According to the research of CICC, the demand of China’s home appliance market experienced a boom in 2017 and entered a depression in the third quarter of 2018. The growth of various categories generally slowed down or even declined. 2019 will continue to face the negative impact of real estate cycle and economic cycle.

To make matters worse, according to the database of China Commercial Industry Research Institute, the national output of room air conditioners from January to February 2020 was 16.285 million, a year-on-year decrease of 40.2%. In the revenue of Midea Group (000333. SZ), the revenue of HVAC business (household air conditioning, central air conditioning, etc.) in 2018 was 109.395 billion yuan, accounting for 42.13% of Midea’s revenue, which is the largest business of the company. The sharp decline in the air conditioning market is bound to have a significant impact on the business in 2020.

Midea Group’s revenue exceeded 200 billion yuan in 2017, with a year-on-year increase of 51.3%. Since 2018, the growth of its main business has slowed down significantly. In 2018, Midea Group achieved an operating revenue of 259.665 billion yuan, a year-on-year increase of 7.87%; The net profit attributable to shareholders of listed companies was 20.23 billion yuan, a year-on-year increase of 17.05%. In the first three quarters of 2019, the company achieved an operating revenue of 220.918 billion yuan, a year-on-year increase of 7.37%, and a net profit attributable to the parent company of 21.316 billion yuan, a year-on-year increase of 19.08%.

At the celebration of Midea’s 50th anniversary, he Hengjian, the founder of Midea, said that “we hope Midea’s revenue can exceed 500 billion yuan”, and it is obviously difficult to achieve this goal in the near future to continue to maintain the development of the home appliance industry. To this end, Midea Group spent a lot of money to acquire KUKA in 2017 and took shares in Beijing Hekang Xinneng Technology Co., Ltd. engaged in new energy vehicle related business in 2019. On the one hand, Midea Group tried to reduce the cost of business operation through digital intelligence and explore the market abroad, on the other hand, it was looking for a market that could bring greater increment.

However, on the road of digitization and diversification, Midea still has many variables to overcome in order to achieve the predetermined goal.

Is the stalled KUKA unlucky?

In 2017, Midea Group invested 29.2 billion yuan to finally complete the tender offer for KUKA, a German industrial robot giant (94.55% of the shares). Since then, robots and industrial automation have been added to Midea’s edition. This is a key step for Midea Group to promote the “dual intelligence” strategy of “smart home + smart manufacturing”, promote the global development of the group, optimize the industrial layout and deeply and comprehensively layout the robot industry. It is also a star project acquired by Chinese capital at sea. This matter has attracted special attention from Germany, the European Union and even China’s industrial circles.

However, KUKA did not bring the expected growth to Midea.

According to the financial report of fiscal year 2018, KUKA’s sales fell by 6.8% year-on-year, from € 3.479 billion in the previous year to € 3.242 billion, and its net profit after tax was € 16.6 million, down 81.2% year-on-year. This decline continued in 2019, with sales falling further to € 3.193 billion, down 1.5%.


Analysis on the development of global industrial robot market

Analysis on the development of global industrial robot market


In view of the sluggish performance, Peter mohnen, the current CEO of KUKA, explained in the financial report that 2019 was a year full of twists and turns due to geo economic and political uncertainty and social unrest. The global economy is declining. The main users of industrial robots are the automobile industry and the electronics industry. However, affected by the economy, the automobile industry is reluctant to invest, resulting in a decline in sales.

As early as November 2018, KUKA announced the resignation of then CEO Dr. till Reuter. Till Reuter entered KUKA in 2009 and led the company to rise from the economic crisis. When there was a sharp decline in performance in 2018, till Reuter’s resignation had something to do with it.

In the financial report, KUKA explained that this situation was due to the economic slowdown in the fourth quarter of 2018, which affected KUKA’s two strategic focus markets: automotive and electronic industries, and more than half of the company’s sales revenue came from these two industries. Another factor is China’s economic slowdown, which is a very important sales market for KUKA. The Chinese market has experienced the slowest growth year since the global financial crisis.

According to the earlier 2017 financial report, KUKA’s board of directors expected that the sales in fiscal 2018 would exceed 3.5 billion euros and the pre tax profit margin would reach 5.5%. This forecast was subsequently revised on October 29, 2018. At that time, KUKA’s expected revenue was 3.3 billion euros and the pre tax profit margin was 4.5%. In January 2019, the company’s forecast for 2018 sales revenue was revised to € 3.2 billion again, with a pre tax profit margin of 3.0%.

Midea said when till Reuters left that it would continue to support KUKA’s growth strategy, including developing the Chinese market, focusing on R & D, investing in digital and industrial 4.0.

However, after the change of command, KUKA’s financial report in 2019 did not perform better. Even the order volume, sales and even the performance in the highly expected Chinese market declined. The slight increase in profits was due to the reduction of expenditure by 48.8% and the reduction of 221 employees.


Analysis on the development of global industrial robot market


Before Midea acquired KUKA, the global sales of industrial robots had been on the rise. According to the prediction of the International Federation of Robotics (IFR), the global sales volume of industrial robots will reach 347000 units in 2017, with a growth rate of 18% compared with that in 2016, and the global annual sales volume of industrial robots will maintain a growth rate of nearly 15% in the next three years. By 2020, it will exceed 500000 units, with a total increase of nearly 1.7 million units.

Afterwards, IFR’s 2017 statistics showed that the total sales volume of industrial robots in 2017 was 387000 units, a year-on-year increase of 32%, and the development growth rate greatly exceeded IFR’s forecast. Among them, the demand for industrial robots in China grew the fastest, with an increase of 58%, reaching 138000 units. In 2018, the global installed capacity was 422000 units, breaking the 400000 mark for the first time, but the growth rate has slowed down, an increase of 6% over the previous year.

When KUKA’s performance fell sharply in 2018, the sales of its competitor ABB’s robot business increased by 13%.

Analysis on the development of global industrial robot market

Note: ABB’s 2018 financial report

Whether the decline of KUKA’s performance is due to market reasons or management reasons can be seen from the comparison of rise and fall.

Since 2013, China has become the world’s largest robot consumer for five consecutive years. The growth rate of China’s robot industry has basically remained above 20%, becoming an important force for the stable growth of the global robot industry. According to relevant data, 136600 industrial robots were added in the Chinese market in 2017, with a year-on-year increase of 60%, accounting for about one third of the global output.

IFR (International Federation of robots) said that one reason why China’s robot demand will continue to grow rapidly is that China’s robot density is still relatively low. In China, there are only about 68 robots per 10000 workers, while the robot density in South Korea is nearly 10 times that in China. In terms of robot usage density, the current leader is South Korea, with 631 robots per 10000 employees, followed by Singapore (488) and Germany (309). Globally, the average density of robots is 74 robots per 10000 employees.

According to IFR (International Federation of Robotics), 422000 industrial robots were deployed worldwide in 2018, of which more than one third were in China. The density of robots in China increased from 11 per 10000 people in 2009 to 140 per 10000 people in 2018, and 338 per 10000 people in Germany (2018). China’s high growth mainly comes from automobile manufacturers and electronic industry, which is an important pillar industry of China’s high growth.

In order to strengthen its market share in China, KUKA has established two industrial robot production plants in Shunde and Shanghai respectively.

However, IFR is not optimistic about the growth of global robot demand in 2019, and the figure given is 0%. The main reason for the decline of robots in the Chinese market is also the sharp decline in the demand of the automotive industry, but emerging application industries are emerging, such as metal processing, plastics and chemistry, food industry, etc.

In view of the current sluggish sales of industrial robots, Midea replied to the reporter of business school, “Despite the recent decline in sales, China is still the largest market for industrial robots in the world. KUKA not only plans to increase robot sales in China, but also further expand its market share. We expect that as long as the overall situation is stable and the investment environment is improved, China’s economy will be driven by growth. From 2020, KUKA will focus on the Asian market of SCARA robots KUKA plans to expand the new production facilities in Foshan / Shunde in the next few years to manufacture new robots, including joint robots and special types, such as SCARA and delta, which are specially developed for the needs of the Asian market. “

KUKA’s share price reached 186 euros in January 2017, while since 2020, KUKA’s share price has hovered below 40 euros.

Beautiful dream of building a car again?

On March 26, 2020, Midea Group issued a suggestive announcement on the acquisition of the controlling interest of Beijing Hekang Xinneng Technology Co., Ltd. (hereinafter referred to as Hekang Xinneng). The announcement said that Midea HVAC, a subsidiary of Midea Group, acquired 18.73% of the shares of Hekang Xinneng and was entrusted to hold 5% of the voting rights of the company to become the controlling shareholder of the company, with a total investment of 743 million yuan, triggering speculation about Midea’s “cross-border car making” again.

According to the official website of Hekang Xinneng, the company was founded in 2003, specializing in industrial automation control and new energy equipment, and was listed on Shenzhen Stock Exchange on January 20, 2010. Its business covers industrial automation, new energy vehicles, energy conservation and environmental protection.

As early as 2003, Midea Group entered the field of bus manufacturing. Midea successively acquired Yunnan bus factory, Yunnan Aerospace Shenzhou automobile and Hunan Sanxiang bus group, and built manufacturing bases in Kunming and Changsha. However, in 2008, Midea announced that it had failed to build cars. Since then, the two manufacturing bases of Midea changed hands, of which Changsha automobile production base was taken over by BYD with 108 million yuan.

On March 27, Midea HVAC disclosed the detailed report on changes in equity. After the information disclosure, Hekang Xinneng’s share price rose by the limit for five consecutive days.

On April 7, hekangxinneng received an inquiry letter from the management department of gem company of Shenzhen Stock Exchange. Among them, some media reports interpreted the acquisition as Midea Group’s expansion of new energy vehicle business.

Hekang Xinneng replied that the company’s new energy vehicle related businesses mainly include three categories: core parts of new energy vehicles, charging piles and smooth operation. It is mainly composed of Wuhan Hekang Power Technology Co., Ltd. (hereinafter referred to as “Hekang power”), Wuhan Hekang Intelligent Electric Co., Ltd. (hereinafter referred to as “Hekang intelligent”) and Wuhan Changdi Technology Co., Ltd. (hereinafter referred to as “Changdi company”).

The core parts business of new energy vehicles is mainly carried out in Hekang power. The company provides key parts and power system assemblies of new energy vehicles, as well as overall solutions for vehicle manufacturers.

The charging pile business is mainly carried out by Hekang intelligent, which provides an overall solution for the intelligent charging station of new energy electric vehicles and its important equipment systems.

Chang’s operation business focuses on the comprehensive operation of urbanization and provides overall solutions for car owners, car factories and business partners. There are two sub sections: Chang’s charging and Chang’s car rental.

Hekang Xinneng said in the inquiry letter, “the company has not formulated the direction for the future development of new energy vehicle business with Midea HVAC, and will timely fulfill the relevant information disclosure obligations according to the actual progress in the future.”

Midea replied to business school on this question: “This equity change is based on the information disclosure obligor’s optimistic outlook for the future development of the listed company. Hekang Xinneng’s industrial frequency converter and servo system have great development opportunities under the background of industrial upgrading, energy-saving transformation and new infrastructure construction, and will further strengthen the industrial layout of Midea Group in the field of industrial automation and power electronics software drive, so as to improve the industrial competitiveness Dynamic industrial chain coordination to expand the tob business scale of Midea Group. “

Hekang Xinneng’s frequency converter helps to accelerate the frequency conversion process of Midea’s large central air conditioning. At the same time, with the help of Midea’s advantageous resources in HVAC and building control, it will further expand new application fields. Hekang Xinneng’s energy conservation and environmental protection, new energy vehicles and other businesses will also increase the diversity of Midea Group’s business. “

However, according to the revenue and proportion of the company’s new energy vehicle business in the last three years released by Hekang Xinneng, the company’s business continues to decline.


Analysis on the development of global industrial robot market


Looking at the financial situation of Hekang Xinneng since its listing, the revenue and net profit fell sharply in 2017, with a huge loss of 256 million yuan in 2018. Fortunately, according to the 2019 performance express disclosed by Hekang Xinneng on February 28, the operating revenue in 2019 was 1.305 billion yuan, a year-on-year increase of 8.15%; The total profit was 19.16 million yuan, a year-on-year increase of 107.50%.


Analysis on the development of global industrial robot market


Midea’s clear strategy for 2020 is “two comprehensiveness”, namely “comprehensive intelligence” and “comprehensive digitization”. Midea Group began to unify and restructure its IT system in 2012, and began to build + Internet, digital transformation and industrial Internet platform in 2015, forming a mobile app and online digital collaboration capability of the whole value chain. In some Midea factories, the improvement of supply chain management efficiency is particularly obvious.

Midea’s industrial Internet is not only used internally in Midea, but also promoted to more than 200 large and medium-sized enterprises through its Midea cloud intelligence, covering more than 40 industries. Guangdong yueyun Technology Co., Ltd., led by Midea Group and established by several units, carries the work of Guangdong Industrial Internet Innovation Center, outputs mature solutions to small and medium-sized enterprises in all walks of life, and helps enterprises get on the cloud platform.

However, according to relevant media reports, the revenue of Meiyun Zhishu in 2018 is about 350 million yuan, and the target in 2019 is 400 million +, which is still very small compared with the volume of more than 200 billion.

Responsible editor; zl

Leave a Reply

Your email address will not be published. Required fields are marked *