Shulou(Shulou.com)11/24 Report--

The aspect of Haier Zhijia and the window of Chinese economy

The huge assembly line intelligent manipulator carries out fine disassembly, crushing and cleaning, plastic granulation of household appliances recovered from all over the country through one by one equipment, and finally through automatic weighing, granulation, packaging, palletizing and other production processes to generate high-quality recycled new materials for household appliances, automobiles, daily chemical, and even food-grade plastics and other fields.

This is the 30th anniversary of Haier Zhijia's A-share listing, the scene I saw in Haier Zhijia Recycling Interconnection Factory, the industry's first "negative carbon" factory in Laixi, Qingdao. The whole factory has 6 fully automatic household appliance disassembly lines, such as refrigerator, washing machine, air conditioner and TV, 1 cleaning and sorting line, 1 electrostatic color selection line and 13 high-quality granulation lines, which almost realizes the digital, intelligent and efficient operation of the whole link. The factory can disassemble 2 million sets of waste household appliances and regenerate 30,000 tons of recycled materials a year, and is committed to building a "lighthouse factory" in the field of global recycling.

"Haier Zhijia recycling industry takes the recovery of household appliances as the starting point, extends to the links of disassembly, regeneration and remanufacturing, and constructs a green recycling ecosystem of 'recovery-disassembly-regeneration-remanufacturing'. It has become a new growth model and growth point of Haier Zhijia. At the same time, it also implements the goal of 'double carbon' through our recycling industry to implement the extension system of producer responsibility." Haier Zhijia vice president and general manager of recycling industry Ren Xianquan said.

Through a "from birth to death" cycle of household appliances from manufacturing to recycling and disassembly to material reuse, Haier Zhijia has constructed a closed-loop value chain of the whole life cycle of products and perfectly implemented the concept of "infinite evolution and value cycle". It has successfully created a "new curve" for the sustainable development of the enterprise-- and this is only one aspect of Haier Zhijia's borderless exploration in the past 30 years.

For 30 years, people are in their thirties, and Haier Zhijia is even more important for Haier Zhijia. Haier Zhijia, which listed A shares in 1993, is a company that can not be bypassed by all value investors and enterprise observers.

On the one hand, he has created great value for the market. Over the past 30 years since listing, Haier Zhijia's market capitalization has increased from more than 2 billion to 230 billion yuan, dynamic PE premium rate reached 28.07% in 2022, income CAGR (compound annual growth rate) 21.8%, net profit CAGR20.3%.

More importantly, among Chinese household appliance enterprises, Haier Zhijia is one of the few enterprises that have stepped on almost all the pace of the times in the past 30 years, providing a window for the development of China's economy in the past 30 years.

You can't reach the future based on the knowledge of the past. Looking at Haier Zhijia on the 30th anniversary of its listing, we try to answer some questions by observing the past, present and future of Haier Zhijia: why is this company promising? What is the long-term trend and growth logic of this enterprise in the future?

Step on every rhythm of the times

Haier Zhijia's business originated from Haier, and the most classic is "smashing refrigerators".

There are always people ahead of the times, there are always people who set a precedent in the industry. When we look back on this history again, we are still filled with emotion: the growth of made in China begins with attaching importance to quality, while Chinese household appliance companies begin to pay attention to quality by smashing refrigerators.

Taking a closer look at the various stages of the development of Chinese household appliances, Haier Zhijia almost steps on the rhythm of the times and is one step ahead of others in all stages of branding, internationalization, globalization, high-end, intelligence, scene, and so on.

The globalization of Haier Zhijia is a classic case of Chinese enterprises going out to sea.

In the 1990s, there are two options for home appliances to go to sea, one is to "take a shortcut", the threshold of OEM is low and the income is fast, and the other way is to create a brand independently and "go a long way". At a time when most of the industry chooses to do foreign brand contract manufacturing to earn easier contract fees, Haier Zhijia began to set up overseas factories, distributors and after-sales service networks, choosing a more difficult way to "create a brand", and the "Haier brand" is emerging internationally.

"if there is no famous brand in the country, you can only experience yourself by entering the world." Reviewing this history, Huang Xiaowu, vice president of Haier Zhijia and director of the global executive office of ESG, said.

But this is clearly a more difficult and complicated road. From 2015 to achieve a break-even in overseas markets, Haier Zhijia has been under great pressure for more than 20 years, from break-even to profit margins exceeding OEM in 2021, another six years.

After more than 20 years of persistence and persistence, Haier Zhijia's "global brand creation" action has gained Haier Zhijia's leading position in the global white power field, and has also provided a rich foundation for its business transformation. Haier Zhijia is already one step ahead when its peers react and follow up.

One step at a time, step by step. It is precisely because the production network and business network are organized by brands, Haier Zhijia enters the core position of the local manufacturing network more quickly than contract manufacturing enterprises. in the process of globalization, Haier Zhijia has carried out more smooth integration in the acquisition of Japanese Sanyo white power business, New Zealand Fisher Parker, American GE Appliances and Italian Candy.

Doing what is difficult and right is one of the most striking features of me in summing up all the key choices of the Haier Zhi family. Difficulty means that the threshold is high and the income is high, while correctness means that it is in line with the general trend. This is also shown incisively and vividly in the process of high-end, intelligent and ecological household appliances.

After entering 2010, after more than 30 years of rapid development, China's home appliance market has officially entered the stock stage from the incremental stage. In the stock era, the basis for the transformation and upgrading of China's home appliance industry is that Chinese local brands should come forward and move consumers with the new brand image created by products and services. so as to stimulate the huge demand for new quality in the stock market-- this is also the underlying logic of the high-end transformation of Chinese home appliances, and the first engine for Haier Zhijia to greatly increase profits in recent years.

From the perspective of high-end, Haier Zhijia has become the representative of domestic high-end household appliances after 17 years of incubation since its establishment of Casati brand in 2006, and its high-end market share has been the first for six consecutive years.

Then, in 2020, it created the world's first smart family scene brand, three-winged Bird. The underlying logic of the three-winged bird is actually the deep-seated strategic upgrading and marketing mode transformation of Haier Zhijia, which has realized the leadership from the household appliance brand to the scene ecology, and successfully transformed the traditional enterprise into an ecological enterprise.

On the 30th anniversary of its listing, Haier Zhijia opened up a road full of thorns and questions, and behind its eye-catching financial report, it accurately seized the globalization and high-end opportunities of Chinese enterprises. actively explore intelligence, ecology, scene, out of a "long slope and thick snow" track.

ESG: the present and Future of the long-term Doctrine

The past 30 years have witnessed the rapid development of China's economy, as well as 30 years full of opportunities and challenges. Times have changed dramatically, but vision, dreams, vision and greatness will not change.

When we look back from the history of Haier Zhijia, we will find that there are always challenges in the home appliance industry, and only those enterprises with long-term thinking, long-term strategy, long-term business logic and long-term resource allocation can find endogenous new forces and opportunities.

So, where is the opportunity?

Huang Xiaowu said, "for global listed companies, ESG is not an option, but something that must be done. For Haier Zhijia, ESG is an opportunity."

ESG is not only a three-dimensional methodology, but also a value that adheres to long-term doctrine, which requires enterprises to have long-term construction in environment, social responsibility, enterprise management and employee development. From the perspective of responsibility and opportunity, Haier Zhijia made explorations and choices in all dimensions of ESG.

As a listed company, the future market will look at two statements: one is the financial statements of the listed company, and the other is the ESG statement. If the financial statements of enterprises mainly examine the profitability in the economic dimension, then the ESG statement mainly examines the sustainable development ability of enterprises in the social dimension.

Unlike most domestic enterprises that begin to practice ESG, Haier Zhijia released its first social responsibility report as early as 2008 based on the advantages of Chinese companies going abroad to create brands. In the following time, Haier Zhijia will ESG concept throughout the whole process of business development, continue to create social value, highlight responsibility, and lead the industry to build a sustainable future.

According to Wu Jian, general manager of Haier Zhijia's planning and design platform, Haier Zhijia actively implements the 6-Green strategy of "green design, green manufacturing, green marketing, green recycling, green disposal and green procurement", integrating low-carbon energy conservation into the whole product life cycle and driving the green development of the whole industry chain at home and abroad.

In this industrial chain, Haier Zhijia integrates low-carbon energy conservation into the whole life cycle of products in terms of environmental governance, and explores a series of new industries and species, such as Haier smart buildings and recycling interconnected factories mentioned earlier. Haier Smart Building innovates "carbon reduction, negative carbon and zero carbon" technology, realizes "carbon reduction" through magnetic levitation intelligent energy saving scheme, "zero carbon" through optical drive energy storage scheme, and "negative carbon" through thermal energy recovery and gaseous expansion power generation. Among them, Haier maglev central air conditioning scheme realizes zero friction oil-free operation, and achieves a green and low-carbon effect of 50% energy saving. At present, Haier Smart Building has become the second growth curve of Haier Zhijia.

If the green transformation on the production side opens up the great potential of industrial manufacturing to reduce carbon emissions, then Haier Zhijia Recycling Interconnection Factory, which is committed to product recycling, has made household appliances, a "major carbon emitter", a "forerunner of negative carbon". It has also gradually grown into the future performance growth pole of Haier Zhijia.

In terms of social responsibility, Haier Zhijia, as a highly international enterprise, actively assumes social responsibility around the world. In China, it is "the most enterprises in the Central Hope Project of the Communist Youth League to assist in the construction of Hope Primary Schools". Overseas, Haier Zhijia donates materials and cash to local public welfare organizations and charitable activities in Britain, Italy, Indonesia and other countries.

It is not difficult to find that the social value created by Haier Zhijia in the past 30 years has been inestimable. Haier Zhijia not only provides 100000 + jobs, but also drives more than 1 million jobs in related industries.

In addition to continuing to create value for society, Haier Zhijia also focuses on creating value for its employees. When it first went public, it had only 1568 employees, and so far there are 100000 + creators worldwide. Haier Zhijia always insists on "maximizing human value", providing employees with opportunities for experience and growth, and allowing countless creators to create extraordinary positions in ordinary positions. In addition to 243 employees in the manufacturing system who have won honors at or above the national, provincial and municipal levels, many scientific and technological workers in the R & D system have also won honors such as China Patent Award and National Science and Technology Progress Award.

Conclusion: learn from Haier Zhijia, what do you learn?

When we look back on Haier Zhijia, the biggest feeling is not the huge profits he has created for shareholders over the past 30 years, nor his dazzling array of products, but the advanced strategic layout of the enterprise. With the internationalization and globalization in the 1990s and the high-end, networking, scene and ecology at the beginning of this century, Haier Zhijia has won the first opportunity for enterprises with a long-term and long-distance mentality.

Facts have proved that opportunists can only win temporary victories, pragmatists can win phased victories, and only long-term activists can win lasting victories.

Of course, in this process is not plain sailing, but full of frustrations and doubts. For a time, there are always good people who question Haier's low profit margin and high expense rate, while ignoring its global layout, sustained investment in scientific research and other reasons, which is a typical short-term perspective.

The difficult road is never crowded. Haier Zhijia's investment has always been calculated in ten or even two decades, which allows him to use higher and thicker technical barriers. In the 30 years since its listing, Haier Zhijia has won 16 National Science and Technology Progress Awards, accounting for 2Uni3 in the industry, 12 patent gold awards, which is also the largest in the industry, and 26421 patents in the smart family, which is also the first in the industry and has won nine consecutive titles in the world. On this road of innovation and persistence, Haier Zhijia is not afraid to be introverted.

Haierzhi household has successfully written an enterprise "evolution history" in the past 30 years, and it has also opened a door to everlasting business for Chinese enterprises. Zhang Lei of Hillhouse Group said: "if the running water does not compete first, the argument is endless." If you want to learn from Haier Zhijia today, the most important thing you should learn is his long-term doctrine that still waters run deep.

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