Dong Mingzhu, seen here, aims to make Gree Electric the world’s biggest maker of air conditioners. The 55-year-old is now the chief executive of Gree Electric Appliances, which vies with LG Electronics for the title of world’s biggest maker of residential air conditioners.
When she joined Gree in 1990, the company was just a small, struggling outfit owned by the city of Zhuhai, across the border from then sleepy Macau.
Dong has sold a lot of air conditioners as Chinese moved to the cities, joined the middle class and built homes. There was one air conditioner for every 300 urban households in China back in 1990. Now there’s an average of one for every such household and soon there will be two and three.
Gree controls 30% to 36% of the market, say analysts, but that’s not because it does lots of advertising. When Dong started 19 years ago, she got family members, friends and friends of friends to buy her air conditioners and relied on them to spread the word. Today she still believes in the potency of word of mouth and spends less than 1% of Gree’s revenue on marketing; a typical Chinese company might spend 5% to 20% on branding.
What Gree does spend money on is research and development. The focus on innovation helps boost exports—roughly 20% of revenue—and sales of commercial air conditioners. Gree is supplying the central air-conditioning for the main football stadium for next year’s World Cup in South Africa.
Its growth in operating income has averaged 60% over the last five years. Last year net profits jumped 77% to $309 million on revenue of $6.2 billion.
Forbes reports that for exports Gree is focusing on countries with few air conditioners.