At the just concluded Gree shareholders meeting, Dong Mingzhu, the chairman of Gree Group, made a comeback in the air conditioning market. She not only questioned the so-called market ranking, but also talked about the sales pressure this year. Today, when high temperature factors are not dominant and production has declined, the uncertainty faced by air conditioning companies is also increasing. From an industry perspective, the mismatch between upstream, midstream, and downstream may lead to a spiral decline in product prices and structure, suppressing the process of high-end development, which may be a more challenging issue. Despite air conditioning being a must-have item in every household, the three giants still compete for it in today's home appliance market. Taking this year's "6.18" JD Home Appliance Racing List as an example, the ranking is based on the cumulative transaction volume of all categories, with Midea, Haier, and Gree ranking first to third respectively; Xiaomi is coming aggressively, ranking fourth, with air conditioning being an important lever in its home appliance sector; Ox, which mainly focuses on air conditioning, although its brand strength is slightly inferior to the former, still ranks sixth on the list, highlighting the importance of air conditioning. From the perspective of fresh air conditioners alone, the top single product on JD.com's home appliance list is a Midea fresh air conditioner, ranked second and third by Xiaomi and Xiaomi Mi Home's two 1.5 horsepower fresh air conditioners. Haier ranks fourth, while Gree's single product ranks sixth. Industry observer Major General Ding told Beijing Business Daily reporters that nowadays, it is still "the one who gets the air conditioner gets the world". This year, the top three in terms of transaction volume on June 18th are still the "three giants of white electricity", which are also the three giants of the air conditioning industry. Xiaomi's ability to approach the top three is mainly due to air conditioning. Relatively speaking, its refrigerator and washing machine capabilities are weak, but Xiaomi's air conditioning has become a sector that can compete with traditional brands after television. Dong Mingzhu's "viral" remarks at the shareholder meeting this time also revolved around air conditioning. Dong Mingzhu said, "Recently, there have been many rumors fabricated online, and we are also constantly cracking down on counterfeits." Dong Mingzhu also questioned Xiaomi's claim that air conditioning ranks first, but what is its core technology? And it is stated that "who is the first consumer has a scale in their heart.". Even without discussing Xiaomi, the air conditioning battle among the "three giants" has never ceased. General Ding pointed out that currently, Gree ranks higher than Haier in the air conditioning industry. However, due to Haier's more comprehensive home appliance category, its revenue scale is higher than Gree. Although Midea air conditioning may appear inferior on the surface, in reality, Hualing and Little Swan are both its own brands. If the "Midea series" share is combined, its advantage over its old competitors such as Gree and Haier is still expanding. The upgrade of the hidden battle between brands due to high temperature factors is also due to overall market pressure. The unexpected high temperature heating air conditioning market in 2023 has also brought impressive performance to enterprises, but the trend this year is still uncertain. Taking Gree Electric Appliances as an example, it achieved a total operating revenue of 2050.18 billion yuan last year, a year-on-year increase of 7.82%; The net profit attributable to the parent company was RMB 29.017 billion, a year-on-year increase of 18.41%. Of last year's revenue, RMB 151.217 billion came from the air conditioning business. Regarding the market situation this year, Dong Mingzhu said that it is not hot and there is more rain this summer, which has some impact on the air conditioning industry. This concern is also reflected in the data. From the perspective of air conditioning production, last year's hot trend continued into the first quarter of this year, but it reached a turning point in June. According to statistics from Aowei Cloud Network, domestic sales and production of household air conditioners in China decreased by 10% and 12.25% year-on-year in June and July, respectively. From sales to May, the cumulative retail sales of domestic household air conditioners decreased by 6.5% year-on-year. Overall, the air conditioning industry still relies on weather for survival. Not only in China, but also in Southeast Asia this year, it has been hit by high temperatures, causing a surge in demand for air conditioning and driving up domestic air conditioning exports. According to statistics from Oviyun, in May this year, the export volume of air conditioners sold to Thailand, the Philippines, and Malaysia increased by 138%, 99.8%, and 71.5% year-on-year, respectively. In addition, the export volume to the Middle East also increased significantly. For the domestic market, high temperatures are driving air conditioning sales because they stimulate user demand for new replacements. A Beijing Business Daily reporter visited the market and learned that most residents only use air conditioning in the summer every year, and only feel a lot of inconvenience when using it, so they want to buy air conditioning with better performance. A consumer told a Beijing Business Daily reporter that their old air conditioner has been in use for ten years, and almost every summer it needs to be cleaned before use, costing 200-300 yuan. Instead, it is better to replace it with a new air conditioner. Currently, many new products on the market have self-cleaning and high-temperature sterilization functions for both internal and external units. Some consumers also claim that the old air conditioners at home cannot even adjust the wind direction and need to manually rotate the blades. However, nowadays, almost all new products can provide air from multiple angles and rotate to control the air flow, without blowing directly at people. Another user lives in an older building with more rooms and cannot install central air conditioning, so it is almost one room, one unit, and the electricity cost is naturally not small. If they replace it with a new one, they can simply replace it all with variable frequency air conditioning, which not only consumes electricity but also stabilizes the temperature. Once the high temperature boost is lost, it is still uncertain whether the demand for replacement can support the air conditioning market. Industry observer Xu Yiqiang told Beijing Business Daily that replacing air conditioners will be the main driving force and long-term factor for the coming years. However, in the short term of 2024, the market may not be as prosperous as last year. Logically speaking, looking at enterprises in the long term and channel merchants in the short term has pushed inventory levels to a high point due to months of high production and high shipments. Channel merchants, under pressure from inventory and capital turnover, will correspondingly reduce orders and instead digest previous inventory. The problem of misalignment remains to be solved. In recent years, high-end has become the most frequently mentioned term in the air conditioning market. However, from this year's situation, air conditioning not only loses its high-temperature boost, but also issues warnings in terms of product structure and price. According to statistics from Aowei Cloud Network, the air conditioning market showed a downward trend in structure and prices from January to April this year. The average online and offline prices decreased by 4.4% and 2.8% year-on-year, respectively, and further expanded in May. From the perspective of product structure, sales of 1.5 horsepower hanging machines below 2000 yuan accounted for 32.4%, a year-on-year increase of 14.1%, while the proportion of high-end products above 3500 yuan has declined. At the same time, there are also many "hidden" price reductions in the market, often appearing in the form of discounts. Generally speaking, 2000 yuan is an important dividing line, and products that previously belonged to this range have been offering discounts. Taking Xiaomi Mi's original price of 1999 yuan for a large 1-horsepower cold hanging machine as an example, the current order price is 1499 yuan. If combined with various discounts of exchanging old for new, the lowest price can reach 899 yuan, below 1000 yuan; The previous 1.5-pit AUX air conditioner priced at 3199 yuan is now priced at 1999 yuan, and after considering various discounts, the final price can reach 1899 yuan. Therefore, some people are concerned whether the strategy of "high-end" has failed. Xu Yiqiang believes that the underlying reasons cannot be generalized and should be considered from the perspective of different market entities. Generally speaking, channel operators are the most sensitive link, as they can immediately feel the slowdown of downstream demand and adjust inventory levels. On the contrary, in some cases, upstream enterprises are still raising production targets, causing a cognitive mismatch between the two parties. The more the upstream seizes sales, the higher the midstream inventory, and the lower the downstream selling price, forming a price reduction spiral. At the same time, consumer confidence has not been as strong as before, and their consumption of air conditioners is more rational. Especially when the performance of high-end air conditioners has dropped to the 2000 yuan price range, the cost-effectiveness of air conditioners in this range has increased, which naturally promotes consumers to choose products with lower prices. Experts point out that the high-end of air conditioning is not just about selling more expensive, but also about improving cost-effectiveness. For air conditioning companies, how to refine their product lines and differentiate between different levels becomes the key. High end products focus on consumer awareness, while mid to low end products strive to expand channels, which inevitably intensifies the all-round competition of air conditioning enterprises from production to marketing. (Lai Xin She)