The anxiety of "old age" Gree is not just about marketing

Recently, a rose air conditioner of Gree has caused a lot of complaints from netizens. Before this, Gree was also frequently complained by netizens. So why has Gree's youth marketing failed in recent years? What kind of problems does Gree face behind the failure of youth marketing? Let's take a look at this article!

Recently, a rose air conditioner from Gree has attracted a lot of complaints from netizens for its "90s aesthetic" and being too expensive. It is said that this rose air conditioner was designed by Dong Mingzhu herself, priced at 29,999 yuan, and is prepared for newlyweds.

In response to netizens' complaints, Gree's official response was: "Give someone a rose, and the fragrance will linger on your hands. The Rose air conditioner is not only a work of art given by Gree to all users, but also demonstrates Gree's beautiful vision of 'making the world fall in love with Made in China'."

As Gree's "super IP", Dong Mingzhu's every word and action attracts public attention, saving Gree a lot of publicity and marketing costs. However, in recent years, Dong Mingzhu herself and Gree, which she represents, have been frequently criticized by netizens.

Why has Gree's youth marketing failed in recent years? What problems does Gree face behind the failure of youth marketing?

1. The “domineering female president” marketing failed

Once upon a time, Dong Mingzhu was the "domineering female president" who personally went to the canteen to inspect and tidy up the canteen, insisted on lowering the price of employee meals, and promised to give employees "one house per person". However, now Dong Mingzhu's remarks are no longer recognized by the public.

Before Rose Air Conditioner, Dong Mingzhu's several responses to Meng Yutong's resignation angered netizens, some of whom thought her remarks were "empty promises" and "outdated ideas." Dong Mingzhu's interaction with former self-media blogger and current Gree executive Wang Ziru in an interview was also not appreciated and was ridiculed by many netizens.

Dong Mingzhu has always adhered to her positioning as a tough entrepreneur. She has lost her temper with employees many times in TV interviews and on live broadcasts. Gree employees also said in interviews that "being scolded by Dong Mingzhu has made them progress." Dong Mingzhu is called the "Iron Lady" because of her style of doing things.

But at present, this tougher entrepreneurial positioning is no longer popular, as there is a significant gap in age, cognition, and vision between the young people who dominate the social platforms.

According to public data, as of September 2023, the proportion of users aged 30 and under on the three platforms of Douyin, Weibo, and Kuaishou were 36.4%, 54.4%, and 40.3%, respectively, and the user scale of the above three platforms reached 743 million, 485 million, and 457 million, respectively.

Today's mainstream social media is a stage dominated by young people. Recognizing and understanding the "new expressions" and "new attitudes" of young user groups and finding the context for dialogue with young people have become the key to youth-oriented marketing.

There are many entrepreneurs who are not liked by netizens because of their tough positioning. For example, Cao Dewang once said on a TV program that "raising employees' wages requires considering whether other companies can accept it." Cao Dewang's remarks greatly reduced netizens' favorability towards him.

There was also Sun Dongxu from Dongfang Zhenxuan who live-broadcasted a "phone-throwing" incident. Netizens believed that his action was a "live-broadcast meeting". In order to appease netizens and stabilize public opinion, Sun Dongxu was dismissed in the subsequent public relations of Dongfang Zhenxuan. Netizens were more sympathetic to the "working man" representative Dong Yuhui, who recently started broadcasting and achieved a GMV of over 100 million in four hours.

Luo Yonghao said in the live broadcast: "When you are doing public relations, you must avoid sounding daddy... I'm not targeting anyone, I'm targeting all Chinese companies. Some people, when they reach a certain age, act daddy-like when facing the public..." Luo Yonghao's expression was liked by netizens, and in the comment section of the relevant video, one netizen mentioned that "Dong Mingzhu also has a daddy-like vibe."

There are two most eye-catching marketing events in Gree's past. One is the "1 billion bet" between Dong Mingzhu and Lei Jun in 2013. The two bet on CCTV "whether Xiaomi's revenue can exceed Gree in five years."

"We want to bet 1 billion yuan" Image source: Bilibili

The second is to create a "successor" Meng Yutong. Dong Mingzhu once vowed that "she would cultivate a second Dong Mingzhu". Since then, Meng Yutong has frequently appeared on hot searches and has rapidly gained fans on major social platforms. Gree took advantage of the opportunity to launch its own broadcast account "Mingzhu Yutong Selection" on the Kuaishou platform, which provided a boost to Gree's online channel construction and marketing.

The former is still a hot topic ten years later, and the latter helped Gree to quickly launch its online self-broadcasting account. The number of fans of the Douyin account "Mingzhu Yutong Selected" exceeded 100,000 within four days of its official operation, and it has gained nearly 3 million fans in two years.

The marketing methods that Dong Mingzhu is familiar with are no longer so applicable today. Compared with the "domineering female president", people may prefer brands that are more in tune with and more interesting. For example, Taobao and Lao Xiangji's "crazy" marketing; Pang Donglai's various news about seeking benefits for employees frequently appear on hot searches; Fenghua and other domestic brands' group marketing and "stealing" traffic from other brands... Today's brand marketing emphasizes interaction and "facing consumers directly", focusing on keeping up with the times and "lowering one's status".

For Gree, current online marketing is still relatively dependent on Dong Mingzhu, and the brand's personalized expression is concentrated on Dong Mingzhu alone. Gree not only lacks a leader who is young in planning, operation, and insight into the mentality of young people, but also lacks another younger and more down-to-earth personal IP. The original Meng Yutong has great potential to take over from Dong Mingzhu and become this IP.

2. Gree’s Anxiety Is Not Just About Marketing

Behind the topic of Rose Air Conditioner being complained about is the news that Gree's market value plummeted due to the transfer of shares. On the night of December 19, Gree announced that it planned to transfer nearly 25% of the shares of Gree Titanium New Energy Co., Ltd. (hereinafter referred to as Gree Titanium) for 1.015 billion yuan. On December 20, Gree closed down 7.09%, and its market value evaporated by 13.2 billion yuan. Gree Titanium is a new energy company whose main business includes the research and development of lithium titanate battery core materials, batteries, new energy vehicles, etc. Gree's move is intended to move into the field of new energy vehicles and promote its own diversification strategy.

It's not just marketing that's making Gree anxious; its business growth difficulties are what's giving Gree's leaders a headache.

Although the air-conditioning industry has recovered in the first half of 2023, with both production and sales in the air-conditioning market experiencing double growth, according to the "Analysis of the Operation Situation of China's Home Appliance Industry in the First Quarter of 2023" produced by the China Household Electrical Appliances Association, industry demand comes more from stock renewal. Due to the high penetration rate of mature home appliance categories in China, it is difficult for the home appliance industry to achieve comprehensive high-speed growth again.

In 2023, Gree failed to be selected into the Fortune Global 500, but its old rivals Midea and Haier are still among the top 500. Midea ranks 278th, having been on the list for eight consecutive years, and Haier Smart Home ranks 419th.

According to Gree's 2023 semi-annual report, Gree Electric's revenue in the first half of 2023 was 99.23 billion yuan, a year-on-year increase of 4.22%. Midea Group's operating income was 196.98 billion yuan, a year-on-year increase of 7.84%. Haier's revenue in the first half of 2023 was 131.62 billion yuan, a year-on-year increase of 8.21%.

Midea's revenue is twice that of Gree, and Haier's growth is faster. In terms of both revenue and growth, Gree is already at the bottom among the three major white goods giants.

Gree's diversification strategy has not made much progress in recent years. In 2022 and the first half of 2023, air conditioners accounted for more than 70% of its revenue. Although Gree has made layouts in various fields in recent years, such as household appliances, smart equipment, new energy, as well as mobile phones, pre-prepared meals, medical equipment and other fields, the revenue in these fields has never reached the level of supporting the entire Gree Group to achieve "diversification".

According to the semi-annual report for the first half of 2023, Gree's household appliances business revenue was 2.177 billion yuan, accounting for approximately 2.19% of operating income, an increase of 0.02% year-on-year. Industrial products accounted for 5.53% of total revenue, and green energy business accounted for approximately 2.94% of total revenue.

Analysis of Gree's main business in the 2023 semi-annual report

In addition to air conditioners and other businesses, Gree's diversified businesses accounted for less than 30% of its operating income. Behind the limited growth of the air conditioner business and the difficulties in the transformation of diversified businesses is the trend of collective transformation of white appliance giants.

3. Collective transformation of white goods giants

With the high penetration rate of traditional home appliances and the slowdown in the growth of the overall market size, the air-conditioning business of white appliance giants is no longer the absolute business focus, and focusing on small household appliances has become the mainstream.

According to public data, from 2020 to 2022, the main business revenue of China's home appliance industry was 1.48 trillion yuan, 1.73 trillion yuan, and 1.75 trillion yuan respectively, and the industry's growth peaked.

According to public data, from January to July 2023, the retail sales of the air-conditioning market will be 152.2 billion yuan, and the retail volume will be 44.3 million units. The retail sales will catch up with the level of 2021, but there is still a big gap compared with 2018 and 2019. Prior to this, the omni-channel sales of the air-conditioning industry experienced a rare three-year consecutive decline.

In addition to the cooling of the overall air-conditioning environment and sluggish real retail demand, large white goods companies are also facing challenges and shocks from small and medium-sized enterprises.

In August 2023, a number of small and medium-sized brands such as Yingtian and Yuetu announced their efforts in the new cold year. In September, Philips' sub-brand Enboli was listed. According to public data, the total production capacity of China's air-conditioning industry will increase by more than 20 million units in the 2024 cold year, reaching the level of 260 million units.

Against the backdrop of sluggish growth in the air-conditioning business, leveraging the brand's technological accumulation and channel advantages to develop small household appliances is the preferred choice among many options.

According to Midea Group's 2022 performance report, Midea's products ranked first in the industry in terms of domestic online and offline market share in six categories, including household air conditioners, tabletop microwaves, and tabletop ovens.

Midea's Taobao flagship store shows that there are currently 16 products with sales exceeding 100,000+ in the store, only one of which is a smart air conditioner. The vast majority are household appliances priced at 50-200 yuan, ranging from microwave ovens, hair dryers to electric kettles. Among them, the best-selling product is a small humidifier priced at 89 yuan.

In the first half of 2023, Midea Group's consumer appliance revenue was 68.13 billion yuan, accounting for 34.59% of its total revenue. Haier Smart Home's classified information on home appliances for its smart home business in China shows that its air-conditioning revenue was 23.14 billion yuan, which is less than 1 billion yuan less than the revenue of refrigerators and freezers. In addition, Haier Smart Home's washing machine, water appliances, and kitchen appliances revenue totaled more than the air-conditioning revenue alone.

In addition to household appliances, Midea, Haier and Gree are also exploring new growth by investing in photovoltaics, energy storage and new energy fields.

In October 2021, Midea released its "Green Strategy", planning to increase the proportion of green electricity to 30% by 2030. In June 2023, Midea invested 1.473 billion yuan to increase its holdings in its subsidiary Hekang New Energy, and finally achieved a controlling stake. In August 2023, Midea and JinkoSolar signed a strategic cooperation agreement to strengthen cooperation in new energy, photovoltaics, energy storage and other business sectors. So far, TCL, Skyworth, Haier, Gree, Midea, the five major home appliance giants have all entered the photovoltaic industry.

Major white goods brands have been making frequent moves in the new energy field. In 2021, Haier Group announced cooperation with SAIC, Kimree, and Geely. Haier and SAIC signed a strategic cooperation agreement, and the two parties will cooperate in multiple fields such as smart car research and development and application. Haier also established a new energy sub-brand "Kataichi", whose main businesses include personalized modification, smart charging technology, and second-hand car vertical transactions.

Many white goods companies have entered various fields to transform their businesses. Gree, which has fallen behind, still needs to work hard in the future if it wants to catch up with Midea and Haier.

Author: Laisheng

Source: WeChat Official Account: KOL User Manual (ID: KOL-TOPKLOUT)