Internet & Tech

Flat battery

Does air-con tycoon regret Yinlong purchase?


Dong Mingzhu: suing Sun and Wei

When Xi Jinping embarked on his high-profile ‘Southern Tour’ in October, his first stop was a factory run by Gree Electric Appliances, China’s leading air conditioning manufacturer.

Xi took the chance to hammer home his message that China needs to be more self-reliant. “Manufacturing is the key to the real economy and the core strength of manufacturing is innovation, or the control of core technology,” he said.

It must have been music to the ears of Gree’s chairwoman, Dong Mingzhu.

As WiC has reported before, Dong is on a mission of her own: to reduce Gree’s reliance on sales of air-conditioners. So far, this strategy has yet to yield too many tangible dividends. Indeed, as we reported in issue 408, shareholders have been upset by some of the consequences, especially Gree’s decision to abandon its 2017 dividend payment so it could invest in the semiconductor industry.

Gree makes so much money from air conditioners that it has historically paid out about 70% of its profits back to shareholders. During the first half of 2018, it resumed the dividend, but only for about 28% of profits. That has prompted a number of analysts, including HSBC’s, to cut their full-year payout forecasts from 60% to 40%.

Dong does not just want Gree to be a manufacturer, but a technological innovator. As such, she hopes to design the chips that will be embedded in white goods and appliances for the Internet of Things era.

Securities firm CICC says this may be no bad thing. “We think the firm will be unlikely to invest heavily in the semiconductor industry and may instead focus on chip design for air-conditioner machines,” it wrote in a recent research report.

Dong’s other big push has been into battery technology for the electric vehicle sector. But here she has had to go it alone. Her decision to pay Rmb13 billion ($1.87 billion) for battery producer Yinlong New Energy was shot down by Gree’s shareholders in the autumn of 2016. Undeterred, Dong invested her own money and today she is the company’s second-largest shareholder with a 17.46% stake, according to

But Dong was back in the headlines last week when it emerged that Yinlong is suing its former president Sun Guohua and former chairman Wei Yincang for embezzlement to the tune of about Rmb1 billion.

Both men were ousted after Dong took more management control and installed a new chairman, Lai Xinhua, a former CEO of Gree’s operations in Zhengzhou in Henan province. According to, the new management team discovered that Yinlong’s internal management was “chaotic” and that it was plagued by connected transactions.

Former chairman Wei has responded to Yinlong’s suit by launching one of his own, although the details remain unclear. Gree has distanced itself from the scandal, saying that it is not connected to the company.

In fact, the link has been getting more substantial: reports that four out of Yinlong’s six most senior vice presidents are from Gree and are now running key departments such as R&D, supply chain management, quality control and vehicle production.

When she first floated the idea of purchasing Yinlong, Dong described the company’s lithium-titanate battery technology as “gold buried in the desert”. However, not everyone agrees. While the batteries charge faster than lithium-ion equivalents. their energy density is lower, and they have yet to be adopted as mainstream battery technology.

Unusually for many businesspersons in China, Dong generally attracts very favourable comments from netizens, who applaud her fighting spirit.

“At least she has the courage to try new things,” reckoned one.

“There have been far too few Ms Dongs since ancient times in China. But there have been lots of spectators,” another added.

It also seems that Gree’s own ambitions to diversify into electric cars are undimmed as well. This week the domestic press reported that Gree may be setting up an EV joint venture with Chang’an Auto, one of Ford Motor’s joint venture partners in China.

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