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Midea’s integrated acquisition business is facing difficulties in the domestic market

Midea released its first half of this years results, showing that its revenue growth rate reached 15% year-on-year. This growth rate was significantly lower than the growth rate of more than 60% in the same period of last year. It was the same as the main competitor Gree‘s revenue growth of 31.4%. There is a big gap. A detailed analysis of its revenue shows that it is difficult to integrate the acquired business after a large acquisition.
Midea’s integrated acquisition business is in trouble
In January 2017, Midea completed the KUKA, one of the four largest robot giants in the world, and thus became one of the most important automation equipment manufacturers in the world. However, from the performance of the first half of this year, it is in the process of integrating KUKA. It seems to be a problem.
Midea’s first half of 2017 results show that the revenue of machinery and automation systems business reached 13.606 billion, while the revenue of this business in the first half of this year was 12.5 billion, down 8.1% year-on-year. The business is mainly KUKA, and it is in the United States. Before the acquisition, KUKA’s revenue in 2016 was 3 billion euros (about 23 billion yuan), indicating a decline in the competitiveness of the KUKA in the industry.
In addition to the acquisition of KUKA, Midea also acquired Toshiba‘s white goods business in 2016. At that time, the establishment of the Toshiba business unit of the United States retained the autonomy of the Toshiba brand business. However, in its annual report in 2017, it was revealed that the Toshiba business unit failed to reverse the loss. In August of this year, Midea changed its “support investment” to “full takeover”, and hoped to reverse the loss of Toshiba’s business and accelerate the expansion of overseas markets.
The continuous acquisition of a large number of large-scale businesses has cost a lot of resources for integration. It seems that this is the reason why the US’s performance growth in the first half of this year has dropped significantly, which is bringing greater challenges to the United States. Domestic companies such as Lenovo Group‘s acquisition of IBM PC business and TCL‘s acquisition of Alcatel‘s mobile phone business have caused losses for several years and have to spend a lot of energy to reverse the situation, which makes people worry that the US will also fall into a low tide after the big acquisition.
Midea is facing challenges in the domestic market
Midea’s current business is mainly divided into three parts. In addition to the above-mentioned machine and automation system business, the other two are HVAC and consumer electronics businesses. These two businesses are also the start-up business of the US. The overall revenue ratio is 44.5% and 38.5% respectively. It can be seen that the two businesses are important, but these two businesses are now facing challenges in the domestic market.
In the HVAC business, Midea has been the second place in the domestic air-conditioning industry for many years and is considered to be the “millennial second child“. In the past few years, it has gradually shortened the gap with Gree, the US air-conditioning business in the first half of this year. The year-on-year growth rate of Gree air-conditioning business was 27.7% and 38.77%, respectively. In the case of Gree’s air-conditioning business, the gap between the two sides has once again widened.
Online air-conditioning market, Gree, the United States has been in the top two, it seems that the pattern can not be shaken, but online they are suffering from the violent attack of Oaks, in the past two years, the three air-conditioning companies online market is three-legged, even For a long time, Oaks occupied the first place in the online air-conditioning market. The rapid advancement of the Oaks online air-conditioning market undoubtedly brought greater challenges to the second-placed beauty.
In the consumer electronics market, competition is more moderate. Haier’s results for the first half of this year show that revenues increased by 14.19% year-on-year, which is comparable to that of the US. The consumer electronics business is also considered to be a relatively moderately competitive enterprise in the domestic appliance industry in 2017. Haier and Midea all put their profit margins in a more important position.
In the case that the air-conditioning market continues to face fierce competition, the United States still needs to spend energy to integrate KUKA and Toshiba white goods business. Will this cause it to be in trouble for some time in the future is a question worth considering, of course, compared to Lenovo, The difficulties that TCL encountered after acquiring overseas companies are much better now. After all, the profits of the United States are still growing, which gives it more room and time to move.

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