On the evening of April 28, Gree Electric published its annual report for 2025. The data indicated that the company’s full-year revenue reached RMB 170.447 billion, a year-on-year decrease of 9.89%. Net profit attributable to shareholders also declined by 9.89%, amounting to RMB 29.003 billion.

This marks the second consecutive year of revenue decline for Gree. In 2024, revenue fell by 7.31% year-on-year, with the decline widening to nearly 10% in 2025. Over these two years, Gree’s revenue shrank from over RMB 200 billion, with cumulative income reduced by over RMB 33 billion.

Gree’s Q1 report for 2026, also released on the same day, showed revenue of RMB 42.966 billion for the first quarter, a year-on-year increase of 3.52%. Net profit attributable to shareholders rose by 3.01%, reaching RMB 6.082 billion.

Gree remains a profitable enterprise.

In 2025, net cash flow from operating activities reached RMB 46.383 billion, a year-on-year increase of 57.93%. This solid financial foundation supports Gree’s strategy of high dividends. Over the past year, Gree distributed RMB 16.755 billion in dividends and proposed share buybacks of RMB 5-10 billion, with at least 70% earmarked for cancellation. Since 2012, Gree’s cumulative cash dividends have exceeded RMB 142.2 billion. Strong cash flow and generous shareholder returns define Gree’s financial profile.

In 2025, Gree’s revenue gap with Midea Group and Haier Smart Home widened further. Midea’s revenue for that year reached RMB 458.5 billion, a 12.1% increase, with net profit attributable to shareholders rising by 14% to RMB 43.95 billion. Haier Smart Home’s revenue exceeded RMB 300 billion, up 5.71%, with net profit reaching RMB 19.553 billion, a 4.39% increase.

Gree ranked last among the three major white goods companies and was the only one to experience a revenue decline. Based on 2025 revenue, Gree was just 37% of Midea’s and 56% of Haier’s, with the gap widening from billions to trillions.

Dong Mingzhu once stated in an interview, “Gree has no successor because no one can treat the company as their own life like I do.”

Marx also made a memorable observation: “People make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”

Tying one’s life to a company is a traditional narrative that injected formidable combat power during Gree’s entrepreneurial era. However, as the company expands to a trillion-yuan scale and requires institutionalized governance, individual limitations inevitably emerge.

I. The Focused Dimension

In the late 1980s, Intel was overtaken by Japanese firms in the memory market, suffering losses for multiple quarters. Founder Andy Grove asked Gordon Moore: “If we were kicked out of the company, what would the new CEO do?” Moore replied: “Exit the memory business.” Grove then led Intel’s strategic shift to microprocessors, laying the foundation for three decades of dominance.

Grove wrote in Only the Paranoid Survive: “Businesses are inherently fragile. Success hardens behavior patterns, and when the environment changes, rigid models often lead to ruin.” This seems particularly relevant to Gree today. Air conditioning has always been Gree’s strongest asset, with technological barriers and brand equity built over three decades. Internally, the air conditioning business is not just a core operation but the company’s entire narrative.

From 2025 to Q1 2026, despite industry-wide downturns, Gree’s market dominance in air conditioning remained unchallenged. Its central air conditioning maintained a market share of over 15% for 14 consecutive years, while household air conditioning accounted for 24.31% of online retail sales, ranking first in the industry.

However, stagnation in the traditional home appliance market has complicated competition. Aowei Cloud data showed China’s total home appliance retail sales reached RMB 893.1 billion in 2025, a 4.3% decrease, with second-half sales at RMB 421.4 billion, down 16%.

Industry Online data revealed China’s household air conditioning shipments totaled 198 million units in 2025, a 1.2% decrease, while commercial air conditioning sales reached RMB 138.68 billion, down 4.1%. Additionally, copper and refrigerant prices remained at historic highs in 2025, further squeezing industry profits.

A rapidly growing market can sustain specialized strategies, allowing companies to reap incremental gains by focusing on a single category. However, once growth peaks and markets shift to stock competition, a single-business structure exposes concentrated risks.

Gree’s consumer appliances segment generated RMB 133.055 billion in 2025, accounting for 78.06% of revenue but declining 10.44% year-on-year. This means nearly all of Gree’s revenue decline came from its core air conditioning business.

In contrast, Midea and Haier Smart Home, also navigating industry downturns, effectively mitigated volatility through diversified businesses.

In 2025, Midea’s industrial technology, building technologies, robotics, and automation businesses generated RMB 122.8 billion in combined revenue, a 17.5% year-on-year increase, accounting for over a quarter of total revenue. Midea’s acquisitions of KUKA and Lingwang Elevator established leadership in industrial robots and central air conditioning.

That year, Haier Smart Home’s global smart HVAC revenue reached RMB 72.356 billion, a 10% increase, driving 3.1% growth in China’s market despite headwinds.

Notably, Midea employed a multi-brand strategy to cover all consumer segments, using cost-effective brands like Hualing to compete with newcomers and COLMO for premium pricing.

Gree, however, relied long-term on a single brand. While competitors rapidly turned over inventory through multi-brand portfolios and “T+3” efficiency models, Gree’s channel and inventory management remained traditional, with inventory turnover just two-thirds of Midea’s.

When competitors can scale volume while maintaining profits, Gree’s competitive edge in air conditioning appears inadequate.

Half a month before Gree’s annual report release, a “genuine copper” controversy put Gree in the spotlight.

At the time, London Metal Exchange copper prices surged past USD 11,461 per ton. In December, 19 air conditioning companies, including Midea, Haier, Hisense, and TCL, signed the “Air Conditioning Aluminum Application Research Working Group Self-Regulatory Pact,” aligning with China’s industrial policy to “replace copper with aluminum.”

Gree, however, insisted on “genuine copper” and rejected aluminum substitution. Dong Mingzhu reiterated Gree’s stance: “Our air conditioners come with a 10-year free warranty. Aluminum cannot currently guarantee such a long lifespan.”

As air conditioning competition intensifies, Gree seeks to defend its premium pricing through “genuine materials” branding.

However, with 19 major manufacturers collectively adopting aluminum, Gree’s peripheral stance on industry innovation trends raises questions about how long its material-based brand barriers can last.

II. The Second Front of a Trillion-Yuan Empire

In corporate strategy, the “forgetting curve” phenomenon occurs when successful companies project core resources, decision-making habits, and management inertia into unfamiliar fields, often backfiring.

Under pressure from its core business, Gree Electric’s urgency to diversify has intensified.

Gree’s diversification journey spans nearly a decade, covering mobile phones, new energy vehicles, chips, robots, medical equipment, and energy storage batteries. Despite numerous attempts and heavy investments, commercialization remains limited, preventing Gree from establishing a true second growth engine.

The 2025 financials show Gree’s non-consumer appliance businesses remain small: industrial products generated RMB 17.381 billion (a 0.77% year-on-year increase), while smart equipment revenue reached RMB 681 million (a 60.51% year-on-year increase) but accounted for just 0.4% of total revenue, insufficient to drive growth.

Among diversification efforts, Gree Titanium’s new energy business has drawn the most attention, with Dong Mingzhu pinning high hopes on it.

Gree Electric invested approximately RMB 2.85 billion in two tranches to gain full control of Gree Titanium, boosting its revenue from around RMB 2.5 billion annually to RMB 8.5-9 billion in 2025, with energy storage orders surging past 10GWh.

This scale expansion coincided with losses. Gree Titanium lost RMB 350-510 million in H1 2025, a narrower loss than previous years but still requiring time and investment to achieve profitability.

Notably, as of June 30, 2024, Gree Titanium’s total liabilities reached RMB 24.786 billion, with Gree providing RMB 1.478 billion in joint liability guarantees. Triggering these guarantees could reduce Gree Electric’s profits by over RMB 1.4 billion at once.

At the 2025 shareholders' meeting, Gree Titanium became a focal point. Vice President Fang Xiangjian, in charge of the unit, admitted “historical issues are severe,” revealing cuts to unprofitable lithium iron phosphate battery and low-margin engineering businesses, along with significant layoffs.

Dong Mingzhu urged patience: “Give it another three to five years.”

Currently, the energy storage industry’s environment is unfavorable. Lithium titanate technology is increasingly marginalized in a phosphate iron lithium-dominated industry, with Gree Titanium’s shipments below 1GWh and market share under 0.3%.

Thus, the correctness of Gree’s technology route choice and the timing of profitability remain uncertain.

Gree, a leader in air conditioning for over a decade, possesses strong manufacturing DNA. Its success stems from self-developed core technologies in compressors, motors, and controllers, requiring deep vertical integration for single categories. This methodology has created path dependency.

Whether manufacturing phones or chips, Gree’s teams default to air conditioning logic, neglecting cross-border capabilities in internet ecosystems, consumer marketing, and hardware-software integration.

For example, Gree’s phone strategy followed home appliance industry logic: no product launches, high pricing, limited channels, and outdated systems—incompatible with the fast-paced mobile industry. This hardware-centric approach works for air conditioning but becomes a liability in other fields.

Management-wise, Gree’s current executive team nearly all hail from the air conditioning division. When decision-makers define success based on air conditioning profit models, they struggle to maintain patience and commitment for new businesses lacking short-term returns.

Product innovation requires ample room for trial and error, demanding greater tolerance from management. Gree maintains a highly centralized management logic, severely compressing trial-and-error costs. This means Gree’s diversification efforts carry immediate operational burdens, contradicting the patience needed to nurture emerging businesses.

III. The Scepter Dong Mingzhu Cannot Relinquish

The flow of capital and talent draws intense scrutiny.

In April 2025, Gree Electric held an extraordinary shareholders' meeting, re-electing Dong Mingzhu as chairman with 124% approval for her fifth three-year term. She stepped down as president, succeeded by Zhang Wei, a Gree veteran since 1999.

This partial power transfer signaled something, yet Gree remains without a clear answer on succession.

Dong Mingzhu once said, “Gree has no successor because no one can treat the company as their own life like I do.”

Marx observed: “People make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”

Tying one’s life to a company injects formidable combat power during entrepreneurial eras, but as companies reach trillion-yuan scales and require institutionalized governance, individual limitations emerge. Dong Mingzhu transformed Gree from an obscure air conditioning factory into a RMB 200 billion manufacturing empire over three decades.

Her assertiveness, focus, and obsessive quality pursuit built Gree Air Conditioning. Yet these same traits now impose invisible constraints during critical phases requiring diversification, youthful transformation, and internationalization. To some extent, Dong's personal style has excessively influenced Gree’s strategic judgments. The launch and failure of Gree phones are widely attributed to her lack of mobile industry understanding, while Gree Titanium’s lithium titanate technology choice stems from her persistence with Yinlong.

When CEO intuition replaces scientific strategic evaluation, decision risks systematically amplify—a typical growing pain as companies transition from founder-led to institutionalized eras.

Diversification demands patience for commercialization inflection points. Succession requires navigating between “Dong Mingzhu's Gree” and “Gree without Dong Mingzhu” to find a path ensuring smooth transition without sacrificing institutional safeguards. This will shape Gree’s future.