2016.11

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美的集团管理模式分享

Corporate Snapshot

2

1980

1993 2000

2001

JV with

Toshiba Carrier;

Acquisition of

Royalstar, Hualing,

CQ General Industry

2012

Organization restructuring

IPO

MBO Management

Handover;

JV in India

Company

Established

1968 1997 1992 2011

Strategic

Transformation;

Acquisition of Carrier

Latin America

2004 2013

Listing

as a whole

2014

Multi-Brands:

2015

JV with Carrier,

Bosch, SIIX,

Yaskawa

Electric Fan

1985

Electric

Motor

Rice

Cooker

1998

2000: Dish Washer

2001: Water Heater, Water Purifier

2002: Refrigerator

2003: ATW Heat Pump

2004: Wash Machine

2005: Vacuum Cleaner, Pressure Cooker

2006: Oven

2007: Air Purifier, Humidifier

2009: Lighting

1998: Compressor

1999: Commercial AC

Microwave Oven

Induction Cooker

Water Dispenser

“Twin Smart “

Strategy

Smart

Home

2016

Strategic Partnership

with Toshiba;

Acquisition of Clivet;

Tender offer Kuka

Corporate History

3

Residential

AC

Acquisition of

Toshiba Macro,

Liguang Aircon

2005 2008 2010

Acquisition of

Chunhua

Acquisition of

Little Swan

Acquisition of

Miraco (Egypt)

Product Portfolio

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One of the Most Extensive Product Portfolio of Any Global White Goods Players

Unit: RMB Bn Source: 2016 Semi-Annual Report

2016H1 Main Business Turnover Breakdown

Turnover Breakdown

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No.1 No.2 No.1 No.1 No.1 No.2 No.2 No.3 No.2 No.3 No.3 No.3 No.1

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Market Share

Over 100 Industrial Design Awards

IF Design Award (Germany), Red Dot Design Award (Germany), IDEA Design Award (US)

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Awards

A - / Stable

A - / Stable

A 3 / Stable

First Chinese home appliance manufacturer

assigned ratings by International Rating Agencies

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Rankings & Ratings

#481, The Fortune 2016 Global 500

#402, 2016 Forbes Global 2000

#6, R&F Global Ranking Top 100

First Chinese home appliance manufacturer

listed on the Fortune Global 500

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Inside / Outside of China: 17 / 10 production facilities; ~90,000 / ~15,000 employees

Manufacturing Footprint

Midea Group

Kit

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10 Product Divisions

10

International

Business

Platform

E-commerce

Platform

M-Smart

Institute

Financing

Platform

Service

Platform

Procurement

Platform

Organization Chart

Resid

en

tial A

C

Logistics

Platform Central R&D

Institute

Midea

Group

Controlling

Shareholders

36%

Strategic

Investors

4%

Senior

Executives

4%

Others

36%

- Annual cash dividend: ≥ 1/3 of distributable profits

- In 2015: DPS 1.2 yuan; Transfer of Capital reserve: 5

shares per 10 shares; cash dividend amount: 5.1bn

yuan; accumulated cash dividend amount: 12.7bn yuan

Three terms of share option scheme for employees.

Two terms of “Partners” programs (ESOP) for key

senior management.

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Cash Dividend

Share Options

“Partners” Program

Governance & Dividend

Dated: 30 Sept. 2016

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Strategic Directions

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科技蓝：

Industry Outlook in China

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Improvement of

penetration rate

With the increased people’s income (growth rate of the real disposable income per capita

in China for 2016H1 is 6.5%) and accelerated urbanization, penetration rate of home

appliances in China is expected to be further improved.

Replacement of

existing appliances

Development of

Smart Home

Modernization of

distribution channel

Strengthening of

industry leaders

Globalization of

Chinese companies

In an era of internet+, with the improved technologies such as smart control, IOT, big data,

and the wide usage of mobile terminals, Smart Home is expected to experience rapid

development in China.

With the development of O2O business model and application of big data, e-commerce is

becoming a substantial channel for home appliance distribution, and home appliance

manufacturers are having increasingly close cooperation with internet companies.

With the competitive advantages in brand, technology, supply chain, services and

channels, home appliance industry is yet to be further consolidated and industry leaders

will be further strengthened.

Rooted in the enormous market in China, and with competitive advantages in scale,

cluster, and capital, Chinese manufactures will play a significant role in fast-growing

developing markets, as well as developed markets via M&A.

Considering that over 1.6bn units of home appliances sold in China, with the improved

quality and features of home appliances, and increased demand for premium products,

appliances are to be further upgraded and replacement market is enormous in China.

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科技蓝：

Vision:

Leader in Chinese home appliance industry;

Top 3 in worldwide white goods industry

Goal:

To be a consumer-oriented innovative company

Second Three Year

First Three Year

Third Three Year

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Vision

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科技蓝：

战 略 主 轴

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Leading Products

• Consumer-oriented products; improved productivity

• More investment in R&D; innovation; improved product mix

• Spin off loss-making categories; reduce product models

Global Operation

Efficiency Driven

• Set up International Business Platform

• Business model from OEM to OBM

• Joint Ventures with Carrier, Bosch, Toshiba, etc.

• M&A

• Launch“632”IT project to standardize process

• Invest on automation of the factory

• Promote T+3 model – production planning based on orders

• Consolidate business support to 6 platforms to create synergies

Strategic Focuses

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科技蓝：

Business Strategy

Globalization Strategy

M-SMART H

om

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产 业 框 架

M-Smart

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6 platforms to support business development

Business Framework

Internet Strategy

Company-

oriented （Midea products）

Customer-

oriented （cross brands）

Users-

oriented （cross industries）

To meet

company’s

demand

To meet

customers’

demand

To meet

users’

demand

Resources

consolidation Fast

growth Delivery to home;

last kilometer

Consolidate logistics

of Midea products

divisions Upgrade information

system

3rd & 4th tier markets’

development

Improve efficiency,

reduce costs Diversification of

delivery methods &

products;

Expand non-Midea

customers

Covering 9.6mm km2 & 100cities; delivery within 24hrs

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Logistics platform: End-to-end systematic solutions

Service Platform: Fast, Efficient & full-service

Founded as service sharing platform

Cleaning of home

appliances;

Water and air

quality test, etc.

Healthy Life

Installation and

repairing, recycling

of home appliances;

Technicians O2O

Convenient Life

I.O.T;

Personalized

services

Digitalized life

Multi-brand

services;

industry service

Sharing Life

Industry standard;

orphan brand;

Social welfare

Charity Life

Platforms

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科技蓝：

Child Star AC

No child sleeping curves

“Angel” protection mode

Fast cooling technology

3 color healthy filter

Beverly Washing

Dryer

Diamond cutting crafts

Accurate detergent adding

Innovative water flow

Twin Screen Smart

Fridge

Food management

Twin screen

Internet connected

Smart Rice Cooker

Titanium pot

IH big fire

Two direction 720 degree

boiling

M2 Water Purifier

No installation needed

Easy filter change

RO+, cold and hot water

WiFi smart management

Comfort Star AC

No wind feeling

Energy-saving

silent

Smart light reaction

Focusing on consumer-oriented research & characterized product features, to achieve differentiated competitive advantages.

Further investment on product R&D, to build a globally competitive R&D scheme and improve innovation capability.

Concentrate on research and innovation of fundamental and core technologies, smart home technologies.

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Product Strategies

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科技蓝：

R&D investment：

Set up Central Research Institute, Smart-Home

Institute (Global Innovation Center)

Invested RMB 3bn, to build largest home appliance

R&D center in Asia

R&Ds center worldwide

Central Institute

Fundamental

& subversive

research

Common

technology

research

Four

Tier

R&D

Scheme

Divisions

Product

develop-

ment

Innovation Projects:

“Start from Scratch” Projects: new platform

development on existing product categories

“Second Track” Projects: new product R&D in new

fields such as health, smart, beauty, nutrition,

environmental protection

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R&D Strategies

Individual

technology

research

“Twin

Smart“

Strategy

Yas-

kawa

Auto-

mation

Efort

KUKA

M-

SMART 1000 robots in use

RMB 5bn used in factory automation

Joint Ventures with YASKAWA (Japan)

Invested in ANHUI EFORT (17.8%)

Launched voluntary tender offer for KUKA (Germany);

current shareholding 13.5%

Automated (Smart) Manufacturing

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“Twin Smart” Strategy

Chip & Module

Open

Connection

Open

Protocol Open

Service Open

E-commerce

Open Open platform

for building smart home

M-SMART Bubble Products:

Bubble Robot

Bubble M-Box

Bubble Box

Bubble Smart plaster

Bubble Router

Over 80 smart product categories on market

Completed the development of WIFI Module, Midea Cloud and core

SDK of system

Finished protocol matching with JD, Alibaba, Xiaomi, Wechat Cloud

Established protocol matching with Homekit、Allseen、Thread、WIFI、

ZIGBEE Alliance

Established matching with Router company (Huawei, Xiaomi), mobile

internet platforms (Wechat, Baidu), smart hardware (ROKID robot), 3rd

-

party application (IFLYTEK, Moji Weather)

Smart Home: M-Smart

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“Twin Smart” Strategy

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HQ Globalization

Subsidiaries Localization

Global standardization

Local Differentiation

Business Mode:

OEM OBM

Brand Image:

Functional Brand

Emotional Brand

Aspirational Brand

Operation Mode:

Direct export Local Production

Joint Ventures, M&A：

Globalization

美的以5亿美元，受让

Midea + Clivet Midea + Toshiba Midea + KUKA

Acquisition of 80.1% stake in the

home appliances businesses of

Toshiba with a consideration of

c.US$500 million

Being licensed to use the Toshiba

brand worldwide for 40 years;

Obtained over 5,000 IP assets

Significant synergies in brand,

channels, R&D, supply chain, etc.

Launched a voluntary tender offer

at EUR115 in cash per KUKA

share

Aligned with the “Twin Smart”

Strategy, to improve intelligent

manufacturing capabilities and to

expand B2B business

With complementary strengths, to

fully explore the robotics market in

China in various areas

Acquisition of 80% stake in Clivet,

a European leading company

based in Italy

Improve market share on the

European as well as global

markets

Significant synergies in in product

offerings, market presence, supply

chain, manufacturing and

technologies

Recent Transactions

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美的集团管理模式分享

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Business Update

Revenue growth recovered; both gross and net profit margin further increased

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Revenue & Margin

Note: Acquisition of TLSC was closed on 30 June 2016. Financial reports of TLSC has been consolidated since then.

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Cash & Cash Flow

Abundant cash-in-hand; strong cash generation capabilities

Note: Acquisition of TLSC was closed on 30 June 2016. Financial reports of TLSC has been consolidated since then.

Cash conversion cycle became negative, cash usage ratio has been largely improved

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Cash Conversion Cycle

Steadily increased market cap & Stable dividend distribution

Cumulated dividend payment from 2013 to 2015 amounts to RMB 12.7Billion.

From Sept. 2013 to Sept. 2016, market cap has

increased over 144%.

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Market Cap & Dividend

RMB Bn

美的集团管理模式分享

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Backup - Financials

Stable turnover growth; improving margin Improving Gross Margin; stable SG&A&Fin Costs

Net asset largely increased; ROE largely improved Sufficient cash; stable cash inflow

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Key Financial Analysis

RMB Bn

RMB Bn

AC inventory Reduced; other categories grow rapidly Both inside and outside China market grow steadily

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By Products & Regions

THANKS