At The End Of The Year, The Price War On Air-conditioning Will Not Stop. Gree Electric Announced To Give Up Profits Again.

At The End Of The Year, The Price War On Air-conditioning Will Not Stop. Gree Electric Announced To Give Up Profits Again.

Date:Dec 27, 2019

[China Refrigeration Network] On the evening of December 12, Gree Electric Appliance (000651, SZ) issued a "Gree Rangli Activity Announcement" through its official microblog and official WeChat public number.  According to the announcement, Gree launched profit-sharing activities twice in November. Orders for "Junyue" and "T Shuang" series products exceeded 6.2 million units online and online. Now "Junyue" and "T Shuang" are already in full production and still cannot meet the market demand.  In view of the fact that the consumers who place further orders are not expected to have the installation conditions until April 2020, in order to meet the consumers who have urgent installation requirements, the company decided to take out "Pinyue" and "Yuefeng II" series of products for profit-sharing activities, with the profit-sharing range as high as 800 yuan ~1000 yuan/set.  For details, please visit "Dong Mingzhu's Store" or go to the local Gree authorized store nearby.


Reporters learned that the "double 12" air conditioners in Oxley, the United States and Haier have also greatly benefited.  Take the official flagship store of the United States on Tmall as an example. For the "Smart Arc" series of the United States, the original price of one large and three-level energy-efficient variable-frequency air conditioner is 2099 yuan/set, and the discount price of "Double 12" is 1498 yuan/set, giving rise to a profit margin of nearly 30%.  Oakes Air Conditioning "Double 12" has a stronger promotion.


Gree Announces Profits Again


On the evening of November 9 this year, Gree Electric announced that it would "give 3 billion yuan in profits to crack down on low-quality and shoddy goods" and then started a price war in the air conditioning industry at the end of 2019.  Gree Electric announced that during the "double 11" period, it would give consumers high-quality models and prices, with the lowest price of 1,599 yuan/set for variable-frequency air conditioners and 1,399 yuan/set for fixed-frequency air conditioners.


Facts have proved that the 3 billion yuan rebate from "double 11" is only a "front dish".  On November 26, Gree Electric announced another ten billion yuan of profit-making activities. Starting from November 27, the "Junyue" and "T Shuang" series of air conditioners will continue to maintain the same price as "double 11" and there is no deadline for profit-making activities.


On December 12, Gree Electric again issued a profit-sharing announcement, saying that the "Junyue" and "T Shuang" series of air-conditioning orders placed by consumers had been fully produced and still could not meet the market demand. The company decided to expand the sales promotion models and then took out the "Pinyue" and "Yuefeng II" series of products for sales promotion.


The reporter inquired about "Dong Mingzhu's Store" and learned that on the night of December 12, after Gree's announcement of profit sharing, the subsidy price for "Pinyue" to set the frequency of heating and cooling to be 1 large, and to hang up the Class III energy-efficient air conditioner was 1,849 yuan/set, compared with the original price of 2,649 yuan/set, each set was preferential for 800 yuan, and the profit sharing rate was actually about 30%.  The subsidy price of "Pinyue" variable frequency heating and cooling air conditioner is 2049 yuan/set, with the original price of 3099 yuan/set, allowing the profit margin to reach about 34%.  The profit margin is no longer as high as that of "Junyue" and "T Shuang" series.


It should be noted that Gree Electric revealed in its announcement on the evening of December 12 that since the start of the profit-sharing campaign in November, the online and offline orders for the "Junyue" and "T Shuang" series of air conditioners have exceeded 6.2 million units, calculated at the lowest price of 1,399 yuan/unit, which means that Gree Electric has sold nearly 9 billion yuan of air conditioners in the above two series since November 9.


In an interview with reporters on the evening of December 12, Liu Buchen, an analyst in the household electrical appliance industry, said Gree Electric Appliances has continuously reduced prices and profits for different types of products, which means that the inventory of "Junyue" and "T Shuang" series of air conditioners has been almost digested. Continued sales will lead to longer installation period and may cause consumers to rebound. Therefore, Gree Electric Appliances announced to change to other types of products for promotion.  He predicted that Gree Electric will continue to reduce prices of different models on a continuous and rotating basis in the future to digest the inventory of different models of products.


"Double 12" Air Conditioner "Carnival"


Generally speaking, the price war in the air conditioning industry has not stopped since November.  As for Gree's price reduction logic, the industry believes that it is to remove inventory and meet the new energy efficiency standards for air conditioners to be implemented next year, as well as the pressure brought by Gree's own revenue growth target.  Liu Buchen told reporters that Gree Electric needed a rush before the end of the year. Dong Mingzhu had expected Gree's full-year performance. Gree must take measures to achieve the revenue growth she wanted.


Dong Mingzhu, chairman and president of Gree Electric Appliance, said in a speech at the 2019 (18th) annual meeting of Chinese business leaders recently that Gree Air Conditioning Subsidy: "In this year's' double 11', Gree took 3 billion in profits and used good products to crack down on inferior products. Although we sold 10 billion on the day of' double 11', we also lost a lot of money. Of course, I think the money is worth the loss, at least it can make the inferior products hard and make him realize his responsibility in the process."


Gree, an industry giant, lowered its price, which has had a great impact on brands such as Ox.  December 12 is the third time Gree Electric has announced a concession.  Statistics obtained by the reporter of national business daily from AVC show that in the week when Gree Electric announced its second big promotion (48th week, November 25 to December 1), the market share of Gree Air Conditioning nationwide rose 5.55 percentage points year on year, that of the United States rose 5.5 percentage points, and that of Oaks fell 2.18 percentage points year on year.  In the online air conditioning market, Gree accounted for 34.03%, up 12.68 percentage points year on year.  U.S. city accounted for 32.15%, up 8.43 percentage points from the same period last year, while Ox city accounted for 7.25 percentage points lower than the same period last year.  Haier's online and offline market share also showed a year-on-year decline.


Perhaps feeling the pressure, the reporter noticed that this year's "double 12" brand, oaks, Haier and other brands have also made greater efforts to promote air conditioning.  Reporters learned from Oaks' Tmall flagship store that Oaks has launched a "20: 00 real 50% discount buying" campaign for a variety of air conditioners, of which Oaks 35Q1 is 1.5 large and Class I energy-efficient variable frequency air conditioners sold for only 949 yuan per set at 20: 00 p.m. on the 12th. The original price of the above air conditioners was 2699 yuan per set on weekdays.  The acquisition price of 949 yuan/set is a 50% discount on the original price of 2699 yuan/set reduced by 800 yuan/set. The profit margin is amazing.


Haier Tmall's official flagship store also showed that on the day of the "Double 12", Haier Air Conditioner launched promotional activities such as "1,600 yuan less 500 yuan", "3,000 yuan less 900 yuan" and "50% discount at 20 o'clock".  According to the official flagship store of Midea Tmall, Midea's "Cool Gold" is 1.5 pcs large and the first-class energy-efficient variable frequency air conditioner has also launched the first 50 "50% discount for real and 1049 yuan for hand".


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