Midea is one of the legendary brands in China and is also a key player described in media texts. We had the honor to take a trip to Midea Group with Mr. Chen Rongyong, deputy party secretary of the Advertising Business Management Center of CCTV on July 9 and 10, to experience the corporate culture and spirit. The two-day trip was tough-scheduled and was surely not enough to see and understand all, but it was really an impressive trip to us.
Brand with Long Standing and Young Team
In the historical exhibition hall of the Midea Head Office, we saw a collection of old photos and data, indicating Midea’s history of development as well as that of Chinese privately-owned enterprises.
In 1968, Mr. He Xiangjian, with 23 workmates and 5,000 yuan of inception fund, started his trial in small town named Beijiao in Foshan City of Guangdong. They first produced covers of plastic bottles; they turned their business to electric fan in 1980, a trial in home appliance industry; in 1981, the trade mark “Midea” was registered officially; and Midea started to produce air conditioner since 1985. It broke a sales income of 100 billion yuan in 2010 and they built up the Head Office in Beijiao in the same year.
What is quite contrastive with the five decades of the enterprise’s history is the young work team, no matter it is the management represented by Mr. Fang Hongbo, the board director, or the grass-roots works. We even saw basketball games playing in their uniforms in the Microwave Electronic Industry Park, all refreshing with their spirit of youth.
We also got to know that the core management of Midea is dominated by young generations born in 1960s and 70s. Departmental managerial staff members were mostly born in 1970s; workshop directors were even born in 1980s.
Talent is the Paramount Resource While Technology is the Core of the Competitiveness
We saw a narration on one side of the wall in the historical exhibition hall, writing “We may give up a business with a profit of one million rather than a talent who may serve the company well.”This is an idea pointed out by the founder of Midea, Mr. He Xiangjian, in 1991, indicating Midea’s importance on talent and technology, which made sense all along our trip to the plant.
Midea has its “month of sci-tech” every October and the highlight of the month is the rewarding ceremony for sci-tech contributions. Midea set aside 20 million yuan for the month of sci-tech in 2012 to reward those innovative talents working in the frontier positions. For the same purpose, Midea also invited foreign experts from Japan, South Korea, Spain and etc. As Mr. Huang Jian, president of the group, said, there have been 300 technical foreign experts working with Midea.
A complete talent tank and incentive system constitutes the foundation for technological advancement. Developing from technology import at the beginning to cooperative development and to independent research and development, Midea persists in pursuing grasp of core technology by itself.
Taking the compressor, “heart of an air conditioner”, as an example, Midea purchased the compressor plant of MACRO Co., Ltd. located in Shunde of Guangdong in the end of 1998. This step made Midea grasp the core technology of compressor making and cultivate its capability of R & D. From 2003, Midea started its own R &D on air conditioners and has reached an advanced level in some specific fields such as frequency-alterable air-conditioner.
By means of purchasing, innovation, cooperation between industry and research fields and joint venture, Midea has gradually learned the core and key technologies for its own industrial chains producing air conditioners, refrigerators, microwave ovens, small-sized home appliances and kitchen electronics. Some of these technologies have reached or been close to the internationally advanced level.
Carrying Robustness and Innovation Through to the End
The founder He Xiangjian or current president Fang Hongb, both of them are quite low-key to the outside world, rarely interviewed by the media, and keepaway from appearance in front of the public.
Businesses temperament of Midea also always reflects its sound mettle. Midea is one of the leaders in the Chinese “white home appliance” industry. During the past four decades, it has experienced booming of home appliance industry, but Midea has always insisted to focus on white domestic appliances to expand the scale and the industry. "For the business expansion, I insist on the principle of 'no burden, no high-flown banner, and no excessive aggressiveness." This is the management company motto in the mind of He Xiangjian, "I would rather go slow a two-step, but can’t be wrong in even half step."
After taking over as Chairman of the Board of Directors in 2011, Fang Hongbo established the development strategy of " changing development mode and promoting strategic transformation", and the primary goal of the transformation is "focus on from quantity growth-oriented to quality growth-oriented ", and it also shall transform from a low additional value to a high value-added, from extensive management to lean management so as to achieve sustained and healthy development. Midea ever produced 65 categories maximum, in 2012, half of them were cut by the company and at present there are only 25 categories.
Along with moderate major policies, there is also advancing innovation in Midea. In Midea, there is asaying which has been emphasized more than once: "Midea's only persistence is to change." For manufacturing enterprises, the company must be truly exceptional with excellent products, which are derived from technological innovation. Thus, Midea never stops the pursuit of the pace of innovation.
As early as 1999, Midea established national enterprise technical centers and post-doctoral workstations. There are currently 19 specialized research institutes, 3 R & D organizations abroad, 22 national high-tech enterprises, 2 key provincial engineering centers, and nationally recognized laboratories of washing machines, dishwashers, refrigerators, microwave ovens, air conditioners and other products. In October 2011, Midea invested 400 million RMB to establish Midea refrigeration technology institute in Shunde, Guangdong. Currently, Midea has applied a total of nearly 10,000 patents, of which there are 5,287 patent applications during the 11th Five-year Plan and 79 authorized patents.
Fang Hongbo: CCTV's bidding for twenty years, Spring Festival time service for more than ten years
On the brand strategy, Midea has also been consistent. In 1992, Midea was for the first time put on the CCTV, and since then, it has been tightly bound to CCTV, without any discontinuity of advertising on CCTV. According to Fang Hongbo’s introduction, even if the company was facing transformation, adjustment and shrinkage in the previous two years, Midea also remained stable on CCTV's advertising.
In addition to the stable investment in the bidding period, Midea has also kept more than 10 years of time service project on the annually held CCTV Spring Festival Gala. And during the major sporting events such as the Olympic Games and World Cup, it has been a partner with CCTV to sponsor the special program of " Midea moments".
In 2013, Midea put more investment on CCTV; in addition to the regular investment, it also sponsored the large-scale public welfare activities such as "Looking for the Best Fireman", which obtained very good results. With a long time accumulation, Midea brand has been continuously improved and dignified.
Entrepreneurship from 5,000 yuan to 100 billion yuan in sales volume, from a private company to a comprehensive group company with modern management system, Midea has witnessed the vicissitudes of life changes of an era, the growth of China's economy and our lives becoming more and more beautiful.