In China's air conditioning market, Gree and Midea have long been at the forefront, dominating half of the nation’s landscape for nearly two decades. Known for their fierce rivalry, these giants have engaged in a series of price wars and legal battles over patents. Recently, they've filed multiple lawsuits against each other, accusing one another of patent infringement, with claims amounting to nearly $100 million. While their public interactions remain cordial, their legal skirmishes have never stopped.
Gree, a state-owned enterprise with a broad shareholder base, has historically focused on independent research and development to innovate and control core technologies. Midea, on the other hand, has adopted a strategy of acquiring established businesses to quickly integrate advanced technologies and products that have already been validated by the market. This approach has allowed Midea to gain a competitive edge, particularly in the robotics sector, where it acquired German robotics giant Kuka in 2016 for $2.92 billion. By contrast, Gree’s ventures into mobile phones and new energy vehicles have yet to yield significant market traction.
The contrasting approaches of Gree and Midea are also evident in the behavior of their respective leaders. Gree’s Chairman Dong Mingzhu has consistently increased her stakes in the company, signaling confidence in Gree’s future growth potential and its leadership in the evolving "Internet+" home appliance space. In contrast, Midea’s founder He Xiangjian has quietly reduced his holdings, perhaps reflecting concerns about the home appliance industry facing a downturn due to rising raw material costs and stricter real estate regulations.
The white goods industry is reaching a saturation point, with the air conditioning market experiencing minimal growth. In 2014, the retail sales of air conditioners in China amounted to 157.5 billion yuan, representing only a 0.6% increase from 2013. In 2015, the market contracted by 4.8%, dropping to 137.4 billion yuan. Even during the heatwave of 2016, the market only rebounded slightly to 160.6 billion yuan. This stagnation has pushed both companies to diversify into smart home technologies and robotics, areas where Midea appears to be gaining ground faster than Gree.
While Gree continues to push for breakthroughs in its new ventures, Midea’s strategic acquisitions and product innovations are helping it maintain its competitive edge. The rivalry between Gree and Midea is not just about air conditioners anymore—it’s about who can dominate the future of smart home solutions and robotics. As both companies navigate these challenges, their strategies will ultimately determine whether they can continue to lead in a rapidly changing industry landscape.
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