Gree gears up to buy NEV maker

Gree President Dong Mingzhu speaks at an auto expo in Wuhan, capital of Hubei province.[Photo/China Daily]

Acquisition of car producer Zhuhai Yinlong will help diversify business, sustain market growth

Gree Electric Appliances Inc－one of China's major air conditioner makers－said it is stepping 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).

The home appliances giant, which has suspended trading in its shares for nearly half a year, is planning to issue 835 million new shares at 15.57 yuan per share to all shareholders of Zhuhai Yinlong New Energy, Gree announced on Thursday.

Gree is diversifying its business in order to sustain market growth, and branching into the electric-vehicle market is one of its ambitious expansion plans. At present, 86 percent of its revenue comes from air conditioner sales.

The company's revenue fell 1.9 percent to 49.2 billion yuan in the first half of the year, Gree reported. Its revenue slumped 28 percent to 99.8 billion yuan for last year, amid China's economic slowdown.

Zhuhai Yinlong, which started manufacturing batteries for electric vehicles in 2009, was China's seventh-biggest electric-car maker last year, receiving 7,000 orders and producing more than 3,000 electric buses, according to its official website.

The group had established production facilities in Zhuhai in Guangdong province, Wu'an and Shijiazhuang in Hebei province by the end of 2015, with an annual capacity of making 33,000 electric buses and 100,000 electric SUVs.

Gree plans to broaden its product range to smartphones and new-energy vehicles from its core air conditioners and white goods operations, Gree President Dong Mingzhu said at a seminar last month.

The company released its second-generation smartphone in June.

"Gree is making efforts to seek new business growth points as production and sales of home appliances are saturated," said Zhang Yanbin, assistant director of All View Cloud, a Beijing-based consultancy specializing in home appliances.

He said it would be impossible for the traditional appliances industry to see a 20 to 30 percent growth in the future.

"In contrast, the new-energy vehicle industry is very promising, boasting huge growth potential, along with support from the authorities," Zhang added.

Statistics from market research firm China Market Monitor Co Ltd showed that sales of air conditioners reached 25.2 million units in the first half of the year, down 1.7 percent year-on-year.

Zhang expressed optimism for Gree venturing into the electric-vehicle market, and said he believed Gee would do much better than in its move into smartphone field because the competition in that area was fiercer.

Other appliances companies are also looking for transformation. For instance, Midea Group recently bought German robotics maker Kuka AG to enter the industrial robotics industry.

China has designated new-energy vehicles a strategic industry, as part of a broader push to upgrade its manufacturing sector. The government expects that cumulative sales of new-energy vehicles to reach 5 million units by 2020.

Xu Yanhua, deputy secretary-general of the China Association of Automobile Manufacturers, said many enterprises such as home appliances manufacturers and internet companies were diving into the electric-vehicle sector while eyeing huge opportunities in the emerging industry.