This is a bit left of field as a story and likely only of interest to a select audience, but it’s really interesting as the Midea chairman is set to spend over £5 million on new technologies.
There have been a few reports of this, but all are from translated sources; there may be some interpretation errors, but the general gist of it should be correct and it fits with some stuff we’ve been on about for a while.
The background to this is or, how it kicked off was that Wang Jianguo, the vice president of Midea, mooted at the “Industry Conference on the New – quality Development of the Top 100 Light Industry Enterprises” (snappy title, we know) that Midea will invest at least £5 billion in R&D over the next three years, targeting fields such as large AI models (hands up who didn’t see that coming!), new energy, robotics, and embodied intelligence.
So, AI… like everyone else, everywhere, all at once! If it doesn’t have “AI” in the pitch these days, it’s not going anywhere so that was a given as soon as they talk tech to try to stoke some interest.
We’d guess that “embodied intelligence” was that again or some extension of AI, but it’s not too well explained.
New energy and robotics, though, they and of interest. But not the most interesting.
The Interesting Bit (1)
What’s more interesting is the pivot away from appliances here.
It turns out that Midea are seemingly concerned about falling behind form what we can gather in terms of technology, against it’s competitors.
Our guess, other Chinese producers and Roborock, Dreame, and Ecovacs are specifically mentioned in some reports, so robotic vacuum cleaners but we suspect strongly that it’s also Korean competition from Samsung and LG, both of whom are all in on smart home stuff, “AI” as it is and so forth.
Xiaomi also gets a mention as they’re coming up fast in the rear view mirror of a few having entered into the refrigerator, washing machine, and air conditioner areas and that’s a big deal domestically. Xiaomi, however, produce a huge swathe of products, a lot of them tech-oriented and a heap of smart home stuff all within their own ecosystem.
Midea’s idea seems to be to move away from the “home appliance” arena and into one of the technologies that power home appliances, we think as it’s not 100% clear.
Fang Hongbo, the chairman of Midea, said that “tactically, we should pay attention to Xiaomi, but strategically, we are not afraid of it.”
Appliance Industry Outlook
The reports say that Fang Hongbo advocates “not getting caught up in the involution of the home appliance industry, claiming it has no future,” and wishes to “accelerate frontier technologies”.
In 2023, he said, “The home appliance industry has entered the mature stage, which is a stock market. For Midea to achieve long-term development, it must undergo industrial upgrading.”
And that, “The possibility of a great technology company emerging from the home appliance industry is almost zero.”
It seems that Fang Hongbo’s take on things, to try to distil it to a bite-sized is, the appliance industry holds little appeal, probably no room for growth or innovation, is stagnant and overly commoditised. And, we might be projecting a bit there as we’d largely agree with that assessment.
It is comforting to know we’re not the only ones, even if it’s a bit depressing.
Interesting Bit (2) Our Comments
For a while now, we’ve been digging into the industry and have mentioned or reported on the dearth of innovation.
Tacking “AI”, a screen or whatever, onto an appliance but not innovating on how it fundamentally works or performs is not innovation, really, that’s just putting a few new decorations on the cake and running a victory lap for being able to sell snow to Eskimos.
Sure, it might move a few units to those that don’t see it for what it is, a parlour trick and a bunch of marketing types will laud their genius on LinkedIn or whatever, get some press, but a few days later, it’s all forgotten.
Buyers get some features that, after a few days, are largely forgotten, other than perhaps bragging rights to anyone who shows even remote interest.
That’s not innovation. It doesn’t change the paradigm.
Washing machines wash, cookers cook, fridges cool and so on. Maybe a smidge better, maybe a smidge more efficient, but no real shift in that paradigm. Even if the press release tries to make out otherwise.
Apart from… more “efficient” ways to manufacture, even if that is detrimental to quality, longevity and/or performance. Which always seems to lead to a race to the bottom on prices.
Perhaps this is a part of the tie-up with Hisense, we suspect it is, but that’s a conversation for another time.
For now, that Fang Hongbo chap might just have a few valid points. Just maybe.
