China Consumer

Hard sell

Gree turns every single employee into a sales rep

Dong-Mingzhu-w

All out sales drive

There are no set rules for what makes a great CEO. Excelling at selling stuff certainly helps. Nearly 15% of Fortune 500 bosses started their careers in sales, according to a 2017 survey by Heidrick & Struggles, a recruitment firm. Cisco’s Chuck Robbins, Starbucks’ Howard Schultz and Oracle Corp’s Larry Ellison are some examples.

Over in China one of the best-known star-salesperson-turned-CEO is Gree Electric’s Dong Mingzhu (see WiC65). In the second year of her career at Gree in 1992, Dong had already managed to contribute one-eighth of the company’s turnover as a sales agent. Her many subsequent successes in closing deals not only allowed her to climb the corporate ladder but also catapulted the Zhuhai-based state-owned enterprise into China’s biggest air-conditioning manufacturer (see WiC155).

Her background explains Dong’s eagerness to cultivate salesmanship in Gree’s ranks – she has publicly professed that she associates the skill with accountability, tenacity, patience, empathy, diligence and integrity. Since February, Gree’s roughly 85,000 employees have all been tasked with running their own mom-and-pop stores online, selling Gree’s products, regardless of their positions at the company.

“[The campaign] shortens our distance with our customers as our staff can have more direct interactions with shoppers. The process also gives them better ideas of how to learn about and serve their customers,” Dong told China Economic Weekly this month, noting that her own digital store achieved Rmb2 million ($300,000) in sales in less than a month.

The latest campaign is meant to help the company reach its goal of generating Rmb600 billion in annual revenue by 2023, roughly tripling last year’s figure. The push will emphasise Gree’s diverse product range: all its staffs’ online stores are accessible only through Gree’s proprietary e-commerce platform which sells electric appliances that include rice cookers, dehumidifiers, steamers to wash cars and heat-pump tumbler dryers.

“The recognition of our other brands such as Tosot or Kinghome is not strong, and yet all home appliances will be more connected in the digital age going forward. We have developed so many products. We should let consumers know, which helps us gain market share,” said Dong, who wants Gree to be known for more than just air-conditioners.

Gree’s diversification began in 2014. It launched a mobile phone brand (see WiC338), invested in electric vehicles (see WiC345) and more recently backed Wingtech Technology, a Shanghai-listed contract phone maker, to buy a controlling stake in Dutch semiconductor company Nexperia.

Yet air-conditioners still accounted for 83% of Gree’s revenues as of the first half of 2018.

The pressure to sell other products has increased in recent years not only because rivals such as Haier and Midea are investing in Internet of Things technology, but also due to China’s cooling property market, which has slowed growth in the country’s air-conditioning sales.

Last year about 31.4 million AC units were sold, marking a 3.7% year-on-year growth versus 2017’s 11.2%, according to durable goods data provider Chinaiol. Government data paints a bleaker picture, showing that air-conditioner sales in major cities dropped 10.6% by units installed. The discrepancy between the two surveys could be attributed to a surge in export orders in the latter half of the year, as the country’s AC inventory reached 42.6 million units by October.

The impact of the market downturn has yet to be reflected on the books at Gree, which expected its full-year revenue to increase by 33% on the year to Rmb200-210 billion, according to a filing made to the Shenzhen stock exchange.

While China’s air-conditioning market is expected to be difficult (Chinaiol forecasts a shrinkage of 10% by unit sales this year), one thing that Gree can celebrate for now is winning its bet against Xiaomi. The wager dates back to 2013 when Lei Jun, Xiaomi boss, vowed in a TV show that his sales would exceed Gree’s in five years. Dong disagreed and raised the wager to Rmb1 billion (see WiC266). Her confidence paid off this week as Lei’s Hong Kong-listed consumer electronics company reported it had turned over Rmb174.9 billion in 2018, or 14% less than Gree. Now we’ll see how serious the bet really was…


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