, aluminum and steel account for a large proportion in production and manufacturing. Since 2020, the prices of such commodities have continued to rise. Taking copper and aluminum as examples, according to the data of Changjiang nonferrous metals network, the average prices of the two raw materials increased by 20.37% and 30.6% respectively in 2021.
According to the financial report, the raw material cost of Gree Electric Appliance in 2021 was 86.227 billion yuan, a year-on-year increase of 13.64%, accounting for 88.27% of the operating cost. Gree Electric said in its annual report that in 2021, affected by global trade friction, geopolitics, epidemic and other factors, the global economy was frustrated, the price of bulk raw materials soared, and market competition and cost pressure were transmitted to the whole supply chain step by step.
The same situation also appears in the overall household appliance industry. In a report released in mid April, China household appliances association mentioned that the industry profit margin decreased in 2021. The main business income of the domestic national power industry was 1.73 trillion yuan, a year-on-year increase of 15.5%; The profit was 121.8 billion yuan, a year-on-year increase of only 4.5%.
Subject to this, Gree's share price has been going down since December 2020. According to the share price of 33.25 yuan per share on May 12, Gree's share price has fallen by more than 47% compared with the highest point two years ago, and the market value has evaporated by more than 160 billion yuan.