On January 10, 2025, a year that marks a quarter of the 21st century and the starting point of a new cycle, Paul Fang, Chairman & CEO of Midea Group, delivered a keynote speech entitled "Riding the Storm, Opening New Chapters" to all Mideans across the globe. He paid tribute to the contributions of every Midean in 2024 and expressed his pride in their concerted efforts to help Midea reach new heights and achieve the best results in its history.This new cycle is characterized by geopolitical tensions, economic slowdown, decoupling, and supply chain disruptions, as well as evolving industries, markets, and technologies. It was in this context that Paul called on all Mideans to follow their common sense, retain an entrepreneurial spirit, counter fierce competetion through proactive change, streamline for growth, and face challenges through breakthroughs. Let's ride through the storm to open new chapters and move towards our shared aspirations, everywhere in the world.
Common sense
remains unshakable
Every company must be cautious in this new cycle that features weak economic growth, technological revolution, and intensifying industrial competition. The "darlings of the last cycle" will fade away in the next if they fail to keep up with change. Huge competitive pressures have hit us like a storm, but we must not be pessimistic or yield. We must adhere to common sense and stay committed to technological innovation, efficiency enhancement, lean management, cost advantages, etc.
In 2024, Midea implemented the business strategy of "enhancing value chain-wide efficiency alongside upgrades of structural growth". Specifically, we advanced Digital & Intelligent Transformation through Midea Digitalization 3.0. Upgrading digital capabilities gave us opportunities to enhance quality and efficiency across all processes and scenarios. In China, we transformed our business models by implementing DTC. In global markets, we made more breakthroughs, prioritized OBM, and globalized our operations on all fronts whilst elevating our level of localization across the worldwide value chain. We also optimized our business portfolios and made progress in ESG.Smart Home Business focused on DTC, OBM, differentiated product innovation, steadfastly making structural upgrades and increasing value chain-wide efficiency. In China, we launched differentiated Smart-home solutions that enabled deep integration of smart appliances. Globally, we strengthened localized innovation and rolled out industry-leading products and technologies, including DIY-installable mobile split air conditioners, cold-climate ducted heat pumps in North America, and AI ultra-fast full-inverter dryers, resulting in overseas revenue of Midea brand products increasing by over 25%.
New Energy & Industrial Technology concentrated on HVAC appliance components, green energy and green mobility. Cumulative production and sales of GMCC air-conditioning compressors reached 1 billion units, and the sales of Meiren chips, mainly MCU, exceeded 100 million units. Welling Auto Parts sold over 3 million sets of thermal management devices, electric drives and Chassis Execution Systems along with over 1 million e-compressors. Hiconics built new energy power plant installations with power exceeding 2GW. CLOU launched the next-generation energy storage system Aqua-C2.5 featuring advanced integrated AC/DC technology, with contracts exceeding 1.6GWh signed in the Americas.
Smart Building Technology introduced solutions such as building energy efficiency upgrades and zero-carbon stores. In China, we launched new indoor ducted units, maglev centrifugal units, air source heat pumps, and other self-developed products. In global markets, we rolled out commercial ultra-high temperature heat pumps, residential heat pumps and other products, and partnered with Toshiba Elevator China to further strengthen our elevator business.
Robotics & Automation debuted multiple new products, including industrial robots, mobile robots, AI controllers, stackers and shuttles. By leveraging KUKA's strong global network, capabilities in product R&D, manufacturing and delivery, and a robust localized industrial chain, we increased our operational efficiency.
Innovative Businesses continued to make breakthroughs and scale up. Annto created end-to-end digital supply chain solutions, expanded green smart logistics, and deepened the 1+3 service model, helping customers grow through its supply chain innovations. Midea Cloud launched Industrial Internet Platform 4.0 M.IoT and AIGC solutions, as it stayed committed to industrial software that helps thousands of businesses achieve intelligent manufacturing. Focusing on the lighting sector, Midea Intelligent Lighting & Controls continuously upgraded its technical capabilities in product intelligence, safety and health to create a healthy and comfortable living space for users. Midea Healthcare released their 5+2+X Technology Strategy, with products included in the national list of high-end medical equipment. Its new production bases and R&D bases began operations, marking accelerating innovation. Midea Healthcare also launched the "China Spine Protection Program" focused on youth spine health, utilizing technologies to promote health.
We must adhere to common sense, maintain strategic focus, excel in every detail, get involved in competition, and bravely face up to fierce competition. In 2024, Midea once again achieved double-digit growth against all odds, with revenue and profit hitting new highs in the first three quarters. In 2025, Midea will stick to common business sense, maintain growth momentum, and create more miracles.
Streamlining for growth
Midea's core business principle for 2025 is "streamlining for growth and facing up to challenges through breakthroughs".
In this new cycle, gains won't last long, as challenges and risks will stubbornly remain. We should encourage innovation, embrace failure, and seek solutions to long-standing issues regarding product competitiveness, innovation, and user-centricity. Simplification is the key to going through complex external and internal change. If we are simple, the world becomes simple; if we are complex, the world becomes a maze. We should seek simple answers and take immediate action, navigating the cycle through Midea's transformation and innovation.
"Streamlining for growth" means following simple principles and logic. We must meet challenges head-on and be ready to revolutionize ourselves. We must bravely streamline our operations and processes, because only "streamlining" can drive growth.
At the business level, it means streamlining business models and portfolios. BUs should give product divisions clear direction and missions. It means streamlining product categories and SKUs, and terminating, merging or transferring non-core businesses, so that we can focus on our core businesses and product categories. We should also strictly review the launch of new product categories.
At the management level, it means streamlining processes and organizations. The R&D teams, in particular, should be further streamlined to fulfill the "Three Generations" strategy. CRC should focus on foundational research to differentiate itself from and collaborate with BUs. We should also simplify and clarify responsibilities, authorities and benefits. For example, country entities should be responsible for country-specific operations, with local teams in charge of product planning while BUs provide support.
Great truths are always simple. As the saying goes, "The more things change, the more they stay the same." After all, businesses are all about the simplest fundamentals.
Facing up to challenges
through breakthroughs
"Facing up to challenges through breakthroughs" means a shift in mindset − breaking free from past practices and methodology. We must recognize that traditional thinking and approaches no longer work. We must never again make basic mistakes, such as redundancy, inefficiency, overgrown non-core businesses, and excessive SKUs. We must dare to concede, dare to let go, dare to self-reflect, and dare to simplify.We must take a 180-degree about-turn and 100% action, with no half measures. In China, we should transform our business models, enhance new-retail, remain steadfast in DTC, integrate online and offline operations, and be responsive to customer needs. Globally, we should prioritize OBM and fully expand into global markets, improving localized business networks and building localized capacities. We should promote product innovation and continue to boost the growth of our Smart Home appliance brands COLMO and Toshiba. We should continue optimizing our business portfolios and increase investments to accelerate ToB transformation, while driving a new wave of digital transformation, embracing AIGC and exploring its applications.Throughout business history, companies that have successfully transformed amidst adversity have invariably done so through bold, radical reforms – reinventing themselves with a "rebirth through destruction" approach, without exception.
Open the door to the world
and grow in the places we know
Midea has a 40-year global footprint, with about 400 subsidiaries in over 200 countries and regions, providing products that benefit around 500 million consumers. Our overseas revenue exceeds USD 20 billion, accounting for more than 40% of our total revenue. We have 17 R&D centers and 22 major manufacturing bases overseas that employ over 35,000 global staff. We have obtained over 100,000 patents in more than 50 countries and regions.
In 2024, Midea made significant progress in global expansion, with BUs and value chains establishing and refining "OBM First" mechanisms and organizations. However, there are still gaps in the speed, depth, and breadth of global development, compared to many leading corporations. Our top priority currently is to put "OBM First" and pursue global expansion.
We should seek global breakthroughs through unprecedented resource input, not only expanding global businesses but also globalizing our R&D functions, manufacturing, supply chains, and workforce to enhance our global presence. We should further deepen the implementation of our "Technology Leadership Strategy", and regulate our overseas R&D centers to enhance global R&D capabilities. Regional management organizations should be created to coordinate existing and planned overseas manufacturing bases for higher efficiency. In addition, we should set out overseas supply chain management rules and guide high-quality suppliers to expand globally to upgrade our supply chain and efficiency. Our global businesses should increase their level of digitalization to improve services, and we should also ramp up M&A and marketing to enhance our brand influence, making Midea a truly global corporation.
We should participate in and face up to fierce competition, but more importantly, we should strive to break free from it. Therefore, we will open the door to the world more quickly and grow in the places we know. We will seek opportunities in places we have and have yet to explore, including developed regions such as North America and Western Europe, and developing regions like APAC, the Middle East, Africa, and South America. Wherever there are businesses relevant to Midea, there are opportunities for growth.
The world is vast; Midea is small. Dare to dream, dare to act, dare to change, and dare to strive – Let's ride through the challenging storm and navigate our journey to all parts of the world. Let's make global breakthroughs. Let's open new chapters. A Midea like this, no matter the era or the macro environment, will always shine through, forging ahead to open a bold new chapter in history!
