The 2015 Annual Report of Midea Group Co., Ltd.
Midea Group Co., Ltd.
The 2015 Annual Report
26 March 2016
The 2015 Annual Report of Midea Group Co., Ltd.
A Letter to Shareholders
In 2015, with China’s economy in a “New Normal” state, the downturn in the household
appliance market has not only led to increased competition, but has also acted as a driver
to the restructuring of this industry. In the face of tremendous pressure from a volatile
market, Midea Group, a team with the courage to transform, together with its shared values,
goals and working practices, faithfully followed our strategic focuses of “Leading Products,
Operational Efficiency & Global Operations” and therefore has continued to strengthen its
reform.
Throughout 2015, our product competitiveness and operating efficiency rapidly increased,
our operational quality thoroughly improved, our overseas business network was further
optimized, our own brands were effectively developed and new progress was made in our
corporate governance. Meanwhile, we established our “Global Innovation Center”, trying to
build a globally competitive and multi-layered R&D system, continued with our strategy of
“Smart Home & Intelligent Manufacturing”, and actively entered into new businesses areas.
In 2015, while maintaining stable revenues, we achieved a year-on-year growth of 17% net
profit, a remarkable result amid the downturn in the household appliance industry.
Also during the year, Midea Group was included on Forbes’ List of Top 500 Global
Enterprises. In addition, Midea Group ranked 32nd on Fortune Magazine’s List of China’s
Top 500 Enterprises 2015, making it the leader in China’s household appliance sector. Also
Midea Group was placed 13th in China’s Top 500 Private Enterprises and 38th in China’s
Top 500 Manufacturers, continuing its performance as a leading manufacturer of household
appliances. In 2015, Midea Group became the first household appliance manufacturer in
China to be rated by the three major international rating agencies—Standard & Poor’s,
Fitch and Moody’s, with its rating results outstanding among both the global household
appliance makers and the domestic private enterprises. On the Ruifu Global List 2015 of
China’s Top 100 Brands in Value, our “Midea” brand was ranked 6th with a value of
RMB71.611 billion. Up to the end of 2015, we had a total of 21,581 granted patents.
2015 has been a wonderful year for us due to our hard work. In 2016, we will strive forward
to realize our dreams without fear!
The 2015 Annual Report of Midea Group Co., Ltd.
History tells us that dreams and ideals are indispensable to success. Dreams help to
succeed. How successful and big a business becomes is dependant on how many dreams
it carries. As such, the future of Midea Group lies within the dreams of all its employees.
With the world now changing much faster than one might have imagined, our different
lifestyles have been or are being changed. The traditional business model that relies on
large-scale effects and low costs can no longer work in the current household appliance
industry, leading to the boundaries of the industry becoming more vague. However, despite
all these changes, it is always the right choice to design and offer products and services
with value for consumers. In the evolution of commerce, it can be seen that all great
enterprises grew and thrived in the bleak periods of an economic cycle. In times of change,
the question of whether we will thrive or wane, unite as one man or fight each other’s own
battles, be confident and tolerant or unwisely arrogant, is all up to our courage to change
and accept change. We change, therefore we survive. The more adverse the
circumstances are, the tougher and more composed we are. We will also change at a faster
rate, our business strategies, management style and business models, towards achieving
our strategic directions, while trying to strengthen our reform and stand out as a great
example of success.
Whatever the household appliance industry will become, we have the courage to challenge
and the ambition to win. We hope that one day Midea will become a truly multinational
company, a global operation and a respectable hi-tech enterprise. And we understand it is
definitely not easy to achieve this. In the face of uncertainties, and fiercer competition and
obstacles in the future, we must have the big picture in mind, pushing forward with every
campaign for reform, arousing the enthusiasm of every employee, encouraging
entrepreneurship and creativity in them and bringing their personal objectives in line with
that of Midea, for the purpose of maximizing the investment returns (ROI) for you, the
shareholders, and sharing with you the fruits of our development.
We will adhere to our guideline of “Leading Products”. Our company will increase our R&D
investments with the goal to build up a global R&D system and enrich our R&D talent pool.
We will continue to develop differentiated products for our customers, adopting a strict
quality policy, launching campaigns for competitive products as well as encouraging
The 2015 Annual Report of Midea Group Co., Ltd.
product innovation and upgrading our product mix. In this way, we will be able to increase
our products competitiveness.
We will follow our path of “Operational Efficiency”. In order to be more competitive in cost,
we will try to increase the efficiency of our employees, capital and properties, further
improve lean management in our product design, supply chain and production, and push
forward with improving our channel efficiency, the development of our e-commerce
capabilities and the reform of our marketing system.
We will also adhere to our roadmap of “Global Operations” to grow our overseas revenue.
We will further upgrade our product mix for the overseas markets, keep expanding our own
brand globally , pursue further business collaborations or M&A opportunities with strong
global competitors, and push forward our global operations by breaking into more markets
while at the same time launching more products and projects.
With an open mind, we will embrace the government’s guideline of “Internet +” by
promoting a win-win partnership with Internet enterprises in creating a better eco-chain in
the Internet industry. Our continuous increased investments in IT will support our IT system
throughout the whole process of our operations and upgrade the internet usage across the
complete value chain covering our organization, marketing, products, and business
models.
We will carry on with our strategy of “Smart Home & Intelligent Manufacturing”. We will plan
for our future with the entire industry and even the whole world in our mind. Our
investments in both fundamental and cutting-edge technologies will be increased, providing
a larger growth space for our new businesses. With the courage to change, we will be able
to keep up with the times and create new competitive edges for ourselves.
We will continue to give play to our strongpoints in modern corporate governance and
mechanisms so as to further reform our organization and corporate culture towards a lively
and creativity- nurturing environment. We will continue to improve our Employee Stock
Ownership Plan (Partner Program), further reform our incentive schemes, strengthen our
power decentralization principles, and focus on our customers and products.
The 2015 Annual Report of Midea Group Co., Ltd.
To have a beginner’s mind helps you to succeed in the end.
It means to learn everything with a humble heart. It also means to think, to listen, to
challenge, to accept, and more importantly, to change! A true golden age awaits Midea in
the near future. In 2016, we will reform Midea in a more determined and effective way,
trying to make our dreams come true.
We are grateful for your companionship, support and trust, and we hereby send our best
wishes to you!
With dreams, ANYTHING is possible for Midea!
The Board of Directors of Midea Group Co., Ltd.
March 2016
The 2015 Annual Report of Midea Group Co., Ltd.
Section I Important Statements, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior
management of Midea Group Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report is free of any false records,
misleading statements or material omissions, and shall together be wholly liable for the
truthfulness, accuracy and completeness of its contents.
All directors of the Company attended the Board meeting to review this Annual Report.
There are no directors, supervisors, or senior management who do not warrant or who
dispute the truthfulness, accuracy and completeness of the contents of this Annual Report.
The financial statements of the Company for 2015 have been audited by
PricewaterhouseCoopers China (LLP) and have obtained a standard unqualified audit
report.
Mr. Fang Hongbo, chairman of the Board and president of the Company and Ms. Yuan
Liqun, responsible person for the Company’s financial affairs have represented and
warranted that the financial statements in this report are true and complete.
The Board has considered and approved the following profit distribution plan for the year
2015: Based on the Company's total existing shares of 4,267,391,228, it is proposed that
the Company will distribute cash dividends of RMB12 per 10 shares (tax inclusive) to all
shareholders and grant them 5 additional shares per 10 shares with its capital reserves.
The future plans and some other forward-looking statements mentioned in this report shall
not be considered as virtual promises of the Company to investors. Therefore investors are
kindly reminded to pay attention to possible investment risks.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
The 2015 Annual Report of Midea Group Co., Ltd.
Contents
Section I Important Statements, Contents and Definitions.............................. 6
Section II Company Profile and Key Financial Results................................... 9
Section III Business Profile .......................................................................... 14
Section IV Management Discussion and Analysis........................................ 22
Section V Significant Events ........................................................................ 50
Section VI Changes in Shares and Information about Shareholders ............ 81
Section VII Preference Shares ..................................................................... 89
Section VIII Information about Directors, Supervisors, Senior Management
and Employees ............................................................................................ 90
Section IX Corporate Governance ............................................................... 99
Section X Financial Report ........................................................................ 105
Section XI Documents Available for Reference .......................................... 204
The 2015 Annual Report of Midea Group Co., Ltd.
Definitions
Term Definition
Company, the Company, or Midea Group Midea Group Co., Ltd.
Midea Holding Midea Holding Co., Ltd.
Little Swan Wuxi Little Swan Company Limited
SDE Bank Guangdong Shunde Rural Commercial Bank Co., Ltd.
Midea Group Finance Midea Group Finance Co., Ltd.
PwC China PricewaterhouseCoopers China (LLP)
Reporting Period 1 Jan. 2015 to 31 Dec. 2015
The 2015 Annual Report of Midea Group Co., Ltd.
Section II Company Profile and Key Financial Results
1. Corporate Information
Stock abbreviation Midea Group Stock code
Stock exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
美的集团股份有限公司
Chinese
Abbr. of the Company name
美的集团
in Chinese
Name of the Company in
MIDEA GROUP CO., LTD.
English (if any)
Legal representative Fang Hongbo
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District, Foshan
Registered address
City, Guangdong Province, China
Postal code
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District, Foshan
Business address
City, Guangdong Province, China
Postal code
Company website http://www.midea.com
E-mail IR@midea.com
2. Contact us
Company Secretary Representative for Securities Affairs
Name Jiang Peng Ou Yunbin
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde
Address
District, Foshan City, Guangdong Province, China
Tel. 0757-22607708 0757-22390156
Fax 0757-26651991
E-mail IR@midea.com
3. Information Disclosure and Place Where the Annual Report Is Kept
Newspaper designated by the Company for China Securities Journal, Securities Times and Shanghai Securities
The 2015 Annual Report of Midea Group Co., Ltd.
information disclosure News
Website designated by the China Securities
Regulatory Commission (CSRC) for the http: //www. cninfo.com.cn
publication of the Annual Report
Place where the Annual Report of the Company
Office of the Board of Directors of the Company
is kept
4. Company Registration and Alteration
Organization code 91440606722473344C
Changes in main business activities since
None
the Company was listed (if any)
Changes of controlling shareholders of
None
the Company (if any)
5. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm PricewaterhouseCoopers China (LLP)
Business address of the 11/F., PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road,
accounting firm Huangpu District, Shanghai 200021, PRC
Name of accountants for writing
Yao Wenping, Huang Meimei
signature
Sponsors engaged by the Company to continuously perform its supervisory function during the
Reporting Period
√ Applicable □ N/A
Representative of
Name of the sponsor Business office of the sponsor Supervisory period
the sponsor
Zeng Jinsong,
CITIC Securities Tower, No. 8 Zhong Xin San 2015.6.26-2016.12.31
Wu Hongri
CITIC Securities Co., Ltd. Road, Futian District, Shenzhen City,
Wu Hongri,
Guangdong Province 518040 2013.9.18-2015.12.31
Qin Chengdong
China International Capital 27 and 28F, International Trade Building 2, Zhao Liang,
2013.9.18-2015.12.31
Corporation Limited No. 1 Jianguomenwai Avenue, Beijing, China Long Liang
Note: Upon the receipt of a personnel change notice from China International Capital Corporation Limited (CICC) on 21
July 2015, the Company issued an announcement stating that Mr. Li Xiaodai of the CICC was no longer responsible for
relevant work during the supervisory period due to his job change. Mr. Long Liang would replace him to work with Mr.
The 2015 Annual Report of Midea Group Co., Ltd.
Zhao Liang as a representative of the listing sponsor and to work with Ms. Gao Shu as a financial advisor respectively
during the supervisory period.
Financial advisor engaged by the Company to continuously perform its supervisory function during the
Reporting Period
√ Applicable □ N/A
Representative
Name of the financial
Business office of the financial advisor of the financial Supervisory period
advisor
advisor
China International Capital 27 and 28F, International Trade Building 2, 1 Gao Shu,
2013.9.18-2015.12.31
Corporation Limited Jianguomenwai Avenue, Beijing, China Long Liang
6. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data due to
changes of accounting policies and correction of accounting errors
□ Yes √ No
2015 2014 YoY Change (%)
Operating revenues (RMB'000) 138,441,226 141,668,175 -2.28% 120,975,003
Net profits attributable to
shareholders of the Company 12,706,725 10,502,220 20.99% 5,317,458
(RMB'000)
Net profits attributable to
shareholders of the Company after
10,911,341 9,476,849 15.14% 3,903,376
non-recurring gains and losses
(RMB'000)
Net cash flows from operating
26,764,254 24,788,512 7.97% 10,054,196
activities (RMB'000)
Basic earnings per share
2.99 2.49 20.08% 1.73
(RMB/share)
Diluted earnings per share
2.99 2.49 20.08%
