Offline dealers complain about "meagre profits" Gree Electric Appliances performance is in a "struggle" market improvement or lack of foundation

Benefiting from the overall recovery of the air conditioning industry, Gree Electric Appliances (000651.SZ) achieved a year-on-year increase in revenue and net profit in the first half of the year, and its overall performance fell within the expected range. However, compared with 2019 before the outbreak, the company is still in a state of decline and its performance has not yet recovered. In the secondary market, Gree Electric Appliances fell by nearly 25% this year, and the latest market capitalization has also shrunk by more than 30% from the peak of more than 400 billion yuan during the year. What on earth made investors make such a choice?

Over the past few days, a reporter from the Financial Associated Press has learned through field visits and dealer research that Gree Electric Appliance's much-watched channel reform is still making a difficult leap forward, and offline dealers generally complain about "meagre profits." and online sales have also pulled down Gree's overall gross profit level. Under such circumstances, different dealers also differ on the choice of payment in the new cold year, and reveal their worries about the air-conditioning market in the short term. There is an analysis that points out that in view of the market saturation and regional rationality of consumption, the air conditioning market will improve or lack of foundation in the short term.

Online and offline "fight in the ring" dealers complain about "meagre profits"

The online trend of the home appliance industry, and even the national retail industry, is an indisputable trend. According to Oviyun.com, the proportion of online zero sales of H1 air conditioners in 2021 has reached 55.3%, more than 50%. In the final analysis, the channel adjustment implemented by Gree Electric Appliances in recent years is to comply with the trend and keep the market share, but the negative impact can not be ignored.

An offline dealer who has been buying and selling home appliances in Shandong for more than 20 years laments, "the biggest feeling is that profits are thin, and there may be reasons for competition among similar brands, the impact of the epidemic, the rise of raw materials, and so on." now the key seems to be to take low prices as the king. "

"now the idea of the manufacturer is to carry out both offline and online at the same time, and Gree has also begun to make efforts online in the past two years. However, because the online products are generally low-end, mainly engaged in price war, so now (manufacturers) can only produce some cheap machines. For example, Gree's machines used to be double-row, but now some of the products are also single-row. The purpose is to reduce the cost, and then the price will be relatively cheaper. "

Another dealer who has been engaged in the home appliance industry for 19 years in Tangshan, Hebei Province, told reporters, "the sales and profits of offline channels are 'double decline'." In our physical stores in ordinary villages and towns, the annual sales of air conditioners alone can reach more than NT $2 million, but now it is only NT $1 million. If the profit of a single unit could reach 400, 500, 500 or 600 yuan in the past, but now the profit of a single unit is only 100 to 200 yuan, and even the high-end model is only 300 to 400 yuan. "

A number of dealers called on manufacturers to pay attention to the interests of offline channels. Some dealers revealed that a well-known air conditioning brand has cancelled offline agents in recent years, mainly online, but recently began to open up offline channels but repeatedly frustrated. "it has not made good progress in opening up offline channels because it has lost the hearts and minds of offline dealers and brought profit harm, and it is too difficult to recover after losing credit," he said. "

Based on the existing perception of online goods in the consumer market (equal quality, lower price), manufacturers' online channel is generally in pursuit of sales volume. As the above-mentioned dealers said, as the channel structure becomes more and more tilted online, the profits of offline dealers are eroded, and the gross profit level of manufacturers is also affected.

Take Gree Electric Appliance's semi-annual report disclosed on the evening of the 22nd as an example. Although the net profit of Gree Electric Appliance reached 9.491 billion yuan in the first half of this year, it still failed to reach the level of 13.816 billion yuan in the same period in 2019. In addition, the overall gross profit margin of Gree Electric Appliances in the first half of the year increased slightly by 2.63 percentage points compared with the same period in 2019, but still decreased by 7.28 percentage points compared with the same period in 2019, among which the gross profit margin of the air conditioning business declined continuously.

There are differences in offline stock preparation in the new cold year, the market is improving or there is a lack of foundation.

Gree Electric Appliance semi-annual report revealed that the time overlaps with the opening time of the new "cold year" in the air-conditioning industry, and the willingness of offline dealers to make money and prepare goods has attracted particular attention.

The above-mentioned offline dealers in Shandong told reporters that the local Gree central air conditioners have been opened, but household air conditioners have not yet been opened. "although Gree used to like to press goods for dealers, but now they do not press goods, and no one will press too many goods in, and no one around them has adopted the strategy of large-scale restocking."

The above-mentioned dealers in Tangshan, Hebei Province, also said, "including agents, the following dealers, are to reduce inventory to a minimum, there is a certain degree of universality."

Most dealers think that they dare not bet on too much goods because of the uncertain market. If the market sales are not as expected, "it is also troublesome for manufacturers to find the price difference, and it is not necessarily when to cash it."

A senior industry insider, who spoke on condition of anonymity, said, "the change in reserve is mainly due to the fact that Gree has changed the previous mode of making money and pressing goods." The first is to reduce the channel level, and the second is to change the price system. Gree used to use 'even in and out', that is, through rebates to dealers to trap dealers. In this model, how much profit a dealer can make in a year does not depend on how many machines you sell, but on whether you can call Gree the corresponding payment at the corresponding time node. But in the current model, profits mainly come from price spreads. "

"Gree may have taken up too much downstream cash in the past, but now the model is back to normal. For example, he may only ask you to hit 18% of the annual quota at the recent opening in Shanghai. Although the cash flow occupancy of manufacturers has decreased, it has a very good effect on the health of the entire channel system, because the flexibility of dealers has increased. So the manufacturer hopes that you can pick up goods in small quantities and enhance your turnover. " The person further pointed out.

At the same time, price has also become a key factor in the dealer's stock preparation strategy. The above-mentioned Shandong dealers told reporters: "the purchase of goods in the new cold year will increase, mainly taking into account the purchase price." The purchase price has increased by 11 points some time ago, and it may go up even higher in October. "

However, according to the information obtained by the reporter, the industry is relatively pessimistic about the "price rise" of air conditioners in the second half of the year.

The salesperson of the largest store in Guangzhou, a well-known home appliance store, told the reporter, "in the past, there were more people who bought high-end, but now the level has dropped. Originally, he wanted to buy four or five thousand, but this year it may be two or three thousand. The feeling is very obvious." It is estimated that it will not rise again in the second half of the year, mainly considering the strength of consumers. "

The above-mentioned dealers in Tangshan, Hebei Province, said, "on the whole, consumers' consumption behavior returns to rationality, seasonal purchases are less, and the saturation of the air-conditioning market is already quite high in both urban and rural areas."

Senior industry insiders said: "personally, I think the price of air conditioners want to go up again, unless the cost continues to rise, but at present it seems to be a little lack of foundation." Price increases are needed. The industry online predicts that the volume of air conditioners for the whole year will increase by only about four points, while at the beginning of the year, people predict that there will be more than double digits, or even more than 15, and the expected difference is too far. "