- Career Development
Precocious President of International HQ
President of Midea International Headquarters
Since joining Midea in 2003, Coobie Zhang has risen rapidly through the ranks to the position of president of the group’s International Headquarters. After graduating from Simon Fraser University in Canada, Coobie joined Midea as a sales representative.
He has had a variety of roles such as key account manager and regional sales manager for Residential Air Conditioning in territories as diverse as Latin America, Europe and Africa. In 2012 he became president of Midea International Division. He has achieved all this before turning 40. On June 25, he took the time to talk to several internal media about the current situation of the company.
Q: Group President Paul Fang this month gave a speech about remodeling our organization for the mobile internet age. How do you feel about his ideas?
A: We are certainly entering a new era. People’s lifestyles have changed radically in many parts of the world. The mobile internet is a tool of improved efficiency that has removed a lot of barriers to communication, and increased the speed while lowering the cost. We have to think as a company about how we can use this to bring new value to the consumer.
Our business model has not fundamentally changed since the pre-internet age. The company has always been about bringing cutting-edge products and satisfactory services to the consumer. However, many of our methods are undergoing major shifts.
Midea started life as a single-product company. The interaction ended when the customer bought the product. The internet age has created the potential for a new relationship between product and consumer. Many boundaries have been blurred. It takes more than just a good product to provide the consumer with a satisfactory experience.
When it comes to home appliances, they of course have to be functional and usable. Now there are many more considerations, such as convenience, malleability, and design. At the development, design and production stages, a manufacturer must always be thinking of the end user. We may need to think bigger and bigger, including considering the entire supply chain. Who should we cooperate with and how? How should we identify ourselves? If we think too conservatively then we are likely to get left in the dust.
We need to identify what new opportunities have arisen. Good things will happen to those who think and act quickly and ambitiously.
To make the most of the internet age, companies need to keep on top of what changes are going on in the industry and in the world. We cannot afford to restrict ourselves within our own little industry.
Simply put, right now our competitive advantage is our product range and the value it brings to customers. However, our model is outdated in the internet age. It may no longer be about what a single product brings to the consumer but a whole collection of products. We cannot build our brand simply on individual items, we need to use our product range to create an ecosystem. We need to transcend our industry and our traditional specialties, thinking about software as well as hardware.
Take Xiaomi for example: their flagship product is cellular phones, through which they can collect consumer data and use it to satisfy customer wants. This has already helped them move beyond the status of a single-product company. Of course, products are still the heart of a company, but to avoid being marginalized we need to think beyond mere hardware.
Q: Are overseas appliances manufacturers still ahead of us?
A: I think the United States and Japan are at the forefront of the industry because they are the best at utilizing internet technology. In China, we still have not found the way of marrying hardware with software that is ideal for the consumer. Amazon, for example, started life as an online market, but it has morphed into a brand with its name appearing on children’s clothes, batteries, and many other products. It made this possible by mastering the entire supply chain. It integrated channel, merchandise and brand.
For example, not only can you buy a washing machine from Amazon at the push of a button, they can deliver it promptly as well as access your data and know what else you might want by comparing you to other customers, putting them in pole position to satisfy your needs.
The American and Japanese companies are already leading the way with the Internet of Things. In the future, all of our products will be interoperable and suitable for a smart home, but this approach is still in its early stages. Having said this, China has phenomenal potential. If we invest well and think smart, we can still overtake our competitors because we are not actually that far behind.
Q: Does the Internet of Things already have a large presence in people’s homes?
A: Very much so, our sales team in America is dealing with this. It is already the case that people are controlling their windows, curtains and other traditionally non-electric items with their phones. Recently, when Paul Fang stayed in a hotel in Hong Kong, he could control just about any item in the room without getting out of bed – this is what the Internet of Things is already doing for us. In the future, cars will become smarter and a lot of traditional manufacturing will be taken over by automated technology. These trends are irreversible.
In the IOT age, as I said communication costs have been significantly reduced, physical distance is no longer a barrier of communication, acquaintance is not as important as before. Today I can reach any colleagues anytime anywhere, and tomorrow I will be able to do so with end consumers from different part of the world, or maybe even planets.
As for changes in the relationship between seller and buyer, there two implications for us: One is on product development. With IOT we are awarded with significant extension of opportunities, which could last the whole lifetime of the product, to engage with the users through built-in product, which can be leveraged to enhance consumer experience beyond a product itself, an integration of experience of both product utility and communication.
A superior product is the one which understands consumers better, the communication between a product and a consumer will become a new trend. The end-game winner would be the one who can effectively integrate the hardware and software experience in an unmatched user friendly way. It is a tremendous opportunity for everyone as well as a threat.
The second is related to organizational transformation. Internet technology will reshape drastically traditional distribution networks and corporate business models, a lot of organization functions can be consolidated across space, any in-house function or processes which lack efficiency compared with external ones will be replaced eventually. The whole competitive landscape will be completely reshaped; we will have to redesign the whole end-to-end value chain to achieve overall optimization. Excellence in one segment may not be transferrable to another. Openness and collaboration will be the key to winning this game.
Q: You say we are not that far behind our competitors, in terms of our future direction, will our Internet of Things strategy be mostly influenced by industry standards or something even broader?
A: Mobile platforms such as Android and ISO could hold the key to the future progress of the Internet of Things. If an individual company is unable to come up with its own integrated system, then the smart home could become dependent on open source technology. Standards will become more convergent and the number of resources that can be integrated on an open platform will increase.
Q: Is there a massive difference between Chinese companies and overseas companies in terms of resources and methods?
A: The development of the Internet of Things is a trend dependent on two things: technological progress and improvements in people’s lifestyle. In developed countries, internet technology has been present in people’s homes for years so the Internet of Things is a natural progression. Though China is a huge market, the cost of smart technology is more expensive compared to median income; so many people simply cannot afford it.
The market will mature and it has huge potential. Companies will be falling over each other to find ways of taking advantage of this. In places like America and Japan by contrast, a large percentage of the population can already afford smart home hardware and are interested in buying it. Therefore, those smart home markets will grow faster than China in the short term.
Q: Globalization is one of the core aspects of Midea’s strategy. Midea International Division, of which you were president, has been replaced by the Midea International Headquarters under recent departmental changes. Can you explain the reason for and implications of this? How will the international headquarters help us fulfill our ambitions?
A: In the past, our approach to globalization was like a car that was trying to travel the world. Our recent departmental changes are like the construction of a highway that will help all kinds of cars get to where they want. Under our international strategic framework, Midea International Division was an engine that drove some of our overseas businesses, but what we need now is an international infrastructure for overseas operations. The Midea International Headquarters will provide guidance that will help overseas subsidiaries and joint ventures to the extent that is necessary.
As a headquarters, what we wish to do is provide individual product divisions with a platform on which they can fulfill their global potential. They are, after all, the ones who have the technical expertise.
* This is a quote from Deng Xiaoping, the leader who oversaw China’s reform and opening up in the post-Mao era.
Q: How do markets like the United States differ from other markets such as Latin America and the Middle East?
A: The US is a very mature market. Markets are highly consolidated. Consumers are more sophisticated. This is different from emerging ones where consumers are more open to new brands and more price conscious rather than brand sensitive. Channels are not highly consolidated, meaning there are more opportunities for start-ups.
There is more flexibility in emerging markets. The entry barrier for a new brand is lower. Not everybody can comply with US standards. In emerging markets, the regulations are not as strict, which means more opportunities for newcomers.
In a mature market, your product strategies need to be fully developed and your products need to meet the highest standards. In an emerging market, products need to be cost competitive to attract the mainstream consumer.
Q: Does your experience as a regional sales manager inform your current job?
A: Yes, of course. My earlier jobs provided me with a lot of insight into the local consumers. You need to study the local culture and what the local consumer needs and how our existing line-up could be useful. This has paved the foundation for Midea’s brand strategy.
My experiences gave me significant exposure to diversified cultures and lifestyles around the world. Being versatile and flexible and thinking from other points-of-view are key to developing relationships, I believe trust is the foundation of business. This mindset is core to doing international business. The fundamental principle applies to both B2B and B2C, "understand your customer/consumer's need and create more value for them than our competition.
Q: In twelve years you have risen very fast to a high level in a very large company, do you often look to older colleagues for guidance?
A: Unfortunately no, we are a young operation staffed by young people, most of who were born in the 1970s or 80s. We are learning by doing as we don’t have a great deal of international experience.
We do benchmark studies of other Chinese companies and try to learn from their globalization processes. Alibaba, Huawei, Lenovo all have experiences we can learn from.
Q: What do you think are some of the biggest achievements of 2015 so far?
A: We have achieved internal alignment in our OBM strategy. In the last three years, MID has been a driving force. However, product divisions were not fully aligned with our long-term OBM strategy and divisions’ approach to investment reflected this. The biggest achievement is that we have more perception on this OBM strategy, which has a much greater return on investment.
Q: Our globalization drive could not be possible without the large number of employees working hard for the Midea family. Do you have anything special to say to these people?
A: In the Chinese market we can still see much room for growth, but we are currently facing a huge challenge. Our knowledge of how to set up systems that befit a global company is still in a preliminary stage. We need to be creative, innovative, fearless, and find the right road for us.
There are plenty of dragons to slay along the way. Sometimes we will feel like perishing. We are in the pioneering age of Chinese companies trying to establish themselves abroad. There is nobody to tell us exactly what to do. We can only teach ourselves.
It won’t be for the faint hearted, but the next ten years will make or break us. There is no textbook on what we have to do, so all I can say is: Go team!