Annual Report
Midea Group Co., Ltd.
Stock code: 000333
Letter to Shareholders
The year 2022 was an unforgettable year, one in which we continued to look toward and
envision the future but also had to persevere through many uncertainties and hardships in
reality. Although it might seem that we have remained in place, each of us has in fact
completed a long journey of growth in our mindsets. In the end, what we now have is the
courage to be tenacious and maintain everlasting hope. We would like to express our full
and sincerest gratitude to all Mideans. Your perseverance in forging ahead has made you
dedicated contributors to the future of Midea. We would also like to thank our shareholders
for accompanying Midea on our growth journey. Despite market fluctuations and
everything else we have gone through, your understanding and trust have been and will
continue to be critical to boosting our confidence as we continue our value growth journey.
In 2022, Midea mainly adhered to the business principles of “Generate Income & Drive
Profit”. In keeping with its strategy of “refocusing” on and “returning” to the basics, Midea
worked hard to improve its profitability, achieve robust operations, and make new strides in
terms of its strategic layout. Midea rose to No. 245 on the 2022 Fortune Global 500 list and
No. 36 on the 2022 Brand Finance Tech 100 list. The Company was also selected as one
of the ESG case companies with practical reference significance according to the “ESG
Inspiring Cases” results released by Forbes China. By early 2023, five of Midea’s factories
had been included in the “Global Lighthouse Network” initiated by the World Economic
Forum, demonstrating Midea’s leading position in intelligent manufacturing and digital
development among manufacturers worldwide.
In this bustling age of uncertainty, industries have undergone tremendous changes. Given
this context, no business can maintain rapid growth forever, because the nature of the
world is that industries, the economy, technologies, and even globalization itself are
cyclical. Nevertheless, a few companies can still achieve sustained growth and earnings
and create value. How to build Midea into one of those “few companies”? This is one of
the core issues that must be resolved. To this end, we must bid farewell to the past and
push ahead with transformation and innovation going forward in order to build the
Company’s strengths for whatever the next round of competition may bring. In order to
make this happen, this is the only option we can choose now.
We need to first experience life's ups and downs before we can understand the simple
truth. As the writer Albert Camus once said, “Whenever it seemed to me that I felt a deep
sense of the world, it was its simplicity that always moved me.” Successful businesses
understand the basic principles of corporate organization, while decaying businesses all
have distinct causes that are responsible for this decay. The most basic principle, law, and
truth are what keeps driving the world. Therefore, when running a business, we must
return to the basics and continue to uphold these basic principles. More specifically, we
must maintain our cash flows and product capabilities and continue to accumulate
technology; this is the law and orientation to which we must adhere. Additionally, the secret
to the success of any company lies in such basic principles as “corporate culture and
values”, “corporate governance structure”, “entrepreneurship”, “a value-creating business
model”, “being capable of persistent learning and introspection”, and “being capable of
creating a second growth curve”. To evolve into a great enterprise that stands out from our
peers, we must not only possess these basic principles, but also hold fast to them.
When facing this era of tremendous changes, long-term development is no longer an
option, but an intrinsic competence that must be built up on an ongoing basis. Strategies
tell us what we should do to ensure that we have a tomorrow; they do not necessarily tell
us what we will actually end up doing in the future. Therefore, Midea must be cautiously
open-minded, always be prepared for the worst-case scenario, and stay alert to potential
challenges. A coordinated emphasis will be placed on breakthroughs in our ToC and ToB
businesses. We will strive to boost the strength of our products and core technologies in
our ToC business while stabilizing and improving our profitability to provide strategic
support for the transformation of our ToB business. Additionally, the transformation of
Midea from a Chinese business into an international one will be advanced by expediting
the layout and growth of the Company’s overseas business, developing the capabilities of
global industrial chains, and continually enhancing the impact of our brands. We will also
extend Midea’s advant
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