Chinese appliance maker Midea grows web sales 150% in 2014
April 2, 2015 11:45 AM
Midea Group,a major Chinese appliance manufacturer and retailer, generated 10 billion yuan ($1.6 billion) in web sales in 2014, up 150% from 4 billion yuan ($64.5 million) a year earlier, according to its 2014 annual report released this week. The company also reported total sales of 140 billion yuan ($22.6 billion) and profit of more than 10 billion yuan ($1.6 billion).
The company produces its own branded products, including air conditioners, refrigerators and washing machines, in 16 factories in China. Midea also operates six overseas factories, one each in Vietnam, Belarus, Egypt, Brazil, Argentina and India.
In 2014, Midea created a sub-company to streamline its online businesses. Like some top consumer brands in the Internet Retailer 2015 China 500, Midea doesn’t operate its own e-commerce site, instead selling through such big online marketplaces as JD.com and Tmall.com. The company also works with about 200 resellers that sell Midea goods on marketplaces to reach more online consumers.
JD.com is No.1 in the Internet Retailer 2015 China 500. Alibaba Group Holding Ltd., the operator of Tmall.com, is not ranked in the China 500 because, like eBay Inc., it is not a retailer but a platform that connects merchants with consumers.
Midea attributes some of its e-commerce success to connecting its bricks-and-mortar stores with its online stores on marketplaces. The company expanded its offline retail network to 1,900 stores last year from about 500 stores in 2013 and revamped its computer systems so that it could fulfill online orders from those retail locations.
The company has developed more than 30 appliance products that can access the Internet, such as Internet-connected air conditioners that consumers can control temperature via a mobile app.
Midea and Chinese smartphone maker Xiaomi Inc. agreed last year to work together to develop more Internet-connected products, the company says.
“Appliance makers and consumers have become connected directly by the Internet, and consumers have become more important in product development,” a Midea Group spokesman says. “Also, the mobile Internet enables home appliances to connect to the web. Midea can’t build this online platform alone, and we have to partner with other Internet companies.”
Midea also is expanding beyond China. The company reported the number of its overseas retail outlets reached 3,800 in 2014. Midea also reported its total sales in Latin American grew 35% and India, 42% in 2014.
The company operates a branded store on Amazon.com in the U.S. and plans to open a research and development center in Louisville, Ky., to develop products better suited for U.S. consumers.
Midea said its goal in 2015 is to sell about 16 billion yuan ($2.6 billion) worth of products online by investing more in online data analysis, loyalty programs and social media marketing.
Household appliance sales keep growing steadily in China. According to the Ministry of Commerce of China, appliance makers increased sales by 12.4% in January and February, compared with 7.3% in a year ago. The Ministry of Commerce says the major market drivers are urbanization and increasing demand for Internet-connected appliances.