How to understand the strategic lack of fear towards Xiaomi, the tactical emphasis on Xiaomi, how the second growth curve will take over, and what the future shareholder return plans are... On the afternoon of May 30, during a one-hour investor communication session at Midea Group's 2024 Annual Shareholders' Meeting, Midea Group Chairman and President Fang Hongbo responded to the above concerns from investors. His candid and humorous responses elicited continuous applause and laughter from the audience.
<h2>Why Fear Xiaomi?</h2>
“Tactically, I value Xiaomi, but strategically, I am not afraid of Xiaomi coming in.” Previously, Fang Hongbo expressed his attitude towards Xiaomi's entry into the home appliance sector during a media interview, attracting market attention.
Fang Hongbo's statement may be related to Xiaomi's expansion in the air conditioning market. According to data from Aowei Cloud Network, in the first four months of 2025, Xiaomi's market share in the online air conditioning market has jumped to third place. Although there is still a significant gap compared to the leading Midea and Gree, it has surpassed Hualing, Haier, and TCL. On May 17, Xiaomi Group President Lu Weibing revealed during a live broadcast that Xiaomi's air conditioning sales will enter the top three in the domestic market by 2025, with plans to reach the top two by 2030.
Faced with the aggressive Xiaomi, an investor asked during this communication session, “How should we understand the tactical emphasis but strategic lack of fear towards Xiaomi?”
“Conclusions are drawn based on common sense analysis and judgment.” Fang Hongbo stated, the home appliance industry is essentially a low-barrier, highly competitive industry. After multiple rounds of battles, it has become a red ocean with fixed strategies; the industry space is limited, and the efficiency space that can be compressed in the industry value chain is also small; in a highly competitive market, no matter how you fight, no matter who wins, it is a massive war of attrition.
“I firmly believe that the possibility of great, high-tech companies emerging in the home appliance industry is nonexistent.” Fang Hongbo added that whoever enters the home appliance industry now has already lost strategically.
It is worth mentioning that Midea's 2024 annual report shows that Midea Group will completely liquidate its shares in Xiaomi Group in 2024, with a sale amount of 900 million yuan. Public information indicates that Midea Group has held Xiaomi shares for 10 years, accelerating its sell-off since 2020, totaling nearly 2 billion yuan in cashing out. Xiaomi had already liquidated its shares in Midea Group in 2019, exiting the list of Midea Group's top ten shareholders.
Industry insiders believe that the mutual liquidation of each other's stocks by Xiaomi and Midea may lay the groundwork for future competition in the home appliance market.
In response to an investor's question about Midea's corporate culture, Fang Hongbo stated that Midea's culture is one that dares to face competition, constantly self-denies, and confronts changes and transformations of the times.
This year, Midea Group has launched an entrepreneur IP project internally, with several vice presidents, including Wang Jianguo and Zhang Xiaoyi, embracing self-media and debuting through videos. “The times have changed, and fully embracing self-media is inevitable.” However, Fang Hongbo emphasized that entrepreneur IP is not a necessary condition for a company's sustainable development and longevity.
Additionally, when mentioning the issue of &#34;human governance&#34; in corporate management, Fang Hongbo stated that Midea does not have such a situation; Midea progresses through corporate governance. “In the past, I have never relied on it, nor do I rely on it today, and I believe I will not rely on it in the future.”
<h2>Increased Dividends?</h2>
Midea Group's &#34;2024 Annual Profit Distribution Plan&#34; shows that Midea Group intends to distribute a cash dividend of 35 yuan (including tax) for every 10 shares to all shareholders, with a total cash dividend amounting to 26.712 billion yuan.
It is worth mentioning that in 2024, the cash dividend amount from Midea Group accounts for nearly 70% of the net profit attributable to the parent company, an increase of 8 percentage points compared to the previous year. Since its overall listing in 2013, Midea has cumulatively distributed dividends exceeding 134 billion yuan.
Several investors have asked whether the company will adjust its shareholder return plan in light of the pressures facing the home appliance industry. &#34;It seems everyone is concerned about the more than 300 billion yuan in cash on the company's books,&#34; Fang Hongbo joked. He firmly stated that the company's future dividend and repurchase ratios will definitely be further increased on the already very high basis, and there will also be planned increases in R&amp;D investment.
<h2>Where Will New Growth Come From?</h2>
In 2024, Midea Group's revenue will exceed 400 billion yuan for the first time. Given the current cutthroat competition in the home appliance industry, investors have inquired when the company's ToB business, as its second growth curve, will take over.
&#34;The space in the home appliance industry is definitely limited, and the vitality of enterprises also has cycles. Looking at companies worldwide that have lasted over a century or have crossed multiple economic cycles, they must achieve industrial upgrades,&#34; Fang Hongbo said. Midea's strategy is very simple: the home appliance business, as the first growth curve, is currently leveraging domestic business model transformation, high-end structural adjustments, and going overseas to realize the scale advantages of the home appliance business; while the first growth curve is slowly declining, the ToB business as a new growth curve will perfectly connect over time.
&#34;Our goal is to hope that in the future, when both businesses account for 50% each, the first and second curves can form a growth relay,&#34; Fang Hongbo added. The logic behind Midea Group's choice of ToB business is industrial upgrading and domestic substitution, such as the company's medical and robotics sectors, which are capital-intensive and high value-added industries. &#34;I think the chosen track is still quite good.&#34;
In addition, regarding future plans for the medical sector, Fang Hongbo stated that the company's positioning in the medical sector is very clear—imaging diagnostic equipment. After several years of exploration, the company established its medical business sector after the Spring Festival this year.
According to a research report from Huachuang Securities, &#34;GPS&#34; (GE Healthcare, Philips, Siemens Healthineers) occupies the top three positions in the global medical imaging market, with the global medical imaging market size in 2023 estimated at about 48.3 billion yuan, and the combined market share of the three &#34;GPS&#34; companies reaching 79%.
&#34;The investment in the medical business sector is also unwavering,&#34; Fang Hongbo believes that the domestic medical imaging diagnostic equipment market is huge, and he revealed that the company does not rule out making some other moves this year to supplement the business structure of the medical sector. After establishing a certain foundation, it is also possible that a medical division will be established in the future.
Regarding the currently hot humanoid robot sector, Fang Hongbo stated that he is optimistic about the robotics business, and there is currently significant layout and R&amp;D investment in this area. &#34;What the future holds for household humanoid robots is something our team is following up on and exploring. It is very difficult to draw conclusions about future developments now.&#34;
This article is sourced from: Shanghai Securities Journal
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At the Midea Group 2024 Annual Shareholders' Meeting, Chairman Fang Hongbo responded to questions regarding Xiaomi's strategies and tactics. He stated that while Xiaomi is taken seriously in tactical terms, there is no fear of its entry into the home appliance market from a strategic perspective. The rapid rise of Xiaomi in the air conditioning market has drawn attention, and Fang Hongbo believes that the competition in the home appliance industry is fierce, making it difficult for great high-tech companies to emerge in the future. Additionally, Midea Group plans to liquidate its Xiaomi stocks in 2024, indicating a competitive relationship between the two in the home appliance market

- At Midea Group's 2024 annual shareholder meeting, Chairman Fang Hongbo addressed investor concerns regarding competition with Xiaomi and future shareholder returns.  
- Fang emphasized that while he respects Xiaomi tactically, he does not fear them strategically, citing the highly competitive nature of the home appliance industry.  
- Midea plans to distribute a cash dividend of 35 yuan per 10 shares, totaling 26.71 billion yuan, while also focusing on expanding its ToB business and investing in high-value sectors like medical imaging and robotics.

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