Forbes Top 500

Advances Newsletter, May, 2015

1

Vol. 5, #4, May 2015, No. 48

Forbes Top 500

The group has entered Forbes’ list of the world’s top 500 public companies


2

ADVANCES Newsletter

Contents

Midea Advances Newsletter is published monthly

by the International Strategy Department of

Midea Group. We welcome all comments,

suggestions and contribution of articles, as well as

requests for subscription to our newsletter. You

can reach us by email at: [email protected]

Address:

ADVANCES, International Strategy Department

Midea HQ

No. 6 Midea Road

Beijiao, Shunde, Foshan, Guangdong

P.R.C. 528311

Tel: +86-757-23270461

Web: www.midea.com/global

Managing Editor:

Kevin McGeary

Regular Correspondents:

Javier Romano

John Baker

Kelvin Wu

Lemon Lin

Shirley Liu

NEWSLINE

Concepcion Midea to

Double Sales Year-On-Year PAGE 4

Group Enters the Forbes 500 PAGE 3

Midea App Available on

Apple Watch PAGE 4

Tasting the Home of the Fu-

ture PAGE 5

www.midea.com

The Brains Behind the Brazil

Brand PAGE 17-19

Big Picture

People

Idea

Idea of the Month: Social

Skills PAGE 16

US$800 million to Be Spent on

Automation in 5 Years PAGE 8

The Fast Food Wars PAGE 15

Magazine Publishes in-Depth

Report about Xiaomi Deal PAGE 9

To Use or Not to Use a Dic-

tionary? PAGE 13-14

Language

RAC Dominates Central

Chinese City PAGE 7

Official Sponsor of Indian

Premier League Cricket

Team PAGE 7

Belarus JV to Diversify Prod-

uct Range PAGE 6

DDB Shanghai Wins RAC

Contract PAGE 6

CAC Global Technical

Training Held in Shunde PAGE

10

Innovative Cooking Solutions

for Homes and Businesses PAGE 11-12


3

Group Enters the Forbes 500

M idea Group has en-

tered the top 500 public companies

in the world, according to The

Forbes Global 2000. Sales, profit,

assets and market value were taken

into account to help Midea to

436th place on the magazine‘s an-

nual list, higher than appliances

giants Whirlpool, LG and Electro-

lux. Impressively, the company also

ranked 24 places higher than Star-

buck‘s.

Midea ranked 408th in sales,

418th in profit, 1117th in assets and 534th in market value, help-

ing it on to the world‘s most respected list of its kind. Though

the United States still leads the way, China overtook Japan for

the first time with 232 companies in the top 2,000. Industrial

and Commercial Bank of China (ICBC), China Construction

Bank, Agricultural Bank of China and Bank of China were the

top 4.

The world has not yet fully recovered from the Global

Financial Crisis of 2008. China‘s domestic economy is experi-

encing a slowdown. However, the Chinese companies on the list

together made US$4.6 trillion in revenue and US$473 billion in

profits. They also boast US$25 trillion in assets and combined

market value of US$6 trillion.

―Midea appears to be reaping seeds that were sewn a long

time ago,‖ said Liu Buchen, one of China‘s leading experts on

the appliances industry.

Since growth slowed down in 2011 due to corporate con-

solidation costs and changes in domestic government policy,

Midea has prioritized products, efficiency and global expansion.

Changes within the company include an emphasis on online

sales rather than traditional channels and manufacturing of in-

teroperable ―smart‖ technology.

These policies have so far paid dividends. In 2014, global

revenue was at an all-time high of US$23 billion, a year-on-year

growth of 17 percent. Net profit was also at a company record-

breaking US$1.69 billion.

This growth looks set to continue. Midea achieved reve-

nue of US$6.87 billion in the first quarter of 2015, a year-on-

year increase of 10.5 percent. The holding company saw net

profit of US$538 million, a year-on-year increase of 32 percent.

Earnings per share were at US$0.13, a year-on-year in-

crease of 32 percent. The gross margin was at 26.8 percent, a

year-on-year increase of 1.5 percentage points.

Group President Paul Fang recently told Caixin finance

magazine that he wants Midea to operate more like an energetic

start-up than an old-fashioned appliance maker. This news is a

vindication of his approach.

NEWSLINE

By Advances


4

Midea App Available on Apple Watch

By Kelvin Wu

M idea‘s M-Smart app is now available on Apple

watch and through other iOS8.2 or higher platforms, it was re-

ported on May 11. The app, titled Meiju, can be downloaded

from the App

store and can

control M-Smart

appliances. The-

se already in-

clude over 30

categories.

According to an

engineer behind

the project, the

App can store

user data and

respond to both

indoor and out-

door environ-

ments to pro-

vide the

highest quali-

ty service. It

knows when

it is raining

and it knows

the tempera-

ture, humidi-

ty and level

of PM2.5. It

is also highly

attuned to a

user‘s habits.

Meiju

is also availa-

ble on

iPhones and

iPads.

NEWSLINE

Via Manila Standard

Concepcion-Midea to Double Sales Year-

on-Year

C oncepcion-Midea Inc., Midea‘s Philippines joint ven-

ture, expects to double sales in 2015 to US$15.63 million amid

the increasing purchasing power of the southeast Asian nation‘s

middle class.

Concepcion Midea general manager Phillip Trapaga said

the company posted impressive sales in 2014 even though oper-

ations only began in May.

―We‘re shy of one year selling our products but we did

well last year. We‘re expecting better sales this year, at most dou-

bling our performance from 2014,‖ he said in a press briefing in

Makati City.

The company will be completing its line of white products,

including the cost-effective inverter technology refrigerator and

the new variable refrigerant flow air conditioners, as well as

large and small kitchen appliances line-up.

The sales target in 2015 is just under 1 percent of the

country‘s US$1.7 billion cooling and kitchen appliances market.

The company plans to become one of the nation‘s top

three providers of consumer products in the next five years.

―We know that it will not happen overnight, but we are

one of the most affordable brands with high regard for quality

and durability,‖ Trapaga said.

The company has introduced cooling systems from win-

dow-type to split-type air conditioners. It plans to introduce

floor-standing, under-ceiling and cassette-types this year.


5

Tasting the Home of the Future

By Lemon Lin

T he Internet has revolutionized the way people live.

It has also revolutionized the way businesses approach the

market, through big data, consumer analysis and changes in

sales channels. However, it has only just started to affect con-

sumers‘ relationships with their household appliances.

At an event held at The Shunde Sheraton on April 22,

Midea set up a stand which gave spectators a taste of the

home of the future, with intelligent products that are likely to

become commonly owned within the next decade. Visitors

could even taste dishes cooked in front of them using the

company‘s futuristic appliances.

In the age of e-commerce, consumers like to experience

what they are buying. Traditional sales techniques and prod-

ucts no longer cut it. The Experience Centre offered a

demonstration of smart, localized and interoperable technolo-

gy which will form the future of the industry.

To stay ahead of the competition, an appliances brand

must be aware of consumers‘ concerns related to travel, enter-

tainment, exercise, health, environment, home, and family. An

effective way of building brand loyalty is allowing members of

the public to experience products first-hand.

By July the show will have been taken on the road to

Beijing, Shanghai, Chengdu and over 50 other major cities in

China. The L-shaped stand is designed like a trendy modern

home. The design mostly consists of black and white, evoca-

tive but unthreatening colours.

The Experience Centre has a highlights area, star products

area, experience area, tasting area, and photo display area. There

are also cooking classes where visitors can taste, smell and touch

the home of the future. The products can be controlled by

online devices such as mobile phones and, in some cases, Xiao-

mi bracelets.

The first thing visitors see upon entering the kitchen is a

―rice map,‖ which shows how Midea has sourced the best prod-

ucts to provide its kitchen experience. As well as rice cookers,

demonstrated in the kitchen are soymilk makers, juicers, toasters

and noodle makers. There is also a children‘s play area, which

means visitors can focus the whole of their attention on the

experience.

The Experience Centre has been receiving good reviews.

A representative of the Small Appliances Division told an inter-

nal publication that he couldn‘t wait to take the show on the

road. The brand of Midea‘s smart home experience will be pro-

moted through word of mouth.

NEWSLINE


6

Belarus JV to Diversify Product Range

Via Belarusian News

T he joint Belarusian-Chinese company Midea Hori-

zont plans to release new products

in 2015, Midea Horizont Director

General You Baofen told Belarus-

sian News.

―Midea Horizont is working

on a new project to produce heat-

ing boilers, dispensers, and cook-

ers. In 2015 we plan to launch the

manufacturing of new products,‖

he said.

Today the company produc-

es only microwave ovens. Its rated

capacity is about 1 million items

per year. ―Up to 80% of our prod-

ucts are exported to former Soviet countries, including Russia

and Kazakhstan. We are also seeking other markets outside the

former Soviet bloc,‖ the Director General said.

According to You Baofen, the company is interested in

steady development and job creation. ―We have been moderniz-

ing and will continue modernizing our equipment in order to

improve economic conditions,

reduce energy consumption and

adverse environmental effects,‖ he

explained.

The joint Belarusian-Chinese com-

pany Midea Horizont was set up

in 2007. Before that, Horizont

Management Holding Company

and Midea Group were long-

standing strategic partners. The

joint venture provides Midea with

the opportunity to advance its

business in the former Soviet bloc

and other markets as well as the

production of various types of household appliances, such as

dishwashers, electric hot plates, teapots, heating boilers, dis-

pensers, cleansers, cooktops and ventilators. The company em-

ploys 150 people, including four professionals from China.

NEWSLINE

Via Marketing Interactive

DDB Shanghai Wins RAC Domestic

Contract

M idea Residen-

tial Air Conditioning

(RAC) has appointed DDB

Group Shanghai as its

agency of record for the

domestic market.

Midea said it chose

DDB because the agency‘s

pitch presented integrated

creative solutions and a

solid understanding of the

market and consumer.

―Midea has always been pursuing effective solutions in line

with long-term branding strategy, sharing

similar goals that DDB believes,‖ said

Twelve Tong, vice president of DDB

Group North China.

Su Rong, marketing head of RAC, added:

―We look forward to the collaboration be-

tween Midea and DDB. We believe togeth-

er we will definitely push Midea to a new

height in the market.‖

DDB has won multiple international

awards in recent years including Eurobest

Network of the Year and Agency of the Year

and Australia/New Zealand Agency of the Year 2014. Its other

major clients include Walls Ice Cream. RAC‘s agency of record

for overseas is BBDO, which also belongs to Omnicom Group.

Twelve Tong


7

Official Sponsor of Indian Premier League

Cricket Team Via The Telegraph

M idea became

the official home appliances

partner of Indian Premier

League cricket team Royal

Challengers Bangalore

(RCB) in April. Krishan

Sachdev, Managing Director

of Carrier-Midea India, pre-

sented the team with a good

luck charm on the eve of the

first match of the league‘s

eighth season.

―We are delighted to

partner with Royal Challeng-

ers Bangalore. RCB is a team

of global cricketing icons and

resembles a youthful approach

with innovative ideas, characteristics that have a strong connec-

tion with the Midea brand,‖ said Sachdev.

―Midea has a long-term commitment to the Indian market

and cricket helps us in

connecting with consum-

ers across segments,‖ he

added.

Premier league runners

up in 2009 and 2011,

RCB is currently in rude

health. On the day before

beating rivals KKR, cap-

tain Virat Kohli oozed

confidence when talking

to the media. ―People

enjoy watching our team

and we will go as far as

we can and we are going

in the right direction of

winning,‖ said Kohli.

NEWSLINE

Bu Kelvin Wu

RAC Dominates Central Chinese City

M idea Residential Air Conditioning

(RAC) won the contract to provide 3100 air

conditioning units to Hubei University of Chi-

nese Medicine on April 28. It also won the bid

to install 1500 units at the nearby Hubei Water

Resources Technical College.

The central Chinese city of Wuhan, capi-

tal of Hubei Province, is a happy hunting

ground for Midea, particularly RAC. So far,

Midea has supplied over 100,000 sets of resi-

dential air conditioners to its education institu-

tions, including Wuhan University, Huazhong

University of Science and Technology, Hubei

University of Technology, Zhongnan

University of Economics and Law,

South-Central University for Nationali-

ties, China University of Geosciences,

Hubei University of Chinese Medicine

and Wuhan Institute of Bioengineering.

As well as winning such projects, Midea

is getting contract renewals from satis-

fied customers. Last year, Midea RAC

won a bid to provide 3000 units to

Southwest University of Nationalities

and they purchased 5400 more this year

due to positive feedback.

Royal Challengers Bangalore


8

US$800 Million to Be Spent on Automation in

5 Years By Lemon Lin

T his year is proving to be a big one in terms of auto-

mated technology in China. Midea was cited by leading financial

publication Caixin in March as a leader in this field.

―2015 is a watershed for robot technology,‖ said Wu

Shoubao, vice president of manufacturing at Midea Residential

Air Conditioning (RAC). ―This year, we will spend US$130-160

million, and over the next five years we will spend just over

US$800 million. In the three years from 2012-2014 we only

spent US$160 million on automated technology.‖

―A machine has to have six rollers to be considered a ro-

bot. That currently costs nearly US$13,000. So far we have only

purchased relatively simple instruments,‖ Wu said. In 2012,

Midea began implementing policies that would lead it to more

automated manufacturing. By the end of last year, the company

had 800 relevant instruments, this year it

will add 600.

Midea‘s residential air-conditioning,

compressor and commercial air-

conditioning factories have already made

this breakthrough. This year the whole

group will follow. RAC is a leader in the

field of cost-cutting through automation.

The factory employed 2800 people

a decade ago, that figure has halved. By

the end of 2015 it will be down to 900

and in three years down to 450, accord-

ing to manager Chen Jiansheng.

The remote-controlled machines at the factory boast flexi-

ble arms and shoulders, shells on the outside which allow them

to be controlled, chips, and button boards.

―With automation, work that used to require seven people

can now be done by two, by the end of this year that will be

down to one,‖ said Chen.

―The peak production period for air conditioning is

around Chinese New Year, a time during which we have histori-

cally suffered from recruitment problems. With the recruitment

of large numbers at a time, there are often safety concerns. Au-

tomation is making this a thing of the past,‖ said Chen.

RAC has a world-class production line. In 2015 it will em-

ploy 26,000 people and efficiency will go up 30 percent. In 2016

it will employ 24,000 people and efficiency will go up 25 per-

cent. In 2017 it will have 22,000 people and efficiency will go up

25 percent. In 2018 it will be down to 20,000 people, meaning

the US$11 billion turned over in 2014 will reach US$16 billion.

Last year Midea Group turned over US$23 billion and

currently has over 120,000 employees. According to Group

President Paul Fang, by the time Midea turns over US$32 bil-

lion in a year, it will be down to 100,000. Automation will lead

to Midea being able to offer the best packages which will help

recruit yet more top talent.

―Currently, we do most of our recruiting ahead of the

peak season. During peak seasons, we require 30,000 people,

the rest of the year we only need 15,000. Over the next year or

two when we have introduced more automation, we will only

require 20,000,‖ said Wu Shoubao.

―It won‘t so much be a case of mass layoffs as recruiting

fewer people. Moreover, the people

we recruit will have at least a Bache-

lor‘s degree as we need skilled work-

ers to control the robots,‖ Wu added.

The installation of automated manu-

facturing equipment requires good

cooperation with research and devel-

opment (R & D) departments. ―We

need to be careful in figuring out

which lines are suited to automation.

It is imperative that output and quali-

ty do not decrease,‖ said Wu.

Over the past four years, automated manufacturing has

been at its pioneering stage. First companies have had to em-

brace it, after that distributors and customers have had to accept

it.

Group Vice-President and head of R & D for Commercial

Air Conditioning (CAC) Hu Ziqiang told a company source

about the division‘s efforts to keep up with the times. ―We have

all been working hard at the standardization and modularization

of the design,‖ said Hu.

At the same time, Midea Group‘s Hong Kong-listed sub-

sidiary Welling Motors is already making components and mo-

tors for robots that will be used in manufacturing. Midea will

also work with the Foshan Municipal Government to build The

South China Robot Research and Development Institute.

NEWSLINE


9

Magazine Publishes in-Depth

Report about Xiaomi Deal Via Caixin

Caixin is China’s most respected finance magazine. This month it

published the below report about Midea’s cooperation with smart-phone

giant Xiaomi.

T hanks to a partnership linking an unlikely pair of

manufacturers, a Chinese consumer can now control his or her

air conditioner by simply tapping a smartphone.

Systems that use smartphone applications to control air

conditioners – which in China are commonly used for winter-

time heating as well as summertime cooling – went on sale in

April through a tie-up between appliance manufacturer Midea

Group Co. and smartphone maker Xiaomi Inc.

Midea is one of several Chinese home-

appliance manufacturers that have diversified in

recent years to keep up with changing times. Haier

Group, for example, last year expanded into finan-

cial services. The Qingdao-based appliance com-

pany's chairman, Zhang Ruimin, said he wants

Haier to be an investment platform for manufac-

turing entrepreneurs in China.

But Midea's tie-up with Xiaomi is unique.

Not only has the appliance maker crossed over

into products that take advantage of the Internet of Things, but

it also let Xiaomi become a minority stakeholder. And in recent

months, Midea's business culture has changed in ways that, for

example, now make company executives more accessible to the

public.

Through a private placement in December, Xiaomi's hard-

ware subsidiary, Xiaomi Technology, bought a 1.29 percent

stake in Midea for 1.27 billion yuan. The stake gives Xiaomi one

seat on the Midea board of directors.

The agreement followed talks between Midea Chairman

and CEO Fang Hongbo and Xiaomi's founder and CEO Lei

Jun. Afterward, the two men started holding monthly brain-

storming sessions to discuss Midea's future.

Fang told Caixin he sees the relationship with Xiaomi as a

win-win not only in financial terms but also because he thinks

Midea can benefit from the smartphone company's Internet-

related management experience.

The tie-up may also help relieve anxiety at Midea which,

like other appliance manufacturers in China, has been grappling

with changes brought on by wireless devices and the Internet.

Xiaomi and Leshi Internet Information & Technology Corp.,

the Shenzhen-listed media and TV-video-movie content integra-

tor better known as LeTV, for example, have already expanded

into the smart TV business, putting pressure on traditional ap-

pliance makers.

Fang said Midea had to act quickly to embrace the chang-

es affecting the appliance industry – changes brought on by the

growing use of Internet-connected mobile devices and the

growing influence of device-makers.

Getting Smart

Xiaomi wireless gadgets including its smartphones

and the Mi Band wearable wristband device can

now be used to control Midea's I Youth air condi-

tioner from across the room.

The system's commercial introduction stems from

Midea research into wireless Internet controls that

started in 2009.

Initially, the appliance maker looked into wiring its

appliances to provide Internet access. But research-

ers realized that this was quickly becoming outdat-

ed. So they switched the focus to connecting appliances through

Internet of Things technology.

In March 2014, Midea laid out a plan to pursue what it

called a "smart home" business strategy for its appliances. An e-

commerce unit was soon launched as part of the company's so-

called M-Smart strategy.

Because Midea had little online and wireless business ex-

perience, it signed contracts with major suppliers such as com-

puter server supplier Huawei Technologies Co. and communi-

cations technology provider Qualcomm Inc.

Midea sought to integrate these products and technologies

to build "smart home" systems that would appeal to consumers

who use home appliances, said Mao Hongjian, head of the M-

Smart Research and Development Institute. Mao decided to see

what Xiaomi had to offer, and decide whether it and other In-

ternet-sector companies could cooperate with Midea.

You can read the whole thing here: http://

english.caixin.com/2015-05-12/100808560.html

Newsline


10

CAC Global Technical Training Held in

Shunde By Shirley Liu

M idea Commercial Air Conditioning‘s (CAC) over-

seas sales company organized three technical training sessions in

April. The first session, which was held April 14-16, was mainly

for introducing the product lineup. The other two sessions fo-

cused on after-sales and were inspired by 11 years of product

lineup training. The first after-sales training was held April 21-

23, and was mainly tailored for the Asia Pacific customer; the

second on April 27-29 mainly focused on European customers.

Highlights of the training included customers attending

dynamic classes together, and small groups taking a combination

of theory and practical classes. Outstanding trainees were invited

as guest lecturers to demonstrate welding and compressor

mainte-

nance.

Test

scores

and

certifi-

cates

were

provid-

ed to

the at-

tendees‘

compa-

nies to inform them of the effectiveness of the training.

The product lineup training was mainly for salespersons,

purchasers, consultants, engineering design personnel and new

customers. During the training, lecturers detailed Midea CAC &

HVAC marketing, Midea CAC product lineup and new product

introduction, covered all Midea CAC products and introduced

major new ones. Products discussed included V5, V5X, heat

recovery variable refrigerant flow (VRF) and fourth generation

network control software. They also visited the Midea show

room, factory and laboratory and learned about after-sales poli-

cies.

The after-sales training which focused on VRF products

was mainly for technical engineers and after-sales persons. In

theory classes, installation, commissioning, key refrigeration

parts, electric control, key electronic components, thorough

compres-

sor anal-

ysis and

practical

engineer-

ing case

analysis

as well as

other

topics were discussed in detail. In practical classes, valuable in-

structions were given to customers on actual operating proce-

dures of the after-sales Midea CAC APP, the fourth generation

of network control software, CCM15 and other tools which

may be used in installation. It was a lifelike environment with

VRF systems, customers complete address setting, system com-

missioning, indoor unit panel disassembly, exchange compres-

sor, vacuum, recharge refrigerant and other common trouble-

shooting operations.

Midea CAC Global Technical Training has been held for

11 years. As a result, more people are becoming familiar with

the brand, products and their technical characteristics. The 1st

session of after-sales global technical training was a milestone in

the history of Midea commercial air conditioner after-sales. It

helped to solve customer's issues about the complexities of

VRF installation, commissioning and maintenance.

In the future, we will continue to increase the comprehen-

siveness and coverage of technical training to further benefit

our customers. The 1st session of chiller products after-sales

technical training will be held in September. What‘s more, we

look forward to the 23rd session of global technical training

which

will be

held at

the

end of

this

year.

Newsline


11

Innovative Cooling Solutions for Homes and

Businesses

This article was originally pub-

lished in BusinessWorld in The Philip-

pines on May 18, 2015.

M idea has launched a

full line of cooling solutions de-

signed to fit the needs of home-

owners and businesses. The

company aims to provide afford-

able solutions, engineered to

meet the challenges faced by

consumers on a daily basis.

―The growing economy

opens new doors for young Fili-

pinos and businessmen,‖ said

Phillip F. Trapaga, general manager

of Concepcion Midea Inc. ―But

when it comes to cooling, each of

these opportunities comes with distinct needs and preferences.

So these hardworking individuals need a partner that can under-

stand their needs.

Anchored on energy efficiency,

affordability and quality, Midea‘s new

range of air conditioners features

Window RAC, Split Type, Floor-

Standing, Under Ceiling, and Cassette

models. Each cooling system brings a

unique set of advantages to the table.

Finding the right air conditioner,

according to Mr. Trapaga, depends on

a number of considerations — includ-

ing size of area to be cooled, total

heat generated within the space, and

even architectural dimensions.

THE STARTER’S CHOICE

The new homeowner has different priorities in mind, rang-

ing from designs to costs in buying and operating. Still, energy

efficiency, affordability and quality remain paramount for these

new homeowners and independence seekers who have just

moved out of their parents‘ homes and are moving into their

own condominiums.

Taking this into consideration, Midea offers a range of

home cooling solutions worthy of the

hard-earned money of these starting

homeowners. The Window Type air

conditioner, for example, is a great op-

tion for first-time air con buyers. Mr.

Trapaga said about the model, ―This

unit offers affordable cooling for the

Filipino family.‖

For those looking for Split-type air con-

ditioners, Midea has three models that

offer a variety of user advantages: the

Primera, the Genesis White, and the

Mirror Black. As the entry-level model,

Primera offers unparalleled functionali-

ty. The Eco Mode and Turbo feature

combine optimum energy-savings and high-speed cooling in

one air-conditioner. It also comes with specially designed silver

ion filters, which help clean and disinfect rooms.

The Genesis White, on the other hand, is engineered for

Newsline

Via BusinessWorld

The Concepcion Midea team (L-R): Assistant Brand Manager Ayn Catalan, Product Officer Atche Portillo, Phillip Trapaga, Deputy General Manager Charles Zhang, Product Officer Jo Anne Salazar and Deputy Marketing Director Jerry Zhao

Phillip Trapaga Talks about Midea’s Potential in the Philippines Market


12

Innovative Cooling Solutions for Homes and

Businesses (Cont.) Via BusinessWorld

Newsline

homeowners who place a greater emphasis on quiet operation.

When Quiet Mode is engaged, its large diameter fan minimizes

the indoor unit‘s noise level — so owners can sleep soundly at

night. It is designed for homeowners who want to have their

first inverter split type air conditioner.

Finally, the Mirror Black is Midea‘s top-of-the-line in-

verter split type air conditioner. Its Turbo DC Inverter and D-

Tech function delivers premium energy efficiency and highly

intelligent operation.

At the same time, its

sleek black finish

makes it a beautiful

design to complement

any living space it‘s

installed in.

SUPERIOR

COOLING FOR

LARGER SPACES

Small commer-

cial establishments and

industrial businesses

need the same level of

comfort required by

home-owners but on a

larger scale. For this,

Midea is rolling out three new models: Under Ceiling, Floor

Mounted, and Cassette. Each unit is engineered for different

installation parameters, making them convenient additions to

any space.

The Midea Under Ceiling offers flexible installation, as

users can place it on the ceiling or mount it on the wall. To

supply better airflow, it is designed with Swing Torsion An-

gles. This cooling unit is available in fixed speed and inverter

versions to meet a wider budget range.

Similarly, the Midea Floor Mounted comes in fixed speed

and inverter. This air conditioner is engineered to deliver supe-

rior and efficient cooling. At the same time, its metallic accent

instantly enhances interior aesthetics.

The Midea Cassette Inverter can be installed in the ceil-

ings of offices or even small living rooms. It boasts 360-degree

Air Outlet that enables it to deliver comfort- able cooling in

every corner of the room. It even comes with a Built-In Drain

Pump that can lift the condensing water by up to 750mm.

Quality is not the only consideration that small business

owners have to factor in. A strong aftermarket service is also

essential because it assures consumers that they will not suffer

from loss of business opportunities in the event of a break-

down,‖ Mr. Trapaga said.

Midea‘s cooling

solutions power

international pro-

jects which in-

clude Singapore‘s

Changi Airport

Terminal 1 and

Beijing National

Aquatics Center

used in the 2008

Olympics. In the

Philippines, the

brands‘ cooling

solutions are pre-

sent in major pro-

jects like The Ra-

ven Bar in BGC.

MIDEA MYPAL NATIONWIDE SERVICE

Midea brings these products to the Philippines with an

unparalleled global quality standard and are backed by a very

reliable and wide Midea MYPAL Nationwide service.

―Midea‘s tried and tested global reputation is now com-

plemented by local expertise,‖ commented Mr. Trapaga. ―At

the same time, we share the same standards of world-class

quality in all our products.‖

He concluded, ―Air-conditioning is just one cornerstone

of Midea‘s extensive portfolio. We are looking to roll out more

appliances throughout 2015.‖

Midea unveils innovative cooling solutions for homes

and businesses

Midea launched its complete range of air conditioning products May

6 at Romulo’s Café, Makati, in front of members of the local press.


13

To Use or Not to Use a Dictionary?

By John Baker

Language

This is the first in a series about language learning. The author

graduated from Cambridge University with a Master's degree in Engi-

neering and spent several years working in financial services in London

before moving to China.

He is currently based at the Midea Group headquarters, working

in Midea International Division's Strategy & Human Resources team.

W orking as an English trainer in Midea Interna-

tional Division (MID), I spend a lot of time giving colleagues

advice about the best way of studying a language – the ‗dos‘

and ‗don‘ts‘ of language learning. If I wind the clock back a

few years to when I

started learning Chinese,

and take a look at how I

was trying to learn, I

can‘t help but admit that

I was practicing most of

the ‗don‘ts‘ and hardly

any of the ‗dos‘.

So what brought

about my change of ap-

proach? Language learn-

ing is divisive: some love

it, others loathe it. How

did I transition from the

latter camp to the for-

mer?

I‘ve been lucky

enough over the last few

years to spend a lot of

time talking to people who

are themselves learning a

language – in their case, English. Many were kind enough to

share with me their experiences of language learning. They

told me the methods they had tried, what had worked for

them and what hadn‘t. After I‘d talked to enough people,

some common themes emerged. Some study methods produce

lasting, long term benefits; others cause frustration and lack of

progress.

As I continued to study Chinese, my own experiences

helped me add to the list of ‗dos‘ and ‗don‘ts‘. Let me mention

one example. One day, not long after I‘d started learning Chi-

nese, I was suffering from a cold and went into a 7 Eleven to

buy some tissues. At that time I didn‘t know the Chinese word

for tissue, so I used an online dictionary to look it up. In the

end though, my attempt to buy tissues failed miserably. The

staff in 7 Eleven couldn‘t understand what I was asking for,

even when I showed them the Chinese word on my phone. At

the time, I really couldn‘t understand why.

On reflection, the problem should have been obvious.

When translating from one language to another, one word

often has various translations, depending on the situation. It

turned out that, instead of asking for paper handkerchiefs, I

was in fact asking for tissue

as in human skin or flesh.

No surprise, then, that the

7 Eleven staff were baffled

by my request.

This example leads to a

broader question. When

you study a language, is it a

good idea to use a dual-

language dictionary? I‘d

argue that the answer is no

- using a dual-language

dictionary is a terrible idea.

Why? Well, since each

word in the language you‘re

learning can have different

translations depending on

the situation in question,

using a dictionary can cause

real confusion. To look at

another example, take the English word ―of course‖. If you

look ―of course‖ up in an English-Chinese dictionary, the first

word you‘ll see is ―当然‖ (dangran). However, ―of course‖

and ―当然‖ only have the same meanings in certain situations.

In some situations when speaking English, saying ―of course‖

can be very offensive. So, if you want to say the meaning of

―当然‖ and choose the English words ―of course‖, you could

An unforgiving place to test one’s language skills


14

To Use or Not to Use a Dictionary? (Cont.)

By John Baker

Language

easily end up offending someone.

A greater problem, however, is that translating always

brings your focus back on to your first language, when you

want your focus to stay on the language you‘re learning. This is

something I‘ll elaborate on in future editions.

To go back to the question of how I came to love lan-

guage learning, I can say that, to me, one thing is very clear:

the way you study a language has a huge effect on how much

you enjoy it. Studying using a dictionary can easily become

tiresome and frustrating. Watching TV shows, listening to

business lectures and chatting to friends and colleagues,

though, is generally much more pleasant and can have a much

more positive effect on your progress.

If you‘re learning a language and encounter a word you

don‘t know, reaching for your dictionary might seem like an

easy thing to do. It might seem like a fast and effective way to

under-

stand the

meaning

of the

word.

The ―of

course‖

example

above,

though,

shows that

that‘s not

really the

case.

What

about using

a single-

language dictionary? Well, that brings problems of its own.

When you read the definition of the word you‘ve looked up,

you may well encounter other words that you are not familiar

with, making the definition difficult to understand. You might

then try and look up those unfamiliar words, but their own

definitions may well contain other words you don‘t know,

which you then need to look up. You can end up in a seeming-

ly endless cycle of confusion.

So then, if we‘re to generally avoid using dictionaries

when learning a language, what can we do to get a good under-

standing of the words we want to learn? I believe that, to an-

swer that question, we have to look back to when we were

children and learned our first language. After all, we all speak

our first language well, so it does seem like the way we learned

our first language must be a pretty good way.

I invite you to join me over the next few months in

thinking about what the best, most natural way of learning a

language is. If you‘ve ever found learning a language to be a

less-than-enjoyable experience, thinking about the way you

study could have a huge effect on not only how much you

enjoy learning a language, but also on how effective the time

you spend learning is.

We live in a globalising world in which language skills are

becoming ever more important. This is especially true for

those of us who work in fast-growing multi-nationals such as

Midea Group. I know there are many colleagues in Midea

Group who are studying English and other languages. If you

are one of them and have your own language learning experi-

ences that you‘re willing to share with me, I‘d be very happy to

hear from you.

“We all speak our first languages well”


15

By Javier Romano

The Big Picture: The Fast-Food Wars

Javier Romano of Midea Commercial Air Conditioning (CAC)

takes a look at the rivalry between the world’s three largest fast food chains

and how it applies to other fields. The lesson: One cannot stress enough the

importance of adapting to local market demand.

O f the many fast food chains in the world, the largest

are McDonald‘s, Kentucky Fried Chicken (KFC) and Burger

King. All of them are based in the home of fast food, The Unit-

ed States.

McDonald‘s, with its US$27 billion a year in sales revenue

and 36,000 outlets, is the largest. KFC pulls in US$23 billion a

year with only 18,000 restaurants. Since its slump five years ago,

Burger King is lagging behind on US$1 billion a year. However,

with 14,000 restaurants it is still the world‘s second biggest burg-

er chain. Inevitably, the Chinese market is of huge strategic im-

portance to all three.

In 1987, KFC became the first Western restaurant chain to

open in China. China is now the company's single largest market

with more than 4200 restaurants in 2013. McDonald's entered

the country in 1990 and has more than 2000 restaurants. Burger

King entered China in 2005 and has only 63.

How is such a big differences possible? While KFC fully

adapted to this market, McDonald‘s did it only partially and

Burger King… the data speaks for itself.

If you enter a Chinese KFC you will see, of course, fried

chicken, which is popular in most Chinese cuisines. However,

you will also see rice. McDonald‘s restaurants in China are simi-

lar to those anywhere but contain some local characteristics such

as

a

se-

lection of small fruit fried pies. Burger King has soy bean milk,

yes, but apart from this everything is the same as in North

America or Western Europe.

Recently in Foshan, where Midea is based, I passed by a

Burger King. A large image of a burger and the word

CHEEEEESE covered the whole wall. Cheese has a very short

history in China. Ninety-nine percent of Chinese do not like

cheese and the other 1 percent tend not to crave it. Who decid-

ed this advertisement was suitable for China? Has he or she

even been to China?

A great example of fast food adapting to the local market

is McDonald‘s and its vegetarian burgers in India. Everybody

knows a huge number of Indians are vegetarian so no need to

be a genius to see that point but they are still the only fast food

chain there offering this option. Since 2013 this has been paying

dividends.

Whether it is burgers or air conditioners, rule number one

of selling is to know your market. Every market has its own

quirks, what worked in the United States will not necessarily

work in China. It all depends on the scale of your business too

of course; and many other factors. If the aforementioned giants

have such disparate performances in the same market, I would

rather take it seriously!

Big Picture

China’s first McDonald’s in Dongmen, Shenzhen

A typical Chinese KFC menu


16

IDEA

Idea of the Month: Social Skills

Via Ten Years Later

These are excerpts from an article which originally appeared in the

Chinese publication 《十年后》, translated by Advances

W e all know how to talk, but knowing how to

converse with people is a highly sophisticated skill.

In work, life and love we use language and body language

to both express and hide our emotions. Having good social

skills isn‘t always about telling people what they want to hear, it

means understanding others and getting your meaning across.

Listen and Appreciate the Rhythm of a Conversation

Most people have had conversations that felt like police

interviews. Maybe in your chat history on a social network, 90%

of conversation with a particular

person consists of questions. Kids ask

each other what their parents do,

adults ask each other about their

earnings and other private matters.

Another type of annoying

conversationalist is the ―performer.‖

This person spends most of the time

talking about how great they are

without giving the other person a say.

They also may spend the conversation

on a soapbox, pulpit or (worst of all) a

stand-up comedy stage.

The key to avoiding becoming

one of these is appreciation of the

rhythm of a conversation. Let people

talk about themselves without making yourself anonymous. It is

also important to look engaged and interested. Any questions

you ask should be relevant to what the person has just said.

Don’t Criticize or Use Harsh Language

In the age of Comedy Central roasts, humorously

insulting people may seem ―cool.‖

However, one should only ever criticize people one is

already close to. Unless you are a professional stand-up comic,

insulting people will not make you look humorous; it will just

make people think you are badly brought up.

The TV show ―2 Broke Girls‖ about well-educated young

Americans provides all kinds of useful information about how

to be polite. For example, instead of saying ―What is your

name?‖ say ―May I ask your name?‖

If you want to be considered a well-mannered person,

say ―please‖ and ―thank you‖ at every opportunity and

apologise when in doubt. When making demands of a

person‘s time, realise that you are asking a favour and act

accordingly. When unable to do somebody a favour, be

apologetic and self-effacing.

Be Genuinely Interested in People and Remember

Facts about Them

The essence of being a bad conversationalist is failing to

understand people. Small talk may seem dull and pedestrian,

but actually it is highly sophisticated.

All conversationalists process and analyse what the other

person is saying. A good conversationalist is

skilled at reading their environment. It is also

important to think about what people don‘t say,

as no functional adult is sincere 100 percent of

the time. A good conversationalist needs to ask

themselves why a person said what they just said,

and what part of it they need to address.

If you genuinely care about people, you will

become a more articulate person who gets their

point across more effectively.

You don’t have to change who you are

Some people fear that learning these social skills

means becoming somebody they are not. When

you were a baby, you cried a lot. Now you know

better than to be noisy. Does this mean you have betrayed

yourself? We are all changed by ageing and experience.

The idea that we should always be true to ourselves is

juvenile, because only through life experience can we know

who our true selves are. This article is not advocating sucking

up or selling out. It is also not claiming comprehensive

knowledge of what is right or wrong. It is aimed at pointing

out some of the subtleties of human interaction.

Language is a loaded weapon. Depending on how it is

used, it can cause a person to feel just about anything. If you

learn how to use it in social situations, you can make yourself

and other people feel less alone.


17

By Kevin McGeary

The Brains Behind the Brazil Brand

Felipe Vogt Product Engineer for Midea-Carrier ABC JV

Felipe Vogt, 27, is a product engineer for joint ven-

ture Midea-Carrier‘s Argentina, Brazil and Chile (ABC)

operations. He is cur-

rently based in Midea

International Division

(MID) in the group‘s

global headquarters in

Shunde where he

helps manufacturers

in China communi-

cate with colleagues in

Brazil.

In the field of

home appliances, Bra-

zil is a market of ma-

jor strategic im-

portance to Midea.

Vogt uses his

knowledge as a native

Brazilian and trained engineer to help Midea tailor its

products for the market in the Latin American country.

He took the time to talk to Advances about products,

cultural differences and the difficulty of the transition

from original equipment manufacturer (OEM) to original

brand manufacturer (OBM).

ADV: Why were you sent to China?

Felipe: I am here on a one year program where I report to

Brazil. I do a lot of factory visits related to products. In Brazil

we were working a lot in the home appliances business and we

were having a lot of issues during the projects, so I was sent here

to speed up communication. My role is to build bridges between

Chinese manufacturing and the Brazilian market, particularly

focusing on quality and scheduling.

Interestingly, for each project, the number of times I have

needed to communicate with Chinese manufacturers has not

changed. Even though I am based here, I still need to talk to

them about two or three times. However, what used to take me

two or three days now only takes me one morning.

ADV: What appliances do

you work with?

Felipe: I work with refrig-

erators, washing machines,

fans, air coolers, water puri-

fiers, water dispensers, mini

bars, and other things. I

don‘t really work with kitch-

en appliances such as micro-

wave-ovens and ovens, but

overall my role is to make

sure our guys in Brazil get

what they want.

ADV: What are some of

Midea-Carrier‘s star prod-

ucts?

Felipe: I think our microwave-ovens have deserved their

success in Brazil. With our own design and under our own

brand it had around a 12 percent market share during the peak

season last year, even though Brazil is not the easiest market

right now. Also, our water purifier, the result of cooperation

between the product division in China and the engineers in Bra-

zil, has a completely touchless interface—unique in the market.

These innovations are difficult to carry out but I am certain that

the water purifier will be a success in the market.

ADV: What challenges does Midea have in building its

brand in Brazil?

Felipe: At least two things: the first is that the product

portfolio needs to match, for example the refrigerators, washing

machines, microwaves, and dishwashers need to complement

each other with their appearance and design. Brazilian consum-

People

Felipe Vogt at his desk in Midea International Division


18

By Kevin McGeary

The Brains Behind the Brazil Brand (Cont.)

Felipe: Whirlpool has two very strong brands in Brazil,

Brastemp and Consul. There are those two and Electrolux.

They are the market leaders. Korean brands like LG and Sam-

sung are getting really strong there and will probably grow there

over the next few years.

ADV: You know so much about the market, have you

always been in this industry?

Felipe: Not really.

When I was still at uni-

versity, I joined a start

up with two PhD candi-

dates. After that I went

to Ireland to learn Eng-

lish and be fully inde-

pendent. Selling cable

television subscriptions

door-to-door in the rain

was the worst job I ever

had but also a great ex-

perience.

Upon graduating, there

are three ways of getting

a job in Brazil: an intern-

ship, a trainee program or

being recruited directly off

the market. The latter

requires prior experience. I was among eight of 5,000 applicants

to be selected for Midea-Carrier‘s graduate trainee program. It

helped that I went to a top university, Universidade Federal do

Rio Grande do Sul (UFRGS), had prior experience as an entre-

preneur and had lived in a foreign country.

ADV: You already had international experience when you

came to China. How does it compare?

Felipe: It is very different. Originally, I thought Ireland

was pretty different from Brazil. But as soon as I came to Chi-

na, I felt like Ireland and Brazil could be the same place. Be-

tween myself and all of the foreigners I know here it feels as

though we are all from the same place, sharing the same culture.

People

ers care a lot about this kind of thing. For instance a kitchen is

no longer just a place to cook, it is a place to invite friends so it

is important that, as well as being functional, the appliances

look the part. We are working hard to make sure we help con-

sumers select the product range that is most suitable for them.

Brazilian consumers are very design-orientated. A car may

have a beautiful design but an under-performing engine. The

refrigerator market in Brazil is one of the most difficult in the

world. Refrigerators need to have new and innovative features,

such as fast cooling for

beer, in addition to the

usual expectations like in-

ternal, well-designed sup-

port for every kind of item,

like cheese, ham, eggs,

cans, bottles, etc.

The second issue is

quality. Consumer demand

in China has a wide variety

of standards, therefore the

products Midea makes for

the domestic market vary in

quality. There needs to be a

minimum standard of qual-

ity for export, and we are

working on that with MID,

because it would be very

difficult to recover from a

poor reputation developing out of quality issues.

ADV: What advantages does Midea have in the Brazilian

market?

Felipe: One of the biggest advantages is that Midea has

decades of experience as a manufacturer of world-class prod-

ucts for the biggest brands in the industry. Midea already knows

how to make the best products, it just needs to apply the same

standards to its own brand as it does to others. As a new brand,

it can carve out a niche as high quality but affordable.

ADV: Who are the competitors?

Midea-Carrier building its brand in Brazil


19

By Kevin McGeary

The Brains Behind the Brazil Brand (Cont.)

identifying the roots of problems rather than advancing at all

costs.

They also began to employ culture experts. For example,

if they wanted to break into the Mexican market, they would

give somebody a camera and a computer and allow them to

spend a year in Mexico learning the language and learning about

the culture, with the long-term aim of learning about the mar-

ket.

Most importantly, the best products that Midea makes

need to be under the Midea brand. Every person who works for

Midea needs to believe in the products and the brand.

ADV: And lastly, how do you spend your free-time in

Shunde.

Felipe: Some days I go out for a few beers with col-

leagues; I play football in the local team; at weekends I go run-

ning or cycling in the park; during holidays I like to travel

around China and Southeast Asia. I have been to Beijing,

Shanghai, Thailand and Singapore.

I also want to go to Guilin, Macao, Indonesia and Tibet if

I still have time. But I am not sure if I will be able to go to all of

these places in the next year. If not there is always next time.

People

When at home, I can do most things on

cruise control. But in China, everything re-

quires great thought and care. It has been a

great experience because everything is so dif-

ferent. Explaining the virtues of sharing the bill

can take 20 minutes, but we are the ones who

need to adapt. Adapting is tough but worth it.

ADV: Do you think cultural differences

are a problem for Chinese brands?

Felipe: Right now I am reading a book

called ―The Samsung Way‖ and it talks about

how they changed the culture of the company.

Thirty years ago, Samsung was an OEM whose

own brand was largely known for cheap prod-

ucts.

Then things

changed. If a

quality issue

was raised

then the entire

production

line would be

stopped until

it was fixed.

The culture of

simply paper-

ing over prob-

lems was root-

ed out and

they began to

ruthlessly pur-

sue the high-

est quality

standards. An

OBM requires

more long-term

thinking than an

OEM. It means

Resting after another victory

Midea BG, a football team that predominantly consists of overseas staff in the Midea Group headquarters. Felipe is second from the right on the back row.


20

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