Overseas push puts Midea on high-growth trajectory

An engineer at the electrical noise testing center of Midea Group in Foshan, Guangdong province. YU GE / FOR CHINA DAILY

Overseas push puts Midea on high-growth trajectory R&D centers, acquisitions turn appliance maker into tech major

The establishment of overseas plants, research and development centers and the acquisition of a number of international intelligent automation solution makers have helped expand the business of Midea Group, a Chinese appliance maker, according to its senior executives.

Based in the manufacturing hub of Foshan, Guangdong province, in the heart of the Pearl River Delta, Midea currently has 17 R&D centers in eight countries. It has invested over 20 billion yuan ($2.89 billion) in R&D over the past five years, according to the company.

The company is planning to set up more R&D centers in Austria, Germany and Singapore in the near future, aiming to tailor-make its products as per local needs. That's part of its larger goal to make them globally competitive.

Midea has 12 overseas plants already, covering major home appliance goods and automation solution products.

"We are more willing to build joint ventures in overseas markets, especially countries and regions along the Silk Road Economic Belt and the 21st Century Maritime Silk Road," said Fang Hongbo, chairman and president of Midea Group.

China proposed the Belt and Road Initiative in 2013 with the aim of building a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes.

Since the establishment of its first overseas plant in Vietnam in 2007, Midea has efficiently expanded its operations. It has been offering its products in global markets over the past few years.

According to Midea's annual report, the group's overseas sales reached 64 billion yuan, accounting for nearly half of the company's total sales in 2016.

Its overseas sales revenue is expected to reach more than half of the company's total revenue in 2017, according to a company source.

Fang, its chairman, said: "Growing market demand in emerging countries and regions, along with an improving domestic demand for smart home appliances, will help boost sales in the years ahead".

Gu Yanmin, vice-president of Midea, said the overseas acquisitions had helped expand its business to new industrial areas, amid intensifying competition in the domestic home appliances market.

"We are now more likely to identify ourselves as a leading technology company, not only in the area of home appliances, but also in industries like heating and ventilation, robotics and automation solutions," Gu said in an early interview with China Daily.

In recent times, it effected a series of international acquisitions.

Midea took a majority stake in German robotics manufacturer Kuka GA last year. It bought more than a 50 percent stake in Israeli motion solution provider Servotronix Motion Control Ltd earlier this year.

"We have been seeking another growth path beyond home appliances, changing our business model driven by mass production at low cost to scientific and technological innovation," said Gu.

Midea also took a large stake in Italian air conditioner maker Clivet SpA and an 80 percent stake in Japanese home appliance manufacturer Toshiba Corp's white goods business last year.