www.midea.com Advances Newsletter, September, 2013

Vol. 3, #7, September 2013, No. 31

Going Public

Newly consolidated Midea Group debuts on the

1 www.midea.com Advances Newsletter, September, 2013

ADVANCES Newsletter

Contents

NEWSLINE New Energy Standard to Automation Adopted at RAC Make Waves in Appliance PAGE 9 Midea Carrier Chile’s Manufacturing PAGE 6 Upcoming Product Launch Laundry Division Preparations PAGE 3 Midea Ranks Highly for IFA PAGE 10 Amongst Chinese CAC’s First VRF Seminar in Corporations PAGE 6 Midea RAC Attracts Mauritius PAGE 3 Customers and Awards at IFA in Berlin PAGE 11 Midea Celebrates Record CAC Installation at Main Sales with Myanmar Dealers PAGE 7 Airport in Mauritius PAGE 4 Little Swan Soars into Hong Kong PAGE 12

Midea CAC Signs with Seven Midea Carrier Brazil Major Chinese Property Represented at Nine of PEOPLE Twelve World Cup Venues Developers PAGE 5 PAGE 8 Going Public PAGE 13

Leaders’ Forum Recently “Arena Midea Carrier” at SNAPSHOT Launched by MID PAGE 5 Expo Febrava PAGE 9 PAGE 15

Midea Advances Newsletter is published monthly Managing Editors: by the International Strategy Department of Midea Group. We welcome all comments, Matthew Smith Mandy Wang suggestions and contribution of articles, as well as

requests for subscription to our newsletter. You Regular Correspondents: can reach us by email at: [email protected] Alex Cheng Address: Himani Joshi Amber Liu ADVANCES, International Strategy Department Crystal Lun Midea HQ Blinda Li No. 6 Midea Road Tony Miao Beijiao, Shunde, , Peck Zhao P.R.C. 528311 Sandra Sun James Yu

Daniel Zhang Tel: +86-757-2360 4714 Sue Ou

Web: www.midea.com

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NEWSLINE Midea Carrier Chile’s Upcoming Product Launch By James Yu

Midea Carrier Chile plans to reach a market share of be- I n a recent interview given to the newspaper El Mercu- tween 5%-10% in small and major home appliances by import- rio, one of Chile’s most popular newspapers, Midea Carrier ing technologies that are practically inaccessible for the middle Chile announced the impending class, but at more attractive prices. arrival of Midea brand appliances, “The objective is to innovate and which will compete for a place in drive down costs in tech that is very the Chilean home appliance market expensive today through mass pro- by directly commercializing prod- duction, targeting mid to high tier ucts with Midea through the retail segments in each category, by way channel. of distribution in the main retail Chile has been defined as a stores, in addition to the e- highly strategic country in the region commerce portals”, declared Fred due to its international openness, Xia, the Commercial Manager of stability, high purchasing power, strong presence of international Midea Carrier Argentina & Chile. brands, and birthplace of retail businesses which are increasing “Our aim is to present the best-in-class products that their presence in the region. Midea currently produces, and to compete with other interna- Therefore, Chile is often considered to be an ideal test tional companies on the same terms; our own brand, with excel- market for development in Latin America, and as such, requires lent design and quality. We want to be a key part of Midea’s high levels of investment from the company to make a business global expansion throughout the upcoming years as it transi- case for building Midea as a full home appliances brand in the tions to an OBM business”, remarked Benjamin Peña Isla, Mar- region. keting & Business Manager of Midea Carrier Chile, about the company’s upcoming launch. CAC’s First VRF Seminar in Mauritius

By Peck Zhao

vider. T his month in Port Louis, Mauritius, Midea CAC held Following this, Peck Zhao, CAC Marketing Manager, its first seminar in the country with the aim of introducing made a separate presentation covering the available product Midea VRF technology and the V4 Plus S mode in particular, in lineup for Mauritius, and the launching of the V4 Plus S-Series collaboration with its distributor there. In total, about 100 con- full-DC Inverter VRF, with the industry’s most efficient DC sultants, contractors, construction developer, and building own- inverter compressors, and 180°Sine-wave electrical control. The ers attended the event. S-Series is available in 6 models ranging from 8-18 HP, and in Dennis Lee, CAC Sales Director for Africa & South Asia, combination, up to 72HP output. Due to improvements in user gave an introduction about Midea Group and the CAC division, friendliness, flexible design, lower noise level, and easy transpor- followed by specifics on the company’s VRF market position, tation, there has been a considerable increase in interest and Midea’s R&D investment and facilities, manufacturing capabil- confidence in VRF products among customers. ity, and support marketing and service. Midea is not only an equipment supplier, but a comprehensive HVAC solution pro-

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NEWSLINE

CAC Installation at Main Airport in Mauritius

By Peck Zhao

Following Beijing Capital International Airport, Mozam- S ir Seewoosagur Ramgoolam International Airport bique International Airport, and Jakarta Soekarno-Hatta Inter- (IATA: MRU, ICAO: FIMP), also known as SSR Airport, is the national Airport, Sir Seewoosagur Ramgoolam is the fourth main international airport in Mauritius, and the location of Mi- international airport project in which CAC has been chosen to dae’s latest success: CAC previously won the contract to provide install their high performance chiller product. Midea CAC’s air conditioning systems for the airport’s new passenger termi- FCUs provide a high degree of comfort, combined with attrac- tive aesthetics suitable for a modern, new termi- nal. The installed products include cassette, duct- ed, and floor standing type units. As expected, the entire CAC installation has being running very well, such that the owner and operator, AML (Airports of Mauritius Co. Ltd) is reported to be quite satisfied with the entire installation and its performance. Midea CAC owns a full range of products, from VRF and rooftop-packaged units, to chiller units such as centrifugal, screw & scroll types, as well as AHUs & FCUs, fulfilling nearly all commercial applications, such as high-rise office buildings, hotels, hospitals, shopping malls, schools, gymna-

nal, with specifications requiring around 400 FCUs ( coil units), with a total capacity of around 8200kW (2330TR). It’s been nearly half a year since the terminal’s opening, and passen- gers have been coming and going in complete comfort, thanks to CAC’s installation. The old runway and terminal have been operated for more than 30 years now, so the government decided to refit the facilities in 2009 with a new runway for aircraft and new terminal for passengers. The new passenger terminal was inaugurated this past March, and fully operational in May. The New Airport Ter- minal, as it is called, has a capacity of 4 million passengers, and at a cost of US$300 million, covers an area of 57,000 square meters. The terminal is equipped siums, and residential spaces such as apartments and villas. with facilities for at least five boarding gates, and is compatible Combined with competitive pricing and flexible support with its with any aircraft up to and including the newest and largest Air- distributors, Midea CAC is poised to capture ever-greater bus, the A380. amounts of business throughout the world.

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NEWSLINE Midea CAC Signs with Seven Major Chinese Property Developers By Sue Ou

cess for developers, which creates redundancy in work and cost; D espite any talk of property market bubble-bursting, secondly, it can remove the intermediate link and operation cost the real estate business is still thriving, which is driving domestic associated with centralized purchases of large quantities. business for CAC. In the first half of this year, the market grew From 2005, Midea CAC has signed with more than 30 by 28.7% year-on-year, and CAC enjoyed growth of 13.2% dur- property developers, such as Hutchison Whampoa, , ing the same period. Reflecting Hengda, Agile Property, Country this growth, CAC has signed stra- Garden Holdings, among others. tegic cooperation agreements By conservative estimates, CAC with seven major Chinese proper- has achieved sales revenue of ty developers such as Ship- over 2 billion RMB in real estate ping, Rhine Group, Long Guang cooperation, a leading figure in Property and others. Midea CAC the industry. has established an early service Back in July, at 11th 21st support system for their real es- Century Real Estate Forum, CAC tate development customers, also was awarded the “2013 Best Real known as their “Centralized Pro- Estate Purchasing Partner curement Mode”, which provides Award“ as well as the “2013 Reli- a new level of cooperation and convenience to developers, sup- able CAC Supplier Award”. In attendance at the Forum was pliers, and those downstream enterprises which sign long-term Wei Xiaohui, Head of Marketing at CAC, where he commented strategic cooperation agreements, or joint supplement contracts that Midea CAC is currently focused on providing low carbon for building projects, after which orders can simply be placed emission, environmentally friendly products, while maintaining each time without additional procedure. This offers two ad- the superior performance expected by his customers in the real vantages: first, it helps to eliminate the individual bidding pro- estate industry.

Leaders’ Forum Recently Launched by MID

By Wang Yongen

ready rank between P3 and M7, and will recruit anywhere from A fter five months of preparation, the Midea Interna- 10 to 15 candidates each year for consideration. A selection tional Division finally launched its Leaders’ Forum this month. from this group will be invited to join following a successful The Leaders’ Forum grew out of the idea to create a sys- series of interviews with each candidate. From each group of tem which could identify and gather “high potential” talent to candidates, the Forum will recruit no more than 5 members per groom for upward career advancement, a process which has year. always proven to be extremely difficult. For this reason, the The Forum will operate as an independent organization, Leaders’ Forum design required much discussion and planning with a hierarchical membership system, within which members in order to produce a method which would be rational and logi- will be promoted through participation across a variety of work- cal in line with an established set of rules. shops, experience exchanges, leadership training, and working The Leaders’ Forum is intended for employees who al- with internal consultants.

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NEWSLINE New Energy Standard to Make Waves in Appliance Manufacturing By Blinda Li

companies with the most efficient products will enable them to C hina’s Standardization Administration recently an- better promote their products, be more aggressive in research nounced that from October 1, 2013, the new Minimum Energy efforts, and ultimately offer consumers superior products. Performance Standard (“MEPS”) for TVs, inverter air condi- Brands which typically have difficulty in producing energy effi- tioners, washing machines, smoke exhausts and heat pump wa- cient appliances will need to act quickly to avoid a massive cut ter heaters. According to the new MEPS, existing washing ma- to their business, meaning the industry will probably see some chines within the Level 1 category (most efficient) will fall into amount of consolidation in the relatively near future. the new Level 5 category (least efficient). The new MEPS fea- tures a higher level of stringency than that of the European Un- ion, and will eliminate washing machines within the existing Level 2-5 range. Thus, China’s washing machine industry will bid farewell to those older, less-efficient products. This move will further stimulate the washing machine industry to reduce energy and water consumption in next generation models. Based on the new standard, it is estimated that more than 60% of existing front loading washing machines will be barred from sale, and over 50% of pulsator washing machines will van- ish from the market, as well. This new standard may prove to be fatal for manufacturers which have relied on selling cheaper, lower-efficiency appliances thus far. Furthermore, the “Pacesetter” subsidy given to those Midea Ranks Highly Amongst Chinese Corporations By Blinda Li

1 billion to RMB 10 billion grew from 227 to 265, according to T his past July, Guangdong’s Enterprises Confedera- Zhong Qiquan, Chairman of Enterprises Confederation. tion and Association of Entrepreneurs jointly released this year’s In the meantime, the development quality of these enter- rankings for Guangdong’s Top 500 Enterprises, Top 100 Manu- prises has been greatly improved; more than 93% of firms from facturing Enterprises and Top 100 Service Enterprises, in which the overall top 500 reported profits. Additionally, the e- Midea Group ranked 8th overall, and 2nd in the Manufacturing commerce business turned out to be an unexpected winner, list. Amongst manufacturers, Midea was narrowly edged out of with two “e-firms” squeezing into the list. 1st place by Guangzhou Automobile Group, but managed to Statistics shows that household appliance corporations top air conditioning competitor Gree, which placed in 3rd. accounted for the largest proportion of the top 500 rankings, The sales of these 500 ranked companies have grown espe- including those names such as Midea, Chigo, Kelon, cially well through 2013 so far; during the first half, the number Vanward, Macro and Elecpro. However, Midea and Chigo were of enterprises with revenue exceeding RMB 100 billion grew the only two household appliance makers listed amongst the from 6 to 9, while those ranging from RMB 10 billion to RMB more exclusive top 100 manufacturer rankings. 100 billion grew to 76 from 62, and the finally those with RMB

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NEWSLINE Midea Celebrates Record Sales with Myanmar Dealers By Alex Cheng

panded its product range to include commercial air condition- O n the last day of August, Midea celebrated its record ers, major appliances and small appliances. We are constantly -breaking sales with dealers in Myanmar at the Myanmar Deal- introducing new and innovative models to better cater to local ers’ Conference 2013, held at Parkroyal Yangon Hotel. The con- needs. Today, Midea offers over 20 product categories and 120 ference was held to business partners who have made models,” explained Alex Cheng, Regional Marketing Director of Midea International Division. U Hla Oo, the Chairman of Good Brothers Co. Ltd., Midea’s distributor in Myanmar, reiterated this point: “Midea offers a wide range of affordable quality products that enable every citizen a chance to lead a better quality of life.” Good Brothers now has 7 Midea showrooms in Yangon, and another

significant contributions to Midea’s brand building mission. Speaking at conference, Coobie Zhang, General Manager of Midea International Division, expressed, “We are truly grateful for the strong, continuing support from our loyal consumers, dealers and distributor over the past decade. Our Myanmar sales have increased fivefold over the previous five years. In return, we are expanding our Myanmar product range and depth, as well 3 in Mandalay. as our sales network coverage to ensure our loyal consumers are Established in 1991, Good Brothers (GBS) is one of the able to easily purchase products best suited to their needs.” pioneers of farming equipment in Myanmar. Presently, the com- “Midea has been importing its products into Myanmar pany welcomes thousands of customers through its doors every since 1999. From just a handful of fan models, Midea has ex- day, across its nationwide network of 13 branch offices (located in Yangon, Mandalay, Kalay, Shwebo, Taunggo, Pyinmanar, Taungyi, Pathein, Hinthada, Mawlamyine, Myeik, Dawi and Sittway). For the past 14 years, GBS has been importing Midea products into Myanmar. From just a handful of fan models in 2005, GBS has expanded the product range to major appliances such as air conditioners, refrigerators and washing machines, and small appliances like induction cookers, rice cookers, slow cookers, microwave ovens and pressure cookers.

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NEWSLINE Midea Carrier Brazil Represented at Nine of Twelve World Cup Venues By James Yu

ing game; Estádio da Fonte Nova, in Salvador; Arena Pernam- B ack in July, Midea Carrier Brazil beat out its competi- buco, in Recife; Arena das Dunas, in Natal; Estádio Castelão, in tors’ bids for the HVAC project at the Arena Corinthians, the Fortaleza; Arena Amazônia, in Manaus; Arena Pantanal, in Cu- Sao Paulo venue for the 2014 World Cup opening ceremony. In iaba; and finally, Estádio Berio-Rio, in Porto Alegre. addition to this key win, Midea Carrier secured wins on the Given the worldwide spectacle that the World Cup repre- HVAC projects at eight of the other eleven stadiums which will sents, the upcoming summer of 2014 will be a fantastic oppor- be hosting games in the World Cup. tunity for Midea Carrier Brazil to showcase its name and prow- Altogether, the cooling technology of Midea Carrier will be ess at a wide majority of World Cup venues. Midea Carrier Bra- servicing the following stadiums during and beyond the World zil looks forward to sharing in the passion and elation that will Cup: Estádio do Maracanã, in Rio de Janeiro, which is also the capture all of Brazil and the millions of other football fans from biggest football stadium in the world; the previously mentioned all around the world. Estádio do Corinthians, in Sao Paulo, which will host the open-

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NEWSLINE

“Arena Midea Carrier” at Expo Febrava

By James Yu

their commercial units. Aside from air conditioners, F rom the 17th to 20th of September, the biggest pro- visitors were also treated to a broad display of the company’s fessional convention for residential air conditioning and refriger- newly launched line of Midea home appliances, including wine ation in Latina America, the Expo Febrava, was underway at the coolers, air coolers, water dispensers and minibar refrigerators. Migrante Exhibition Centre in Sao Paulo. As the number one supplier of air conditioning for the The expo at- 2014 World Cup, tracted most of the Midea Carrier built a major players in Latin miniature football America, and Midea stadium at the expo, Carrier was certainly playfully named not an exception to "Arena Midea Carrier", this, bringing all three which made up the of its major brands to overall exterior of the participate at the booth. The showgirls show. Midea Carrier’s in attendance were booth was prominent- also dressed in classic ly located just by the Brazilian football jer- entrance to the expo, seys, and other attend- occupying an area of ing staff wore blue 300 square meters, jerseys with the Midea making it one of the Carrier logo. largest exhibits there. Vintage uniforms from different periods throughout Products on display included Midea’s latest commercial Brazil’s glorious football history were shown in the “arena” VRF unit, the MDV4+, and a newly launched high-end residen- windows, in order to evoke emotions amongst expo attendees, tial split, Primer, which utilizes the newer, more energy efficient while large maps of Brazil were also displayed, showing the 9 inverter technology. For the Carrier brand, the company showed World Cup arenas cooled by Midea Carrier air conditioning their full range of commercial air conditioners, in addition to technology (out of 12 total venues). Automation Adopted at RAC

By Crystal Lun

A midst the trend toward lean manufacturing by Midea RAC, the division has persisted in its efforts to adopt automa- tion at its mold production facilities. Large investments have been put into implementing the new automated production lines, and so far there are nearly 60 units of robotic equipment in use. These will be responsible for reducing labor intensity, en- suring a higher level of production safety, as well as promoting greater efficiency and quality.

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NEWSLINE

Laundry Division Preparations for IFA

By Blinda Li

By ruling out the traditional exhibition mode (single white T he Internationale Funkausstellung Berlin (IFA), also color, silvery products, and quantity-based displays), the Booth known as the Berlin Radio Show, is one of world's leading trade Design Group (BDG) adopted its own “Built-in Color Model” paradigm, to accurately convey the colors and natural appearance of the company’s products. Energy and environmental conser- vation has been a consistent theme over the more recent years in the industry. Customers all over the world are paying greater attention to energy efficiency in addition to aes- thetics and visual design when they choosing home shows for consum- appliances. er electronics and Throughout every home appliances. aspect of the booth Each year, a pletho- design, the BDG ra of manufacturers thoroughly consid- from around the ered and then re- world converge on considered every Berlin to show their detail, in a tireless latest designs, tech- effort to show nologies, and prod- Midea at its best ucts, which in turn when the world attracts thousands of visitors and buy- ers. The IFA has been an annual event since 2005, and this year’s IFA runs from September 6th to 11th (Ed: as of this writing, 2013’s IFA was just about to open, but has al- ready finished at the time of our publication). To put on a superior display of its products for global attendees, Midea’s Laundry Division has been busying itself with an original booth design, inviting product arrangement, attractive catalogue pro- turns its focus on the IFA. From the look of the previews here, duction, and eye-catching video production to accompany the it would seem that the BDG has succeeded. booth.

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NEWSLINE Midea RAC Attracts Customers and Awards at IFA in Berlin By Crystal Lun

floor standing air conditioner from Midea RAC earned it the T he annual IFA (Internationale Funkausstellung Ber- Product Innovation and Industrial Design Innovation Awards lin) came and went in Berlin this month, however, this year’s respectively. Traditionally, CHEARI has announced and pre- exhibition was unprecedented, with an exhibition area of more sented its awards at IFA in Berlin every year. than 140,000 square meters and exhibitors from more than 1400 Midea RAC, over its 28 year history, has consistently held companies. Midea always puts a broad spread of its products on to its belief of “innovation through technology”. Back in early display at IFA, lately with prevailing themes of intelligent design August, RAC revealed its new products for the 2014 refrigera- tion year, focusing on aspects of energy efficiency and speciali- zation. Apart from air conditioners in the ECO energy-saving series, also known as "1 kWh per night", features such as rapid refrigeration and Wi-Fi control have debuted for the new year. Midea RAC Division President Wu Wenxin remarked, "The main job we should focus on earnestly is to do the right product, without distraction. Also, the other main job is to make sure the reliability of the product, not just today, but to- morrow, after five years, and even ten years still with this em- phasis persistently.” Midea RAC has invested considerable resources in order to improve the consumer experience. According to Wu, in 2012, more than 1 billion RMB was invested in quality improve- and energy efficiency. According to Midea employees staffing ment. “To satisfy customer demand is our direction of the ef- the exhibit, many European customers who inquired about the forts to improve," expressed Wu. products on display were most attracted by the degree of energy efficiency of each appliance, and Midea RAC’s products were of particular interest to visitors there. Midea RAC has developed and implemented world-leading technologies, such as high efficiency heat exchangers, damper electronic expansion valve control, and intelligent defrosting control. These innovations have allowed RAC to offer a lineup of ultra-efficient air conditioners worldwide with SEER and SCOP energy efficiency ratings of A+++. In the pursuit of the highest quality, RAC also carries out comprehensive simulation environment trials, such as noise tests, endurance tests, drop tests, transportation vibration tests, and environmental simula- tion tests, to name a few. Aside from RAC’s exhibit attracting great interest at the show, the CHEARI (China Household Electric Appliance Re- search Institute) Innovation Awards presentation on the 9th of September at IFA gave Midea much deserved recognition for its achievements. The “1 kWh per Night” technology and the KH

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NEWSLINE

Little Swan Soars into Hong Kong

By Blinda Li

dence in a highly international city as Hong Kong. F rom August 24 to 25, the Jiangsu provincial govern- Today, Hong Kong has become Jiangsu’s seventh-largest ment ran the “Jiangsu Fair”, an extensive show at the Hong trading partner, third-largest importer and one of its major in- Kong Exhibition Center with the aim of helping to promote vestors. In the first half of 2013, Jiangsu’s total foreign trade local businesses in external markets. A total of 160 Jiangsu busi- volume decreased by 0.1% year-on-year, but its trade volume nesses presented over 345 products to the attendees in Hong with Hong Kong reached US$ 16.52 billion, a year-on-year in- Kong, and Midea’s Little Swan was one of those companies. crease by 36%. By the first half this year, Hong Kong had in- The fair will showcase 6 product categories: Lifestyle, High vested in 35,331 different projects in Jiangsu, with contractual -end Manufacturing, Emerging Industries, Arts, Industrial De- foreign capital of USD$24.83 billion, and paid-in foreign capital sign, and Logistics. Exhibits were busy with product promotion, of USD$11.30 billion. procurement contract negotiation, and economic discussion. Little Swan’s exhibit consisted of high-end products tai- The Jiangsu Fair was started by the Jiangsu government in lored for Hong Kong consumers, able to highlight the compa- 2009, and has continued on an annual basis across a different ny’s advanced technologies, and the quality that 55 years in the province each year, with sales exceeding RMB 30 billion in total. washing machine industry produces, so as to build a world-class This year marks the first opening in Hong Kong for the Jiangsu washing machine brand in the face of increasingly fierce compe- Fair, enabling Jiangsu products to gain more exposure and confi- tition.

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PEOPLE Going Public

By Mandy Wang & Matthew Smith

Li Feide Director of Strategy & Planning Midea Group Board Member [email protected]

This month marks a fairly significant turning point in Midea’s story, with the September 18th public listing of Midea Group (SZSE 000333) capping a year-long consolidation process. The importance of Midea becoming a public company is matched only by the complication of such a process, and so we have been lucky enough to steal away some time with Li Feide, a key figure in the planning and execution of the recent Midea IPO. areas such as corporate governance and management systems in His history with Midea began back in 1999 after finishing the domestic, non-state-owned corporate environment, using his Master’s degree, and he previously served as a member some of the most professional international companies as of and secretary for the former GD Midea Board of benchmarks. Now that the listing is complete, we would like to Directors. fully implement management and board of directors formats which follow professional standards. Advances: Thank you for taking the time to talk with us. Can you describe what prompted Midea to pursue the recent Advances: Can you describe the difficulties Midea consolidation and public listing? previously experienced from its existence as part-public, part- private? For instance, when interested parties would look at an Li: Going public was a part of our overall business annual report for the company, only to realize the disclosure strategy. We are aiming to become a global company with the was only for a section of the entire company. same standards as other global firms of the USD$20 billion scale. Now, due to the history of the Chinese capital market, Li: Indeed, this is a very strange phenomenon, and yet it many companies have had both public and private subsidiaries is very common to see here in China. For us, the interactions at the same time. In order to maintain the independence of such between our public and private parts were obviously great, but listed companies, it becomes difficult to realize structural and also sometimes limited in ways which could be frustrating. For business synergies between both types of companies. example, the public part has a healthy sum of cash on hand, but Since our consolidation began a little over a year ago, last it cannot be used in by the private part because of limitations in August, Midea Group has reformed into a structure of overall capital markets law. The result is that our public company is functional departments and revenue generating business only able to earn 1% on that extra cash sitting in the bank, while divisions. This reformation required a matching change in how the private side is forced to pay 6% to borrow any cash it needs. we exist in the capital market. This is just an example. We need to know what other Looking forward to the future, our goal is not just about international companies used to have similar situation like us do. becoming a public company, but to start an entirely new Our goal is to build an integrated public enterprise. chapter for Midea Group on the international stage, expanding our business through the capital market platform by forming a Advances: How long has Midea been preparing for this truly integrated company. listing? What kinds of challenges were encountered during that Moreover, Midea has stepped up to play a leading role in period?

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PEOPLE

Going Public (cont.)

By Mandy Wang & Matthew Smith

Li: In terms of general strategy, this is something we at a 99% success rate, and the antitrust procedures stated by the have been thinking and planning about for years. In order to Ministry of Commerce were fulfilled in a timely manner without form an integrated company, it was necessary to achieve capital any hitches. Overall, it was a very satisfactory performance. integration, as well. But speaking of the real work and actual preparation for this event, it really began from last year, and we Advances: What do you feel are the most significant faced a many challenges during this process. aspects of Midea becoming fully public? How will this influence First of all, Midea Group’s listing was more complicated Midea moving forward? Will Midea’s previous business strategy than a simple IPO (initial public offering). It included the IPO change at all? itself, as well as the share swap and merger. Previously, Midea Group had its own shareholders and GD Midea Electric Li: What we are more concerned with, is that our Appliances also had its own shareholders. We had to consider company has the proper structure necessary to deal with corporate governance, management, acquisitions, development, and other aspects in the future. This listing will be as significance as other major events in Midea’s history, such as the original 1993 GD Midea listing and company consolidation.

how to protect each party’s interests, which was challenging, but finally accomplished to everyone’s satisfaction. Secondly, this entire event was very complicated, given the need to explain to all relevant stakeholders why we needed to do this, what benefit they would get by doing this and how it Now that the entire company is a public entity, Midea would improve the performance of the company. Moreover, Group is more transparent, with each business visible to the since the new “Measures for the Administration of Material capital market. Our entire business, with operating results, Assets Reorganization” was adopted by the China Securities management performance, and other indicators, will be in full Regulatory Commission in 2008, we were the first ones to do a view to be examined and judged by the market. merger-IPO: merging a listed firm with a non-listed firm From this point, we will carry forward with our original through a share swap, followed by an overall public listing of strategy for transformation, to better develop our business and the new firm. We really had no previous examples to learn increase profitability. The only difference is that the market will from. now be watching us. Thirdly, we pushed ourselves to complete this project with the greatest attention to quality and efficiency possible. We followed procedures carefully and strictly, always evaluating the time needed and performance produced. As an example, we completed our stated goals relating to the shareholder’s meeting

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SNAPSHOT

historic moment

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