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Letter to Shareholders
“Go for our dreams no matter how difficult it will be”, we have kept that in mind ever since the beginning of 2016.
In a changing era with global economic turmoil and China’s economy in a “New Normal” state, we have never stopped chasing our dreams. With the courage to transform, the pragmatic approach, the hard-working spirit and the enthusiasm in our genes, as well as a market-oriented and open mechanism, the spirit of pioneering and sharing, we were able to deliver an impressive performance for the past 2016 and move closer to achieving our dreams.
The targets we set for 2016 were all achieved. We enjoy a higher position in this industry with the improved efficiencies, optimized asset structure and growing overseas business. Our efforts in global operations and asset allocation have produced remarkable results. The acquisitions of Toshiba Lifestyle, KUKA, CLIVET, SERVOTRONIX, etc. around the world are key steps of Midea advancing towards a global technology group of consumer appliances, HVAC and robots & automation. Also, Midea has earned support and recognition from all its shareholders and the capital market, with its market cap up 34% for 2016 and exceeding RMB200 billion for the first time. In this year, Midea made it to the Fortune Global 500.
However, with the world now changing much faster than one might have imagined, the fittest can never always be the fittest, and an enterprise has to keep adapting itself to changes for survival and growth.
In 2017, we will “Keep the Wind in Our Sails”. We will maintain our strategic focusers, face our weaknesses with a humble heart, keep working hard and believe that our efforts will be rewarded someday. After decades of development, we are confident about Midea’s future. It WILL become a global technology enterprise. To make it happen, we will remain pioneering, hold onto Midea’s spirit and build a stronger and better Midea.
“Leading Products, Operational Efficiency & Global Operations” has been our core strategic focuses for the past few years, and we will stick to that with the following measures for a long time to come:
Firstly, we will keep developing leading products by ensuring continual inputs to R&D, as well as improving the R&D structure, R&D environment and innovation mechanism. Meanwhile, we will strengthen R&D on a global basis by bringing in leading R&D talents for achieving technology breakthroughs and better quality products. In this way, we will be able to increase the core competitiveness of all our products.
Secondly, we never stop pursuing operational efficiency. We will unwaveringly promote lean management through our whole value chain, as well as the MBS (Midea Business System) and the “T+3” production strategy based on customer orders. With the end and retail demand as the center, we produce accordingly, distribute rapidly, improve the product mix, increase channel efficiency and reduce inventories so that our business cycles could be further shortened and our cash flows further improved.
Finally, we will stick to global operations and continue with our efforts to expand in regional markets so as to build up an international operation system. By promoting business growth of our existing operations around the world and increasing the weight of overseas business, we are trying to rebuild and optimize Midea’s international system at every level and link.
In the meantime, we will continue to foster new business. With KUKA as the platform, we will work on industrial robots, commercial robots, service robots and artificial intelligence, as well as increase investment in key components and application control in the field of industrial automation.
We will try to achieve greater efficiency by streamlining the organization, further improving the appraisal mechanism for employees and reforming the incentive mechanism, to make sure that the organization is in line with our strategies and objectives.
With dreams, Midea takes only a few decades to grow from a workshop to a Fortune Global 500 company. Through hardship and changes, Midea is now in its golden age.
We have achieved so much in the past, and we will achieve so much more in the future. Keeping in mind that we still have far to go to create long-term competitive edges and further transformation, in 2017, we will continue to forge valiantly ahead with our dreams and try to achieve greater success.
Finally, we would like to express our gratitude for the support and trust of all our shareholders. We wish to share our success with you!
The Board of Directors of Midea Group Co., Ltd.