Getting started
He Xiangjian was born in 1942 in Shunde in Guangdong – an area now well known for its electrical appliance factories. He worked as a farmer, before becoming an apprentice in a factory. In May 1968 he and 23 other Shunde residents raised Rmb5,000 ($730) to start a factory making plastic medicine bottles.
Big Break
By 1980 He’s factory had diversified into producing fan parts for a state-owned firm. He then launched the firm’s first electric fan, called the Pearl. In 1981 he purchased the Midea trademark, and renamed his firm.
Growth
In 1984 Midea started producing a plastic box fan, that could be used overnight, which it exported successfully to Hong Kong. It also sent a team to Japan to study production technologies. By 1985 it had begun to produce air-conditioners, and in 1993 it ranked third in China’s air-con market. In the same year it listed in Shenzhen.
Learning from Panasonic
Competition in the air-con business then saw Midea’s market share slip. So in 1997 He decided to introduce a ‘divisional’ structure modelled on Panasonic. Five divisions were created, each dedicated to a product area such as air-con, home appliances and compressors. This decentralised the decisionmaking process and led to improved results.
Need to know
Midea is focused on the white goods market and has avoided the temptation to diversify into ‘black’ goods such as mobile phones and TVs. But He reckons too that there is more than enough growth potential in the “great cake” of the domestic home appliance market to keep his shareholders interested.
To this end he has been acquiring other brands such as Little Swan to make washing machines and refrigerators. His goal is to hit Rmb120 billion of sales this year. Midea expects to generate 50% of its revenues overseas in 2010.
In his own words
“I walk a step or two behind rather than take half a wrong step.”
Succession
Late last year He handed over company control to professional managers and his groomed successor, Fang Hongbo, who replaced him as chairman. Contemporary Manager magazine says that this is an unusual step for old-school entrepreneurs, and that He has set an interesting example. “I have solved the succession problem,” said He, who now has more time for his great passion: golf.
Wealth
He ranked 17th on the 2009 Hurun rich list with Rmb23 billion.
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