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Gree Electric Appliances: China's Air Conditioning Empire and the Iron Lady Who Built It
Introduction & Episode Roadmap
Picture this: a 36-year-old widow arrives in Zhuhai in 1990, having left her three-year-old son with his grandmother in Nanjing. She has no connections, no capital, and no experience in manufacturing. What she does have is an iron will forged in the crucible of personal tragedy and the burning ambition to reinvent herself in the boomtowns of China's newly opened Special Economic Zones.
Three decades later, Dong Mingzhu has overseen a company whose stock has risen 2,300% during her tenure, and she has become a legend in China. The factory she joined as a lowly salesperson—where she was assigned the least promising territory in one of China's poorest provinces—became the world's largest residential air-conditioner manufacturer, with production spanning 10 locations including Hefei, Chongqing, Wuhan, Tianjin, Wuhu, Zhengzhou, Shijiazhuang, Changsha, Pakistan, and Brazil.
As of mid-2025, Gree Electric Appliances trades on the Shenzhen Stock Exchange with a market capitalization of approximately $35.1 billion. The company achieved operating revenue of 189.164 billion yuan in 2024, a 7.26% decrease from 2023, and a net profit attributable to shareholders of 32.185 billion yuan. Yet beneath these respectable numbers lies a story of strategic triumphs and stubborn miscalculations—of an empire built on a single product, of diversification attempts that have largely fizzled, and of a succession crisis that raises fundamental questions about what happens when a company becomes inseparable from its iconic leader.
Following Gree's 2019 mixed-ownership reform, the company no longer has a controlling shareholder. Its largest stakeholder is a Hillhouse Capital-managed investment fund, which has a 16 percent stake. The structure is unusual—neither purely state-owned nor privately controlled—and represents one of China's most significant experiments in SOE reform.
The central question is both simple and profound: How did a nameless factory in a Chinese special economic zone become the global leader in air conditioning, and what happens when a legendary founder can't—or won't—let go?
This is a story about China's manufacturing evolution, about the peculiar risks of charismatic leadership, and about what it means to build an industrial empire when the world around you is transforming at breakneck speed. The themes that emerge—single-product dependency, the challenges of state-owned enterprise reform, and the eternal question of succession—resonate far beyond Zhuhai's humid shores.
The Zhuhai Special Economic Zone & Founding Context
The Setting: China's Reform Era
To understand Gree, one must first understand Zhuhai in 1980. Zhuhai Special Economic Zone, established on 5 August 1980, is one of the five special economic zones in the People's Republic of China. Originally comprising a territory of 6.1 km² in Zhuhai City, it was expanded to 15.16 km² on 29 June 1983, and 121 km² on 5 April 1989.
In April 1979, Xi Zhongxun and other Guangdong officials presented in Beijing a proposal to give broader flexibility to the coastal provinces of Guangdong and Fujian to attract foreign investment, with additional exemptions in four cities, namely Shenzhen in the Pearl River Delta region, Zhuhai and Shantou in Guangdong and Xiamen in Fujian Province. For these, Chinese Paramount leader Deng Xiaoping coined the name "special zones" and characterized them as experiments in the mold of the pre-1949 Communist base areas. The proposal was approved on July 15 and the four special zones were officially established on August 26, 1979. As part of an effort to overcome domestic political resistance, the name "special economic zone" was ultimately chosen over "special zone" to emphasize that only economic, not political, experiments should be carried out.
Zhuhai took a different path by emphasizing environmental protection alongside economic growth. While other Pearl River Delta cities chose rapid industrialization, Zhuhai suppressed heavy industry to maintain environmental quality. This decision would shape the city's character—and the types of companies that thrived there.
Zhuhai and the surrounding landscapes were developed into an industrial output zone in the 1980s. Prior to that, Zhuhai generated economic development on the basis of tourism, benefiting from the comfortable subtropical climate. Zhuhai enjoys the reputation of a coastal garden city. When environmental pollution from the manufacturing industries threatened the quality of life, Zhuhai introduced strict environmental laws and hired engineers from Singapore to assist the city with urban planning.
The Merger That Created Gree
Established in March 1985, Zhuhai Gree Group Co., Ltd. has grown into the largest and most powerful state-owned leading enterprise in Zhuhai with a credit rating of AAA. It laid a strategic industrial layout of "one core and four pillars" covering manufacturing, financial investment, construction investment, construction and installation, and island tourism. With accurate understanding of the market and accurate prediction of future trends, Gree Group has completed the transformation into an international company with over 3 decades' effort.
The origins of what would become Gree Electric trace back to the mid-1980s, when China's opening-up policy was transforming coastal cities into laboratories for market economics. Industrial Development Co. of Zhuhai SEC (the predecessor of Gree Group), Guanxiong Plastic Company, and Haili Air Conditioner Factory were all established in 1985, each a modest enterprise in a city still finding its footing.
A technician named Zhu Jianghong played a crucial role in turning Guanxiong Plastic Factory profitable in 1988. His success, particularly in the electric fan market, set the stage for the formation of what would become Gree Electric. Gree Air Conditioner Factory was founded in August 1991, when Guanxiong and Haili were incorporated into one company. The company started as a nameless factory with 200 employees and annual production of less than 20,000 units—a rounding error compared to today's output of tens of millions.
Early Structure & State Ownership
GREE Group was owned by Zhuhai Municipal People's Government (the local government of Zhuhai). GREE Electric is a majority state-owned enterprise, primarily by the city of Zhuhai. This SOE structure would prove both a blessing and a constraint—providing stability and government support, but also limiting managerial flexibility and creating tensions that would culminate in the landmark 2019 privatization.
The significance of this structure cannot be overstated. Unlike private entrepreneurs who could make swift decisions about capital allocation and strategy, Gree's management operated within the framework of state ownership, where political considerations often intersected with commercial ones. Yet within this framework, a remarkable woman was about to begin her ascent—one that would eventually give her de facto control of a company she didn't technically own.
The Rise of Dong Mingzhu: From Widow to "Iron Lady"
A Remarkable Origin Story
Dong Mingzhu was born the youngest of seven children in a working-class family in Nanjing, capital of east China's Jiangsu province, in August 1954. When she was a child, she wanted to be a soldier. That childhood dream of military service would prove prophetic—though her battlefield would be the corporate arena rather than actual warfare.
Dong graduated from a specialized institute in Wuhu, Anhui in 1975, with a degree in Statistics. After graduation, Dong got an administrative job at a local government chemistry laboratory in Nanjing for 15 years. For a decade and a half, she was a government researcher—a stable, unremarkable career path that might have lasted until retirement.
Then came the personal tragedy that changed everything. In 1990, at age 36, recently widowed Dong left her three-year-old son to his grandmother and quit her job at the government research facility in order to move to the more economically developed Shenzhen in Guangdong province and to find a new job, but moved to Zhuhai soon. The decision to leave her young child behind speaks to both the desperation of her circumstances and the fierce ambition that would define her career.
The Sales Phenomenon
Joining Haley (Gree Electric's predecessor) as a salesperson, she worked for four years as an air-conditioner saleswoman. This was not a glamorous assignment. Air conditioner sales in early 1990s China meant traveling to remote provinces, cultivating relationships with dealers, and spending weeks away from home—if you could call a new city home at all.
"Sent to a poor province, Anhui, she produced one-eighth of Gree's annual sales, catching the attention of Zhu Jianghong, Gree's first general manager." Consider the magnitude of this achievement: a newcomer, given what was considered the company's least promising territory, generated fully 12.5% of total company revenues within 18 months. The sales totaled approximately $2.8 million in 1992—a figure that might seem modest today but represented an extraordinary performance in a market still developing its appetite for air conditioning.
What made Dong different? Industry analysts point to her willingness to challenge conventional wisdom. Rather than accepting the brutal price wars that characterized the industry, she developed innovative dealer support programs that built loyalty and allowed Gree to compete on factors other than price alone. She treated dealers as partners rather than mere distribution channels—a philosophy that would later crystallize into Gree's distinctive sales model.
Meteoric Rise Through the Ranks
By 1994, she had become the company's head of sales; by 1996, its deputy president; by 2001, its president; and by 2012, its chairwoman. Each promotion was earned through performance, but also through a reputation for being willing to fight—for her ideas, for her team, and for what she believed was right for the company.
Dong, 70, has been at the helm of Gree Electric since 2012 as a chairwoman and president, serving the company in different roles for more than 30 years. When Zhu Jianghong retired in 2012, he handed the reins to Dong, completing a succession that he had carefully orchestrated over years. In an industry dominated by men, Dong had risen to the top through sheer force of will and demonstrable results.
Dong is, without a doubt, the face of the company. She is frequently spotted in the company's advertisements on buses and in airports across China, local variety shows, and has even appeared in a full-page advertisement in the New York Times. In 2020, she made her live-streaming debut alongside professional live-streaming influencer Li Jiaqi.
In 2021, Fortune ranked Dong the seventh most powerful international women in the world. But her rise to global prominence masks the deeper question that now haunts the company: what happens to Gree when Dong is no longer at the helm?
Building the Air Conditioning Empire (1994–2010)
Restructuring and IPO
The mid-1990s marked Gree's transformation from a regional manufacturer into a national champion. By 1994, Gree underwent a significant restructuring that granted it operational independence from its parent entity, Zhuhai Haili Cooling Engineering Company Limited. This pivotal change led to the company being renamed Gree Electric Appliances Inc. of Zhuhai, formalizing its identity as a dedicated air conditioning manufacturer. The company was listed on the Shenzhen Stock Exchange in 1996.
The IPO was a crucial inflection point. Access to public capital markets allowed Gree to fund expansion at a pace that would have been impossible for a purely state-owned enterprise dependent on government budgets. The listing also imposed the discipline of quarterly earnings reports and investor scrutiny—forces that would shape management decision-making for decades to come.
The Unique Dealer Model
Gree establishes new sales companies through joint ventures with tier-1 dealers and then sells products to consumers through second- and third-level dealers. Even in the off-season, Gree's risk of excessive inventory is significantly reduced, avoiding dramatic fluctuations in sales. To maintain a long-term relationship with dealers, the company implemented the off-season and year-end rebates, building a positive circulation among the offline channels.
This dealer model was Dong Mingzhu's brainchild, refined during her years as a salesperson and sales manager. Rather than treating dealers as interchangeable distribution points to be squeezed for maximum margin, Gree created joint ventures that aligned dealer interests with the company's own. The result was a network of highly motivated partners who had genuine stakes in Gree's success.
The model had additional benefits during downturns. While competitors faced the dual challenges of slumping demand and inventory write-downs, Gree's rebate structure and joint venture arrangements distributed risk across the value chain. Dealers had incentives to smooth demand across seasons, and the joint venture structure meant that inventory management was a shared responsibility rather than a game of hot potato.
Surviving the Global Financial Crisis
The company grew 47% in 2008, despite the 2008 financial crisis, booking $23 billion in contract sales. This is a remarkable statistic that deserves emphasis: while global trade contracted and consumer spending collapsed across much of the world, Gree posted nearly 50% revenue growth.
Several factors contributed to this resilience. First, China's domestic market was still in the early stages of its air conditioning adoption curve—penetration rates remained low compared to developed markets, providing insulation against global trends. Second, when the 2008 financial crisis broke, China implemented the fiscal policy of "home appliances going rural to expand domestic demand." Nonurban residents who bought color TV sets, refrigerators, mobile phones, and washing machines received a 13% subsidy on the product price, which quickly stimulated the consumption of domestic electrical appliances. Third, Gree's dealer network proved remarkably resilient, maintaining distribution even as other channels contracted.
Global Expansion & Partnerships
The company has two joint-ventures with Daikin, Zhuhai GREE Daikin Device Co., Ltd., and Zhuhai GREE Daikin Precision Mold Co., Ltd. GREE Electric Appliances Inc and Japan's Daikin Industries Ltd signed an agreement in 2009 to invest 910 million yuan (US$133 million) in two joint ventures to develop advanced inverter-type air conditioners in China. China's largest maker of home air conditioners and the world's second-biggest maker of air conditioners planned to form two ventures in Zhuhai, Guangdong Province, where Gree is based, for the production of key components and molds.
The watershed moment in Daikin's trajectory occurred in 2008 when it formed a strategic partnership with Gree, China's largest air conditioner manufacturer. This collaboration enabled Daikin to tap into Gree's expansive distribution network and manufacturing expertise, significantly enhancing its own market reach. The partnership proved mutually beneficial; Gree capitalized on Daikin's advanced inverter technology while Daikin secured a foothold in a market driven by increasing consumer demand for energy-efficient solutions.
By 2012, inverter air conditioners claimed over 60% of the Chinese market share, a figure that surged to over 90% by 2024. This partnership exemplifies a pattern that has served Gree well: absorbing advanced technology from foreign partners while maintaining control of the domestic market.
With products sold in more than 160 countries, the company ranked first in the household air conditioners field, with a global market share of 20.6%, in 2019. By the end of the decade, Gree had established 11 production bases around the world, nine located in China, with another two in Brazil and Pakistan.
The empire had been built. But as the next decade would reveal, maintaining dominance would prove far more challenging than achieving it—especially as a new competitive landscape emerged and the company's attempts to diversify would meet with decidedly mixed results.
Key Inflection Point #1: The 2019 Privatization & Hillhouse Capital
The Mixed-Ownership Reform
In December 2019, GREE Group sold most of the stake they owned in GREE Electric to a private equity fund. An investment fund backed by Hillhouse Capital won a bid to acquire a 15% stake in Gree Electric Appliances Inc., China's largest air-conditioner maker, from its government-owned parent in a deal with an estimated value of $7.5 billion.
Zhuhai Mingjun Investment Partnership, a fund managed by Hillhouse Capital Management, Ltd. won a bid to acquire 15% stake in Gree Electric Appliances from Zhuhai Gree Group Co., Ltd. on October 29, 2019. On December 2, 2019, Zhuhai Gree Group Co., Ltd. signed a share transfer agreement with Zhuhai Mingjun Investment Partnership to transfer 15% stake in Gree Electric Appliances for CNY 41.7 billion. Zhuhai Gree Group Co., Ltd. transferred 902.36 million shares for CNY 46.17 per share. Post closing, Zhuhai Gree Group Co., Ltd. was no longer the controlling shareholder of Gree Electric, with its holdings reduced to 3.2% from 18.2%.
This was not a routine transaction. It represented one of the most significant privatizations in Chinese corporate history—a high-profile endorsement of the government's "public-private partnership" programme that sought private entrepreneurs to invest in state-owned companies to help improve their efficiency and competitiveness.
Why This Deal Matters
The ownership change had profound implications for governance, strategy, and investor perception. Li Jin, chief researcher at the China Enterprise Research Institute in Beijing, characterized the deal as having "great significance" given the tough competition facing Gree in the domestic home appliance sector. The mixed-ownership reform was positioned as helping "Gree Electric enhance its competitiveness and push forward the internationalization of the Chinese manufacturing industry."
Following Gree's 2019 mixed-ownership reform, the company no longer has a controlling shareholder. Its largest stakeholder is a Hillhouse Capital-managed investment fund, which has a 16 percent stake. Dong, who has 1.8 percent, is the sixth-largest owner, though her influence extends beyond her equity holding, as she and the Hillhouse fund are considered persons acting in concert.
This "acting in concert" arrangement is crucial. Despite holding less than 2% of the shares directly, Dong Mingzhu's influence remains paramount through her alliance with Hillhouse. As of March 2025, Chairwoman Dong Mingzhu and privately owned investment entity Zhuhai Mingjun collectively held 18% of its total equity interest, while state-owned Zhuhai Gree Group owned about 3.5%.
Why Hillhouse?
"What Gree Electric lacks most is the ability to keep abreast of the retail market and the post-1990s and post-2000s consumers' preferences. Hillhouse Capital has invested in some internet giants such as Tencent Holdings Ltd and JD, so the introduction of strategic investors will help the company further innovate," Everbright Securities analyst Jin Xing said. Founded in 2005, Hillhouse Capital is known for its investments in top Chinese technology firms such as Tencent, Baidu, Didi Chuxing and Meituan-Dianping.
Hillhouse Capital Group, founded in 2005 by Zhang Lei, began as an Asia-focused investment firm known for venture and growth equity investments in tech companies. As it expanded into buyouts and more mature companies in the 2010s, Hillhouse gradually developed an operating partner capability to support its long-term, hands-on investment philosophy. Early on, Hillhouse's approach to value creation was influenced by Zhang Lei's belief in building businesses that stand the test of time through patient capital and operational improvements.
Another differentiator is Hillhouse's extremely long-term orientation and permanent capital approach. Unlike many PE firms with 5-year fund lives, Hillhouse often holds investments for a decade or more. This allows their operating partners to implement changes that might take several years to fully manifest without the pressure of an imminent exit. Hillhouse's willingness to invest in heavy R&D or in multi-year IT projects sets it apart – it behaves more like a strategic owner.
Hillhouse's team helped Gree Electric Appliances automate parts of its manufacturing and adopt lean processes, aiming to resolve inefficiencies and cut costs. The partnership brought Silicon Valley-style operational expertise to a traditional manufacturing company.
The Bidding War
Two units under investment management firms Hillhouse Capital Group and Hopu Investment Management entered the last stage of bidding for a 15 percent stake in leading Chinese home appliance maker Gree Electric Appliances. Zhuhai Mingjun Investment Partnership, under Hillhouse, and the consortium of Gewu Houde Equity Investment Partnership and Genesis Financial Investment led by Hopu Investment, filed share purchase applications and paid the required deposits.
In April 2019, Gree announced its plan to sell the stake, and firms such as Baidu, Singapore's Temasek Holdings, and Hopu Investment Management all sought to buy the shares. Gree Electric said its state-owned parent picked Zhuhai Mingjun Investment Partnership after a six-month bidding process that attracted around 25 interested companies and consortia. The intensity of interest underscored both Gree's blue-chip status and investors' appetite for exposure to China's consumer market.
The privatization marked the end of one era and the beginning of another. But whether Hillhouse's digital expertise and long-term capital could solve Gree's fundamental challenges—especially its dangerous dependence on air conditioning and its struggle to find growth in new markets—remained to be seen.
Key Inflection Point #2: The Diversification Gambles
The Strategic Imperative
As early as 2012, "diversification" appeared in the annual report for the first time as a strategy for the company's future development. In 2016, Gree officially announced its entry into the era of diversity. The rationale was clear: no matter how dominant Gree might be in air conditioning, a company dependent on a single product category—in a market that was maturing and becoming increasingly competitive—faced existential risk.
Compared with 83% four years ago, A/C revenue against total revenues decreased to 70% in 2019, a relatively small number compared to Midea Group's average of 40%. While this represented progress, it also highlighted the gap between Gree and its more diversified rivals. Midea's ability to generate 60% of revenues from non-air conditioning products gave it a resilience that Gree lacked.
A reporter from Cailian Press observed that in 2021, Gree Electric began classifying its revenue composition into seven categories in its annual report: air conditioners, household appliances, industrial products, intelligent equipment, green energy, other main businesses, and other businesses, a classification that was maintained until 2023. However, in the 2024 annual report, the revenue composition was adjusted to five categories: consumer appliances, industrial products and green energy, intelligent equipment, other main businesses, and other businesses. In other words, in the 2024 annual report, Gree Electric no longer separately discloses specific data for air conditioners and household appliances.
This reclassification may reflect a psychological shift in the company's approach to diversification—or perhaps an attempt to obscure the continued dominance of air conditioning in the company's revenue mix.
The Smartphone Misadventure (2015–2021)
Between 2015 and 2021, Gree Electric also introduced several mobile phone models. The air-conditioner giant first unveiled its smartphone ambitions in 2015, when chairwoman Dong Mingzhu, one of China's most prominent businesswomen, said that Gree could "easily surpass" Xiaomi in the smartphone market.
Outspoken Gree chairwoman Dong Mingzhu had lofty claims about the company's smartphones claiming they were "as good as Apple iPhones" and that Gree would "easily surpass Xiaomi" in the smartphone market. In hindsight, these claims seemed ludicrous at the time and did not pan out as expected.
In the following three years, three generations were released in succession, but all ended up with unsatisfying sales performance. The total shipment of three generations combined was less than 100,000. For context, Xiaomi shipped over 100 million smartphones in 2018 alone.
Gree Electric, one of China's biggest air-conditioner makers, reportedly disbanded its smartphone unit after seven years amid sluggish consumer spending on electronics devices. Gree, based in the southern Chinese city of Zhuhai, has disbanded the core team of its smartphone business, which at its peak employed 100 people in the southern tech hub of Shenzhen.
The smartphone venture exemplified the perils of diversification driven by ego rather than strategic logic. Gree possessed no particular advantage in smartphones—no proprietary operating system, no differentiated hardware, no established distribution channels for mobile devices. The company's manufacturing expertise in air conditioning compressors and heat exchangers was entirely irrelevant to smartphone production.
The Yinlong EV Saga: Dong's Personal Crusade
If the smartphone venture was a costly distraction, the Yinlong saga became a years-long drama that tested the limits of Dong Mingzhu's judgment and her ability to impose her will on a reluctant board.
Gree Electric announced plans to step into the fast-growing new-energy vehicle market by acquiring Zhuhai Yinlong New Energy Co Ltd, a local electric-vehicle producer, for 13 billion yuan ($1.81 billion). Yinlong, established in 2004, had started making inroads into the new energy sector in 2009. The company sold 3,189 electric buses in 2015, seizing a 3.6 percent market share in China. It had a lineup of seven electric passenger cars and 18 electric buses.
Gree offered to acquire Zhuhai-based Yinlong in November 2016 for CNY 13 billion but was rejected by majority shareholders. The proposal failed to win approval at a shareholder vote—a rare public rebuke of Dong Mingzhu's strategic judgment.
Most executives would have accepted defeat and moved on. Dong doubled down. She personally invested CNY 2.6 billion of her own funds to become Yinlong's second largest stakeholder—a remarkable demonstration of conviction (or stubbornness, depending on one's perspective).
The Yinlong Scandal & Eventual Acquisition
The Yinlong investment quickly went sour. The shares were put up for sale by a local court as Yinlong's ex-chairman Wei Yincang was wanted by police for allegedly embezzling CNY 1 billion of corporate funds. He fled to the US in December 2018 and has not returned. The scandal exposed governance failures that Dong had apparently failed to detect during her due diligence.
Gree has paid CNY 1.83 billion (USD 282.9 million) for 30.47 percent equity in Yinlong, which also makes electric buses, electric vehicle charging devices and other energy storage systems. Yinlong racked up losses of CNY 682 million (USD 105.5 million) on revenue of CNY 4.3 billion (USD 669.3 million). The firm's sales of electric buses ranked fourth in the country in the first seven months.
Gree Electric Appliances successfully bid for a majority stake in energy storage device manufacturer Yinlong Energy after the failed takeover attempt in 2016. Together with the 17.46 percent stake already held by Dong Mingzhu personally, Gree would have majority voting rights of 47.93 percent.
Yinlong Energy China Ltd. is now known as Gree Altainano New Energy, after the company acquired Altairnano - a leading US innovator in LTO battery technology with over 40 years of industry experience, in January 2010. This acquisition has allowed Yinlong Energy to revolutionise the global new energy industry with its innovative LTO (Lithium Titanate) material. Yinlong Energy's mission is to drive global new energy technology by providing LTO battery, LTO storage, and LTO transportation solutions.
GREE ALTAIRNANO NEW ENERGY INC. is a group company involved in global comprehensive new energy industry, integrated R&D, production and sales of LTO battery core materials, batteries, electric motors & controllers, charging equipment, intelligent energy storage systems and new energy vehicles, as well as the recycling of power batteries for cascading utilization. GREE Altairnano takes scientific and technological innovation as the core to create a closed-loop new energy industrial chain. Headquartered at Zhuhai, GREE Altairnano has two brands, Guangtong Automobile and Altairnano Energy Storage System, and industrial parks in Handan, Shijiazhuang, Chengdu, Tianjin, Luoyang, etc. The company has accelerated the pace of technological innovation and industrial upgrading with a comprehensive R&D system.
Whether Gree Titanium (as the energy storage unit is now known) will ever justify the years of drama and billions invested remains an open question. The lithium titanate battery technology offers genuine advantages in safety and cycle life, but faces significant cost disadvantages against mainstream lithium-ion chemistries. Bulls argue that energy storage represents a massive growth opportunity that Gree is well-positioned to capture. Skeptics note that the company's core competency remains air conditioning—and that the Yinlong saga revealed troubling gaps in strategic judgment and due diligence.
Key Inflection Point #3: The Midea Challenge & Pandemic Crisis
Losing the Crown
Gree lost the top spot in China's air conditioning market to rival Midea in the first half of 2020, the first time in at least two decades that it was not the No. 1 seller.
Midea overtook Gree as domestic leader in air-conditioners during the first half of 2020, with Midea generating 64 billion yuan in sales of air-conditioners compared to Gree's 41 billion yuan during the same time period. The gap was not close—Midea's air conditioning revenue exceeded Gree's by more than 50%.
According to the data, Gree took third place in online sales in the first half of this year, and its market share fell to 16%. In second place is AUX with a market share of more than 22%. The industry's first, naturally, is the MIDEA group, with a market share of more than 35%, surpassing the two major giants in the field of air conditioning.
Midea took away the online sales champion's crown in 2019. Gree is temporarily seated in the offline throne, but its total market share of air conditioning is only 32.7%, beaten by Midea's 34.9%.
The loss of market leadership was not merely symbolic. It reflected fundamental strategic choices that had diverged over years. Midea had embraced e-commerce earlier and more aggressively. It had diversified more successfully into robotics (through its acquisition of German industrial giant KUKA) and other product categories. And it had adopted a more flexible manufacturing model that could respond quickly to demand shifts.
The Online Sales Problem
Gree's severe frustration amid the pandemic is inseparable from its sales model, relying on offline dealers. Dong Mingzhu has always adhered to the physical store strategy to protect dealers' interests.
This loyalty to dealers—the same network that had been Gree's competitive advantage for decades—had become a liability in the digital age. The joint venture structure that aligned dealer interests with Gree's also created powerful resistance to any channel shift that might cannibalize brick-and-mortar sales. Dealers who had invested capital and built businesses around Gree franchises had no interest in seeing online channels grow at their expense.
As its brick-and-mortar business tumbled during the pandemic and consumers turned to online shopping, Dong has sought to shift from relying on traditional retail toward e-commerce. During a livestreaming session in June, Dong sold more than 1 billion yuan worth of Gree products on e-commerce sites including Kuaishou, JD.com and Suning.
On the evening of June 18, Chairman Dong Mingzhu's live show recorded CNY 10 billion in revenue. Combined with the previous four live broadcasts, sales reached CNY 17.8 billion. Hopefully, live streaming's emergence will pull Gree out of the predicament.
The livestreaming phenomenon provided a temporary boost but raised questions about sustainability. How much of that revenue represented genuine new demand, versus channel shift from dealers who felt compelled to support the boss's livestream? And was a company really adapting to digital commerce if its primary online strategy was watching its 66-year-old chairman sell products on camera?
Pandemic Impact
Total revenues plummeted from CNY 200 billion in 2019 to CNY 20 billion in the first quarter of 2020, and the net profit margin hit a 5-year low. In contrast, Midea Group, a more all-around player, recorded three times the revenue of Gree.
During the first three quarters of last year, Gree's profits fell 38.06% to 13.7 billion yuan on revenue of 125.9 billion yuan, marking an 18.8% drop in sales.
The pandemic exposed vulnerabilities that had been papered over during good times. Air conditioning is a discretionary purchase that requires installation—both characteristics that made it particularly susceptible to lockdown disruption. Meanwhile, Midea's more diversified product portfolio included small appliances that could be shipped directly to consumers without professional installation.
The Widening Gap with Midea
Midea's revenue in 2024 is estimated to be around $50 billion, reflecting their significant market presence. In 2024, Midea Group Co. Ltd. was the largest global household appliance company with sales that amounted to over 53 billion U.S. dollars.
Compare this to Gree, which in 2024 made a revenue of $26.39 billion USD, a decrease over the revenue in the year 2023 that was $28.82 billion USD.
Midea now has twice the market cap of Gree, better access to international markets, and appears unlikely to lose its hold as the industry's top player anytime soon. The reversal in fortunes is one of the most significant competitive shifts in Chinese manufacturing over the past decade.
The previously disclosed performance data showed that Midea Group achieved revenue growth of 9.44% and net profit growth of 14.29% in 2024, while Haier Smart Home saw increases of 4.29% and 12.92% in these two indicators, respectively, compared to the previous year. Gree, by contrast, saw revenue decline 7.26% in 2024.
The Succession Crisis & Leadership Drama
The CEO Resignation Shock
Chief Executive Huang Hui, one of Gree's longest-serving board members, has resigned for personal reasons. Huang joined the company in 1992, one year after it was formed. After 17 years as vice president, Huang was named CEO in 2017, and has recently been in charge of shepherding Gree's day-to-day operations.
He was considered the most promising candidate to succeed Dong, said home appliances analyst Liu Bucheng.
The February 2021 resignation of Gree's chief executive officer, Huang Hui, took the market by surprise. It was the second top executive departure in the last half-year. Huang's decision to leave the company came less than seven months after Wang Jingdong, a former vice president and secretary to chairwoman Dong Mingzhu, resigned in August 2020, ending an 18-year tenure in the company.
Wang Jingdong, Huang Hui and Dong Mingzhu were known as the "iron triangle" of Gree management. They were once considered Dong Mingzhu's successors, but only half a year after Wang Jingdong's resignation, Huang Hui also left Gree.
The departures raised troubling questions. Were potential successors leaving because they saw no path to genuine authority as long as Dong remained in charge? Or were there deeper disagreements about strategy that proved irreconcilable?
Whether it was Huang Hui or Wang Jingdong, there were serious differences between Gree's current development thinking and Dong Mingzhu. Home appliance analyst Liu Buchen believed that Huang Hui was not only the CEO but also the head of technology—his resignation was more unexpected than the resignation of Wang Jingdong the previous year.
Dong's Fifth Term & Stepping Back
Dong will serve a fifth three-year term as chairwoman, while 49-year-old Zhang Wei is Gree's new president, the Zhuhai-based white goods giant announced in April 2025. Starting her career at Gree as a sales representative, Dong has worked at the company for more than three decades.
At the same time, Zhang Wei was appointed as the company president, with a term consistent with that of the 13th Board of Directors.
In a February 2025 television interview, Dong Mingzhu stated that Gree's successor plan is not empty talk but a well-considered strategic layout. She pointed out that several candidates have been arranged to undergo training in different positions, and the key is to screen out the most suitable person for Gree's future development through practice.
Gree's offline specialized stores in many places across the country have been changing their signs to "Dong Mingzhu Healthy Home", and at the same time, several online live-streaming rooms related to Gree Electric Appliances have also been renamed to "Dong Mingzhu Healthy Home". In response, the relevant person in charge of Gree Electric Appliances said that "Dong Mingzhu Healthy Home" is actually Gree Electric Appliances' plan to comprehensively upgrade the terminal SI this year. "Dong Mingzhu Healthy Home" is mainly for new stores, but some stores will be upgraded based on the previous Dong Mingzhu stores. The person in charge also said that the threshold for opening a "Dong Mingzhu Healthy Home" is not low, and only merchants who are qualified to operate all types of household appliances will be authorized to open a store.
The rebranding raises an obvious question: if succession planning is truly underway, why is the company doubling down on associating its brand with its 71-year-old chairman?
The Controversy Around Dong
A comment by Dong Mingzhu, chairwoman of the state-owned Gree Electric Appliances, recently sparked Internet controversy in China. She labeled those who studied abroad as "spy" suspects. Dong, 70, said at the company's shareholders meeting on April 22 that she would only hire talents who graduated from local universities, as spies could be among those who came back from the West. She said it's difficult to check who is and is not a spy.
State media criticized Dong for stereotyping and discriminating against the returnees and overseas Chinese students. The Shanghai-based Xinmin Evening News said Gree should blame itself for failing to attract and retain talents with international experience.
"How to run Gree is the right of Dong Mingzhu and the company's management team, but altogether rejecting a group of people is against the Labor Law," said Hu Xijin, former editor of Global Times. "Such a comment at the shareholders' meeting has a negative impact on society and is inconsistent with the country's opening-up policy."
"Gree Electric failed to diversify into the smartphone and auto businesses. Now, Dong is spouting this kind of Boxer-style anti-intellectual populist nonsense, trying to cater to some populists," a Guangdong-based netizen said. "Her comment offended not only the returnees but also people with an international vision and a scientific spirit. These people are those who have real purchasing power."
The controversy highlighted a tension that has grown more acute in recent years: Dong's combative persona and willingness to make provocative statements may have served Gree well in building brand recognition, but it increasingly risks alienating consumers, employees, and investors who prefer a more measured corporate voice.
In March 2025, Dong Mingzhu appeared to take aim at Xiaomi and Lei Jun, stating, "Some people became the richest, but look at how much money they distributed to shareholders - it's just about inflating stock prices." She directly criticized certain companies for joining industries by "stealing technology and poaching talent," calling such methods destructive. She questioned whether becoming a leader through the lowest prices was meaningful, arguing that poor product experience makes consumers the biggest victims.
Investment Analysis: Bull Case vs. Bear Case
Bull Case
Brand Power and Market Position Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. The company's sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels.
While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continuing progress in premiumization, such as holding the top two market shares by sales value in high-end central air conditioners to household and commercial clients in China.
The Gree brand commands significant pricing power in China. Years of advertising investment—much of it featuring Dong Mingzhu herself—have created consumer associations of quality and reliability that competitors struggle to match. In Hamilton Helmer's 7 Powers framework, this represents genuine brand power: the accumulated investment in brand building creates a durable asset that competitors cannot easily replicate.
Energy Storage Optionality New energy has been a key part of Dong Mingzhu's planning. Further in-depth deployment of energy storage is Gree's willingness to win.
"At present, the distributed energy model of Gree photovoltaic air conditioning + energy storage is more suitable for the application scenarios of lithium titanate batteries, which may become Gree's breakthrough in the current lithium battery pattern. In addition, the future energy storage market demand will develop rapidly, and Gree Titanium will become a key configuration of Gree's energy storage system."
If energy storage grows as rapidly as proponents expect, Gree's investment in Yinlong/Gree Titanium could prove prescient. The lithium titanate technology offers differentiated performance characteristics—particularly in safety and cycle life—that may command premium pricing in grid-scale and commercial applications.
Hillhouse Partnership A distinctive feature of Hillhouse's approach is its long-term, partnership mindset. The operating team works with companies often for years (not just a quick fix), reflecting Hillhouse's longer investment horizon.
Hillhouse's involvement brings operational expertise, digital capabilities, and patient capital. Unlike private equity firms with 5-year fund lives that might push for short-term cost-cutting, Hillhouse has demonstrated willingness to invest in multi-year transformation programs.
Valuation Morningstar initiates coverage on Gree Electric Appliances with a fair value estimate of CNY 48 per share and assigns the firm a narrow moat, Medium Morningstar Uncertainty, and Standard Morningstar Capital Allocation ratings. With a focus on the domestic air conditioning market, Gree has accumulated rich development capabilities and a strong distribution network, which underpin its sector leadership. While rising input and marketing costs are expected to weigh on Gree's midcycle margins, this should be partly mitigated by ongoing product premiumization and manufacturing automation. Their assumptions price Gree at 10.8 times 2024 price/earnings, which lags peers Midea and Haier, but is higher than its current level of about 9 times.
At single-digit P/E multiples, Gree offers value-oriented investors exposure to Chinese consumer spending at a significant discount to global appliance peers.
Bear Case
Single-Product Dependency Air conditioners remain the biggest contributor to Gree's earnings, with an over 70% representation over the years. Despite years of diversification rhetoric, Gree remains fundamentally an air conditioning company operating in a maturing market. When air conditioning sales stumble—as they did during the pandemic—the entire company suffers.
In Porter's Five Forces analysis, this concentration creates vulnerability on multiple fronts: - Buyer Power: Major retailers and distribution channels can extract concessions, knowing that Gree's fortunes depend on moving air conditioning units. - Competitive Rivalry: Midea and Haier can cross-subsidize air conditioning price wars with profits from other product categories. - Threat of Substitutes: Evolving climate control technologies or changing consumer preferences could disrupt the entire category.
Succession Risk For Gree, the departure of Meng is not that important, but whether the company can find a sustainable business model without the charm of Dong Mingzhu will be crucial.
The company's identity has become inseparable from Dong Mingzhu. The "Dong Mingzhu Healthy Home" rebranding, the personal livestreaming efforts, the constant media presence—all reinforce an equation where Gree = Dong. This creates what might be called "founder dependency risk" in Hamilton Helmer's framework: the company's competitive advantages are partially tied to an individual who cannot lead forever.
Digital Transformation Lag "What Gree Electric lacks most is the ability to keep abreast of the retail market and the post-1990s and post-2000s consumers' preferences."
Younger Chinese consumers discover, evaluate, and purchase products through digital channels that Gree has been slow to master. The company's dealer-centric model, while advantageous for inventory management and dealer loyalty, has impeded the agility needed for omnichannel commerce.
Diversification Track Record The smartphone venture failed. The Yinlong acquisition became a scandal-plagued saga. Even supporters acknowledge that diversification has been "slow to break through." Each failed diversification attempt consumes capital and management attention that might have been directed toward defending and extending the core air conditioning business.
Geopolitical and Regulatory Risk Gree generates over 80% of sales domestically and is backed by China's Zhuhai local government. Heavy domestic exposure limits the company's ability to offset China-specific risks. As a company with government ties operating in an increasingly complex geopolitical environment, Gree faces risks that are difficult to quantify but impossible to ignore.
Key Metrics to Track
For investors monitoring Gree's ongoing performance, three metrics deserve particular attention:
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Air Conditioning Market Share (Domestic): The most important indicator of competitive position. Any continued loss of share to Midea would signal that structural challenges are deepening. Conversely, stabilization or recovery would suggest that operational improvements are taking hold.
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Online Sales as Percentage of Revenue: This metric captures the company's digital transformation progress. Movement toward the 50%+ levels seen at more digitally-native competitors would indicate successful channel evolution; stagnation would signal ongoing structural disadvantage.
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Non-Air Conditioning Revenue Growth: The test of diversification strategy. Meaningful growth in green energy/energy storage, industrial equipment, or other categories would validate years of investment and reduce single-product dependency. Continued stagnation would reinforce the bear case for structural concentration risk.
Conclusion: The Legacy Question
The story of Gree Electric is, in many ways, the story of modern China itself: an unlikely rise from obscurity to global prominence, powered by a combination of government support, shrewd strategy, and tireless execution. Dong is now at the forefront of a highly anticipated deal that shifted the ownership, and the actual control of the company, that she had helped develop from a little known factory owned by a local Chinese government into a major white goods giant through three decades of fight in China's rapidly growing but fiercely competitive home appliance market.
Fiscal 2023 was Gree's best year to date, with profits of $4.1 billion, which it attributed to innovation efforts. In its first-ever ESG report, Gree said it owns 44 "internationally leading" technologies, of which 41 are related to green energy.
By 2022, the company had applied for over 85,000 Chinese patents, reflecting a strategy of relentless innovation as the "soul of the brand" to sustain high-quality manufacturing and reduce dependence on external suppliers. In December 2024, Gree announced successful production of its own silicon carbide (SiC) chips after six years of effort, aiming to secure supply chain autonomy. R&D personnel exceeded 15,000 in 2023, comprising more than 21% of the workforce.
These are genuine achievements that deserve recognition. Gree built a world-class manufacturing operation in air conditioning. It created a dealer network that became a competitive advantage. It invested consistently in R&D and technology. And it did so while navigating the complex landscape of state-owned enterprise governance.
But the company's future depends on resolving tensions that have become increasingly acute:
- Can Gree reduce its dependence on air conditioning without losing focus on what it does best?
- Can it embrace digital commerce without alienating the dealer network that remains its distribution backbone?
- Can it develop the next generation of leaders when the current leader has become synonymous with the brand itself?
- And can it maintain its technological edge against competitors who are younger, faster, and more diversified?
Data shows that in 2024, the average revenue growth rate of the A-share home appliance sector was only 8.16%, and the average net profit growth rate was even lower at -43.27%, marking the lowest level in the past three years. With the traditional home appliance market showing signs of fatigue, seeking new growth space through diversification has become an inevitable choice for producers.
The industry headwinds are real. But so are Gree's resources, capabilities, and brand equity. The question is whether leadership can deploy those assets effectively in a rapidly changing competitive landscape—and whether the company can successfully execute a leadership transition that has been deferred repeatedly over the past decade.
Dong Mingzhu built an empire through force of will, commercial acumen, and an iron determination that earned her the "Iron Lady" moniker. The ultimate test of that legacy may be whether she can also build an institution capable of thriving without her.
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