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Chinese home appliance maker Gree aims to turn out its own chips

Chairwoman Dong Mingzhu sees smart homes as key to tripling revenue by 2023

Dong Mingzhu, chairwoman of Gree Electric Appliances, said smart homes are key to the company's growth. (Photo by Akihide Anzai) 

BEIJING -- China's Gree Electric Appliances, the world's biggest maker of air conditioners, is preparing to enter the fiercely competitive "smart home" market.

Dong Mingzhu, Gree's chairwoman, told the Nikkei Asian Review in an interview on the sidelines of this year's meeting of China's National People's Congress that the company must produce its own computer chips to improve the quality of its products.

"In this global era, we purchase many components from different countries. But if you want to improve quality, you have to have control of essential parts in your own hands," said Dong, one of China's most powerful businesswomen. That control is essential, Dong believes, to bring Gree into the market for smart homes and internet-connected appliances.

Gree set up a semiconductor design company last August, investing 1 billion yuan ($150 million). In December, the company announced an investment of 3 billion yuan in Chinese chipmaker Anshi through third parties. Dong declined to elaborate, saying, "We cannot reveal further investment plans for now." But she rejected the suggestion that the move into chipmaking was spurred by the U.S.-China trade dispute. "It has no relation to that at all. We are just thinking how we can meet demands from customers," she said.

Dong said Gree had revenue of more than 200 billion yuan in 2018, an increase of 50 billion yuan from the previous year, thanks to the company's move into washing machines, refrigerators and other home appliances.

"We are not merely an air conditioner company anymore," Dong said. Gree's main air conditioner business has a market share of around 35% in China, according to Euromonitor International. But that is down from 39% in 2013, as rivals such as Haier Electronics Group and Midea Group have chipped away at its position.

Gree's revenues rose by 50 billion yuan in 2018, due in part to its expansion into home appliances, according to Chairwoman Dong Mingzhu.

In addition to its chip design investment, Gree recently decided to build a new washing machine plant and an artificial intelligence research center in the central Chinese city of Chengdu at a cost of 5 billion yuan.

Dong has set a sales target of 600 billion yuan by 2023. At present, overseas sales make up 20% of the total at Gree. "There is more room for growth in foreign markets," she said, but added that her focus remains improving the quality of the company's home appliances. In the U.S., Haier had the top market share in the home appliance market last year, at 27%, according to Euromonitor.

Dong is working to integrate new technologies into her company's business, personally investing in Chinese electric car maker Yinlong. "Energy storage technology is the reason for the investment. Even if your house and products become smart, if the power is off, they are no longer smart," Dong said. 

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