This is not the first time Dong Mingzhu has introduced “foreign aid” for channel reform. Previously, technology self media expert Wang Zizi was “poached” and appointed as the channel reform leader at Gree Electric Appliances.
In order to promote channel transformation, Dong Mingzhu, Chairman and President of Gree Electric Appliances (000651. SZ), has once again introduced “foreign aid”.
On May 9th, Gree Electric Appliances announced the establishment of a Home Appliance Business Department, which will merge the functions and personnel of the Home Air Conditioning and Small Appliance Business Department, Ice Washing and Household Appliance Business Department, and appoint Lu Luqun as the Sales Director to be in charge of the Home Appliance Business Department, with a probationary period of six months to one year. Lu Luqun previously worked at JD.com and has been operating Gree’s sales in Hebei for the past two years, stabilizing the market after the spontaneous withdrawal of former Hebei Gree Province representative Xu. The impact of this organizational structure and personnel adjustment on Gree’s channel transformation is worth paying attention to.
Regarding the screenshot of the internal document posted by Gree Electric Appliances on May 9th circulating online, a regional sales manager of Gree Electric Appliances told a reporter from First Financial on May 10th that it should be true; In addition, at least two industry veterans close to Gree Electric also told reporters that the documents are true.
The reporter from First Financial News sought verification from Gree regarding the authenticity of the above-mentioned documents, but as of the time of publication, Gree Electric Appliances did not provide a positive response.
Previously, Dong Mingzhu introduced technology self media expert Wang Zizi and appointed him as the project leader for Gree Electric’s channel reform. Industry speculation suggests that Lu Luqun, who serves as the Sales Director of Gree Home Appliances Business Department, has a parallel relationship with Wang Zizi, the head of Gree’s channel reform project, in terms of seniority.
Hebei New Sample
Regarding the development of Gree Electric Appliances in Hebei over the past two years, a local dealer commented in an interview with a First Financial reporter that “efficiency has improved”, and he also believed that “Mr. Lu (referring to Lu Luqun) has high abilities and emotional intelligence.”.
In August 2022, former Hebei Gree Province representative Xu spontaneously withdrew from Gree and established a new gateway to develop Philips air conditioning. Gree Electric Appliances immediately authorized a new distributor in Hebei – Zhuhai Huange Digital Technology Co., Ltd. (referred to as Huange Digital Technology).
According to Tianyancha, Huange Technology was established in May 2022, with Xiamen Saifu Trading Co., Ltd. holding 51% of the shares and Zhuhai Huange Trading Co., Ltd. holding 49% of the shares. The legal representative of Huange Mathematics is Zuo Yujie, and the directors include Lu Zhougang (General Manager of Guangzhou and Foshan Gree Sales Company), Xie Fan (Head of JD Home Appliance Business), etc. The manager is Lu Luqun.
Xiamen Saifu Trading Co., Ltd.’s parent company, Xiamen Saifu Group, is regarded by industry insiders as an affiliated enterprise of JD founder Liu Qiangdong. Lu Luqun was the General Manager of Jingpin Home Appliance Project Department in JD Home Appliance Business Unit before taking up his position in Huange Digital Science and Technology. Industry insiders told First Financial reporters that Huan Ge is also responsible for Gree’s JD store, JD home appliance store, and other businesses related to Gree products.
In the past two years, Lu Luqun has attended several dealer conferences in Gree Hebei as the CEO of Huange Technology. In May 2023, at an event held in Shijiazhuang, in addition to air conditioning, Lu Luqunli promoted Gree’s refrigerators, washing machines, and other electrical products; Last August, at the 2023 Gree Hebei Dealer Autumn Opening Summit, Lu Luqun continued to promote the expansion of Gree’s product line in retail terminals, in response to Gree’s transformation from air conditioning to whole house appliances.
Lu Luqun has solved the market shock caused by the spontaneous withdrawal of Dai Xu from Hebei Gree Province, and also drew on JD’s digital marketing experience to promote Gree’s channel transformation in Hebei. The above dealer said that when Xu spontaneously operated, he had to send a fax to pick up the goods; After Lu Luqun’s trading, purchasing goods can be processed online, and Gree’s organizational structure for sales services in Hebei has been streamlined.
“The new appointment of Gree Electric Appliances signifies that Lu Luqun’s channel transformation in Hebei over the past two years has gained recognition from Dong Mingzhu,” said Zhang Yanbin, a senior industry observer.
As for whether the new organizational structure and personnel arrangements will promote the sales model of Gree and JD’s cooperation in Hebei to Gree’s nationwide sales system, Zhang Yanbin believes that it is not certain. Due to its unique characteristics in the Hebei region, Gree needs to address the challenges posed by Xu Zizang’s establishment of a new portal. The foundation of Gree’s sales channels nationwide is tens of thousands of specialty stores, and in some regions where the original sales system was sound, it may not necessarily have to be transformed into a cooperative sales model between Gree and JD.com.
Gree re layout
Gree Electric Appliances maintained growth in its performance in the first quarter of this year, but there is also pressure. According to its first quarter report, Gree Electric Appliances achieved a revenue of 36.364 billion yuan in the first quarter of 2024, a year-on-year increase of 2.56%; The net profit attributable to the parent company was 4.675 billion yuan, a year-on-year increase of 13.77%; The net cash flow generated from operating activities was -2.94 billion yuan, a year-on-year decrease of 119.52%, mainly due to a decrease in cash received from selling goods and providing services.
Compared to the other two leading white battery companies in China, Midea Group and Haier Smart Home, Gree Electric Appliances had a lower revenue growth rate in the first quarter of this year. Against the backdrop of rapid growth in the domestic household air conditioning market in China last year, the growth of the domestic household air conditioning market is under pressure this year. For Gree Electric Appliances, which focuses on air conditioning and relies mainly on the domestic market, it is also urgent to accelerate the sales of refrigerators, washing machines, household appliances, and small appliances.
Gree Electric Appliances achieved a revenue of over 200 billion yuan last year, reaching 204 billion yuan. Among them, the revenue from air conditioning was 151.2 billion yuan, a year-on-year increase of 12.12%, accounting for 74.13%; The revenue of household appliances, including refrigerators, washing machines, and small appliances, was 4.002 billion yuan, a year-on-year decrease of 12.38%.
It is worth looking forward to how Lu Luqun will integrate Gree’s channel resources nationwide and promote the sales of other electrical appliances such as refrigerators, washing machines, and small appliances after taking office. Before Lu Luqun, Xie Guanghui, the assistant to the president of Gree Electric Appliances, was responsible for Gree’s domestic sales business for a period of time. He had a background in research and development.
“She dares to ‘show her sword’ to Xu Zizang and has a background in training on a large platform (JD.com). This time, she has been appointed as the Sales Director of Gree’s Home Appliance Business Department, which is equivalent to being responsible for Gree’s sales of household air conditioners and other appliances in China. She also understands Gree’s competitors’ situation, which is expected to help promote internal changes within Gree.” A senior industry insider commented on Lu Luqun’s new appointment.
Interestingly, this is not the first time Dong Mingzhu has cited “foreign aid” for channel transformation. Dong Mingzhu previously recruited technology self media expert Wang Zize to Gree Electric Appliances and appointed him as the person in charge of channel reform. The industry insiders mentioned above revealed that after joining, Wang Ziran promoted the “online approval” work at Gree, which means that dealers can directly place orders online without the need for provincial agents or other agents.
Lu Luqun and Wang Zizi have also had the experience of being on the same stage. According to the official WeChat account of Gree Hebei, on November 14, 2023, as the CEO of Huange Digital Technology, Lu Luqun shared a new customer acquisition model under the digital situation at an event. As the project leader of Gree Electric’s channel reform project, Wang Zizi also introduced Gree’s new marketing model at the event.
“The path of (new marketing) is correct, but it is difficult to implement.” A dealer told a reporter from First Financial that Gree’s traditional sales channel system, despite having multiple levels and personnel, provides training, promotion and other services to dealers. In some areas where provincial agents have been weakened, the control of price systems has also weakened, and the phenomenon of collusion will impact the interests of distributors. This dealer expects that after Lu Luqun takes office this time, the area operated by Huange Technology in Gree’s domestic sales business will increase. He hopes that Gree will continue to “manage the price system well, so that everyone can make money.”.
“Whether she can maintain stability in the operation of Gree’s domestic sales business, how to integrate into Gree’s culture, and how to get along well with General Manager Dong Mingzhu test her wisdom,” said the senior industry insider.
On May 10th, Gree Electric Appliances rose 1.27% to 43.22 yuan per share.