Author | Meng Xiao The main text contains 5192 words, with an estimated reading time of 13 minutes. BYD Qin is rightly called China's industrial miracle.

The main text consists of 3720 words, with an estimated reading time of 10 minutes.

Midea has already entered the field of automotive electronics.

Recently, L60, the first model of Leedar, was officially released. What the industry is more concerned about is its embedded car refrigerator. This product is currently the industry's largest embedded full-featured car refrigerator, and surprisingly, the manufacturer is Midea Group. It is worth noting that this refrigerator is a product jointly created by Midea and the automotive industry.

In mid-September, Midea Group successfully listed on the Hong Kong Stock Exchange, adding another Fortune Global 500 company to the Hong Kong stock market. This time, Midea Group's total number of H shares issued globally was 5.66 billion shares (before the exercise of over-allocation options), with an issue price of HK$54.8 per H share, resulting in an estimated initial fundraising of approximately HK$31 billion for Midea Group. This fundraising amount of HK$31 billion also set a record in the Hong Kong stock market in nearly three years. Midea Group has added a new stock to the "A+H" shares, and according to BT Finance statistics, there are now 149 "A+H" shares listed up to date.

On September 17, the opening price of Midea Group's stock was HK$59.2, up 8%. The stock price then rose by more than 9% at one point, closing the day with a gain of +7.85%. Following this, the stock saw a continuous rise for the next 5 trading days, and as of the close on September 26, the closing price of Midea Group's stock was HK$77.25, with an increase of 30.5% from the issue price.

On September 26, Midea's market capitalization on the Hong Kong Stock Exchange reached HK$583.9 billion, while at the same time, China Petroleum & Chemical Corporation's market capitalization on the Hong Kong Stock Exchange was HK$584.2 billion. Midea Group's market capitalization has now caught up with Sinopec. Midea Group's market capitalization in Hong Kong exceeds that of Netease at HK$451.4 billion, Postal Savings Bank of China at HK$470 billion, and Nongfu Spring at HK$349.8 billion. Midea's total market value on the Hong Kong Stock Exchange has entered the top 20 in terms of market capitalization.

On the third day after Midea Group's listing on the Hong Kong Stock Exchange, Nio's sub-brand Leedar officially released its first model, L60. Midea's embedded, full-featured car refrigerator has also attracted strong industry attention.

Midea Group stated that this refrigerator is also a product created in collaboration with the car company Nio. The LeDoo L60 is aimed at household users, and household appliances such as refrigerators also target household users, with both parties coming to an agreement. The product design and functions also highlight a high degree of fit. Against the backdrop of slowing growth in household appliances, entering the rapidly growing new energy vehicle track injects new growth points for Midea Group's future development.

The cooperation with new energy vehicle companies has significantly stimulated the capital markets. Midea Group's A-shares saw an extremely rare 11-day consecutive rise, followed by a 6-day consecutive rise after the release of the new Nio LeDoo car. Both Hong Kong and A-share prices rose sharply. As of the close of the A-share market on September 26, Midea Group's stock price rose again by 4.92% to 73.56 yuan per share, with a 19% increase since September 9, and a total market value of 556.3 billion yuan.

Midea, which does not produce cars, has better plans.

Nio's founder Li Bin and Midea Group chairman Fang Hongbo are both from Anqing, Anhui Province and are well-known entrepreneurs in China. Previously, the two did not have many interactions, but on April 10 of this year, they appeared together at Midea Group's Weiling Auto Parts Anqing Factory and filmed a short video together: officially announcing Midea's strategic cooperation agreement with Nio.

As Lei Jun frequently promotes Xiaomi cars, Li Bin has also begun a personal marketing approach, continuously creating short videos to increase popularity. The cooperation video of Li Bin and Fang Hongbo has attracted a lot of attention. Also drawing market attention is the strategic cooperation agreement between Midea Group and Nio.

According to the disclosed agreement, Midea Group and Nio will carry out extensive cooperation in the field of new energy vehicle components, automation production, digital construction, low-carbon sustainable parks, and intelligent logistics. In particular, the two parties will deepen their cooperation in the field of auto parts and new technology development, jointly researching and developing products like air conditioning compressors, electric drives, integrated thermal management, and in-car refrigerators.

The agreement also includes extended cooperation in the industrial sector, with collaboration in industrial robots, automotive and general industrial automation solutions, digital management, and even logistics. Li Bin and Fang Hongbo have high expectations for their cooperation, with Fang Hongbo openly expressing his hopes, stating, "I hope that in the future, every Nio vehicle will have auto parts produced by Midea in Anqing."

Both Li Bin and Fang Hongbo have high hopes for the cooperation between the two parties. Fang Hongbo does not hide his expectations, saying, "I hope that in the future, every Nio vehicle will have auto parts produced by Midea in Anqing."

If BYD autos only equip Nio's vehicles with air conditioners from Midea, it is very unlikely for the two big shots to personally step in, but the deep collaboration between the two companies shows their expectations of each other. Nio needs the endorsement of a powerful partner, especially in the increasingly fierce competition in the new energy vehicle industry, while Midea Group is seeking new growth points in the market environment where the scale of domestic appliance retail is declining year by year.

To cope with the soft market in the home appliance industry, Fang Hongbo began to bet on the automotive parts track. In 2018, Midea Group established Weiling Automotive Parts Co., Ltd. in Anqing, focusing on incremental parts for new energy vehicles, with a key focus on three directions: electric drive, thermal management, and chassis execution system-related products. By 2022, they had supplied parts to Ideal and Weimar, and the revenue from the automotive business had reached several hundred million yuan, still far from Midea Group's goal of hundreds of billions. In June 2023, Midea Group signed a strategic cooperation agreement with Xiaopeng, one of the new forces in car manufacturing, in addition to Nio, Midea Group has taken over all three new forces in car manufacturing. Traditional car companies such as Jianghuai have also become partners of Midea Group.

As the leader in the domestic white goods industry, Midea Group, although not in the automotive manufacturing industry, has essentially joined the automotive supply chain. With 'refrigerators, color TVs, large sofas' being standard equipment for new energy vehicles, along with energy storage business, the cooperation between Midea Group and new energy vehicle companies seems to be aiming for more than just refrigerators.

The vast market of new energy vehicles.

In 2014, the emergence of new players like Nio and Xiaopeng officially kicked off the rapid development of new energy vehicles in China. After ten years of development, as reported by the China Economic Net, as of June 2024, the total number of new energy vehicles in China has reached 24.72 million vehicles, accounting for 7.18% of the total number of vehicles, and this proportion is increasing year by year. Pure electric vehicles account for a large proportion of new energy vehicles, reaching 18.134 million vehicles, accounting for 73.35% of the total new energy vehicle sales.

These are just historical data. The development of new energy vehicles has been accelerating since the beginning of this year. In the first half of 2024, sales of new energy vehicles reached 4.397 million vehicles, a year-on-year increase of 39.41%, setting a historical record. After entering July, the strong momentum of new energy vehicles continued. In that month, the production of passenger vehicles reached 1.782 million vehicles, with sales of 1.72 million vehicles. Among these, the sales of new energy vehicles reached 0.878 million vehicles, accounting for 51.1% of total sales. This was the first time that new energy vehicles accounted for over 50% of total sales. In August, China's sales of new energy vehicles reached 1.092 million vehicles, accounting for 53.9% of total passenger vehicle sales, compared to a sales ratio of approximately 36.1% in the same period in 2023, showing the current popularity of new energy vehicles.

It is the booming market of new energy vehicles that has led to strategic agreements signed between Midea Group and car-making newcomers as well as traditional car companies. As traditional car companies like Jianghuai are also entering the new energy vehicle market, for Midea Group, which is interested in entering the automotive electronics track, the new energy vehicle industry is a piece of cake with unlimited potential. Midea Group itself does not manufacture cars, but it can make money from car companies in a model similar to the automotive supply chain.

In 2018, Midea Group's Weiling Automotive Parts Co., Ltd. was established, and in 2019, they began to plan the car-mounted refrigerator project. It only took Midea Group 4 years to achieve successful cooperation results with Nio's vehicles.

As the first new force in car making to announce cooperation with Midea Group, Nio sold 0.16 million vehicles in the whole year of 2023, with a growth rate of 30.7%. As of now, Nio has accumulated sales of about 0.58 million vehicles. From January to August 2024, Nio's sales volume was 0.1281 million vehicles. During the same period, Ideal and Xiaopeng sold 0.2881 million and 77,200 vehicles respectively. The combined sales of Nio, Xiaopeng, and Ideal are nearly 0.5 million vehicles. Currently, all three companies have signed strategic cooperation agreements with Midea Group, and with other companies like Wenshi and Jianghuai, Midea Group's monthly sales volume of cooperative companies exceeds 0.6 million vehicles.

Automotive media person Zhang Zhiyong believes that it is a smart move for home appliance companies to join the automotive supply chain. "Although the market for new energy vehicles is huge, only BYD and Ideal are profitable among many car companies, while Nio has lost over 100 billion and Xiaopeng has also lost hundreds of billions, with losses continuing. The new energy vehicle industry has become an industry with high investment and slow returns. By not producing cars and joining their supply chain, risks of heavy assets are avoided, while high returns can still be obtained. Once, as Fang Hongbo hoped, 'Nio cars all use Midea's products,' Midea Group could be the biggest winner in the new energy vehicle market.

A New Track Outside the Overseas Market

Midea Group has performed exceptionally well in overseas markets and has become a home appliance company with a high proportion of revenue from overseas markets. In 2023, the revenue from overseas markets accounted for 41%. By continuously acquiring high-quality companies overseas, Midea has rapidly expanded its global market. Previously, enterprises that were acquired with huge investments have now shown returns.

For example, Midea Group acquired KUKA, an industrial robot company in Germany, in 2016 for 115 euros per share, with a premium of 60% and a total investment of 31.5 billion yuan. KUKA had been in losses, but in 2023, KUKA reached a key turning point, achieving record high revenues and profits, finally emerging from losses.

In fact, there were signs that KUKA would emerge from losses. In 2020, KUKA's sales in China were approximately 3.7 billion RMB, accounting for about 15%, and three years later, with orders from leading manufacturers like BYD and Nio, the revenue in China nearly doubled, accounting for over 22%. In the booming environment of the new energy vehicle industry, there is widespread use of KUKA industrial robots, and profits are only a matter of time.

Apart from overseas business, Midea Group has set its sights on in-vehicle home appliances, not only for new energy vehicles but also for trucks and fuel vehicles. This marks a new breakthrough in the home appliance industry entering a period of stock.

With the improvement of people's living standards and the increasing demand for a healthy lifestyle, there is a growing need for in-vehicle home appliances during long-distance travel. Especially for truck drivers, due to their unique work nature, they spend most of their time in the vehicles, and currently there are millions of truck drivers in China. The huge demand from this large group will become a growth point that Midea Group cannot ignore. At the same time, the popularity of camping and other leisure vacation methods has been increasing, and the rate of RV penetration has also been rising year by year, bringing a large number of scenarios for the use of in-vehicle home appliances.

From home scenarios to vehicle scenarios, the transition of scenarios is not a direct product conversion, requiring a large amount of research and development investment. For this reason, midea group co., ltd has invested a large amount in research and development. The financial report shows that since 2020, midea group co., ltd has invested over 10 billion yuan in research and development each year. In the past three years, the growth rates of research and development investment were 18.74%, 5.02%, and 15.57% respectively. The research and development investment has reached nearly 40 billion yuan, with research and development expenses accounting for 3.5%, 3.7%, and 3.9% of total revenue, showing a continuous increase trend in research and development proportion. Meanwhile, during the same period, the research and development expense growth rates of its rival Gree were 4.03%, -0.24%, and 7.65%, with research and development expenses accounting for 3.3% in each year. It is evident how strong midea group co., ltd's research and development efforts are.

With the continuous growth in overseas market sales and the turning losses to profits through overseas brand acquisitions, in the era of stock appliances, midea group co., ltd has set its sights on in-vehicle home appliances. Whether it is new energy vehicles or other vehicle models, they represent specific usage scenarios for in-vehicle home appliances in the future. Perhaps this is also the secret to midea group co., ltd's ability to firmly hold onto the leading position in the household appliance industry.