Dong Mingzhu, chairman of GREE Electrical Appliances, said in Beijing on August 28, that the 1 billion bet with Lei Jun was over and the result was known to all. She said that she didn’t want one billion yuan and that she would like to gamble with Lei Jun for another five years. Lei Jun, chairman of Xiaomi responded, “I think I can give it a shot.”
Early in 2013, Dong Mingzhu and Lei Jun bet 1 billion yuan on the turnover of GREE and Xiaomi in five years, and GREE won.
In December 2013, Lei Jun and Dong Mingzhu were invited to the “Top 10 Economic Personages of Year 2013” hosted by CCTV. Lei Jun and Dong Mingzhu came up to stage and presented the awards together. “In five years,” Lei Jun said, “if the turnover of Xiaomi can beat GREE’s, I would like everyone to witness that chairman Dong Mingzhu loses me one yuan.” Dong Mingzhu said aggressively that if there is any bet worthy of playing, it will be a billion bet.
Lei Jun immediately replied, “We are ‘created in China’; you are ‘made in China’. We will definitely win the 1 billion yuan.” He also asked Ma Yun, who came to present the award on the spot, to see to the bet.
Yet Lei Jun still lost. According to the two companies’ annual reports, in 2018, Xiaomi Group achieved total revenue of 174.915 billion yuan, and GREE achieved total revenue of 1981.23 billion yuan.
Over the past five years, the two chairmen have repeatedly talked tough over each other about the $1 billion bet.
In 2013, Lei Jun said in an interview with People magazine that “GREE is bound to lose”. In an interview with Dialogue CCTV in 2014, Lei Jun further said that “GREE will lose in a year or two.”
Dong Mingzhu is also unwilling to show weakness. In 2014, at the 13th National People’s Congress of the People’s Republic of China and the 13th National Committee of the Chinese People’s Political Consultative Conference, she said, “five years later, Lei Jun will lose 1 billion yuan to me. I am 100% confident.” In 2017, Dong Mingzhu said at the opening ceremony of Shanghai Trade Fair, “Next year will witness the result. No problem. I am sure. No problem!”
Last year on December 2, Dong Mingzhu unilaterally declared that GREE had won during China Entrepreneur Summit. At that time, Dong Mingzhu also said that the gambling game itself with Lei Jun was meaningless, since there was no comparability between the two. Because GREE belongs to the real economy and Xiaomi focuses on the internet, which belongs to light assets.
In terms of the current development speed, Xiaomi seems to be slightly better: its income in 2018 was lower than that of GREE, with its annual growth rate as high as 52.6%, while the latter’s annual growth rate was only 33.61%.
In the first half of this year, Xiaomi’s revenue reached 51.95 billion yuan, an increase of 14.8% over the previous year. GREE has not issued a mid-term report yet. According to its schedule, the company will publish the semi-annual report of 2019 on August 31. GREE’s revenue performance in the first quarter of this year was rather disappointing, which was far less than that of last year’s annual growth rate, with an increase of only 2.49% compared with the previous year, reaching 40.548 billion yuan.
So what else can GREE do apart from air conditioning?
In 2012, Dong Mingzhu took over Zhu Jianghong’s position and rose from a saleswoman to the leader of GREE, which became a legendary inspirational story.
After that, Dong Mingzhu put forward the grand goal of “increasing 20 billion yuan annually, reaching the revenue of 200 billion yuan in 2018 and building another GREE in five years”, and she planned a diversified business strategy for GREE, involving four major sectors: air conditioning, household appliances, high-end equipment and communication equipment.
However, except for the air-conditioning business, GREE has not been recognized by the market, whether it is investing in mobile phones or new energy vehicles.
On the other hand, Xiaomi has developed the “Mi Home” concept, including air conditioning, television, sweeping robot, rice cooker, washing machine, intelligent door lock and so on, all of which can be connected to the Mi Home to realize intelligent voice control. At present, the number of users of Mi Home APP developed by Xiaomi has exceeded 2.6 million. More than 50% of the users of Mi Home APP are purely non-Xiaomi mobile phone users.
Therefore, we are very curious to find out that with air conditioning as its single competitive category, how much room will GREE have for its growth in the next five years, while Xiaomi is on the right track.