2016.06

1

美的集团管理模式分享

Corporate Snapshot

2

1980

1993 2000

2001

JV with

Toshiba Carrier

2012

Brand

registered

Organization restructuring

IPO

MBO

completed

Management

Handover Established

1968 1997 1992 2011

Strategic

Transformation

2004 2013

Listing

as a whole

2014

Xiaomi Invested

in Midea

Three Listed Companies: Midea Group (SZ.000333), Little Swan (SZ.000418), Welling (HK.00382)

Multi-Brands:

2015

JV with

Carrier,, SIIX

Yaskawa

Electric Fan

1985

Electric

Motor

Rice

Cooker

1998

2000: Dish Washer

2001: Water Heater, Water Purifier

2002: Refrigerator

2003: ATW Heat Pump

2004: Wash Machine

2005: Vacuum Cleaner, Pressure Cooker

2006: Oven

2007: Air Purifier, Humidifier

2009: Lighting

1998: Compressor

1999: Commercial AC

Microwave Oven

Induction Cooker

Water Dispenser

Robotics Smart

Home

2016

Strategic

Partnership

with Toshiba

Corporate History

3

Residential

AC

Acquisition of

compressor

Liguang Aircon

Acquisition of

Royalstar,

Chunhua

2006 2007 2008 2010

Acquire Hualing,

CQ General Industry,

JV with Qinghua

Acquisition of Little

Swan; Increase

stake in Royalstar

Acquisition

of Miraco,

Guiya

Lighting

Widest range home appliances product categories, plus motors, logistics, financial services, etc.

Residential AC

Commercial AC

Refrigerator

Wash Machine

Compressor / Motor

Oven / Microwave

Hoods / Stove

Rice Cooker

Dishwasher

Water Heater

Small Appliances

Lighting

Logistics

Water Purifier

Air Purifier

Complete Kitchen

Smart Home

Every Year About 300mn Midea new products entering into over 100mn households

Product Categories

4

Unit: RMB yuan Source: 2015 Annual Report

online retail sales No.1 in home appliance industry #1

2015 Turnover Composition

Turnover Composition

5

No.1 No.2 No.1 No.1 No.1 No.2 No.2 No.3 No.4 No.3

Source: China Market Monitor2015.1-12 (sales amount)

No.3 No.4 No.1

6

Market Share

Over 100 Industrial Design Awards

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

7

Awards

#32，Fortune China Top 500

#436，Forbes Global Top 2000

#13，China non-State owned Company Top 500

#38，China Manufacturing Company Top 500

#6，Ruifu Global Ranking Top 100

A - / Stable

A - / Stable

A 3 / Stable

First Chinese home appliance manufacturer

assigned ratings by International Rating Agencies

8

Rankings & Ratings

Handan: Residential AC

Shunde, Guangzhou, Zhongshan: Residential AC, Commercial AC, Refrigerator, Microwave Oven, Gas Stove, Oven, Sterilizer, Small Appliances, Compressor, Motor, Lighting

Hefei, Wuhu: Residential AC, Commercial AC, Refrigerator, Hoods, Heater, Compressor, Motor

Guixi: Lighting

Wuxi, Suzhou, Huaian, Changzhou: Washer, Vacuum Cleaner, Heater, Motor

Wuhan, Jingzhou:] Residential AC

Chongqing: Residential AC, Commercial AC

China

14

9

China Footprint

Saudi Arabia

Residential AC, Refrigerator, Induction Cooker, Rice Cooker

Vietnam

All Categories

China

Residential AC, Commercial AC Residential AC

India

Egypt Residential AC, Commercial AC

Brazil

Residential AC

Argentina

Microwave Oven, Stoves

Belarus

Overseas

7

10

Global Footprint

Midea Group

Resi

den

tial

AC

Refr

igera

tor

Lau

nd

ry

Co

mm

erc

ial

AC

Liv

ing

Ap

plian

ces

Kit

chen

Ap

plian

ces

En

vir

on

men

tal A

pp

lian

ces

Wate

r H

eate

r

Part

s &

Co

mp

on

en

ts

9 Product Divisions

11

International Business Platform

Logistics

Platform

Treasury

Platform

E-Commerce Platform

Service

Platform

Supply Chain

Platform

Consolidate business support to 6 platforms to create synergies

Organization Chart

Midea

Group

Controlling

Shareholders

36%

Strategic

Investors

14%

Senior

Executives

5%

Others

45%

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

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

shares per 10 shares; cash dividend amount: 5.1bn

yuan; accumulated cash dividend amount: 12.7bn yuan

Three terms of share option scheme for employees.

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

senior management.

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Cash Dividend

Share Options

“Partners” Program

Governance

Dated: 31 March 2016

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科技蓝：

Strategic Directions

13

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科技蓝：

Vision:

Leader in Chinese home appliance industry;

Top 3 in worldwide white goods industry

Goal:

To be a consumer-oriented innovative company

Second Three Year

First Three Year

Third Three Year

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Vision

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科技蓝：

战 略 主 轴

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Leading Products

• Consumer-oriented products; improved productivity

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

• Spin off loss-making categories; reduce product models

Global Operation

Efficiency Driven

• Set up International Business Platform

• Business model from OEM to OBM

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

• M&A

• Launch“632”IT project to standardize process

• Invest on automation of the factory

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

• Consolidate business support to 6 platforms to create synergies

Strategic Focuses

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科技蓝：

Business Strategy

Globalization Strategy

M-SMART H

om

e A

pp

lia

nc

es

Ma

nu

fac

ture

r

Sys

tem

In

teg

rati

on

So

luti

on

Pro

vid

er

产 业 框 架

M-Smart

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6 platforms to support business development

Business Framework

Internet Strategy

Company-

oriented （Midea products）

Customer-

oriented （cross brands）

Users-

oriented （cross industries）

To meet

company’s

demand

To meet

customers’

demand

To meet

users’

demand

Resources

consolidation Fast

growth Delivery to home;

last kilometer

Consolidate logistics

of Midea products

divisions Upgrade information

system

3rd & 4th tier markets’

development

Improve efficiency,

reduce costs Diversification of

delivery methods &

products;

Expand non-Midea

customers

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

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Logistics platform: End-to-end systematic solutions

Service Platform: Fast, Efficient & full-service

Founded as service sharing platform

Cleaning of home

appliances;

Water and air

quality test, etc.

Healthy Life

Installation and

repairing, recycling

of home appliances;

Technicians O2O

Convenient Life

I.O.T;

Personalized

services

Digitalized life

Multi-brand

services;

industry service

Sharing Life

Industry standard;

orphan brand;

Social welfare

Charity Life

Platforms

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科技蓝：

Child Star AC

No child sleeping curves

“Angel” protection mode

Fast cooling technology

3 color healthy filter

Beverly Washing

Dryer

Diamond cutting crafts

Accurate detergent adding

Innovative water flow

Twin Screen Smart

Fridge

Food management

Twin screen

Internet connected

Smart Rice Cooker

Titanium pot

IH big fire

Two direction 720 degree

boiling

M2 Water Purifier

No installation needed

Easy filter change

RO+, cold and hot water

WiFi smart management

Comfort Star AC

No wind feeling

Energy-saving

silent

Smart light reaction

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

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

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

18

Product Strategies

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科技蓝：

R&D investment：

Set up Central Research Institute, Smart-Home

Institute (Global Innovation Center)

Invested RMB 3bn, to build largest home appliance

R&D center in Asia

R&Ds center worldwide

Central Institute

Fundamental

& subversive

research

Common

technology

research

Four

Tier

R&D

Scheme

Divisions

Product

develop-

ment

Innovation Projects:

“Start from Scratch” Projects: new platform

development on existing product categories

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

fields such as health, smart, beauty, nutrition,

environmental protection

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R&D Strategies

Individual

technology

research

“Twin

Smart“

Strategy

Yas-

kawa

Auto-

mation

Efort

KUKA

M-

SMART 1000 robots in use

RMB 5bn used in factory automation

Joint Ventures with YASKAWA (Japan)

Invested in ANHUI EFORT (17.8%)

Increased shareholding in KUKA (Germany) > 10%

Automated (Smart) Manufacturing

20

“Twin Smart” Strategy

Chip & Module

Open

Connection

Open

Protocol Open

Service Open

E-commerce

Open Open platform

for building smart home

M-SMART Bubble Products:

Bubble Robot

Bubble M-Box

Bubble Box

Bubble Smart plaster

Bubble Router

Over 80 smart product categories on market

Completed the development of WIFI Module, Midea Cloud and core

SDK of system

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

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

ZIGBEE Alliance

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

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

-

party application (IFLYTEK, Moji Weather)

Smart Home: M-Smart

21

“Twin Smart” Strategy

22

HQ Globalization

Subsidiaries Localization

Global standardization

Local Differentiation

Business Mode:

OEM OBM

Brand Image:

Functional Brand

Emotional Brand

Aspirational Brand

Operation Mode:

Direct export Local Production

Joint Ventures, M&A：

Globalization

美的集团管理模式分享

23

Business Update

Revenue dropped due to active channel destocking; both gross and net profit margin increase

24

Revenue & Margin

25

Cash & Cash Flow

Abundant cash-in-hand; healthy cash flow generated from operating activities

Strong balance sheet with improved liquidity and reduced financial leverage ratio

26

Financial Liquidity & Leverage

YoY inventory further reduced; inventory turnover days reduced

27

Inventory & Inventory Turnover

Steadily increased market cap & Stable dividend distribution

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

From Sept. 2013 to end 2015, market cap has increased 97%.

28

Market Cap & Dividend

RMB Bn

美的集团管理模式分享

29

Backup - Financials

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

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

30

Key Financial Analysis

RMB Bn

RMB Bn

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

31

By Products & Regions

THANKS