Midea Group Co., Ltd.
The 2023 Annual Report
March 2024
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The 2023 Annual Report of Midea Group Co., Ltd.
Letter to Shareholders
Amidst the profound changes in the market environment and formidable challenges in
2023, Midea remained steadfast in implementing the annual business principle of
"Stabilize Profitability & Drive Growth”. Our focus on certainties over the long cycle has
ultimately resulted in our best-ever business results. In 2023, Midea recorded total
revenue of RMB373.7 billion, with a net profit reaching RMB33.7 billion. Our net operating
cash flow surpassed RMB57.9 billion. Additionally, Midea ranked No. 278 on the Fortune
Global 500 list and was included on the Fortune China ESG Impact list and the Fortune
Most Admired Chinese Companies list in 2023. We were also lauded by Forbes as an
Industry Benchmark for Sustainable Development Industrial Enterprises in China. We
extend our heartfelt gratitude to all Mideans for your going ever onwards. With
determination and calmness, we have been pushing our way through the thick mud of all
the difficulties. Extraordinary dedication even in the most ordinary positions and a deep-
rooted entrepreneurial spirit have been the cornerstone of Midea's continuing vitality for
generations, warming every corner of Midea like sunshine every single day. Appreciation
also goes to all of our shareholders for your steadfast support through thick and thin. Your
trust has been the driving force and bedrock of our unremitting pursuit of long-term growth
and sustained shareholder returns.
We stand at a new juncture, where we can view the vast world from a fresh perspective. In
the past, our business journey resembled a mountaineering expedition, relying solely on
our capabilities for success. However, running a business today is more akin to surfing the
waves, navigating through rippling uncertainties. We are often caught off guard by the
sudden decline of once glorious corporations and rapid falls of new-money. Even industry
giants are adapting swiftly. Corporate succession has accelerated, with reshuffles and
phaseouts happening every day. The rules of the game are being rewritten, and business
paradigms are shifting, leaving every sector and individual facing similar challenges, as
we find ourselves in uncharted territory. It's time to bid farewell to illusions and the past
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The 2023 Annual Report of Midea Group Co., Ltd.
cycle, breaking free from outdated thinking and embarking on a journey of reflecting on
and challenging ourselves. In this process, resilience and determination are crucial.
In the face of sluggish global growth, how does Midea secure its growth? How does Midea
cultivate new competitive strengths amidst waves of technological advancements and
shifting business models? With formidable challenges overseas, how do we expedite our
global business distribution? In the face of anxieties over economic restructuring and
shifts in growth models, how do we navigate through the cycles?
These challenges test our corporate governance, compliance, operational systems, and
agility. In this world, there's no room for pessimism or optimism; only realism. As Game of
Thrones, a popular TV drama, aptly put, "Chaos isn't a pit. Chaos is a ladder”. Our choices,
not fate, determine our path. In this ever-evolving era, our success depends solely on how
we define ourselves. What is certainty? To be certain is to ascend beyond time and space,
and to summarize common sense knowledge and methods. To achieve industrial
upgrades from basic to premium offerings and from low to high added value, it is essential
to harness the cost-efficiency strengths and the force of technological advancement. In
essence, innovation and creativity play a pivotal role in this process. The greatness of a
company lies in taking common sense to the utmost level, doing the right things,
upholding principles, and weathering any storm with resilience. It's not time or
circumstances that trap us, but our mindset. We must reflect on ourselves, confront
challenges head-on, and brave the waves. Guided by our common sense knowledge and
courage as a compass, we are ready to confront storms and sail into uncharted territory.
In 2024, Midea will focus on enhancing value chain-wide efficiency alongside structural
growth through upgrades. Several economic crises occurred in the world’s history.
Maintaining ample liquidity, high-performance operations with low cost and high efficiency,
and competitiveness of core business operations is key to navigating economic crises and
market downturns. Hence, Midea must stay committed to business model upgrades,
structural upgrades, and industrial upgrades and navigate the ever-evolving environment
and changes with strategic certainty.
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The 2023 Annual Report of Midea Group Co., Ltd.
Business model upgrades: Midea will adhere to the “Chinese Market DTC (Direct To
Customer), Overseas OBM Priority” strategy. The essence of the DTC strategy is
customer-oriented retailing. Meanwhile, global breakthroughs are critical at this time. A
truly globalized company is localized. With an internationalized headquarters, we aim to
make ourselves at home across the world. To this end, we will resolutely strengthen
overseas infrastructure for after-sales services, logistics, branding, etc.
Structural upgrades: Upholding a customer-oriented principle, we will redouble our efforts
to enhance our "Three Generations" capabilities across research, reserves, and
development. We will recruit high-calibre professionals worldwide, including top global
talent, experts, and scientists, to drive technological advancement and innovation. Seizing
opportunities brought by structural upgrades, Midea aims to establish itself in this era as a
pioneering enterprise.
Industrial upgrades: We will continue to balance ToC and ToB business development. We
are fully aware that the development of ToB business involves longer cycles and additional
time. To that end, we will exhibit strategic patience and persistence and continue to invest,
gradually laying the groundwork for developing capabilities of overcoming challenges.
There are no friends of times, only friends of trends. The end of an era inevitably heralds
the dawn of another. In the ebb and flow of industries and in every economic crisis, only a
select few enterprises emerge victorious. This is a constant process where new
businesses rise and old ones fall. To be a friend of trends in this era full of uncertainties,
we must surmount confusion and foster courage. Over the past 55 years, Midea has
adeptly navigated changing times, remaining steadfast in the face of challenges. What has
propelled Midea forward amidst these ever-shifting tides? It's the entrepreneurial spirit
deeply ingrained in our core, driving vitality for generations and fostering sustained growth
and progress. This spirit is Midea's legacy. We are dedicated to fostering an environment
where every individual is valued, irrespective of their background, and where the
entrepreneurial spirit thrives for generations to come. We will seek out those bold sailors
bound for all ports in the world. With an extensive business portfolio comprising the smart
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The 2023 Annual Report of Midea Group Co., Ltd.
home business and the commercial and industrial solutions, Midea boldly embraces
evolution, braving the waves to explore broader business prospects.
While no one can precisely predict Midea's future, just as in 2014, we couldn't foresee our
development in 2024, nor anticipate the profound changes in 2023 when we were at the
end of 2022. Yet, Midea's future lies ahead, filled with unexplored markets, regions, and
countries, as well as with undeveloped business, waiting for us to deliver better and better
business results. Together, they constitute the unwritten chapters of Midea's future. As
stated in Blossom Shanghai, a blockbuster TV series in China, running a business is like
navigating an ocean; we must row steadfastly until we reach our destination. Midea must
brave the waves and forge ahead towards our goal. When the horizon widens and the
water turns azure in front of us, we will know that we’ve arrived at the ocean of endless
possibilities.
We look forward to continuing this journey with our shareholders. Let’s witness Midea’s
power to flourish!
Board of Directors, Midea Group
March 2024
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The 2023 Annual Report of Midea Group Co., Ltd.
Section I Important Statements, Contents and Definitions
The Board of Directors, the Supervisory Committee, directors, supervisors and
senior management of Midea Group Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee that the information presented in this report is free
of any misrepresentations, misleading statements or material omissions, and shall
together be wholly liable for the truthfulness, accuracy and completeness of its
contents.
Mr. Fang Hongbo, Chairman of the Board and CEO of the Company, Ms. Zhong
Zheng, Vice President, CFO and Director of Finance of the Company, and Ms. Chen
Lihong, head of the accounting department (equivalent to accounting manager) of
the Company, have represented and warranted that the financial statements in this
report are true, accurate and complete.
All directors of the Company attended the Board meeting to review this report.
The future plans and other forward-looking statements mentioned in this report
shall not be considered as promises of the Company to investors. Therefore,
investors are kindly reminded to pay attention to possible investment risks.
The Board has considered and approved the following dividend payout plan: based
on the 6,920,391,836 shares at the disclosure date of this report (the total share
capital of 6,968,950,724 shares minus the repurchased 48,558,888 shares in the
repurchased share account at that date), it is proposed that the Company should
distribute a cash dividend of RMB30 (tax inclusive) per 10 shares to all the
shareholders and should not carry out any bonus issue or convert capital surplus
into share capital. When the profit distribution plan is implemented, if any change
occurs to the total shares eligible for profit distribution, the profit distribution plan
shall be based on the total shares eligible for profit distribution at the record date of
the profit distribution, and the total dividend amount shall be adjusted under an
unchanged dividend per share.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
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The 2023 Annual Report of Midea Group Co., Ltd.
Contents
LETTER TO SHAREHOLDERS ................................................................................................ 2
SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ............................. 6
SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ...................................... 10
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS ................................................. 15
SECTION IV CORPORATE GOVERNANCE ........................................................................ 122
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ....................................... 158
SECTION VI SIGNIFICANT EVENTS ................................................................................... 200
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ..... 220
SECTION VIII PREFERENCE SHARES ............................................................................... 229
SECTION IX BONDS ............................................................................................................ 230
SECTION X FINANCIAL REPORT ........................................................................................ 235
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The 2023 Annual Report of Midea Group Co., Ltd.
Documents Available for Reference
1. The original of The 2023 Annual Report of Midea Group Co., Ltd. signed by the
legal representative;
2. The financial statements signed and stamped by the legal representative, the CFO
& Director of Finance and the head of the accounting department;
3. The original of the auditor’s report with the seal of the accounting firm, and
signed and stamped by CPAs;
4. The originals of all company documents and announcements that are disclosed
to the public via newspaper designated for information disclosure during the
Reporting Period; and
5. The electronic version of The 2023 Annual Report that is released on
http://www.cninfo.com.cn.
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The 2023 Annual Report of Midea Group Co., Ltd.
Definitions
Term Definition
The “Company”, “Midea”, “Midea Group” or the “Group” Midea Group Co., Ltd.
Midea Holding Midea Holding Co., Ltd.
KUKA KUKA Aktiengesellschaft
TLSC Toshiba Lifestyle Products & Services Corporation
Hiconics Hiconics Eco-energy Technology Co., Ltd.
WDM Beijing Wandong Medical Technology Co., Ltd.
CLOU Electronics ShenZhen CLOU Electronics Co., Ltd.
Swisslog Swisslog Holding AG
Servotronix Servotronix Motion Control Ltd.
WINONE WINONE Elevator Company Limited
Reporting Period 1 January 2023 to 31 December 2023
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The 2023 Annual Report of Midea Group Co., Ltd.
Section II Company Profile and Key Financial Results
1. Corporate Information
Stock name Midea Group Stock code 000333
Stock exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
美的集团股份有限公司
Chinese
Abbr. of the Company name in
美的集团
Chinese
Name of the Company in
Midea Group Co., Ltd.
English (if any)
Abbr. of the Company name in
Midea Group
English (if any)
Legal representative Fang Hongbo
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Registered address
Foshan City, Guangdong Province, China
Postal code 528311
Past changes of registered
N/A
address
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Business address
Foshan City, Guangdong Province, China
Postal code 528311
Company website http://www.midea.com
E-mail IR@midea.com
2. Contact Us
Board Secretary Representative for Securities Affairs
Name Jiang Peng You Mingyang
Midea Headquarters Building, No. 6 Midea Headquarters Building, No. 6
Midea Avenue, Beijiao Town, Shunde Midea Avenue, Beijiao Town, Shunde
Address
District, Foshan City, Guangdong District, Foshan City, Guangdong
Province, China Province, China
Tel. 0757-22607708 0757-26637438
Fax 0757-26605456 0757-26605456
E-mail IR@midea.com IR@midea.com
3. Information Disclosure and Place Where this Report Is Kept
The website of the Shenzhen Stock Exchange
Stock exchange website where this Report is disclosed
(http://www.szse.cn)
China Securities Journal, Securities Times and Shanghai
Media and website where this Report is disclosed
Securities News, as well as http://www.cninfo.com.cn
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The 2023 Annual Report of Midea Group Co., Ltd.
Place where this Report is kept Company Investor Relations Department
4. Company Registration and Alteration
Unified social credit code 91440606722473344C
Changes in main business activities
None
since the Company was listed (if any)
Changes of controlling shareholder of
None
the Company (if any)
5. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm PricewaterhouseCoopers Zhong Tian LLP
Business address of the 11/F., PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road,
accounting firm Huangpu District, Shanghai 200021, PRC
Name of accountants writing
Yao Wenping and Wu Fangfang
signatures
Sponsor engaged by the Company to continuously perform its supervisory function during the
Reporting Period
□Applicable √N/A
Financial advisor engaged by the Company to continuously perform its supervisory function during the
Reporting Period
□Applicable √N/A
6. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□ Yes √ No
2023-over-2022
2023 2022 2021
change (%)
Operating revenue (RMB'000) 372,037,280 343,917,531 8.18% 341,233,208
Net profit attributable to shareholders
33,719,935 29,553,507 14.10% 28,573,650
of the Company (RMB'000)
Net profit attributable to shareholders
of the Company before non-recurring 32,974,908 28,607,973 15.26% 25,929,086
gains and losses (RMB'000)
Net cash flows from operating activities
57,902,611 34,657,828 67.07% 35,091,704
(RMB'000)
Basic earnings per share (RMB/share) 4.93 4.34 13.59% 4.17
Diluted earnings per share 4.92 4.33 13.63% 4.14
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The 2023 Annual Report of Midea Group Co., Ltd.
(RMB/share)
Weighted average ROE (%) 22.23% 22.21% 0.02% 24.09%
Change of 31
31 December 31 December December 2023 31 December
2023 2022 over 31 2021
December 2022
Total assets (RMB'000) 486,038,184 422,555,267 15.02% 387,946,104
Net assets attributable to shareholders
162,878,825 142,935,236 13.95% 124,868,124
of the Company (RMB'000)
Indicate whether the lower of the net profit before and after non-recurring gains and losses was
negative for the last three accounting years, and the latest auditor’s report indicated that there was
uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate whether the lower of the net profit before and after non-recurring gains and losses was
negative.
□ Yes √ No
7. Differences in Accounting Data under Domestic and Overseas Accounting
Standards
7.1 Differences in the net profit and net assets disclosed in the financial reports prepared under
China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□Applicable √N/A
No such differences for the Reporting Period.
7.2 Differences in the net profit and net assets disclosed in the financial reports prepared under
CAS and foreign accounting standards
□Applicable √N/A
No such differences for the Reporting Period.
8. Key Financial Results by Quarter
RMB'000
Q1 2023 Q2 2023 Q3 2023 Q4 2023
Operating revenue 96,262,922 100,725,480 94,122,108 80,926,770
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The 2023 Annual Report of Midea Group Co., Ltd.
Net profit attributable to
8,041,853 10,190,438 9,485,190 6,002,454
shareholders of the Company
Net profit attributable to
shareholders of the Company
7,672,681 9,979,172 9,188,736 6,134,319
before non-recurring gains and
losses
Net cash flows from operating
9,272,312 20,512,362 15,002,382 13,115,555
activities
Whether there are any material differences between the financial indicators above or their summations
and those which have been disclosed in the Company’s quarterly or semi-annual reports
□Yes √No
9. Non-recurring Gains and Losses
√Applicable □N/A
RMB'000
Item 2023 2022 2021 Note
Gain or loss from disposal of non-current
-233,657 -59,854 77,527
assets
Except for effectively hedging business
related to normal business operations of the
Company, gain or loss arising from the
change in the fair value of financial assets
held for trading, derivative financial assets,
financial liabilities held for trading, derivative -345,146 -604,446 995,824
financial liabilities, and other non-current
financial assets, as well as investment
income or loss produced from the disposal
of the aforesaid financial assets and
liabilities
Other non-operating income and expenses
except above-mentioned items (mainly
government grants, reversed impairment
1,345,521 1,777,103 2,352,849
provisions for receivables that are tested
individually for impairment, compensation
income, fine income, etc.)
Less: Corporate income tax 143,692 103,624 668,578
Minority interests (after tax) -122,001 63,645 113,058
Total 745,027 945,534 2,644,564 --
Particulars about other items that meet the definition of non-recurring gain/loss:
□Applicable √N/A
Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is
enumerated as a non-recurring gain/loss in the .
□Applicable √N/A
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The 2023 Annual Report of Midea Group Co., Ltd.
Section III Management Discussion and Analysis
1. Industry Overview for the Reporting Period
1.1 Summary of the business scope
Midea is a leading global technology group comprising the Smart Home, Energy Solutions and
Industrial Technology, Intelligent Building Technology, Robotics & Automation, and Other Innovation
businesses. With a business portfolio that is focused on the coordinated development of the ToC and
ToB businesses, Midea offers various smart home products and services to individual consumers, as
well as provides diversified commercial and industrial solutions for corporate clients. To be specific,
Midea Smart Home primarily covers smart appliances, smart home and related peripheral industries
and ecological chains, undertakes the construction of intelligent scenarios for end users, user
operations and data value discovery, and is committed to providing end users with the best experience
of entire-house smart home appliances and service. Midea Energy Solutions and Industrial Technology,
with technology as the core driver, commands key technologies in “green energy” and “key industrial
components”. It operates many brands including GMCC, Welling, CLOU Electronics, HICONICS,
SERVOTRONIX, MR, MOTINOVA, MSCT, TOSHIBA, SUNYE, etc., with its products covering high-
precision core components such as compressors, motors, chips, valves, reducers, auto parts, motion
control and automation, high- and low-voltage variable frequency drive, energy storage and cooling
modules. It provides green, efficient and intelligent products and technology solutions for pan-industrial
customers across the world. Midea Intelligent Building Technology is principally engaged in products
and services in relation to buildings, as well as the relevant operations. With iBUILDING, Midea’s digital
building service platform, as the core, its business covers HVAC, elevators, energy, building control, etc.
Its primary products include VRF units, large chillers, unitary units, machine room air conditioners,
escalators, passenger elevators, freight elevators, etc., as well as building automation software and
building weak electricity integrated solutions. Supported by “Building Equipment and Facilities + Digital
Technology + Industrial Ecosystem”, it facilitates logistics, information, feeling and energy flows of
buildings to empower buildings with digital and low-carbon technologies and build sustainable smart
space. Midea Robotics & Automation primarily focuses on providing solutions of industrial robotics,
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The 2023 Annual Report of Midea Group Co., Ltd.
automatic logistics systems, and transmission systems for future factory-related fields, as well as
solutions for health care, entertainment, new consumption, etc. The Other Innovation Business mainly
includes Annto, which provides customers with end-to-end digital and intelligent supply chain solutions;
Midea Cloud, which provides industrial software and digitalisation consulting services for intelligent
manufacturing and industrial interconnectivity through its industrial internet platform MIoT; Midea
Lighting, which focuses on the R&D, production, and sales of lighting and intelligent pre-decoration
electrical products; and WDM, which is committed to innovation in medical imaging technology,
providing high-quality medical imaging products and services for clinical use.
With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your
Future” as its mission, “Embrace what’s next - Aspiration、Customer First、Innovation、Collaboration、
Dedication” as its values, “High-quality Development and High-performance Operations” as its
management and operation standard, Midea integrates global resources and promotes technological
innovation to create a better life for over 400 million users, major customers and strategic partners in
different areas worldwide every year with satisfying products and services. In face of higher
requirements for products and services in the digital Internet era, Midea continues to promote its
strategic focus of “Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and
Global Impact”, so as to build Midea in the new era. To be specific, it strives to achieve Technology
Leadership by building scale advantages in R&D and strengthening the efforts and investment in core
and cutting-edge technologies; be Direct to Users through direct contact and interaction with users and
reinventing product service and business models; be Digitization & Intelligence Driven through
“Comprehensive Digitalization and Comprehensive Intellectualization”, as well as improving efficiency
internally and focusing on users externally; and achieve Global Impact by seeking breakthroughs in key
regions in terms of market, channel and business model dimensions and serving global users.
Midea, a global operating company, has now established a global platform with around 200
subsidiaries, 33 R&D centers, 40 major manufacturing bases, and more than 190,000 employees. Its
business covers more than 200 countries and regions. Overseas, Midea has 17 R&D centers and 21
major manufacturing bases in more than ten countries.
1.2 Position in the home appliance industry
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The 2023 Annual Report of Midea Group Co., Ltd.
Midea Group ranks No. 278 on the Fortune Global 500 list unveiled in August 2023, marking its eighth
consecutive year on the list. Meanwhile, Midea has also been named to the 2023 Fortune China ESG
Impact list for its high-value practices in environmental management and social contribution, in addition
to being included in the 2023 Fortune Most Admired Chinese Companies list for its outstanding
performance in business resilience, sustainability, social responsibility and the like. In June 2023, the
Forbes magazine released its 2023 Global 2000 list and Midea ranks No. 199, up 18 places from last
year. Also, Midea Group has been named as one of the Forbes 2023 World’s Top Companies for
Women and the 2022 Forbes World’s Best Employers, among others. In the “2022 Forbes China
Sustainable Development Industrial Enterprises Top 50 Selection” held in February 2023, Midea was
selected as an Industry Benchmark for Sustainable Development Industrial Enterprises by virtue of its
solid performance in green manufacturing, carbon neutrality, sustainable development and ESG
practices. As shown on the “TIME World's Best Companies 2023” list jointly released in September
2023 by America’s TIME magazine and Statista, the world's top business data platform, Midea Group
earned itself a spot and was rated “very high” in terms of “Growth Rate”. Midea Group was successfully
selected and performed very high in the Growth Rate dimension of the list. In July 2023, the Summit
Forum of Top Enterprises in China Light Industry released the 2022 list of “Top 200 Enterprises in
China Light Industry”, and Midea Group once again topped the list with an outstanding score of 98.07.
In March 2023, Midea won the China Industrial Grand Prize at the Seventh China Industrial Grand
Prize Ceremony jointly organized by the China Federation of Industrial Economics and 13 national
industry associations for its excellent performance in technology innovation, quality management and
branding, among others. By the end of 2023, five of Midea’s factories had been included in the “Global
Lighthouse Network” initiated by the World Economic Forum, covering air conditioners, refrigerators,
laundry appliances, microwave ovens, dishwashers, etc., which demonstrates Midea’s leading position
in intelligent manufacturing and digital development among manufacturers worldwide. Meanwhile,
Midea takes the lead among domestic home appliance makers by ranking No. 39 and No. 36
respectively on the 2023 China 500 list and the 2023 Tech 100 list released by Brand Finance, a British
brand assessment institution. Midea has been given excellent credit ratings by the three major
international credit rating agencies, Standard & Poor’s, Fitch Ratings and Moody’s. The ratings are in a
leading position among home appliance manufacturers worldwide as well as among Chinese non-
state-owned enterprises. Particularly, Standard & Poor’s has raised the credit rating on Midea to “A”,
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The 2023 Annual Report of Midea Group Co., Ltd.
making it the highest-rated private manufacturer in China.
In 2023, Midea has successfully retained the "Number One Engine" of ToC business on the domestic
market. According to data provider AVC, Midea ranks first in the industry with respect to both the online
and offline domestic market share for eight home appliance categories, namely, residential air
conditioners, countertop pan-microwave ovens, countertop electric ovens, electric radiators, electric
fans, induction cookers, electric kettles, and air fryers.
Offline market shares and rankings of the Company’s primary home appliance products (by value of
retail sales) in 2023
Product category Market share Ranking
Residential air conditioners 34.9% 1
Laundry appliances 26.9% 2
Clothes dryers 23.8% 2
Refrigerators 15.2% 2
Countertop pan-microwave ovens 61.5% 1
Countertop electric ovens 48.7% 1
Induction cookers 46.9% 1
Electric radiators 43.9% 1
Electric fans 43.7% 1
Electric kettles 41.9% 1
Rice cookers 39.4% 1
Air fryers 32.0% 1
Water dispensers 26.2% 1
Electric pressure cookers 40.5% 2
Electric baking pans 32.5% 2
Blenders 28.7% 2
Water purifiers 17.8% 2
Electric water heaters 22.3% 3
Freezers 11.5% 3
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The 2023 Annual Report of Midea Group Co., Ltd.
Online market shares and rankings of the Company’s primary home appliance products (by value of
retail sales) in 2023
Product category Market share Ranking
Residential air conditioners 34.5% 1
Laundry appliances 38.1% 2
Clothes dryers 40.5% 1
Refrigerators 19.0% 2
Countertop pan-microwave ovens 51.6% 1
Countertop electric ovens 25.9% 1
Induction cookers 55.2% 1
Electric kettles 26.4% 1
Electric radiators 23.0% 1
Electric fans 22.8% 1
Air fryers 20.6% 1
Water purifiers 18.3% 1
Electric pressure cookers 38.9% 2
Rice cookers 26.9% 2
Electric water heaters 29.5% 2
Electric baking pans 28.1% 2
Freezers 12.5% 2
Water dispensers 14.2% 3
Blenders 13.3% 3
* Air conditioners refer to floor-standing and wall-mounted ones only.
1.3 Industry Overview
A. Home Appliance Industry
In 2023, as the external environment continued to improve, the economy saw an ongoing upward trend,
and domestic demand steadily expanded, the gross domestic product ("GDP") grew by 5.2% year on
year. Meanwhile, the domestic home appliance industry experienced growth in both export and
domestic sales. According to the statistics released by the General Administration of Customs, China's
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The 2023 Annual Report of Midea Group Co., Ltd.
total export value of home appliances reached RMB617.42 billion in 2023, marking a 9.9% increase
compared to the previous year. According to the data from AVC, the domestic home appliance retail
market hit a size of RMB849.8 billion in 2023, showing a 3.6% year-on-year increase. In terms of
categories, different categories exhibited different development trends. Products such as air
conditioners, refrigerators, laundry appliances, and major kitchen appliances, due to their high visibility,
exhibited a structural upgrade trend driven by the demand for newer and more advanced models.
Meanwhile, categories such as dishwashers, built-in microwave-steamer-ovens, cleaning appliances,
and water purifiers were experiencing a steady increase in their market penetration rates. In terms of
consumers, consumers showed a "K-shaped" differentiation pattern. While rapid growth was seen in
the high-end home appliance market, there was also notable demand for highly cost-effective home
appliances. In terms of products, industry focus was still placed on green, healthy, and smart home
appliances. Regarding retail, there was a notable shift towards whole-process services, with a
heightened emphasis among retailers on the shopping experience, convenience, and the quality of
post-sale services. In 2024, policies will be focused on green, smart, and elderly-friendly home
appliances. Local governments and home appliance enterprises will be encouraged to introduce more
practical subsidy policies, thus expanding green consumption and continually enhancing the
sustainability of consumption.
According to the data from AVC, the domestic retail sales of air conditioners were RMB211.7 billion in
2023, up by 7.5% year on year. Due to the improved macroeconomic landscape and the favourable
consumer environment, 2023 was the first year of growth recovery for the air conditioning sector after
three years of subdued performance. In terms of products, an upgrade continued in the horsepower
("HP") structure. Particularly, both online and offline sales of 2-HP wall-mounted air conditioners surged
by 30.2% and 32.1%, respectively, compared to the previous year. In terms of price, the strategy of
boosting sales using favourable prices was adopted for the large-capacity wall-mounted air
conditioners, while the pricing structure for floor-standing air conditioners continued its upward trend. In
the offline market, products in the RMB5,000 to RMB6,000 range accounted for nearly 27% of 2-HP
wall-mounted air conditioners, while those priced within a range of RMB9,000 to RMB10,999
represented more than 19% of 3-HP floor-standing air conditioners. From a functionality perspective,
the sales share of new Energy Efficiency Grade 1 products grew continuously, surpassing 84% in the
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The 2023 Annual Report of Midea Group Co., Ltd.
offline market. Furthermore, health, comfort, and intelligence-related functions played a significant role
in fueling growth across the industry.
According to the data from AVC, the domestic retail sales of laundry appliances were RMB93.4 billion
in 2023, up 5.8% year on year, and the retail sales of clothes dryers reached RMB12.9 billion, up 23.8%
year on year. The wash and care segment enjoys a large market, diverse demand scenarios, and
highly inelastic demand. As a major driving force, the washer-dryer suites captured more than 15% of
the retail sales in the wash and care industry in 2023. Moreover, they experienced steady and robust
upgrading of the product structure. According to the projection by AVC, the average price of clothes
dryers will increase by 8.5% year on year, and products priced at RMB8,000 and above will constitute
over 70% of the washer-dryer suites.
According to the data from AVC, the domestic retail sales of refrigerators were RMB133.3 billion in
2023, up by 7.0% year on year. The product structure of refrigerators was significantly optimised. In
terms of price, the average online product price saw a year-on-year increase of 9.2%, whereas offline
products witnessed a 5.7% rise. In the offline market, the retail sales share of refrigerators priced at
RMB8,000 and above approximated 55%. In terms of products, cross-four-door and French-style multi-
door refrigerators emerged as the main growth drivers of high-end refrigerators. Their combined retail
sales share in the offline market exceeded 71%. Meanwhile, driven by renovation scenarios, the trend
towards the "compact yet spacious" feature became more prominent, with attention also given to a high
ratio of freezer capacity. With the integration of home appliances and home scenarios, the penetration
rate of built-in refrigerators has been steadily rising. In 2023, the retail sales shares of built-in
refrigerators in the online and offline markets reached 17.6% and 36.7%, respectively.
According to the data from AVC, the domestic retail sales of major kitchen appliances were RMB167
billion in 2023, up by 5.3% year on year. Overall, the market exhibited features such as steady demand
for inelastic categories and a growing preference for high-quality products. In 2023, performance
disparities were seen among categories. The retail sales of inelastic categories such as range hoods,
stoves and water heaters reached RMB99.8 billion, marking a 6.5% year-on-year increase. Meanwhile,
quality-living categories, including dishwashers, water purifiers, and sterilising cabinets, saw retail sales
totaling RMB42.3 billion, reflecting an 8.6% year-on-year growth. However, integrated stoves
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The 2023 Annual Report of Midea Group Co., Ltd.
experienced a 4.0% decline. By categories, the retail sales of water heaters hit RMB50.5 billion, rising
by 7.4% year on year. Due to the accelerated replacement and upgrade, the retail sales share of gas
water heaters increased to 41.3%. Smart features, health-related functions, and increased capacity of
water heaters contributed to their structural upgrades. Water purifiers achieved a total of RMB20.5
billion in retail sales, marking an 11% increase year on year, driven by significant and rapid capacity
iteration in the online market. The sales of water purifiers with a capacity of 1,000 G accounted for
more than 33% of online market sales, representing a nearly 10% increase from the previous year. The
retail sales of dishwashers reached RMB11.2 billion, up by 9.6% year on year, driven by large built-in
sets. Full-size built-in dishwashers accounted for 74% of retail sales in the offline market. Function
upgrading continued. In terms of functions, functions such as the integration of functions of washing,
sterilisation, drying and storage, layered and separate washing, and automatic recognition and program
matching have become mainstream.
According to the data from AVC, the total retail sales of small kitchen appliances in 2023 amounted to
RMB54.93 billion, representing a 9.6% year-on-year decrease. Despite an overall decline in this
category, certain products, such as soy milk makers, electric steamers, and coffee machines, saw
significant increases in retail sales, up by 18.8%, 17.5%, and 13.0%, respectively, compared to the
previous year. Moreover, inelastic and big single core items such as rice cookers and electric pressure
cookers experienced notable price increases due to growing consumer demand for quality. Additionally,
the further development of the "single economy" and "silver economy" has driven the demand for
small-capacity single products and appliances with elderly-friendly designs.
According to the data from AVC, the domestic retail sales of cleaning appliances reached RMB34.4
billion in 2023, showing a 6.8% year-on-year increase. By categories, cleaning appliances achieved a
boost in both performance and product experience thanks to technological advancement. Specifically,
floor scrubbers remained the top performer, experiencing the fastest growth in the cleaning appliance
industry. The retail sales of floor scrubbers amounted to RMB12.2 billion, marking a remarkable 22%
year-on-year increase. Additionally, constant innovations, such as high-temperature drying and deep
sterilisation technology of floor scrubbers, have contributed to the enhanced product functionality.
B. Robotics and Automation Industry
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The 2023 Annual Report of Midea Group Co., Ltd.
World Robotics 2023 Industrial Robotics released by the International Federation of Robotics (“IFR”)
showed that robotics technology has been rapidly advancing. For example, collaborative robotics,
utilising sensors and visual recognition technology, can respond in real-time to changes in their
environment. With improved safety performance, their range of applications is rapidly expanding.
Intelligent robot grippers, leveraging sensors and visual recognition technology, can identify materials
and apply appropriate force to manipulate workpieces, making them more responsive. Through
software technology and open platform communication architectures, the integration and plug-and-play
convenience of robots have been further optimised. By providing more intuitive and user-friendly
interfaces and enabling natural language or graphical programming, robot programming has become
easier. Sensors, vision systems, and 5G technology assist robots in adjusting parameters based on
real-time conditions, achieving self-optimisation capabilities. By integrating cloud computing technology,
cloud robotics has discovered a broader array of applications, significantly reducing the maintenance
costs of using robots. Additionally, robotics technology is also contributing to sustainability in many
fields. According to IFR data, the global industrial robot installations reached a record high of 553,052
units in 2022, marking a 5% growth over the high base of 2021. In terms of regions, Americas achieved
a year-on-year growth of 8%, Europe achieved a year-on-year growth of 3%, and Asia achieved a year-
on-year growth of 5%. Among the newly installed robots, 73% were installed in Asia. Domestic robot
installations in China increased by 5% year-on-year, reaching 290,258 units in 2022, accounting for 52%
of the global installations. IFR also predicted that the compound annual growth rate from 2023 to 2026
will reach 7%, with the global industrial robot installations expected to reach 718,000 units by 2026.
According to the latest statistics of IFR, in terms of industrial robotic density (the average number of
industrial robotics per 10,000 workers), South Korea ranks No.1 in the world with 1,012 robotics, while
the robotic density of China has increased from 25 to 392 robotics (close to Japan’s 397 robotics)
during the decade from 2013 to 2022, ranking No. 5 across the world. Since 2016, China has been the
fastest growing and largest industrial robotics market in the world. Supported by diverse factors such
as flexible demands of the manufacturing sector, declining demographic dividend, emerging markets
and the development of innovative technologies, industrial robotics will be applied to more and more
areas, with great potential and prospects.
According to MIR analysis, in 2023, China’s industrial robot industry entered a period of adjustment,
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The 2023 Annual Report of Midea Group Co., Ltd.
transitioning from a phase of market growth explosion to a new cycle featuring existing market share
capture and position securing in the segmented incremental markets. Under this circumstance, the
demand side becomes the focal point of the industrial chain. In the second half of 2023, industrial robot
manufacturers implemented measures such as product promotions, enhanced channel expansion, and
other incentives to accelerate inventory clearance, and these efforts have proven to be effective. The
industrial robot market showed improvement in the second half of the year compared to the first half,
demonstrating increased resilience. From the perspective of downstream industry demand, the
demand in the photovoltaic industry cooled off towards the end of the year but still maintained rapid
growth. The automotive, consumer electronics, and general industry sectors experienced some
recovery but fell short of expectations. The demand in the lithium battery industry showed significant
divergence, with strong investment in energy storage batteries while the demand for power batteries
experienced destocking and investment slowdown. According to MIR data, the shipment volume of
industrial robots in China in 2023 was 283,154 units, representing a year-on-year growth of 0.4%.
Looking at specific models, collaborative robotics and lightweight vertical multi-joint robots have shown
a growth trend, while other models such as planar multi-joint robots, heavy-duty vertical multi-joint
robots, and delta robotics have experienced some decline in shipment volume. According to MIR
predictions, by the end of 2023, the “destocking” phase in the market had nearly concluded, and
market demand will gradually pick up. The year-on-year growth rate of industrial robot shipments in
China in 2024 is expected to be between 5% and 10%.
C. Intelligent Building Technology Industry
In the intelligent building technology industry, Midea focuses on products, services and related
businesses with respect to buildings. It aims to provide users with comprehensive, intelligent and
sustainable building solutions based on the digital building platform and by facilitating the logistics,
information, feeling and energy flows. The smart building ecosystem mainly includes HVAC, elevator,
intelligent building (building automation) and integrated energy management. From the perspective of
the industry competition pattern, domestic HVAC, elevator and building control have the same pattern
and two major characteristics. The first is the high proportion of foreign and joint venture brands; the
second is the low market concentration. According to the data from HVAC, ChinaIOL.com and
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The 2023 Annual Report of Midea Group Co., Ltd.
Changjiang Securities Research Institute, the proportion of foreign brands of commercial air conditioner
in 2023 was about 43%, and the long tail effect was obvious as only four manufacturers have a share
of more than 10%. For elevators, the data from the Business Yearbook of Elevator Industry in China
indicate that the proportion of foreign and joint venture brands in the elevator market is as high as 70%,
while the revenue scale and market share of the top domestic brands are still low. In 2023, the four
major brands of Kone, Mitsubishi, Hitachi and OTIS's revenues exceeded RMB20 billion in China. The
building control market is also dominated by Honeywell, Siemens, Johnson Controls, Schneider and
other foreign brands. From the perspective of the market size and development prospects, according to
the data from ChinaIOL.com, the sales revenue (excluding tax) of domestic commercial air conditioners
in 2023 was RMB142.9 billion, up 11% year on year, of which domestic sales accounted for about 88%;
the compound growth rate in the past three years was 13%. The application field of commercial air
conditioner is mainly divided into residential, commercial, industrial and public building. By business
type, the sales of ToB business accounted for more than 70%, and the revenue surpassed RMB100
billion in 2023. In industrial development, the periodicity of the non-residential part of commercial air
conditioner was smaller than that of residential part, which was more related to infrastructure
investment. For example, government public construction, transportation, data center, culture,
education and entertainment, medicine and other downstream segmentation still maintained a good
growth trend, and a long-term high growth rate. According to the data from the National Bureau of
Statistics, in 2023, the domestic output of elevators, escalators and lifts was 1.557 million units,
maintaining a solid year-on-year growth of approximately 4%, the majority of which were sold
domestically. Judging from the operating data of major manufacturers, the output value of a single
elevator was about RMB200,000, considering the average factory price of a single elevator equipment
and the maintenance business; the annual market size of domestic elevator equipment was RMB250-
300 billion, and the scale of the elevator industry was even larger. The data from EqualOcean
Intelligence shows that the current market size of intelligent building, which was about RMB7.1 billion in
2021, is relatively small. The equipment-based businesses such as commercial air conditioner and
elevator are "organs" in building construction, whereas building control is the "nervous system" which
controls various equipments for the high-efficiency and low-carbon operation of buildings, and
determines the overall quality of building solutions. Overall, the domestic revenue of the smart building
industry alone is approximately RMB400 billion, and the compound annual growth rate of the industry is
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The 2023 Annual Report of Midea Group Co., Ltd.
between 5% and 10% (revenue caliber). Meanwhile, the rollout of the Action Programme to Promote
Large-Scale Equipment Renewal and Consumer Goods Replacement by the State Council may bring
stronger demand.
As indicated in a report released by the Changjiang Securities Research Institute, new opportunities
are ushered into the smart building industry, which are "carbon emission peak and carbon neutrality",
"digital and intelligent transformation" and "domestic replacement". With the establishment of the dual-
carbon strategy, the intelligent and low-carbon process of building construction is expected to
accelerate. Buildings account for a relatively high proportion of energy consumption and carbon
emissions in China. According to data from the Building Energy Efficiency Research Centre of Tsinghua
University, the carbon emissions of building operation accounted for about 22% of the total domestic
carbon emissions in 2021, and the proportion will further increase for the growing newly started
buildings and the decreasing inventory buildings. Therefore, as one of the major sources of carbon
emissions in the whole society, the low-carbon or even zero-carbon process in the construction field will
undoubtedly be propelled. In the recent years, a series of "carbon emissions peaking and carbon
neutrality" policies were successively issued, such as the Opinions on Implementing the New
Development Concept to Achieve Peak Carbon Emissions and Carbon Neutrality in a Complete,
Accurate and Comprehensive Manner, the Opinions on Advancing the Green Development of Urban
and Rural Development, the Action Plan for Peak Carbon Emissions by 2030, and the 14th Five-Year
Plan for Comprehensive Work on Energy Conservation and Emission Reduction. China’s local
governments have issued their action plans for peaking carbon emissions while the ministries and
committees of the central government rolled out documents for the same purpose, such as the Opinion
on Fiscal Support for Peaking Carbon Emissions and Achieving Carbon Neutrality issued by the
Ministry of Finance, the 14th Five-Year Plan for Building Energy Efficiency and Green Buildings issued
by the Ministry of Housing and Urban-Rural Development, and the Advanced, Energy-saving and
Accessible Levels of Energy Efficiency for Key Energy Consuming Products and Equipment (2024
Edition) unveiled by the National Development and Reform Commission. All these policies mention
buildings, HVAC, etc., with a view to improving the building energy consumption management system,
enhancing the building energy consumption monitoring capacity, building energy saving management
capacity, and building energy efficiency level, and promoting the large-scale development of ultra-low
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The 2023 Annual Report of Midea Group Co., Ltd.
energy consumption, near-zero energy consumption, and low-carbon buildings. With stronger policy
incentives and constraints, the building energy-saving upgrading, intelligent operation, and cooperative
energy management are bound to become the main measures for the targets in addition to the
construction of low-carbon building standards and administrative supervision. As to the market side, the
electricity price reform, "power rationing" and other measures have raised the cost and the input-output
ratio in building energy saving renovation, energy management, and digital operation, and thus more
and more market entities begin to positively carry out the “dual carbon” strategy and energy saving
renovation. Taken as a whole, under the background of "dual carbon", the building construction, as one
of the main sources of energy consumption and carbon emissions in the whole society, accelerates the
process of energy conservation and carbon reduction, and catalyzes the outbreak of demand for
efficient low-carbon building solutions. The demand for digital intelligent building will also increase
significantly, as the development level of buildings is a key link in "smart city" and still lagging behind
under the trend of digital economy. At the same time, with continuous progress of communication,
computing power and algorithms, the system-level control such as HVAC and elevators will move to the
building-level control - the first is the space expansion brought by changes from "control" to "service";
the second is the narrowing gap to foreign enterprises with first mover advantage. Additionally, the
more positive and clear signal comes from the transformation and upgrading of the elevator industry
driven by digital intelligence. In 2018, the General Office of the State Council issued the Opinions on
Strengthening the Quality and Safety of Elevators for the purpose of promoting the elevator installation
on existing residences and the maintenance of old elevators. Specifically, the maintenance should
press for quality, and resources should be allocated on the basis of fully grasping the operation of
elevators, hence the application of information technology such as big data and IoT is getting more
important. In 2020, the State Administration for Market Regulation divided the maintenance methods of
different elevators according to the standard of "whether there is a remote monitoring system based on
IoT". The domestic replacement of commercial air conditioner has undergone three processes: single
unit, multi-split unit, and large chiller. The share of homegrown brands was approximately 57% in 2023,
and that of the homegrown brands of large chillers, where the barriers are relatively high, is also
increasing. The commercial air conditioner industry has entered the stage of domestic replacement in
all aspects, and thus there is a large space for future growth. Compared with air conditioner, the
domestic replacement process of elevator is relatively slow, but the relevant market pattern will be
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The 2023 Annual Report of Midea Group Co., Ltd.
optimized with the gradually weakened real estate dividend, the changes in maintenance mode, and
the application of IoT. In the medium and long term, there will be more opportunities and increasing
competition in the smart building industry with the market structure of "high proportion of foreign
investment & low market concentration". On the one hand, the policy of "double carbon" is fostering the
energy-saving upgrading and smart operation under the context of high proportion of carbon emissions
and energy consumption by buildings. On the other hand, with the improvement of digital intelligence,
the input-output effect of smart buildings is changing qualitatively.
2. Business Scope in the Reporting Period
In 2023, despite the gradual recovery of domestic market demand and the overall rebound of the
economy, the global political and economic environment remained complex and the business
environment remained challenging due to fluctuations in overseas economies, currency movements
and the deterioration of geopolitical conflicts overseas. Against this backdrop, Midea Group held firm to
its operating philosophies, effectively implemented its annual operating principle of “Stabilize Profit &
Drive Growth”, and continued to focus on its core businesses and products. As a result, Midea
delivered the best business results in its entire history, as well as various remarkable advancements,
with better key indicators such as profitability and cash flow, demonstrating its operational resilience
and long-term, high-quality growth. For 2023, Midea achieved, on a consolidated basis, total revenue of
RMB373.7 billion, up 8% YoY; and a net profit attributable to its shareholders of RMB33.7 billion, up 14%
YoY.
A. Focused on users and scene-based product planning, and continuously refined the whole
value chain leveraging Midea’s multi-category advantages and digital technologies, so as to
upgrade business scenes, products and services
In order to carry on with the “customer-oriented” strategic reform, the Company creates more user
value in business scenes, products and services which are in direct contact with users. Based on users'
yearning and pursuit for a better life, Midea pursues higher goals such as originality, sustainable selling
points and technology explicitness, and continues to empower itself with the tool of big data, so as to
achieve the vision of "Bring Great Innovations to Life". In addition, based on user needs and
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The 2023 Annual Report of Midea Group Co., Ltd.
consumption trends, Midea offers its own products and ecosystem products. It provides users with
differentiated entire-house smart solutions with the deep integration of “smart home appliances + smart
home”; and launches homegrown core terminals, such as smart central control and household smart
host which deeply integrate home appliances and smart home systems, making life at home more
efficient, convenient, healthy and comfortable. By doing so, it aims to lead the way in the innovation of
smart household appliances.
Residential air conditioners:
Based on three major directions of carbon neutrality, air value, and smart home, Midea has focused on
its technological strategy of “cooling, heating, energy conservation, intelligence, health, and comfort”,
and rebuilt the “Three Generations”, exploring disruptive and differentiated product technologies to
enhance product competitiveness. In 2023, Midea’s R290 technology for air conditioners achieved
another breakthrough. The new Efficlima product achieved a seasonal coefficient of performance
(SCOP) of 6.3 and a seasonal energy efficiency ratio (SEER) of 12.17. Compared to R32 refrigerant,
which was mainly sold in 9000BTU models of the same power range, R290 Efficlima refrigerant
achieved a reduction of approximately 447kg CO equivalent emissions. In recognition of Midea’s
contributions to the implementation of the HCFCs Phase-out Management Plan (HPMP) and ozone
layer protection in the room air conditioner industry, the Foreign Environmental Corporation Centre of
the Ministry of Ecology and Environment, the United Nations Industrial Development Organisation, and
the China Household Electrical Appliances Association jointly awarded Midea Air Conditioner the first-
phase HPMP certification for the room air conditioner industry. Additionally, Midea’s R290 air
conditioning products are TV-certified, surpassing the highest level of energy efficiency in the
European Union. Targeting entire-house air solutions, Midea has taken the lead in launching the 1:1
Freshness Air Machine, which truly achieves a comprehensive health air system with professional-
grade sterilisation, purification, fresh air, and dehumidification. It is equipped with a 2000-fold high-
energy pulse sterilisation system, achieving an air purification efficiency of up to 400m/h and a fresh
air volume of up to 210m/h. By utilising high cooling capacity and breezeless technology, it achieves
rapid cooling and a golden comfort sensation of 0.1m/s, while also incorporating linked temperature
and humidity control technologies to provide a comfortable experience throughout the seasons. Midea
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The 2023 Annual Report of Midea Group Co., Ltd.
"Cool Kitchen" Series Kitchen Air Conditioner provides a solution to address core pain points in
Chinese kitchens. This series is characterized by "large cooling capacity", "cooking smoke resistance",
and "easy-to-install design", effectively meeting users' demand for a comfortable and cool kitchen.
Moreover, it employs a new system design equipped with technologies such as the graphene thermal
conductivity coating, copper pipe sprayed with anti-corrosion coating, black magic box for oil filtration of
the outdoor unit, and water misting, achieving advantages in new scenes, such as high heat transfer
performance, corrosion resistance, and zero water discharge. The All-Season III Commercial Air
Conditioner relies on the industry’s first entire-house intelligent air solution that meets the criteria of
“whole-space, full intelligence, good air, and customisation.” It utilises continuous enhanced vapor
injection technology to achieve robust operation even in environments as low as -2°C. Equipped with a
T3-level ultra-high-temperature compressor and employing full liquid cooling zone heat management
technology, it achieves robust cooling at temperatures as high as 58°C, maintains high-performance
cooling at 43°C, and operates efficiently at 35°C. Integrated with a “multi-system multi-module central
control core,” it can connect to “entire-house floor heating, entire-house fresh air, entire-house humidity
control, and entire-house health,” allowing customizable entire-house air management.
Laundry appliances and refrigerators:
In view of the four demand directions of cleanness, health, efficiency and care, Midea comprehensively
builds its core competitiveness in the global laundry and care industry. It has launched the Washer-
Scrubber, the first solution in the industry that integrates the functions of a washing machine and a floor
scrubber. Specifically, this product is equipped with a shared water system for its base and washer,
demonstrating Midea's novel integrated design in the waterway, air path, dust collection, and circuit.
Moreover, it employs the internationally advanced AI-powered Light Dry Cleaning technology. The hot-
water-flushing floor scrubber enables potent airflow, penetration, and efficient drying while boasting a
cleaning ratio of the mop as high as 1.10. Additionally, the AUTO-PROTECT chlorine dioxide slow-
release anti-bacterial technology is employed to enable food-level sterilization, safe and
environmentally friendly. This product adopts AI technology to accurately judge the stain scene and
achieve precision mopping through reverse torque. Furthermore, patented technologies, such as the
Auto-Dos dual-chamber self-dispensing system and the Auto-Cut automatic hair-cutting technology,
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The 2023 Annual Report of Midea Group Co., Ltd.
are used for this product. To be more specific, the Auto-Dos system allows precise dispensing of
different cleaning solutions through automatic proportioning. As for the two chambers, the left chamber
is intended for cleaning solutions for floor and mop cleaning, enabling thorough dissolution of heavy oil
and dust. The right chamber houses an automatic cleaning station and drainage system and enables
sterilization and stain removal. The Auto-Cut technology can accurately identify, suck, and cut the hair
at the corner, effectively preventing hair entanglement and blockages. Also, this product is equipped
with a high-definition camera, which, through large-scale modelling training on the home scene images
using AI technology, allows this product to proactively detect stains on the floor and perform deep
cleaning in specific areas. More importantly, this invention has won the Red Dot Design Award and the
iF Design Award. COLMO New Image Zero Built-In Washer-Dryer Suite adopts automatic electronic
pop-open doors with the industry’s first zero built-in technology, crystal clear dazzling window, and
white cloud wave appearance. The glass doors are seamlessly integrated with the machine, and can
automatically open after washing and drying. The laundry appliance features clean care soft washing,
and employs multi-phase detergent rapid dissolving direct spraying technology, achieving the industry’s
highest detergent utilisation rate. It has obtained certifications for washing waterproof levels of technical
jackets, light exercise wear and tear and elastic recovery performance, and international green
woolmark. The clothes dryer is equipped with the new second-generation full variable frequency
technology, miniaturised with high energy density, leading the industry in low noise, and fast drying
performance. To respond to the green strategy, Midea made arrangements for the development of the
full-life-cycle green wash and care technology for products. This move made Midea K03 Washing
Machine the first laundry appliance in China to be certified by the Life Cycle Assessment. Concurrently,
this product reached the highest energy efficiency rating in Europe, attributed to a decrease of 43% in
annual electricity consumption as compared to conventional models. Moreover, the novel ultra-thin
platform reduced the weight of the entire machine by 10%. Through the optimisation of eco-friendly
packaging materials and the degree of recyclability, the consumption of non-biomass resources during
the whole life cycle of this product is reduced by 26% compared to traditional products on the market.
Midea has introduced several localised new products in overseas markets, such as the M01 Series
Front-Loading Washing Machine tailored for the high-efficiency energy-saving requirements of the
European market, the versatile Toshiba front-loading series products designed for the low water
pressure demand in the ASEAN market, Midea Stirring Fully Automatic Washing Machine Series with
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The 2023 Annual Report of Midea Group Co., Ltd.
A-level energy efficiency targeting the Brazilian market, and MA501, Midea’s first smart wave drying
paired washing machine, launched for the North American market.
Midea focuses on three major technological innovations for refrigeration, i.e. the “High-energy Photon
Pulse Sterilization Technology”, the “High Activity ORR-based Ultra-low Oxygen Catalysis Refrigeration
Technology”, and the “Precise Ice Temperature Technology-coordinated Plasma-based Preservation
and Purine Regulation Technology for Aquatic Products”. COLMO EVOLUTION Tianshu Refrigerator is
equipped with the industry's first AI-Door automatic door opening and closing technology, allowing the
90-degree panoramic door opening. This series is also the first one in the industry to have employed
the -40℃ cryogenic technology, allowing AI molecular-level nutrient management and thus capable of
significantly increasing the anthocyanin content and effectively inhibiting purine. TOSHIBA Large-
capacity Built-in Pear Suite Refrigerator employs the self-developed vacuum insulation material in
combination with the novel horizontal evaporator to ensure small dimensions but a large capacity.
Moreover, the front bottom cooling system and dual-axis free-track hinge effectively help users
maximize space efficiency. The industry's pioneering constant-humidity fruit and vegetable preservation
technology and meat freshness enhancement technology are employed to accurately provide a
suitable storage environment for each type of food ingredient. This series boasts the industry's quickest
60-minute ice-making function and is equipped with three technologies, namely the "pulse sterilization
technology", "low-oxygen preservation technology", and "purine reduction technology". Additionally, a
number of homegrown products have been launched in overseas markets, such as the first French-
style refrigerator with chilled water function for the North American market and the new Built-in BMF
series for the European market.
Kitchen appliances and other home appliances:
Aiming at delivering a more comfortable kitchen environment, Midea starts with the kitchen
environment and cooking smoke and has rolled out range hoods that enable efficient smoke suction.
To protect users' health, a range of products, including dishwashers, steam ovens, and rice cookers,
has been introduced to respond to users' demands for kitchenware cleaning and sterilization, and
healthy cooking. Midea Smoke-free Series Range Hood employs multiple technologies. Specifically,
the MAX efficient dual air ducts are used to ensure efficient smoke suction; the FCS future chip power
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The 2023 Annual Report of Midea Group Co., Ltd.
engine is used to achieve the highest suction in the industry of 28 m/min and wind pressure of 1,200
Pa; the nautilus shell-like design and the aerodynamic streamline wing-like design are incorporated to
reduce the smoke discharge resistance, increase the smoke discharge velocity, and effectively lower
noise; the intelligent collaborative cruise technology enables automatic start-up and air volume and
wind pressure regulation; the unique 110℃ high-temperature steam technology is used to deliver a
cleaning and sterilization rate of more than 99%, which, at the same time, has been granted the
authoritative "level-1 smoke removal" certification in the industry. Midea Concentrated Flame
Fragrance Creating Gas Stove is equipped with a pioneering Concentrated Flame burner that can
effectively increase the covered pot area by 80%, improve warming-up efficiency by 40%, and enhance
temperature picking-up efficiency by 28%, far surpassing the industry’s Grade 1 Fragrance Creating
standard. It utilises the Tianyuan high-efficiency Concentrated Flame plate, achieving a thermal
efficiency of up to 70%. With the pioneering synchronous valve firepower control, it can synchronise
and adjust the inner and outer ring flames for uniform combustion. COLMO AVANT Series Dishwasher
boasts the industry’s highest cavity occupancy ratio, with three-layer dish baskets capable of
accommodating and washing more tableware. They integrate innovative technologies such as Dual
Flow deep cleaning, ion deodorisation, and ultimate hot air drying, surpassing the highest national
water efficiency standards. The industry-first dual-axis variable track hinge enables 5mm micro-seam
insertion, meeting the demand for kitchen integration.
Midea Real Taste Built-in Microwave-Steamer-Oven-Fryer Combo features a zero built-in design and
employs microclimate temperature and humidity dual-control technology. This automatically adjusts the
temperature and humidity environment during baking according to the ingredients, significantly
enhancing food texture. It innovatively upgrades the “Steam with Only One Cup of Water” technology,
with steam time lasting up to 120 minutes, while increasing steam utilisation and reducing water
buildup in the cavity. It utilises self-developed MIX fat burning algorithms, achieving an air frying de-
fatting rate of over 95%. It also features multi-layer simultaneous baking function and innovative air
duct design combined with rapid heating algorithms, enabling multiple ingredients to be baked
simultaneously and uniformly. Targeting the high-end market, Toshiba’s first built-in waterwave stove
and Toshiba Stone Kiln Microwave Oven have been introduced, while products such as FSR Large
Oven and Cabinet-style Freestanding Gas Oven have been launched for the North American market.
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The 2023 Annual Report of Midea Group Co., Ltd.
Midea Red Flame Premium Aroma Series Rice Cooker focuses on “fragrant and delicious rice” by
innovatively employing top-cover IH heating to achieve a high-temperature red flame plate at 131°C.
Combined with bottom and side heating, it enables three-dimensional enveloped heating, bringing out
the deep aroma of rice. Midea Quick Tender Series Electric Pressure Cooker focuses on
“deliciousness and speed” by using 2200W 3D intense fire to cover the pot and 3D high-pressure
tender locking technologies to lock in juices and enhance flavour from all angles, meeting users’
demands for efficient and delicious cooking. Midea Hot Series Air Fryer focuses on “healthy and good
taste” by using innovative three-dimensional heat source technology and a brand-new air duct design
to improve the uneven cooking issue of traditional air fryers. It can also intelligently control cooking
temperature, airflow, humidity, etc., to achieve multidimensional tastes and satisfy the need for healthy
and tasty food. Midea Level-1 Silence Quiet Blender, through original noise reduction technology and
structural optimisation, solve the pain point of loud noise during use. Additionally, with the small space
grinding system, its residue rate is less than 0.5%, and its food crushing performance reaches an
industry-leading level.
For entire-house water use scenarios, COLMO Tianshu Electric Water Heater features AI-Core instant
heating engine technology and “20x Capacity Expansion” technology. This enables a large water flow
rate of 10L/min and produces an extensive hot water volume of 1,200L, achieving the Leader certificate
from the CHEARI. With AI power adaptation and ATC adaptive constant temperature control systems,
it enables cold to hot bidirectional electronic adjustment, achieving precise control for every Celsius of
water temperature, meeting the water needs of the whole family in whole scenes. It adopts the
industry’s first hexahedral structure design with a sapphire-cut surface. As the industry’s first variable
frequency high-flow water purifier, Midea Waterfall 1,000G Water Purifier introduces the innovative
Waterfall system, boosting flow rate by 36%. Leveraging five-dimensional noise reduction technology, it
achieves the lowest noise level in the industry. With a spiral flow channel design, it enhances anti-
clogging capabilities. Utilising multi-membrane RO filter technology, it offers a lifespan of up to five
years. Its swirl water inlet design eliminates the need for scale inhibitors and has received authoritative
certification for Super Grade 1 Water Efficiency and water conservation in the industry. Midea has
launched an industry-first 360°spill-proof electric kettle with an innovative structure to prevent leakage
when pouring. It features built-in gravity pendulums and anti-leakage gravity ball structures, ensuring
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The 2023 Annual Report of Midea Group Co., Ltd.
comprehensive spill prevention when tilted. Employing a unique combination of a straight spout and a
bottle flow channel structure, it effectively guides water flow, precisely controlling the stream to ensure
smooth pouring.
In the field of entire-house cleaning, Midea has released the next generation of Dust-free Floor
Scrubber Series GX5 Pro and G9. They feature integrated functions of “vacuuming, mopping, and
washing,” addressing pain points such as hair entanglement, water residue, and incomplete cleaning.
With a unique dual scraper design, they effectively prevent hair entanglement, while the triple-edged
floor brush cleans corner areas efficiently. Additionally, they come with self-cleaning roller brushes and
air-drying odor removal functions, providing a more lightweight and user-friendly experience through
their lightweight body design combined with self-traction assistance. The Smart Eye Series Robotic
Vacuum Cleaners V10 and V12 have undergone comprehensive upgrades, including automatic dust
collection, automatic cleaning, and hot air drying functions for their docking stations. They are equipped
with a 5,000Pa suction power to enhance cleaning efficiency and utilise “AI structural light + 3D
recognition” to achieve precise obstacle avoidance and escape.
B. Adhered to technological innovation, established a digital R&D system for agile innovation,
improved the "Three Generations" R&D model, implemented the strategy of “Innovation
Patentability, Patent Standardization, Standard Internationalization and Midea Standard Goes
Out”, and promoted the strategy of “Technology Leadership” in a comprehensive manner
Midea continued to invest in R&D. Through larger investments in this respect, it aims to achieve
leadership in R&D achievements and product trends, as well as a stronger presence in the industry and
a better R&D environment. The Company made innovations with respect to mechanism, and
developed more leading products through both excellent user experience and differentiated
technologies, reform of the whole value chain of R&D using digital technology, and deep integration of
big data analysis and R&D. It kept reforming its product development model according to the strategic
focus of “Leading Products”. An innovative R&D model featuring a “Three-Tier Technical Committee
System” and a “Four-Tier R&D System” from the organizational dimension and “Three Generations”
from the technology dimension has been put in place and constantly refined to support the fulfillment of
the goal of “Being the Number One or the Only One” in respect of various product categories.
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The 2023 Annual Report of Midea Group Co., Ltd.
Centering on customer needs and based on different organizations and technologies, the Company
carries out innovative product development, research on cutting-edge platforms, research on core
components, creation of differentiated selling points and improvement of the basic product performance.
Through group development of products across the world, building a global product platform, as well as
increasing product development efficiency by way of group planning and group development, Midea is
building “Technology Leadership”. As of the end of 2023, Midea boasts 16 national-level science and
innovation platforms, including national key laboratories, national open innovation platforms for artificial
intelligence, national cross-industry and cross-field platforms, national industrial design centres and
corporate technology centres, post-doctoral research stations, etc.; as well as 70 provincial- or
ministerial-level science and innovation platforms, including provincial and ministerial-level corporate
technology centres, engineering technology research centres, industrial design centres or key
laboratories. Under the guidance of the strategy of “Technology Leadership”, the innovation platform
serves as the core of its technology innovation system and is responsible for the implementation of
technology development strategies and the commercialization and application of technology innovation
achievements, thus driving Midea’s transformation towards a global technology group in a faster
manner.
Midea Group is committed to investing in the research of core technologies and has made significant
breakthroughs in the main tracks and in the field of new industrial technology. In the field of smart
home, Midea has developed several key technologies through the project of “Research and
Industrialisation of Key Technologies for Entire-house Smart Air Solutions”. These technologies include
coordinated control technology for entire-house air treatment equipment, proactive hosting control
technology, and high-efficiency cooling technology for high-ambient temperature environments. They
effectively address issues such as coordinated control of various air treatment devices in the whole
house, personalised proactive services, and adaptability to high-ambient temperature cooling, providing
users with intelligent air solutions. Through the project of “Research and Industrialisation of Key
Technologies for High Power Density Digital Variable Frequency Power Supplies”, catering to the
needs of high space utilisation and multifunctional integration of kitchen appliances, Midea has focused
on breakthroughs in key technologies such as small volume, high power density, and high reliability of
digital variable frequency power supplies for kitchen appliances to meet the diverse needs of users in
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The 2023 Annual Report of Midea Group Co., Ltd.
various scenarios. Additionally, through the project of “Research and Industrialisation of Key
Technologies for Natural Refrigerant Electro-thermal Hybrid Heat Pump System with High Energy
Efficiency”, Midea has introduced the concept of micro-channel flat tube uniform flow & reduced
charging technology for the first time, and developed a low GWP refrigerant electro-thermal hybrid
water heater based on intelligent logic modelling, achieving the A+ energy efficiency level of EU
appliances. Furthermore, Midea has utilised reconfigurable Helmholtz resonance cavity vibration
isolation technology to optimise compressor systems, achieving low-noise effects for water heaters. In
the field of commercial and industrial solutions, through the project of “CO2 Rotary Compressor for
Thermal Management of Electric Passenger Vehicles”, Midea is the first to use rotary compressors in
passenger cars. This application of rotary compressors in eco-friendly refrigerant thermal management
areas leads comprehensively in key performance parameters such as energy efficiency ratio, noise,
vibration, pulsation, and oil discharge rate under design conditions. Through the project of “High-
efficiency and High-reliability Integrated Electromechanical Control Maglev Variable Frequency
Centrifugal Unit”, Midea has developed system stability analysis and gain matrix tuning technology
based on advanced nonlinear matrix inverse solution. This includes the research and development of
multimodal self-optimising mode identification technology and variable speed state signal tracking
detection technology to enhance the stability of maglev compressor system operation. Through the
project of “Research and Application of Full-time and Full-domain Coordinated Optimisation Control
and Panoramic Intelligent Operation and Maintenance Technology for Environmental Control System”,
Midea has developed the optimisation control technology of the environmental control system based on
a hybrid drive model of data mechanisms. This achieves rolling load prediction based on time series,
effectively improving the overall energy efficiency of the environmental control system. By the end of
2023, Midea had won a total of three national science and technology awards, and more than 440
provincial and ministerial science and technology awards, as well as received over 340 "Internationally
Leading/Advanced" certificates for its technologies. In terms of industrial design, Midea leads the way
in user experience and interaction upgrading with ongoing innovations. In 2023, Midea won a total of
135 industrial design awards, including 33 Red Dot Design Awards, 49 iF Design Awards, 47 IDEA
Awards, and six G-mark Awards.
Midea has strengthened the transformation of R&D achievements while carrying out the core
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The 2023 Annual Report of Midea Group Co., Ltd.
technology research. By the end of 2023, Midea held more than 80,000 valid patents. In 2023, Midea
was granted more than 4,000 invention patents around the globe. Midea continues to improve patent
quality. It won multiple awards at the 2023 24th China Patent Awards. To be specific, the "Frame
Components of the Clothing Handling Device and the Clothing Handling Device" won a Silver Invention
Award, the "Stand-alone Air Conditioner (CH)" won a Silver Design Award, and the Excellence Award
was received for eight patents including the "Control Method and Control Device of the Air Conditioner,
the Air Conditioner, and the Storage Medium of the Air Conditioner", the "Rotor Core, the Rotor and the
Motor", the "Control Method, Control Device, Computer Equipment and Storage Medium for Robotic
Motions", the "Magnetic-bearing Compressor, the Air Conditioner and the Setting Method for the
Protective Air Gap Value", the "Range Hood", the "Control Method for Defrosting Food in the
Microwave Oven and the Microwave Oven", the "Air Cylinder, the Compression Mechanism and the
Compressor", and the “Smart Door Lock”. In addition, 21 provincial-level patent awards were granted to
Midea during 2023.
In order to provide strong support for the fulfillment of the strategic objective of “Technology
Leadership”, Midea further implements the “3+1” standardization strategy of “Innovation Patentability,
Patent Standardization, Standard Internationalization and Midea Standard Goes Out”. And through a
two-tier (Group-business divisions) standardization management system and the double drivers of
“standard innovation + product innovation”, Midea shifts innovation achievements to advanced
technological standards. During 2023, Midea put forward the standard quality priority for the first time,
and furthered the technology strategy project standard transformation campaign. In the year, it took
part in the formulation/revision of 235 new technological standards, including five international
standards, 70 national standards, 28 industry standards, and 132 local and group standards. And it led
the introduction of the standard of “Household and Similar Refrigerating Appliances—Purification and
Health” into the ASEAN, playing a part to promote high-quality development of the “Belt and Road”.
Besides, the said standards also include “Standard for Functional Requirements of Toolchain for
Artificial Intelligence Model Deployment on Edge Devices”, “Ergonomics - Accessible Design - Part 4: A
Method for Estimating Minimum Legible Font Size for People at Any Age”, “Carbon Footprint of
Products—Product Category Rules—Air Conditioners”, “Technical Requirements for Household and
Similar Tumble Washer-dryer”, “Specification for Home Integration Built-in Effect Evaluation for Built-in
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The 2023 Annual Report of Midea Group Co., Ltd.
Refrigerator”, “Standard Samples of Induction Cookers for Thermal Efficiency (86%) Testing”, “Electric
Dishwashers for Household Use-Methods for Measuring the Performance”, “Standard Samples of
Reference Microwave Ovens for Thermal Efficiency Testing”, “Programmable Controllers—Part 2:
Equipment Requirements and Tests”, “Energy Storage Thermal Management—Refrigeration (Heat
Pump) Units”, “Evaluation Requirements for the Organization of Appraisals of Energy Conservation and
Carbon Reduction for Household Appliance Manufacturers”, “Fine Bubble Technology”, as well as
green and low-carbon standards such as “Carbon Footprint Measurement Rules for Household
Appliance Products—Room Air Conditioners”, and “Carbon Efficiency Ratio Calculation Methods for
Products—Room Air Conditioners”. Additionally, Midea leads an international standardization taskforce
at IEEE (Institute of Electrical and Electronics Engineers), is the secretariat institution of the 3rd
Household Appliances Standardization Technical Committee of Guangdong Province, and hosted the
2023 Working Meeting of the National General Group for Artificial Intelligence Standardization.
Additionally, Midea won 40 new standardisation expert seats in relevant organisations at home and
abroad, and undertook seven provincial and above-level standardisation pilot projects.
C. Deepened the channel transformation, further improved the channel efficiency and rebuilt the
retail service abilities so as to achieve direct connection with customers
Being customer-oriented, Midea continues to enhance vertical efficiency and horizontal synergy
efficiency, as well as accelerate retail growth and transformation. Through the reform of direct retailing,
Midea has been continuously promoting the "vertical efficiency improvement" of offline channels, and
advancing the transformation of new operator empowerment. By improving operators' digital drive,
retail empowerment, engineering projects and other five capacities, it optimises the operation
competence and consistency of omni-category operators, and realises "One Midea" for all markets,
ensuring the consistency of user service and experience. As online and offline markets integrated at a
faster speed, based on changes in levels, characteristics, needs and ways of spending in different
channels, Midea drives the retail transformation based on user demands and experience, and keeps
refining the retail operations system, so as to achieve direct connection with retail customers.
In 2023, online sales (including online sales in lower-tier markets) as a percentage of Midea's total
sales surpassed 50% in the domestic market. In the e-commerce channel, Midea continued to push
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The 2023 Annual Report of Midea Group Co., Ltd.
ahead with the upgrade of scenario-based product suites and the breakthrough of trending product
categories. Additionally, Midea redoubled its efforts at channel segmentation and made arrangements
for interest-based e-commerce platforms, which delivered continuous breakthroughs. During the "18
June" and “Double 11” shopping festivals in 2023, Midea ranked first in the industry for 11 consecutive
years in terms of total sales online. Also, efforts were made to promote the integration of online and
offline business in the domestic market, rapidly develop new business models such as O2O and OMO,
and build the abilities of the shared inventory system and digitalized delivery. Meanwhile, by promoting
omni-channel development of Midea's customer system in the e-commerce ecosystem, Midea
improved the efficiency of customer operation and met the consumer needs for scenario-based and
one-stop shopping through the development of multi-category ecological stores. Midea continued to
strengthen stores' retail capabilities and, starting from self-run exclusive stores, improved their whole-
chain retail experiences and helped stores carry out digital retail transformation driven by new systems
and tools. First, it continued to upgrade the "Midea Cloud Sales+" ecosystem, developed Midea's own
retail business platform, and successfully accomplished the “physical operation centre” reform and the
full upgrade of the "Midea Cloud Sales" system. As a result, the "Midea Cloud Sales" App recorded a
year-on-year increase of over 100% in the daily average page views (PV), and the efficiency of direct
retail was significantly boosted. Second, it reconstructed the retail system of stores based on the
"Midea Cloud Sales" App and the "Midea Home Delivery" mini-app to provide service support functions
such as store management, shopping guide, financial instruments and cloud warehouse. Third, with the
support of digital marketing tools, it promoted service models such as model rooms of real estate
projects, trade-ins, and precious traffic attraction, as well as facilitated stores' online and offline whole-
scene marketing and promotions, thereby empowering online and offline integration, customer
acquisition and potential customer conversion. Fourth, it developed a digital and intelligent platform
operations system to improve stores' management efficiency and conducted classified product
operation and hierarchical store management based on the label-based system for products and stores
so that retail data and business activities can be reviewed online and stores can carry out rapid
analysis and precise operation. By providing industry-leading digital platform services, Midea has
completed the all-product-category, pre-decoration, and retail upgrades of more than 17,000 stores,
and has established more than 8,000 benchmark stores of digital retail. Midea made vigorous efforts to
expand into the new retail market (lower-tier markets). As a result, Midea gained the largest overall
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The 2023 Annual Report of Midea Group Co., Ltd.
share of the core new retail channel platforms in the industry and has fully expanded into stores in new
retail markets, achieving a product penetration of more than 98%. Through joint, product suite-based
and scenario-based display, it provided a full range of shopping experience. And it continued to work
on new categories and products and exploit new potential on the new retail market. As a result, Midea
has outperformed its peers in terms of the sales of emerging products such as residential central air
conditioners, dishwashers, air fryers, and clothes dryers. With the introduction of models such as
collective procurement and vouchers, it has improved consumption quality. In this context, the average
prices of Midea’s products in all categories have risen by more than 10% in the new retail channels.
Meanwhile, by offering cleaning, clothes care and exchange instead of repair in a year services, Midea
has been providing high-quality whole-chain consumer services at the pre-sale, in-sale and post-sale
stages, and strengthened the user royalty in the new retail channels. In terms of marketing, Midea
promotes brand image enhancement, content-based marketing and digital traffic attraction, and
redefines Midea Entire-house Smart Appliances with "Humanising Technology", "Humanising AI" and
"Humanising Design". From single products, product suites, to entire-house products, it creates active,
comfortable smart home experience that varies with users in different scenarios. Highlighting premium-
brand product suites, Midea empowers terminals with its resources in high-end circles, creates user
experience value, and cultivates perception and sense of identity with long-term systematic marketing
and promotion activities. On popular social media platforms, Midea effectively reaches users with new
categories of products through whole-new content marketing, digital marketing, and precision
marketing to enhance brand presence, user-initiated searches and marketing-based traffic attraction.
Midea continues to enhance consistent end consumer experiences. Based on the "M-Smart" platform,
it integrates online and offline user services, allowing users to experience products offline and buy
products online, thus strengthening out-of-store marketing capabilities and expanding the coverage of
post-sales services. By doing so, Midea ensures that consumers can achieve the same shopping
experience at franchised stores as they do on e-commerce platforms, improves product promotion of
offline stores and the effect of distribution and traffic direction of online stores, continues to attract
footfall for stores, and strengthens the marketing capabilities of offline stores. In terms of user
operations, Midea utilises a diverse approach across online and offline touchpoints, leveraging digital
tools such as WeChat Enterprise and mini-apps to connect with users. By deeply exploring user needs
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The 2023 Annual Report of Midea Group Co., Ltd.
and pain points, Midea has built an integrated TOB/C operation system. This involves accurately
segmenting user groups, providing targeted products and services, strengthening member benefits and
service systems to enhance user satisfaction. Furthermore, through user co-creation platforms, Midea
motivates more users to actively participate in product co-creation, review, and recommendation
activities. By the end of 2023, Midea’s private domain users had exceeded 20 million, and the
registered members had surpassed 180 million. Based on the “1+3+4+N” axis of the entire-house
smart strategy, Midea has built long-term competitive capabilities. Focusing on the three core terminals
of smart central control, home gateway, and smart sensors, it has established a matrix of smart home
products. By integrating a full range of smart home appliances, Midea has launched the system of four
major appliances, offering visual, proactive, and intelligent home appliance integration functions and
services. This forms a entire-house product system and capability of “smart home appliances + smart
home”. Midea has established standardised processes and targeted support throughout the entire
chain including investment attraction, store establishment, scene design, solution sales, installation,
and commissioning. It continuously optimises efficiency tools, providing simple and easy-to-use digital
tools such as “Design Helper”. It has initially established a smart technology service system covering
multiple regions, forming comprehensive support capabilities for intelligent solution design, delivery,
installation, commissioning, acceptance, and after-sales service.
Centering around three types of targets: users, customers, and engineers, Midea perseveres in the
business model reform of the user service system to improve service quality and user experience and
provide one-stop entire-house smart home appliance service solutions. First, Midea upgraded service
standards based on the peak experience principle, refined the service procedure and technical process
for various categories of home appliances and introduced them to the public through press conferences
and mainstream media, as well as enabled users to review service standards online at any time.
Second, Midea has set up a butler-style service system tailored to specific service scenarios such as
factory-installation, product suites, high-end brands, and special user groups. Based on the entire
product lifecycle, it proactively engaged with users to provide differentiated butler service models for
different groups. Third, the delivery and installation services of product suites have been improved to
optimise the user experience and facilitate the transformation of single-product stores into product-suite
service stores. It aimed to establish a product suite service network with “one district, one county, one
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The 2023 Annual Report of Midea Group Co., Ltd.
point”, achieving comprehensive coverage of product suite business in domestic counties and markets.
Additionally, it has built an engineer training and certification system to enhance the multi-category
service capabilities of engineers. By leveraging the transformation of service networks and multi-skill
training, it has implemented a service model where product suite purchasers have “one contact person,
one visit” service experience. Fourth, it has enhanced entire-house smart service capabilities by
establishing entire-house smart service training bases based on store distribution and providing
specialised training. Through engineer certification for entire-house smart service capabilities and the
establishment of professional service teams, it has gradually achieved comprehensive coverage of
entire-house smart services. Fifth, in-depth insights into user and customer return and exchange
service needs have led to direct returns and exchanges for users, allowing them to view, expedite, and
review their returns and exchanges. The return and exchange service process was simplified to
enhance the return and exchange service experience. Sixth, Midea enhanced the service experience of
high-end brands by selecting excellent service outlets, realising “one appointment and one delivery and
installation” for high-end brand product suites. In some regions, pilot programs were provided for
integrated services including “sales-delivery-installation-maintenance-repair”. Special certification was
offered for high-end brand engineers, and engineer service incentives were established. Through
projects such as “Service Butler” and “High-end Private Care”, the aim was to enhance user stickiness,
creating a distinctive premium service experience that leaves a lasting impression.
Annto, a subsidiary of Midea Group, is a technological innovation-based supply chain management
company and is committed to providing customers with end-to-end integrated, digital and intelligent
supply chain solutions. Annto deeply fosters itself in the industrial supply chain service sector and,
adhering to the "customer-centric" business philosophy, provides customers with end-to-end digital and
intelligent supply chain solutions ranging from production and logistics services from raw materials to
finished products, a shared inventory system from online to offline channels, ToB/C integration, to
integration services of warehouse distribution logistics and integration services of delivery and
installation. It helps enterprises promote channel reform and supply chain efficiency improvement and
improve competitiveness, and keeps supporting customers' high-quality growth and sustainable
development. With the industry-leading practical experience in channel reform of major enterprise
customers such as Midea and the continuous improvement of the intelligent warehouse network
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The 2023 Annual Report of Midea Group Co., Ltd.
system for domestic supply chains, Annto has covered thousands of brand customers in daily chemical,
beverage, wine, food, home appliances, home furnishing and new energy industries, with its market
share and brand presence steadily strengthened. Annto continues to strengthen the in-depth
integration of technology with the logistics and supply chain business to create a comprehensive end-
to-end intelligent logistics platform. Through the development of the integrated intelligent logistics
platform, it opens up the digital chain covering production logistics, warehousing and distribution
networks, distribution capacity and end service platforms. It has realised the effective application of
multiple self-developed digital control capabilities, enabled online control of the logistics elements of
“people, vehicles, goods and sites”, and significantly improved the efficiency of supplier operation,
intelligent warehousing management, whole-process visible distribution, dynamic scheduling of
transport capacity and whole-process control of delivery and installation. By doing so, it facilitates
customers’ digital upgrades. In terms of production logistics, through the pre-production logistics model
reform of “pre-planning, pre-material preparation and pre-quality control”, Annto realised direct
distribution to stations, and improved lean logistics of incoming materials and reduced factory
inventories. It also supported the digital transformation of suppliers and realised whole-value-chain
coordination of replenishment/pick-up plans, label and bar code management and transport-packaging
integration, lowering logistics costs and enhancing delivery quality and efficiency. In terms of the
warehousing and distribution network, with the support of mobile terminals, automation equipment and
5G technology application, Annto realised whole-scene mobile operations. Supported by AI
technologies and big data models, it enhanced its warehousing network planning capability with
warehouse locating algorithm and warehousing network model planning algorithm, and provided more
professional and efficient warehousing network planning solutions. In terms of transport capacity
management, Annto has put in place an urban distribution transport capacity scheduling platform, line
operation and analysis platform, logistics network planning platform and other platforms based on
intelligent algorithms, and optimised transport and distribution costs and distribution quality with the
whole-process visible, intelligent transport scheduling application for urban trunk line distribution. By
planning vehicle routes and using algorithms and tools to select superior line operators, it supported
the reform of transport capacity resources control of operation centres, and matched intelligent
algorithms used for the tendering and procurement of scheduling resources to supply and demand. In
terms of end services, Annto focused on online management of outlet and engineer resources,
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The 2023 Annual Report of Midea Group Co., Ltd.
developed the intelligent management platform and "Annto Service +" mini-app to output refined
services, such as installation appointment, complied delivery and installation, precise appointment and
integration of delivery and installation of large home appliances, home furnishing products and
charging piles, based on big data and mobile technologies, and to improve customer/user service
experience. In addition, Annto builds a product operation system. Guided by the Voice of Customer
(VOC) platform, it empowers more than 230,000 internal and external users with digital tools,
establishes a closed-loop service system, responds quickly to users' suggestions and needs, and
significantly improves user satisfaction.
In 2023, Annto adhered to the “1+3” service model, enhancing its end-to-end service capability.
Production and logistics are important parts of the manufacturing supply chain under the “1+3” service
model. Centering on the role of an expert in advanced, lean and digital logistics in the manufacturing
industry, Annto applied its experienced “Lighthouse Factory” supply chain solution to manufacturing
customers, and consolidated its core strengths from aspects of lean logistics and digital empowerment.
In terms of transportation mode and transport capacity, a door-to-door parts pick-up model has been
created through consolidation warehouses. The sites were chosen based on the concentration of parts
suppliers, cargo volume, distribution frequency, and routes, with consolidation points already
established in Changzhou and Wenzhou to significantly improve service efficacy. In terms of green
recycle packaging, Annto formulated the standards for packaging of incoming parts, promoted
recyclable standard lease cartons at Lighthouse factories in response to Midea’s Green Strategy, and
has provided hundreds of customers with recyclable standard lease carton services that supports the
development of green logistics. In terms of digital capacity building, it focused on the improvement of
digital capacity of Midea’s Lighthouse factories, created the service model of “product set pre-service,
quality pre-service and plan pre-service” for the manufacturing supply chain, trialed at some factories,
and improved the full set rate of material orders of factories, management and control of quality and the
turnover rate of inventories. Upstream parts suppliers were provided with label cloud service to
optimise the synergistic effect between upstream and downstream industrial chains. Annto achieved an
efficiency upgrade through the integration services of “a shared inventory system” and “warehouse
distribution logistics.” On the warehousing side, Annto built its warehousing capacity based on
warehousing network planning. It created an IoT intelligent park management system, constructed an
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The 2023 Annual Report of Midea Group Co., Ltd.
industry-leading warehousing operation system, and provided customers with whole-scene, whole-
chain warehousing operation solutions. With self-researched site selection and continuous optimisation
of all-category warehousing network layout routes, it accomplished a 6% decrease in average mileage
per unit, a 22% decrease in average time per unit, and an 8% increase in the proportion of same-day
and next-day deliveries. Its smart park relied on the IoT intelligent management system, distinguished
scene requirements, created a differentiated service combination, and supported the independent
deployment of internal and external customers. Annto premised its warehousing operation capability on
lean enhancement and benchmark/pilot breakthroughs as its method. It simultaneously promoted
iterative upgrades of “lean”, “information-based”, and “automated,” establishing a whole-chain lean
warehousing operation system from base warehouse to regional distribution centre warehouse. On the
trunk line distribution side, Annto integrated line resources, built the line traffic monitoring system and
line cost capacity and supported the optimisation of transport capacity and structure as guided by line-
based operation. Leveraging the transport capacity and structure model for core lines and core cities, it
constructed line resource capacity to achieve the optimal capacity structure solution. Meanwhile, it
promoted the dispatcher transitions to operating route capacity and online management of single
vehicles, made the whole chain visible online, and built the high-efficiency whole-vehicle performance
platform with individual transport capacity resources. It established a routinised and standardised “zero-
carriage” network by promoting cooperation in industrial belt and ecosystem parks. This was achieved
through the integration of resources and structural optimisation, which resulted in a transformation of
transport capacity, and the creation of national front-end assembling and point-to-point delivery
capabilities. It promoted product-wise line operation on the basis of line-based operation, and
constructed the “zero-carriage” network composed of one-way short chains. Through technical tools
and management reform, Annto promoted online management of business at all links, thus improved
customer experience. On the urban distribution side, Annto emphasised on “warehousing network
planning, traffic integration, route operation, and transport capacity transformation”. It achieved
warehousing efficiency through warehouse capacity integration, and optimised personnel efficiency and
flat effect. Annto concentrated on route traffic, expanded direct control over the routes, adjusted
transport structure, and increased the total amount of controllable transport capacity, including 6,900
units of new energy transport capacity. Based on a mature distribution centre network and over
200,000 mature routes, it efficiently covered over 99% of the towns across the nation. By optimising
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The 2023 Annual Report of Midea Group Co., Ltd.
and iterating algorithm tools according to dispatch factors, dispatch procedures, order profiles, and
customer profiles, Annto achieved an optimal one-click scheduling with an adoption rate of over 95%. It
deepened strategic cooperation in the fast-moving consumer goods industry, initially established a
regional distribution network for fast-moving consumer goods, and combined DTC strategy and b/C
integration capacity building to achieve next-day delivery for over 80% of orders and delivery within 48
hours for over 94% of orders. On the end delivery and installation service side, Annto strengthened its
“2C integrated delivery and installation” capabilities to support businesses in connecting with users.
Based on terminal capabilities building, it optimised the delivery and installation management platform
and “Annto+” mini-programme, continued to deepen network capacity building, launched digital
management and service tools, and achieved online management and operation of final delivery and
installation engineers nationwide. By the end of 2023, it was cooperating with over 4,000 domestic
outlets, with more than 40,000 delivery and installation engineers. Focusing on home appliances, home
furnishing, new energy, healthy travel and life services, it provided standardised service products,
including the integration of delivery and installation of home appliances, “three-guarantee and five-
guarantee” services, new energy-related “surveying and installation” services. It optimised service
processes through strong-control appointment, text message rescheduling, emergency delivery, suite
delivery, positioning signing, and so on. Combined with integrated and smart supply chain service
capabilities, it comprehensively improved the final delivery and installation service.
D. Promoted “Global Impact”, enhanced localized operations overseas and adhered to a
customer-oriented principle when it comes to products
In 2023, numerous risks and challenges such as fluctuation of macro economy, fierce change of
exchange rate and continuing high inflation were seen in overseas home appliance markets, yet the
overseas business of Midea sustained large-scale growth and stable earnings in performance, whose
operating tenacity was improved. Aiming at the local primary markets, Midea continued to forward-
deploy its overseas business organisations. It established the European, Middle East, and African
(EMEA) regional headquarters and the American regional headquarters, which have already begun
operations, in order to respond to the market more quickly and meet local customer demands more
effectively. Meanwhile, the role of the international business headquarters transitioned to the Centre of
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The 2023 Annual Report of Midea Group Co., Ltd.
Excellence (CoE), providing further support for the organisational capabilities of the overseas
marketing teams. It established and perfected organisational teams in various regions, continuously
integrated localisation talents into the system of internationalisation and optimisation talents, and
continuously promoted a diverse, equitable, and inclusive (DEI) corporate culture. The overseas R&D
centre also increased its investments and expanded in scale, optimised its talent system to ensure
continuing development of overseas business. Meanwhile, Midea built up the core capability system on
all fronts, involving studies on front-end users’ demands, definition and development of products,
channel expansion, sales and operation, user service, etc. It organised teams in various regions across
the globe to hold several meetings to share and discuss local best business practices and future
development plans, promoting global business expansion and enhancing team cohesion. It continued
to build a digitised human resources system. In 2023, the basic module of the global human resources
system was launched, and a whole-module human resources system will be in use worldwide by 2025.
Midea continued to expand its overseas manufacturing layout, expedited the introduction of the "China-
based Supply for the World + Local Supply" model, promoted the construction of manufacturing bases
in Brazil, Indonesia, Italy, Thailand, India, Mexico, and Egypt, among others, and promoted
coordination and support between domestic and overseas teams in the manufacturing end. In addition,
it started the Overseas Manufacturing Plants 632 Project and thus realised standardised manufacturing
flow and data management. The first phase of the project has been completed and put into use. Based
on the successful practices of domestic Lighthouse factories, Midea selected excellent employees for a
lean manufacturing system and developed overseas lean manufacturing talents, as well as carried out
pilot programmes of automation-oriented transformation in overseas manufacturing bases, thus
improving its overseas manufacturing efficiency and delivery capability. Meanwhile, it kept enhancing
the EHS management system of overseas factories and established the risk prevention mechanism to
ensure safe and stable operation of its overseas manufacturing bases. Midea refined its global service
system and improved its service capability worldwide. Always being customer-oriented, refinements
were made from the four dimensions of spare parts delivery, customer contact, service network and
service technology engineering to improve customer services and experience. Also, Midea continued to
operate its global spare parts centre in an efficient manner, enabled online and visualised order
fulfillment, and strove for global professional operation. Meanwhile, the service network comprising
iService, the overseas after-sales service system, and the cloud call centre platforms has been
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The 2023 Annual Report of Midea Group Co., Ltd.
improved. In 2023, the cloud call system has been made available in 10 countries and regions
including Italy, Singapore, Hong Kong, Malaysia, Germany, Mexico, the United States, Canada and
Australia. Also, Midea optimised the management of master data for global outlets and service
engineering, enabling shared interfaces between call centres and after-sales service systems, which
has significantly improved service accuracy and efficiency. Meanwhile, supported by speech analysis,
semantic recognition and access to social media by intelligent voice robots, Midea continued to build a
fast-response and proactive global service system. The introduction of Amazon Connect, a global,
omnichannel cloud contact centre, into Midea enabled the Company to achieve the iterative upgrade of
its global contact centre, thereby achieving the whole-procedure closed-loop management ranging from
user reaching to service completion, while significantly reducing operating cost and improving voice call
quality. The Amazon cloud security tool has been adopted to satisfy the overseas requirements for data
security and effectively protect privacy and data security for end users. Midea insisted on improving the
structure of its own brand products and enhancing product efficiency. In the North American market, the
growth in variable frequency air conditioner products was significant, with sales revenue of variable
frequency window air conditioners increasing by over 120% year-on-year, and that of variable
frequency portable air conditioners increasing by over 140% year-on-year; and multi-door refrigerators
increased by over 300% year-on-year. In the EMEA market, sales revenue of double-door refrigerators
(over 300L) increased by over 110% year-on-year, and sales revenue of large-capacity front-loading
washing machines increased by over 60% year-on-year. Midea insisted on user-oriented product
development and strengthened the ability to understand local users. In North America, South America,
Asia Pacific, and Europe, it built user research and market insight teams with rich experience to
promote product innovation and brand building. To strengthen its development of overseas self-owned
brands, Midea sped up its efforts to make breakthroughs in self-owned brands worldwide, facilitated the
synergy of brands, products and services, deepened its access to users in the front-end market,
expanded product and brand promotion, and enhanced the brand awareness in all links of operation
and service. Through the improvement of brand value in joint efforts with the world-famous Manchester
City Footfall Club (the Man City), Midea reached hundreds of millions of footfall fans around the world.
The team star Erling Haaland was selected as Midea Global Brand Spokesperson, and the relevant
advertisement was exposed more than 900 million times globally, representing a stronger brand
presence. Drawing on the experience of the North America-specific brand development model, Midea
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strengthened the influence of its brands from numerous perspectives, including offline retail experience,
shopping guide team development, social media launch and marketing of entire-house collection
products, in Asia-Pacific and Middle Eastern markets. Besides, it boosted online content-based
marketing inside and outside its websites, upgraded its content planning, visual presentation and
shopping experience in all aspects, advanced the building of its brands' official websites, refined the
brand matrix, as well as established marketing resource pools. Midea sped up the expansion and
refinement of its overseas channel layout, used digital tools to empower retail, strengthened the retail
network in scale and depth, as well as promoted the introduction of specialised channels and channel
structure upgrades. As a result, hundreds of air conditioner-specific channel customers were developed
in the Asia-Pacific market, and the scale of channels for built-in products increased more than 30%
year on year in the European market. Also, Midea increased the activity of retail business, improved
the display of new products in retail outlets, and enhanced the interaction with customers and their
brand awareness, in addition to leveraging digital tools to empower traffic acquisition, transformation
and upgrade, user accumulation and other aspects. Midea continued to improve the coverage of its
management system for purchase, sales and inventory in retail outlets, continuously optimised and
enriched application scenarios of the system to improve the sales efficiency of stores, and took
advantage of module- and tool-based system operating model to speed up its iteration of retail stores'
promotion tools, thereby improving flexibility in promotional retail and convenience in retail operation. In
the overseas market, it leveraged new media content-based marketing to enhance the interaction
between products and users, promoted the application of innovative technology through pilot
programmes, and optimised the contents launched in quality and efficiency. Moreover, Midea further
flattened its channels with continuous efforts and accelerated its endeavours to facilitate the
transformation of DTC retail model in North America market, thus achieving an incremental yield as
considerable as tens of millions of dollars in 2023, up approximately 50% year on year. Midea
continuously delved into overseas e-commerce businesses to support the development of its own
brands, and made progress in multiple aspects such as business growth, structural optimisation, and
brand building. In 2023, e-commerce sales revenue increased by 16% year-on-year, and e-commerce
operations covered over 30 major countries or regions worldwide, focusing on a balanced development
model across multiple channels, modes, and countries. Midea established its own e-commerce data
analysis system to achieve data-driven and whole-chain closed-loop from product to user. It fully
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enhanced the operational efficiency and profitability performance of the value chain to create unique
data capabilities. It continued to maintain the market-leading position and sales channel vitality of core
categories. For instance, in the US online market, the market share of microwave ovens remained at
an industry-leading level, and the categories such as dehumidifiers also grew against the trend. The
scale and share of range hoods, refrigerators, laundry appliances and other categories also increased.
At the same time, it continued to optimise product structure and create hot-selling Stock Keeping Unit
(SKU). During overseas e-commerce shopping festivals such as BFCM and Prime Day, Midea had
over 100 products that entered the best-selling list in their respective categories, and ranked in the top
ten in sales in more than 20 categories. It boosted content and traffic operation to increase its voice on
social media. Influencer cooperation projects have attracted tens of millions of viewers and resulted in
hundreds of live broadcasts. Midea also advanced the construction of brand official websites and
Amazon flagship stores, gradually forming a flagship matrix layout of three major brands across seven
major sites.
Midea continuously enhanced its international logistics service supporting capabilities. In 2023, the
cumulative shipment volume of Midea Group’s global production bases exceeded 800,000 TEUs, with
the proportion of prepaid clause volume increasing by 14%. It continued to build an end-to-end agile
delivery capacity, enhancing customer satisfaction, and establishing a stable, efficient, safe, and
collaborative supply chain system to support the global breakthrough of overseas business. Midea
expanded the logistics supply ecosystem and deepened cooperation with strategic partners, trunk lines,
tractors, railways, wharves and other parties to optimise the competitive advantage of export costs,
achieving a year-on-year decrease in pre-port operation costs of 13%. Meanwhile, it promoted multi-
mode operation to reduce carbon emissions to achieve green logistics. Midea strengthened the quality
control of order operations, established service evaluation standards and application mechanisms,
improved the quality and delivery efficiency of various operations, and the abnormal cost decreased by
more than 60% year-on-year. Midea built overseas local logistics capabilities, deepened local
operations and delivery, and established local logistics teams at multiple overseas manufacturing
bases to achieve integrated import and export operations. It completed the construction of numerous
warehousing and distribution networks to achieve short-chain delivery of overseas orders. Through
forward warehouses in Belgium and Greece, it covered nine countries in Europe, shortening the order
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delivery cycle to more than three days. The spare parts warehouses in the United Arab Emirates were
established to improve the timeliness and satisfaction of post-sale services for its own brands in the
Middle East. The operation of finished products warehouses in Thailand were launched to meet local
delivery and export shipment needs, and at the same time, the overseas e-commerce logistics and
international express business were expanded to enhance multi-product operational capabilities.
In 2023, the depreciation of the Japanese yen led to an increase in the cost of imported products in the
Japanese market. The continued price increases in consumer goods inhibited the willingness to spend.
The overall demand weakened in the home appliances market, causing more intense competition.
Focusing on user experience consistently, TLSC stayed cool-headed when handling numerous
challenges of uncertainty. Through strengthening the coordination with the Group and the relevant
product divisions, it effectively improved product quality, optimised the product development process,
and ensured the launch of new products and stable supply of products. By taking multiple measure like
enhancing communication with key customers, strengthening retail in the market and the development
of new channels, it sustained a leading market share for refrigerators, microwave ovens and other
products. By taking such measures as stabilizing price and improving products structure, it effectively
alleviated the adversity of market scale downturn. And it delivered further improvements in profitability
through efficiency gains and cost reductions, with an increase in profit. Meanwhile, TLSC continued to
boost synergies with the Group and the relevant divisions on branding, R&D and innovation, supply
chain integration, quality improvement, etc., so as to build a strong product portfolio for the global
market together, thereby enabling business of TLSC to expand to and cover more than 120 countries
and regions.
E. Stepped up the comprehensive digitalization to materialize data- and platform-based
operations in the whole value chain, and thus to become more competitive in the digital era
With a focus on the “Digitisation & Intelligence Driven” strategy, Midea stepped up the comprehensive
digitalisation to materialise data- and platform-based operations in the whole value chain, and thus to
become more competitive in the digital era. In terms of domestic sales, Midea promoted a customer-
centric DTC transformation strategy. Through measures such as “visible delivery time of production
capacity, no sales without delivery dates, and automatic order review,” it achieved 100 % visibility of
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The 2023 Annual Report of Midea Group Co., Ltd.
order delivery dates and over 96 % automatic order review, enhancing delivery efficiency. The
Company pushed forward “worry-free retail and a O2O shared inventory system,” and the stock
stagnation rate dropped by 14%, with the average inventory period of central warehouses shortened by
13 days. By implementing “consumer direct returns and exchanges, logistics signing and appointment
adjustments, and the establishment of evaluation systems”, it enhanced the customer experience.
Midea further drove retail channel transformation through actions like “trade-in activities,” “model room,”
and “precise traffic attraction,” leading to retail sales surpassing RMB3.5 billion. It directed channel
inventory back to authenticity, accomplishing the integration of “retail order, logistics order, installation
order,” the whole retail logistics installation chain was online and visible, ensuring the authenticity and
controllability of overall retail data. The usage rate of cloud warehouse reached 100%, and the
inventory with long storage time in the cloud warehouse decreased by 10% compared to the previous
year.” The fulfillment timeliness rate of cloud warehouse ToC delivery reached 92%. Through store
sales tools such as “Design Helper” and “Decoration Calendar,” online product selection and visitor
access were realised. Over 15,000 sales guides have used these tools, producing nearly 100,000
proposals, thereby increasing the design efficiency of terminal store guides by up to 90%. The
continued improvement of data empowerment, operator empowerment, and tool empowerment through
retail tools such as Retail Assistant has enhanced overall operational efficiency, with the activity rate of
operators nearing 90%, and an online task rate of 100%. In terms of overseas sales, Midea focused on
the global business efficiency enhancement and digital transformation, and comprehensively launched
the “Digital 3.0” project. Through end-to-end panoramic analysis of the value chain, it focused on the
digital capabilities of overseas staff, product management, order management, overseas manufacturing,
overseas logistics, overseas e-commerce, direct access to overseas users, and supply chains,
promoting domestic digital transformation experience abroad and facilitating the “Global Impact”
strategy. Coupled with business digital perception capabilities based on user insights, Midea
continuously created innovative products to meet customer needs and enhance user experience.
Through the iBOS integrated sales platform system that was fully implemented across overseas
subsidiaries, it integrated end-to-end whole-process information on project production, shipment,
logistics, and orders, realised whole-chain data visualisation, and improved overseas order fulfillment
efficiency by 30%. It promoted the improvement of overseas channel management systems, which
have covered five countries, with the registrations of channel customers exceeding 1,000, further
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enhancing the channel operation framework system. The newly established MideaClub system
supported the establishment of professional installation channels and has been implemented in four
countries. By early 2024, the number of registered installers exceeded 1,700, with the number of
installation orders nearly 10,000, advancing the online data adaptation of overseas installation services.
The overseas e-commerce platform I-ECOM can connect to eight major e-commerce platforms to
obtain data, with the total amount of data accessed exceeding 300 million. The platform can support
the e-commerce business of various Midea units and conduct operational analysis from various
dimensions such as market, competition, selling points, and reviews. The newly added post-sale
knowledge base enhanced digital capabilities such as the analysis of Voice of Customer (VOC). A
membership system has been piloted in Brazil and a Customer Data Platform (CDP) has been
launched online, supporting Midea’s overseas DTC strategy. Through the digital platform, Midea
achieved product planning and development driven by user insights and technological innovation,
forming an innovative mechanism for its own overseas brand business. Midea also optimised the digital
capabilities of overseas manufacturing and completed the digital system building of overseas
manufacturing bases such as the Brazilian factory. In terms of ToB business, Midea planned and built
the ToB business template based on multiple industrial forms. It designed and defined the ToB end
repeat purchase and project-based business templates, and overall planned the capabilities of the ToB
marketing platform to provide digital service capabilities for pre-sales, mid-sales, and post-sale. In 2023,
in the fields of intelligent building technology and energy solutions and industrial technology, pre-sales
digital empowerment was completed, building a customer-centric model to achieve digital capability
support from business opportunities to contract orders. At the same time, using energy solutions and
industrial technology business as a pilot, the design of the ToB end repeat purchase business template
was completed, and it has been launched in some businesses, achieving the digital empowerment of
integrated domestic and overseas sales orders, inventory management, logistics management, and the
integration of business and finance. This has facilitated business increment creation and improved
order fulfillment efficiency by over 15%. In terms of supply chain and manufacturing, Midea supported
global planning and order integrated operations through the Integrated Supply Chain (ISC) platform,
contributing profits of over RMB150 million and saving 100,000 work hours for the whole value chain.
Midea promoted the compliance and controllability of the end-to-end workflow of the overseas supply
chain. Efficiency in pricing, supporting systems, and personnel increased by 15%, achieving supply
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The 2023 Annual Report of Midea Group Co., Ltd.
quality synergy and improving quality indicators by 10%. Midea furthered the construction of several
“dark factories”, the domestic manufacturing data operation platform was fully launched and was
promoted in overseas factories. Based on reliability reverse analysis, incoming materials’ dynamic
testing was realised, and the assembly scheduling of several overseas factories was put online. The
one-click order ratio of knocked-down parts (KD) enhanced to 98%, achieving traceability of domestic
and overseas KD key material quality, real-time visibility of production progress, abnormal working
hours warning, etc., reducing working hours by up to 30%. Midea enhanced production and research
collaboration, empowered through the digital process platform, shortening the process route generation
cycle by 90% and improving transfer production efficiency by 62.5%. Midea further optimised its energy
and carbon emission management system, improved the Energy Carbon Management Platform and
the Industrial Park Microgrid Management System. Besides, EHS management in parks achieved
intelligent collection, analysis, early warning, and closed-loop handling of abnormal situations at all
monitoring points. MIoT, Midea’s industrial internet platform, can provide over 90 solutions covering
nine key fields, including safe manufacturing, energy conservation and emission reduction, quality
control, supply chain management, R&D design, production and manufacturing, operation
management, warehousing and logistics, and operation and maintenance services. Midea served over
500 large enterprises to achieve digital transformation and upgrading. MIoT was successfully selected
as a “Cross-industry and Cross-field Industrial Internet Platform” by the Ministry of Industry and
Information Technology in 2022 and 2023. Midea’s “model-based three-dimensional structured process
design solution” by Midea Cloud successfully made the “2023 Annual List of Leading Smart
Manufacturing System Solution Projects” jointly selected by the Ministry of Industry and Information
Technology and the State Administration for Market Regulation in 2023. It was also recognised as a
leader in the IDC MarketScape: Manufacturing Vendor Assessment Report for Overall Solution of
China Digital Factories.
Midea steadily advanced its data empowerment initiatives, strengthened the construction of a digital
talent ecosystem, and enhanced the integration of digital capabilities with practical business operations.
Thousands of digitally proficient personnel have been trained, possessing practical skills.
Simultaneously, efforts were concentrated on data empowerment within core business scenarios such
as research and development, marketing, supply chain, overseas markets, and ToB domains. In the
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The 2023 Annual Report of Midea Group Co., Ltd.
realm of smart home business, novel concepts were discovered through the fusion of large and small
data methodologies, facilitating the creation of popular and innovative products. Digital site selection
capabilities now encompass all store types, facilitating the application of sales operation chain data and
advancing real-time online retail data and channel data sharing. Operational efficiency is enhanced
through data operation, while thousands of product SKUs are covered by intelligent stocking and
replenishment systems, effectively reducing inventory levels and establishing anomaly alert systems.
Leveraging overseas digital planning efforts, numerous new products were crafted, and the global
Voice of Customer (VOC) platform integrated data from multiple channels. This integration realises a
closed-loop tracking function from “customer voice” to “problem improvement”, continuously traversing
and analysing the entire chain of data. It provides accurate and effective data-based evidence for
channel optimisation and product pricing in overseas operations. Breakthroughs in digital planning
within the ToB domain were achieved, leveraging data analysis to facilitate business opportunity
discovery. A business data analysis framework was constructed around project-based operations,
enhancing the competitive edge of ToB business operations.
Midea continued to strengthen the building of digital base and information security, focusing on the
supply and stability assurance of basic resources. The first phase of construction of the cloud base of
Midea in Guian has been completed, with a reserve of over 60,000 positions, capable of supporting
Midea’s future computing needs for digital development over the next 10 years. Nineteen security
measures have been implemented, including the transformation of DRUPS in data centres, network
isolation, and risk assessment of the park, continuously eliminating more than 370 hidden dangers,
promoting stability construction, achieving a year without P-level faults, and completing the construction
of a self-developed cloud host platform. The construction of big data and database service platforms
has been completed, with the efficiency of data development and management increased by more than
three times, and both the data volume and computational tasks of the big data platform have increased
significantly. The efficiency of the research and development process has been continuously improved,
with a 15% increase in front-end construction efficiency, a 35% increase in deployment efficiency, and a
22% increase in software release process efficiency achieved through engine optimisation. A
comprehensive defence system, security operation system, and privacy compliance system have been
established, comprehensively promoting application security governance and “left-shift” application
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The 2023 Annual Report of Midea Group Co., Ltd.
security, escorting the stable operation of business security. In addition, innovative use of AIGC large
models, natural language processing (NLP), and recommendation algorithms has led to the launch of
86 intelligent Q&A application scenarios, providing consulting services to employees, service engineers,
salespersons, and cooperative customers, with a user base exceeding 750,000. The AI drawing
platform has also been built to address the pain points of external tool usage, providing design
solutions for business needs.
Midea promoted the strategy of "Digitization & Intelligence Driven" and accelerated the implementation
of "Comprehensive Intellectualization" to "Customize a Smarter Midea Life for You" In terms of
intelligent products, Midea remained committed to improving the comprehensive user experience of
Midea products, consolidating the entire-house basic guarantee capability, and creating a customer-
oriented Midea Smart Life solutions. In 2023, the MSmartLife App continued to improve its application
experience, reducing device abnormal offline rate by 17%, plugin white screen rate by 79%, and
application cold start time by 25%. The comprehensive performance reached an industry-leading level,
creating a stable and smooth user experience. As at the end of 2023, the registered users of the
MSmartLife App exceeded 55 million, and the monthly active users exceeded 8.2 million. Based on the
overarching entire-house smart strategy, Midea has constructed long-term competitive capabilities.
Focused on three core terminals: intelligent central control, home gateway, and smart sensors, Midea
has established a multi-category matrix of smart home products including smart door locks, lighting
drivers, and switch panels. Integrating the full range of smart home appliances, Midea has launched
four major appliance systems, providing visual, proactive, and intelligent functions and services for
home appliances and home integration, forming a entire-house product system and capability of “smart
home appliances + smart home”. In September 2023, Midea released the industry’s first large-scale
language model “Meiyan” in the smart home field. Based on the semantic depth understanding and
powerful generation capabilities of general large-scale models, it has the advantages of precise replies
and rapid responses within the domain, satisfying users’ interaction needs in aspects such as “clothing,
food, housing, and enjoyment”. Midea also launched the next-generation proactive service-based
“Midea’s Home Brain”, based on the “Meiyan” large model, possessing four core capabilities: intelligent
connection, intelligent perception, natural interaction, and autonomous decision-making, supporting
eight major subsystems and numerous application scenarios including entire-house air and entire-
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The 2023 Annual Report of Midea Group Co., Ltd.
house water. Midea’s independently developed full-stack solutions including chips, modules, and AI
algorithm edge deployment toolchain Aidget have addressed the challenge of large-scale deployment
of AI algorithms in IoT edge devices with limited computing resources, achieving innovative
breakthroughs in IoT edge intelligence technology in the smart home field, and won the 2023 Top Ten
Technological Advancements in China’s Internet of Things selected by the Chinese Institute of
Electronics and the China Institute of Communications. In addition, Midea actively participated in the
drafting and formulation of relevant industry standards both domestically and internationally, so as to
promote the wider popularization and application of new technologies in the industry and enhance
industry influence. In 2023, Midea established task groups and assumed the chairman of the task
groups in the IEEE Computer Society/Artificial Intelligence Standards Committee (C/AISC) and IEEE
Robotics and Automation Society's Standing Committee for Standards Activities (RAS-SCSA), in
addition to being a co-leader and a co-leader unit in the Smart Life Task Group of the Artificial
Intelligence Sub-Committee of the China National Information Technology Standardization Network
(NITS).
F. In view of consumer stratification, launched multiple brands and diversified product
portfolios, and enhanced the promotion of the core values of these brands to empower retail
sales and user operation
In 2023, Midea continued to promote the "COLMO+TOSHIBA" dual high-end brand strategy. In the
year, the overall retail sales of the dual high-end brands saw a year-on-year growth of over 20%.
COLMO serves high-end users with premium entire-house smart solutions. In the area of products,
after five years of development, COLMO's high-end entire-house smart solutions comprehensively
cover two major segments of smart home appliances and smart home, including a variety of home
appliance categories such as commercial air conditioners, entire-house water, refrigerators, wine
cabinets, clothes dryers, laundry appliances, nursing cabinets, kitchen appliances, and small domestic
appliances. Also, it released the industry's first large model in the field of home furnishing, upgraded
the high-end entire-house smart solutions, and launched the first entire-house smart door lock and the
AIRCUBE, solidifying the industry positioning of "Smart Villa Expert". EVOLUTION New Image Suite—
Moonstone Grey and Cloud White launched by COLMO, with product upgrades of being completely
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The 2023 Annual Report of Midea Group Co., Ltd.
built-in, customized, and compatible in combination with differentiated, custom panels, meet the needs
of elite consumers when at home. COLMO launched the TURING advanced customised entire-house
water system, using AI intelligent technology to customize the natural high-level water ecosystem
through five dimensions of safety, purity, skin touch, temperature sensation, and taste. Starting from
different water usage scenarios, COLMO has created five major products: TURING pre-filter, central
water softener, central water purifier, water purifier-heater, and sparkling water direct drinking machine,
providing a customizable entire-house water system solution that comprehensively meets the high-end
water-associated needs of elite users. COLMO Washer-Scrubber has integrated and upgraded
washer-dryers and robot vacuum cleaners, and they are equipped with AI-powered light dry-cleaning
technology, creating a new form and species in the home appliance industry. COLMO AVANT Gas
Water Heater features the industry-first Reco dual-core technology, efficiently recovering heat from the
flue gas and achieving purification, recovery, and reuse of condensate water. At the user and market
ends, COLMO has constructed a user rights system centred around the entire lifecycle of home
appliances, enhancing the overall user experience and launching highlight benefits and services such
as deep appliance cleaning, 1V1 butler service, and exclusive member activities, covering over 1.3
million member users. The number of COLMO members increased by over 200% year-on-year in 2023,
with a nearly 400% increase in monthly active users on the COLMO mini-app. According to the data
from AVC, the proportion of COLMO products in the high-end market increased significantly in the first
half of 2023, with drinking water products accounting for over 57%, water purification products
accounting for over 18%, and cabinet air conditioners accounting for 16%. Additionally, retail sales of
COLMO household products increased by 58% year-on-year. At the brand and channel end, COLMO
leveraged cooperation with high-end IP resources through three major marketing activities: the Elite
Life Festival, the Ultimate Brand Month, and the COLMO Lifestyle Summit. It also targeted high-end
sports user groups by consecutively naming the Wuxi Marathon, sponsoring the Rolex Shanghai
Masters, and cooperating with the Ultra Gobi. Through communication and cooperation with the
designer community through events like Design Shenzhen, Design Shanghai, and Guangzhou Design
Week, COLMO accelerated the development of high-end whole-scene channel distribution. Currently, it
has established over 800 experience stores in more than 250 cities.
Toshiba upholds its positioning as “the first Takumi and exquisite brand of high-end home appliances”,
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The 2023 Annual Report of Midea Group Co., Ltd.
committed to creating a breakthrough star-level lifestyle for consumers with its inherited Takumi and
exquisite aesthetics. As a globally renowned home appliance brand with a century of history, Toshiba
has emerged as a new choice for high-end consumer groups in the domestic market. In 2023,
Toshiba’s domestic market retail sales recorded a year-on-year increase of over 60%. During the “618”
and “Double 11” periods, online retail sales grew by 92% and 40% respectively year-on-year. In terms
of products, according to third-party data, Toshiba 450 White Pearl Refrigerator, focusing on the zero
built-in demand, ranked first in sales among products priced above RMB8,000. The sales of Toshiba’s
high-end microwave-steamer-oven combo products ranked first among products priced above
RMB5,000. Toshiba also launched the first “Cozy Home” suite that covers multiple scenarios and
categories, focusing on kitchen, water, and bathroom scenarios, with spatial layout, residential feel, and
authentic aesthetics as the core concepts, creating a heartfelt living space for sophisticated lifestyle
enthusiasts. The total retail sales of the entire suite exceeded RMB500 million in 2023. Toshiba’s star
Stock Keeping Unit (SKU), the Toshiba Electric Fan “Huaxinfeng”, achieved sales of 50,000 units in
2023 and has been ranked first in the industry for five consecutive months according to AVC statistics.
In terms of brand, with a focus on the brand proposition of “Details Matter”, Toshiba has established a
complete brand communication chain, effectively covering the 5A crowd, from brand dissemination to
end empowerment. This includes activities such as the debut of “Cozy Home” at Japanese airports,
national designer tour salons, key city roadshows, and quarterly store experiences. In terms of channel,
Toshiba actively promoted retail transformation. Toshiba completed the cooperation with over 200
brand operators, built 260 star-level life pavilions of Toshiba brand and over 350 Toshiba brand joint
halls, promoted the realisation of a latest unified terminal image and preliminarily completed the
building of the national retail system.
WAHIN continued breaking the boundaries of traditional home appliance models. The brand insists on
innovation, embracing the Generation Z with "Trendy Designs, Practical Functions and Fun
Interactions". It strengthened the slogan "Young and Daring" for branding, and positioned itself as a
brand of "young, high-tech and trendy appliances", continuing to provide users with good-looking,
interesting and surprising products with easy-to-use technology. The total retail sales of the brand in
2023 was close to RMB9 billion. During the "Double 11" period, the sales of WAHIN products reached
close to RMB1.2 billion. Particularly, WAHIN air conditioning products ranked among the top three in
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JD.com, Tmall and Douyin by value of retail sales. In terms of brand, in 2023, WAHIN collaborated with
partners such as champion of the China Rally Championship and the School of Art Management of the
Central Academy of Fine Arts during the spring and Youth Day seasons, initiating synergistic efforts to
explore novel modes of youthful marketing. This endeavour led to the introduction of artist-customised
trendy products and virtual store metaverse marketing strategies, garnering favour among younger
demographics. During the summer of 2023, WAHIN engaged in cross-industry collaboration with the
top-tier Chinese anime “Soul Land”, employing AIGC technology for the first time in brand event
marketing. It launched limited-edition iced beverages and air conditioning fragrances, continuously
delving into trendy and enjoyable scenarios. On “Double Eleven” in 2023, capitalising on the fervour
surrounding the League of Legends S13 World Championship, WAHIN partnered with the JDG team to
unearth the sustained emotional value of its products, perpetuating the cultivation of brand
differentiation. In 2023, WAHIN’s brand exposure exceeded 4.4 billion UV, with a year-long increase in
followers across all platforms surpassing 686,000. In terms of marketing, WAHIN is a solid TOP3 in the
air conditioner industry. In 2023, it mainly promoted structural models, such as 3-HP floor-standing, 2-
HP wall-mounted and fresh air conditioners to build the user mind of "WAHIN Magic Machine" series
products. Through the matrix penetration of all-platform introduction of off-site celebrities, the search
indexation of "WAHIN Air Conditioner" in Douyin and Xiaohongshu increased by more than 120% and
200% respectively year on year, with a total of 280 million visits across the Internet. The e-commerce
search ranking of "WAHIN Air Conditioner" elevated to TOP15, which is an impressive result of the
traffic attraction and sales promotion efforts. As such, the brand has achieved dual gains on brand
presence and product sales.
G. With technological innovation as the core driving force, focused on green energy and key
industrial components, grasped growth opportunities in the industry, and provided green,
efficient and intelligent products and technology solutions for pan-industrial customers across
the world
Midea Energy Solutions and Industrial Technology is a co-builder in digital transformation and green
sustainable development across the global pan-industrial sector. With the vision of "Technology Drives
the Whole World”, it provides technologically advanced, reliable and eco-friendly key components for
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the consumer appliance and industrial automation segments based on decades of experience in the
home appliance and HVAC industries, as well as offers green energy solutions across the entire
energy value chain based on its expertise in energy management. The Industrial Technology Research
Institute and a strategic development organisation have been established in 2021 to focus on both
independent development and acquisitions. Based on the solid root technology system, such as
thermal management technology, drive control technology, energy storage technology, power and
electronic technology, etc., a complete industrial chain layout and product matrix have been put in
place in the field of key industrial components and new energy. Continuous efforts are also made to
increase the investment in key and cutting-edge technologies, and enhance the introduction of senior
experts in the industry. In 2023, Midea Energy Solutions and Industrial Technology received a number
of awards in the industry, including eight science and technology awards that are of the provincial level
or above. To name a few, a first prize of 2023 Science and Technology Progress Award of China
National Light Industry Council for the "Research and Industrialisation of Key Technologies for Highly
Adaptable Silent Variable Frequency Compressor", a first prize of the 2023 National Business Science
and Technology Progress Award for the "Research and Industrialization of Key Technologies for High
Power Density Permanent Magnet Motor and its Compressor", and a second prize of the 2022 Science
and Technology Progress Award of Guangdong Province from Guangdong Provincial Department of
Science and Technology for the "Research and Industrialization of Key Technologies for the New-
generation Cross-category and Low-carbon Motor Systems". In 2023, more than 1,500 patent
applications were lodged and nearly 400 invention patents were granted, in addition to two 24th China
Excellence Awards for Patents. Also in the year, seven technologies of which the development was led
by Midea Energy Solutions and Industrial Technology (namely, "Research and Application of Key
Technologies for High Power Density Permanent Magnetic Motors and Compressors", "Research and
Application of Key Technologies for Energy-efficient R290 Rotary Compressors", "Research and
Application of Key Technologies for Green and High-quality Thin Permanent Magnet Motors",
"Research and Application of Key Technologies for Quasi-dual-stage Reciprocating Compressors and
Cooling Systems", “Research and Application of Key Technologies for High Capacity Highly Efficient
Variable Frequency Scroll Compressor”, “Research and Industrialisation of Key Technologies for
Integrated Rotary Compressor”, and “CO2 Rotary Compressor for Thermal Management of Electric
Passenger Vehicles”) have been recognized by bodies of experts in the industry as "Internationally
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Advanced". Meanwhile, the "R290 Mini-sized Double-cylinder Large-capacity Inverter Compressors"
and the "Novel Ultra-high Power Density DC Brush-less Fans for Large Variable Refrigerant Flow (VRF)
Air Conditioning Systems" developed by Midea Energy Solutions and Industrial Technology won the
2023 AWE Award for Core Components. Additionally, two subsidiaries of Midea Energy Solutions and
Industrial Technology, namely Guangdong Meizhi Precision-Manufacturing Co., Ltd. and Guangdong
Welling Motor Manufacturing Co., Ltd., were included by the Ministry of Industry and Information
Technology into the 2022 List of Green Manufacturing and recognized as national "Green Factories".
By maintaining the focus on the field of key industrial components for consumer appliances, Midea
Energy Solutions and Industrial Technology continued to consolidate its leading position in the industry.
First, according to the 2023 data from ChinaIOL.com, in terms of residential air conditioner
compressors, its global market share increased to 45%, continuing to rank first in the world, while it
achieved breakthroughs in overseas markets for scroll compressors, and launched the brand new
product of R290 Heat Pump Compressor in the European region, providing a new experience that is
energy-efficient, safe, reliable, low-carbon and environmentally friendly, and contributing to the
sustainability of the heating, ventilating, and cooling industries. Second, in terms of refrigerator
compressors, its global market share reached 16%, ranking second in the industry, and breakthroughs
were achieved regarding the core customer base in several overseas markets such as the US, Brazil,
and India. Third, in terms of motors, its global sales shares recorded approximately 40% and 22% for
residential air conditioner motors and laundry appliances motors, respectively, maintaining the
advantage as an industrial leader, which, coupled with the launch of a high-efficiency silent product of
Household Fresh-air Outer Rotor Motor, provided a firm support for the expansion of new market
segments. The Foshan Xingtan Base for components of consumer appliances has been established to
make a forward-looking layout in intelligent manufacturing of mechanical and electrical products. Midea
has comprehensively automated, digitalized and intellectualized the production layout, process design
and production management, seeking to build an Industry 4.0 intelligent manufacturing demonstration
base in China. The integration work on the Thai compressor company proceeded well, which has
helped significantly increase the overseas production capacity of refrigerator compressors. The Thai
motor factory's construction has been completed, initially establishing overseas mass production
capacity for ECM motors. Third, through the facilitation of the mass production in 2023 in the
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manufacturing base in India, the first self-built overseas base for A/C compressors, the global supply
capacity for the key components continued to increase. Additionally, Midea Energy Solutions and
Industrial Technology continued to invest more in R&D of chip products and technologies, as 14 chip
products of four major series (namely, master control, touch control, inverter, and IPM) have been put
into mass production and introduced to the market (over 30 million chips sold in the year), with an
internationally advanced performance regarding the quality indicators for the same type of products.
This is followed by the successful supply of these products to mainstream manufacturers of household
appliances, and the earning of the Best MCU of the Year of the 2023 China IC Design Achievement
Award from AspenCore for MCU MR88F001 (a master control chip product).
In response to the rapid growth of the renewable energy industry, Midea Energy Solutions and
Industrial Technology focused on providing comprehensive, effective, and integrated green energy
solutions throughout the entire energy value chain. These solutions encompass large-scale energy
storage, commercial and industrial energy storage, residential energy storage, smart grids, photovoltaic
EPC, and new energy vehicle components. In the energy supply segment, it offered photovoltaic
solutions; in the energy allocation segment, it provided intelligent power distribution system solutions; in
the energy consumption segment, it delivered new energy vehicles and pedelec components that
achieve higher energy efficiency, as well as efficient and energy-saving variable frequency drives; in
the energy regulation segment, it offered energy storage solutions that enhance load adjustability and
ensure power supply reliability; and in the energy management segment, it provided intelligent energy
solutions. With respect to new energy, in 2023, CLOU Electronics tightly grasped opportunities from the
global energy storage industry by accelerating localization in the Northern American market. It has
incorporated a company in America to further strengthen its presence in the overseas market. The
abilities to design energy storage products and provide localized services have been improved, and
active measures have been taken to conduct business expansion in the energy storage markets of
Asia, Africa and South America based on the channel advantage of foreign power grids, so as to
achieve the global layout of the energy storage business. In terms of products, in 2023, CLOU
Electronics passed the review as a corporate technology centre recognized by the national government.
The Aero product series have been integrated into a platform, which supports rapid deployment and
installation, thereby greatly reducing the time needed for on-site grid connection. Moreover, it launched
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the Aqua series (liquid-cooling product portfolio) to provide one-stop services for customers from early-
stage investment to the full-life-cycle capacity increase at the DC side. Meanwhile, it is planning for the
development of the second-generation liquid-cooling products in order to provide integrated energy
storage solutions. In the field of smart grids, Midea Energy Solutions and Industrial Technology has
steadily advanced its business development, actively participating in projects with the State Grid
Corporation of China and the China Southern Power Grid. In the 2023 tender procurement for
electricity meters (including electricity consumption information collection) by the State Grid
Corporation of China, it was among the first-choice suppliers. It also secured contracts as a
mainstream supplier in the framework tender for distribution network equipment by the China Southern
Power Grid. Additionally, it intensified efforts to expand into overseas markets, achieving significant
year-on-year growth. It obtained relevant certification qualifications for low-voltage metering switch
products and actively participated in the formulation of enterprise technical standards for metering
switches with the State Grid Corporation of China. It completed the development and inspection of the
entire series of electricity meters and electricity consumption information collection products for the
State Grid Corporation of China and the China Southern Power Grid in 2022. It also completed the
research and development of intelligent pole-mounted switches with integrated functions (capacitive
tapping), digital pole-mounted switch products, integration terminal function and protocol consistency
testing devices for the State Grid Corporation of China, multi-version single-phase/three-phase
electricity meter simultaneous online testing production line, and remote testing system for charging
piles. Concurrently, it expedited international certification for new products, with the overseas 24 series
new products passing third-party authoritative organisation SGS certification and accelerated aging test
(ALT). In terms of the supply chain and manufacturing, in 2023, the resources of the supply chain were
integrated to reduce the procurement costs. Meanwhile, the reduction in the bids made to win projects
related to any category of components or parts for intelligent power grids has been achieved.
Furthermore, taking the advantage of large projects, the rapid cost reduction for core energy storage
components has been promoted. Additionally, the cell resources were supplemented, and leading
battery suppliers were employed. On the other hand, the efficiency and automated degree of
production was improved by promoting the full-automation-oriented renovation of the production line for
single-phase electric energy meters, and introducing a fully-automated module production line to the
energy storage base in Yichun. Also, planning and implementation of the expansion of the new liquid-
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cooling line has been completed. Hiconics consistently practiced Midea Group’s “Green Strategy” of
sustainable development. In the field of new energy, it rapidly developed residential energy storage and
photovoltaic EPC businesses. In the residential energy storage sector, it adopted an independent
research and development production model, vigorously introducing research and development
personnel and enhancing production capacity layout. Simultaneously, it invested in the construction of
high-standard testing centres within the industry, advanced product certifications in major overseas
markets, met various requirements of global customers, and has secured significant orders from
multiple overseas markets. It has established integrated research and production capabilities for
energy storage inverters, battery packs, and other vertical integration, covering various core segments
of the industry chain. Combining overseas market demands, it developed products such as single-
phase and three-phase integrated residential energy storage systems, and also positioned itself in
solar inverters, charging piles, and component-level power electronic products. In the photovoltaic EPC
field, by establishing a photovoltaic EPC operation headquarters, it quickly seized opportunities in
energy structure transformation and promotes the layout of domestic businesses and backend
capabilities. It offered solutions including residential photovoltaic solutions, zero-carbon industrial and
commercial parks solutions, and smart energy convergence solutions externally, experiencing rapid
operating revenue growth. Continuously increasing investments, it established a new research and
development base in Suzhou, improved the layout of the research and development system, upgraded
and transformed production lines, enhanced self-production capabilities in core areas, and constructed
manufacturing bases in Anqing to comprehensively support medium and long-term manufacturing
needs. Simultaneously, it deepened internal and external sales transformations, reshaped overseas
marketing teams, and successfully built marketing channels in mainstream overseas markets such as
Europe and the Americas.
Deepening its focus on intelligent transportation components, Midea Energy Solutions and Industrial
Technology leverages its solid core technology in the consumer electronics field to quickly develop
three major product lines: Automotive Grade thermal management, electric drive systems, and chassis
actuation systems. The existing eight product lines of the three major systems gradually went into
production and delivery, and the total shipment of 750,000 units in 2023, representing a YoY increase
of 400%. In terms of technological breakthroughs, following the industrial trend of integration, the
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upgrading from components to modules has been implemented. Based on the solid mastery of thermal
management technologies for years, Midea launched the Integrated Module for Thermal Management
(Comprehensively Integrated) after the introduction of the water-end integrated modules and the
refrigerant integrated modules. In terms of market expansion, over 20 new customer-oriented
designated cooperation projects were initiated in 2023. Furthermore, the compressor products have
been recognized by multiple customers and have covered all model types of multiple mainstream
automobile manufacturers. Meanwhile, the first customer-oriented designated cooperation project for
the Integrated Module for Thermal Management (Comprehensively Integrated) has been received, with
the estimated output value of potential orders exceeding RMB300 million. Additionally, the
independently developed product of the 800V Silicon Carbide High Rotation Speed Motor Compressor
continues to win recognition from more major car makers at home and high-end customers abroad. In
terms of capacity guarantees, thermal management, electric drive, and chassis actuation product lines
have all started mass production. Furthermore, the mass production and deliveries of products such as
compressors and valve terminals have been achieved at the new energy vehicle parts manufacturing
base in Anqing. Midea Energy Solutions and Industrial Technology acquired Wuhan TTium Motor in
2022, officially entering the field of two-wheeled travel and expanding its business in the key
components of pedelecs. Furthermore, by introducing Midea's supply-chain system and advanced
experience of large-scale production, it set up modern factories in China and Vietnam. Moreover, it
successfully pitched to multiple industrial leaders in Europe, concluded agreements with domestic
strategic customers, and continued to improve the product matrix of E-bikes in 2023.
In the field of industrial automation, Servotronix, Hiconics, SUNYE and other brands under Midea
Energy Solutions and Industrial Technology provide complete solutions from the sensing to the control
level for customers in the process, hybrid and discrete industries, helping industrial customers improve
quality and efficiency, and achieve digital transformation and green development. As a specialist in full
process innovation in industrial automation, Servotronix focuses on the entire industrial automation
chain, including software tools, motion controllers, servo drives, servo motors, and encoders, and
continuously provides customised motion control solutions for customers in various fields. Meanwhile, it
enhanced the application of products and technologies in new fields, with a focus on customers from
industries such as lithium batteries, photovoltaics, semiconductors, robots, laser processing, and
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consumer electronics by conducting targeted customer pitching campaigns and providing them with
integrated solutions. Based on its advantage of the advanced technological strength, it launched
multiple products such as the BD3 AC Servo System, the CDHD2S Linear Drive, the DC304
Manipulator Control System for Integrated Display and Control, the SoftMC804 Medium-sized Motion
Controller, and the Vision Motion Controller within 2023. Additionally, it continued to promote reforms in
marketing management and enhance process management, and used digital information systems to
develop the full-value-chain closed-loop management system from business leads to payment
collection, so as to improve the ability to acquire business leads and achieve their successful
conversion. As a domestic top brand in the field of high-voltage variable frequency drives, Hiconics has
formed industrial drive solutions with high-voltage and low-voltage variable frequency drives as its core
products. Also, it actively participates in the revision of national and international standards related to
variable frequency drives to promote wider application of technologies in the industry. Hiconics’ HCA
series of high-performance high-voltage variable frequency drives won the "Outstanding Product
Innovation Award" issued by the China Power Supply Society for its high power density, highly
integrated design, high-speed operation and other features. As for low-voltage variable frequency
drives, SUNYE under Hiconics continues to launch differentiated products. Furthermore, Midea Energy
Solutions and Industrial Technology actively works on reducer and other key component technologies.
Its self-developed high-performance harmonic reducer won the “Leaderobot 2023 Robot Reducer
Technology Breakthrough Award” at the Annual Conference of China Robots. It also improved its
business layout regarding the harmonic reducer products for SCARA robots, six-axis robots and
collaborative robots. While the new factory for reducers has completely put into operation and the
previous bottleneck on the precision processing technology for harmonic reducers has been eliminated,
independent production and delivery of the reducer products have been achieved, with the delivery of
over 6,000 units.
H. Seized market opportunities amid domestic and international circulations, responded to
China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological
innovations and business model upgrades, and provided customers with full-stack solutions
for intelligent buildings
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Midea Intelligent Building Technology, with the vision “to be a global leader in building technology" and
the mission of "co-building sustainable smart space", has transformed from a commercial air
conditioning product supplier to an integrated solution service provider for intelligent building
ecosystems. Midea Intelligent Building Technology has six major product manufacturing bases and
seven R&D centres worldwide, with a sales network covering global markets. It has formed the largest
and most comprehensive professional smart building product matrix and service network in China. In
2023, according to Commercial Air Conditioner Market data, Midea ranked No. 1 in terms of
commercial air conditioner sales in the domestic market, and the market shares of Midea's core
products, such as centrifugal units, screw chillers and modular units, are the highest among domestic
brands. According to the data from ChinaIOL.com, Midea leads the way in the domestic VRF market
compared with other domestic or foreign brands, with a market share exceeding 20%. As shown by
data from www.abi.com.cn, the output and unit sales of Midea’s centrifuge products exceeded 2,200
units in 2023, surpassing foreign top brands to grasp the largest domestic market share of centrifugal
units. Meanwhile, data from ChinaIOL.com show that in 2023, Midea Commercial Air Conditioner
accounted for more than 27% of China's total commercial air conditioning export value. According to
the European Heat Pump Association's data forecasts, to achieve the REPowerEU plan, the number of
heat pumps in the European market will increase to 60 million units by 2030. In view of that, Midea
Intelligent Building Technology is continuously expanding its heat pump production base in Italy, and
comprehensively enhancing Midea's competitiveness in the European market.
Midea Intelligent Building Technology launched the "GREEN FOR ONE" strategy and the "Digitalization,
Engineering, Procurement, Construction, and Operation (DEPCO)" model at the 2nd TRUE Building
Technology Summit held at the beginning of 2023. Specifically, the "GREEN FOR ONE" strategy helps
all practitioners to respond to challenges from the low-carbon industrial transformation from four
dimensions, namely products, ecosystem, services, and, the industry. The DEPCO model is a
complete set of service standards and systems to effectively implement "smart building" projects, which
is people-oriented and operating objectives-centred. In 2023, Midea Intelligent Building Technology
participated in domestic and overseas industry exhibitions, such as ComVac ASIA 2023, AHR EXPO,
ISH Frankfurt, the China Heat Pump Exhibition (HPE), the China Refrigeration Expo, the China
International Intelligent Building Exhibition, China International Medical Equipment Fair (CMEF)
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(Spring), the China Hospital Construction Conference and International Hospital Build and
Infrastructure Exposition (CHCC), the China Animal Husbandry Expo, the Entrepreneurs Summit of
Energy Conservation Service Industry, the Industrial Green Development Achievements Exhibition, and
the Shanghai International Carbon Neutrality Expo in Technologies, Products and Achievements, to
demonstrate a series of product development results and solutions. These included the K WING
Magnetic Levitation Centrifugal AC Compressor and its key component—the Magnetic Levitation
Variable Frequency Centrifugal Compressor, the R290 Air-source Heat Pump, the Carbon Neutrality-
oriented Air-source Heat Pump Unit, the M-Thermal Air Source Heat Pump, the Full Variable
Frequency Air-source Heat Pump Unit for Cooling and Heating, the R32 Variable Frequency Air-cooled
Module Unit, the Variable Frequency Direct Heating Circulating Hot Water Unit, the Water-cooled
Screw Variable Frequency High-temperature Heat Pump Unit, the Variable Frequency Air Source
Blaze Heating Unit, and the Dual Grade I Sideward Variable Frequency Blaze Unit. Meanwhile, what
was demonstrated also covered the integrated energy solution, the customised HVAC solutions for
scenarios, such as livestock and poultry greenhouses and slaughtering, Midea's comprehensive energy
solutions for low-carbon industrial parks, the Intelligent Operation Center (IOC) Platform of Midea
Intelligent Building Technology Jingzhou Factory, the smart hospital solution “LIFE2.0” for medical
customers, Midea's two brand-new digital carbon reduction platforms--the "iBUILDING Product Carbon
Footprint Management Platform" and the "iBUILDING Virtual Power Plant Operation and Management
Platform", KONG DDC M0 and KONG NZ Systems. Particularly, the integrated energy solution, based
on the iBUILDING Midea Building Digital Platform, enhances the comfort of users through the building
load sensing and prediction technology for HVAC. Concurrently, the coupling control of energy
consumption facilities, such as PV, energy storage, heat pumps, and air conditioners, are achieved to
satisfy management requirements, such as green energy supply, dynamic power distribution, efficient
power supply, and the interaction between power supply and load, power the whole house with
renewable electricity, and create a healthy and comfortable living environment. The smart hospital
solution LIFE2.0 empowers the evolution and upgrading of specific scenarios such as wards, outpatient
clinics, surgeries, testing, imaging, machine room facilities, command centres and other healthcare
spaces through “a big platform and small scenarios" and the integration of the four flows of LIFE. This
solution can help promote the change from system integration to scenario application, and help smart
hospitals build "future-oriented" capabilities. The iBUILDING Product Carbon Footprint Management
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Platform empowers enterprises with the real-time collection, query, and integrated authentication of
data on carbon footprint throughout the lifecycle of products. Additionally, this platform has multiple
functional modules, such as carbon footprint modelling, carbon footprint analysis, supply chain
management, carbon footprint report management, and supply chain authentication management,
establishes strategic cooperation with authentication agencies, such as SGS and TV SUD, and can
generate review reports in line with requirements of varied authentication agencies. The iBUILDING
Virtual Power Plant Operation and Management Platform, based on Midea's many commercial air
conditioning systems for commercial buildings nationwide, supports the power system in peak shaving.
Meanwhile, through Midea Intelligent Building Technology's energy efficiency management solutions, it
has accelerated the connection to the water-cooled air conditioning system, constantly expanded its
adjustable load capacity. Furthermore, this platform can assist the government in maintaining reliable
power supply to residents and enterprises, support power companies to achieve peak shaving and
ensure the safe and stable operation of power grids, and help users to obtain subsidy benefits of
energy conservation and emission reduction. Moreover, Midea Intelligent Building Technology signed
the Load Aggregation Platform Cooperation Agreement with the China Electric Power Research
Institute in 2023 to jointly create an air conditioning load aggregation platform, which will be promoted
to all subsidiaries of State Grid Corporation of China, promote the digital reform of load management,
and support the orderly and stable power supply in all regions.
With respect to product development, Midea Building Technologies, in 2023, successively launched
multiple new products to consolidate its business in areas such as HVAC, building automation, and
elevators. These include the launch of the whole-new MCube Series Energy Storage Thermal
Management AC Liquid-Cooled Unit and the new-generation R290 Refrigerant Nature Series Integral
Heat Pump in Europe. Among these, the MCube Series Energy Storage Thermal Management AC
Liquid-Cooled Unit can operate reliably in various harsh environments, maximising the safety and
stability of energy storage containers. It is UL- and CE-certified, reaching a leading level in the industry.
Additionally, it achieved a 75% reduction in heating energy consumption and a 23% increase in cooling
energy efficiency through full-frequency intelligent control technology and innovative heat pump
technology, significantly improving the adaptability of low-temperature batteries. The new-generation
Nature Integral Heat Pump utilises R290 refrigerant with an extremely low GWP value of 3, featuring
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exceptional performance in extreme temperatures. It is the first product to be HP Cold-resistance
Certified by Intertek across the world, functions well in ultra-low temperatures. Midea K WING Magnetic
Levitation Centrifugal AC Compressor and its key component Magnetic Levitation Variable Frequency
Centrifugal Compressor showcased research and development achievements in the field of oil-free
magnetic levitation. Midea K WING Magnetic Levitation AC Compressor adopted a high-speed motor
direct drive structure and magnetic levitation bearing technology, eliminating the need for other
mechanical transmission structures and lubricants. The magnetic levitation variable frequency
centrifugal compressor can deliver 100% oil-free air, ensuring compressed air meets the high-quality
level of ISO08573-1 Class 0, meeting the strict requirements for compressed air purity in industries
such as pharmaceuticals, food, and beverages. Midea’s newly developed K WING Screw Evaporative
Cooling Chiller Unit optimised the cooling water system using evaporative cooling technology, providing
greater energy savings compared to air-cooled units, with easier installation and maintenance. It
effectively addressed issues such as large footprint, high energy consumption, high noise levels, and
operational difficulties of traditional chiller units. To address the four major pain points in water machine
operations, Midea officially launched the Chiller Smart Operation Solution, which includes iManager
and Chiller Doctor. iManager, supported by iBUILDING’s underlying digital capabilities, is a large-scale
intelligent software platform for property and equipment maintenance managers of commercial air
conditioner equipment. Chiller Doctor covers online, offline/local network intelligent operation and
maintenance, realising software-hardware linkage through 4G intelligent edge gateways, facilitating the
digital and intelligent upgrades of chillers. The new-generation VRF VC MAX with cooling function only,
equipped with an efficient and powerful scroll compressor with enhanced vapor injection, satisfies
refrigeration requirements within a wide range of temperature. Atom X, specifically designed for the
North American market, integrates 24V unitary units and VRF units, and combines the sideward
outdoor unit and the indoor unit. It can not only reduce the installation space for the outdoor unit, but
also maintain the current interior architectural style. Coupled with the automatic filling of refrigerants, it
can be flexibly applied to the North American market dominated by alternative scenarios. Atom T is a
series of multifunctional VRF units and products that integrate air cooling and heating and water
heating functions, adopt the R32 environmentally friendly refrigerant, and are developed for the
European Union market. The outdoor units of the whole series can meet the requirements of diverse
family scenarios. Additionally, the series meets the EU and Australian subsidy requirements for energy
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efficiency. The MDV Power series of light commercial air conditioners features fully variable frequency
technology, high efficiency, and energy conservation. Midea's third-generation full DC technology that it
carries can help save 20% more energy. It satisfies complex installation requirements through long
piping and high drop height. The standard 35Pa external static pressure of this product enables strong
heat dissipation. Being compatible with built-in and ducted internal units, it can be applied in multiple
scenarios, such as shops, catering, leisure, and entertainment. With the MDV New Gen Series VRF as
a targeted product, Midea powered into emerging markets, supporting VRF transformation needs with
new and old processes and a full-process system, and intelligently and efficiently output optimal
solutions through transformation design software. The newly released KONG DDS (Direct Digital
Sphere) system aims to solve problems such as complex installation and high maintenance costs of
traditional building automation systems. DDS features small size, easy installation and maintenance,
flexibility, and adaptability to building control upgrade needs. The digital elevator brand, LINVOL,
introduced the Evin-E/Evik-E passenger elevator, a digital and intelligent elevator solution specifically
designed for residential buildings. This solution was aimed at enhancing management and services
throughout the entire lifecycle. Utilising the MECS frequency-conversion integrated control system and
elevator Internet of Things ("IoT") technology, it has achieved highly integrated, precise, and efficient
control. The elevators feature precise leveling technology, as well as multiple protection settings, such
as door light curtain protection, CPU WDT protection, and reverse operation/speed protection, ensuring
both comfort and safety for passengers. Moreover, Midea's digital building platform, iBUILDING, has
been utilised to build a digital operation and maintenance system that covers all scenarios of buildings.
The construction of the Phase I factory of the Xiaotang Intelligent Manufacturing Base for LINVOL has
been completed and the second-generation machine room freight elevator was introduced. These
industry-leading strides in terms of speed and lifting height have assisted Midea in unlocking its
potential for vertical space in buildings. Additionally, Midea Swimming Pool Heat Pump received the
world’s first TV Süd certificate for swimming pool heat pump recycled material content and the first
government procurement demand standard certification (cooling unit for green data centre cooling
systems) issued by the China Quality Certification Centre (CQC).
As building energy consumption is increasing its proportion of the energy consumption of the whole
society in the progress of urbanization, accelerated efforts have been made in the construction of
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"zero-carbon buildings" with "green energy system" as the core. In building energy management, the
iBUILDING Midea Building Digital Platform conducts intelligent energy adaptation and management
with a customised design based on the building's characteristics. At present, the iBUILDING smart
building business has stepped into industrial parks, medical institutions like hospitals, and public
facilities. In terms of market expansion, in 2023, Midea Intelligent Building Technology secured multiple
market orders and provided products and services to clients across various industries. These include
projects such as the National Museum of Chinese Writing, the Chengdu Universiade, the Rajkot
Greenfield International Airport in India, the Yuanjiang Railway Station Plaza in the China-Laos Railway,
the Zhengzhou-Jinan High-Speed Railway, the Ningbo Metro Line 6, the Huawei Artificial Intelligence
Computing Centre, the Shanghai Xinjiangwan Office Park of Douyin Group, the Centralised
Procurement Project of China Mobile for High-pressure Chiller Units, the Wyndham Grand Zhaoqing
Downtown at Seven Star Crags, the Xi’an TUS-Children’s Hospital, among others. Industrial projects
encompassed the Chang’an Automobile Yubei Factory and Liangjiang Factory, the CRRC’s factory for
the production of 100-meter-long large blades, the centralised procurement project for commercial air
conditioner for Li Auto, and the Keda Intelligent Industrial Park in Guangzhou. Multiple projects of
Midea Intelligent Building Technology have won awards, resulting in constantly improving market
recognition and influence. Particularly, the iBUILDING Intelligent Operation Centre and the Heyou
International Hospital Project both entered the Fortune magazine’s list of China's Best Designs 2023.
And three awards of the 2023 Red Dot Award and four awards of the iF Design Award 2023 were
granted to Midea Intelligent Building Technology’s ChillerDoctor Gateway, the Cassette Indoor Unit
with 360° Circular Air Exhaust, the R290 Air-source Heat Pump Unit, Midea Headquarters Building
Intelligent Operations Center (IOC), Midea Jingzhou Factory Intelligent Operation Center (IOC), and
Midea Industrial Park West District Intelligent Operation Center (IOC). The three iBUILDING smart
building benchmark projects--Midea Headquarter Building, the Jingzhou Factory of Midea Intelligent
Building Technology, and the West District of Midea Industrial Park--won the 2023 Asia Design Prize.
Projects such as the Shanghai Tongji Hospital IOC, the Midea Headquarters Building IOC, and the
Midea Jingzhou Factory IOC received the A’ Design Award and the Successful Design Award. Midea
Headquarters Building, Shanghai Tongji Hospital, and Midea Intelligent Building Integrated Digital
Management Cloud Platform iBUILDING Portal were awarded at the 16th International Design Awards
(IDA). In the 2023 “Blue Sky Cup” evaluation of efficient HVAC systems, Midea’s high-efficiency HVAC
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system for the Shanghai Citigroup Tower and the M-BMS ultra-efficient intelligent environmental control
system for the Beijiao Park Metro Station both received the “Excellent Engineering Award”. The M-BMS
ultra-efficient intelligent environmental control system for the Dadao Metro Station also received the
“Energy Saving Technology Award”. Midea was recognised as a typical case in Guangdong Province’s
“Carbon Peak and Carbon Neutrality” initiative for its case study titled Aiding Green Sustainable
Development with Zero-Carbon Production Lines, Workshops, Parks, and Products. Midea’s "Smart
Clean Space Solution" won the titles, "Preferred Solution" and "Quality Solution" of Operating Room
Planning, Design and Construction of the Second "Professional Promotion Project of High-quality
Development of Hospitals in China--Golden Ruyi Award". Additionally, LINVOL smart elevators for
villas were recognized as the "User Preferred Home Elevator Brand" at the First National Home
Elevator Summit.
In regard to technological innovation and standardization, Midea Intelligent Building Technology
continuously strengthened R&D input and made remarkable results in 2023. For example, the "Key
Technologies and Industrialization of Wide Temperature Range Full Condition High-efficiency Multi-
split Air Conditioning Systems", jointly completed by Midea, Shanghai Jiao Tong University, Xi'an
Jiaotong University, and Guangdong Midea Environmental Technologies Co., Ltd., won the First Prize
of Industry-university-research Cooperation Innovation of the China Industry-university-research
Cooperation Innovation and Promotion Award. The project “Wide Temperature Range High Efficiency
and Energy Saving Air Source Heat-pump Heating Key Technologies and Industrialisation” completed
by Midea in collaboration with Shanghai Jiao Tong University was awarded the Innovation Award First
Prize of the 2023 Invention and Entrepreneurship Awards by the China Association of Inventions.
Midea’s key technology and industrialisation projects for wide temperature range multi-scenario high-
efficiency multi-connected air conditioning systems, as well as research and application projects for
smart building IoT control systems and virtual debugging platforms, were respectively awarded the First
Prize and Second Prize of the 2022 Productivity Promotion (Innovative Development) Awards. The
project “Efficient Equipment Room Multi-Intelligent Body Distributed Control System and Virtual
Debugging Platform Technology Research and Application” by Midea was awarded the First Prize of
the 2023 Energy Conservation and Emission Reduction Technological Progress Awards. The project
“Large-scale Multi-connected Heat Pump Type Air Conditioning High-precision Digital Simulation and
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Industrial Application” jointly completed by Midea and Shanghai Jiao Tong University won the First
Prize of the 2023 China Simulation Federation Scientific and Technological Award. The project “Key
Technologies for Low Carbon Lifecycle of Large-scale Multi-connected Heat Pump Type Air
Conditioning Based on Digital Simulation” completed by Midea in collaboration with Shanghai Jiao
Tong University and the project “Key Technologies and Applications of Ultra-efficient Intelligent
Environmental Control and Operation Maintenance System for Rail Transit Stations” completed by
Midea in collaboration with Guangzhou Metro Group respectively won the first prize and second prize
of the 11th China Association of Refrigeration Scientific and Technological Progress Award; Midea’s
“Heat Transfer Enhancement Mechanism and Industrialisation of New Heat Exchangers Based on
Non-uniform Collaboration of Wind Speed and Fin” and “Research on New Corrosion-resistant
Aluminum Tube Technology and its Industrial Application in High Energy Efficiency All-aluminum Heat
Exchangers” respectively won the first prize and second prize of the 2023 Science and Technology
Progress Award of Guangdong Light Industrial Council. Four of Midea products, namely the "MDV8
Unbounded VRF Unit", the "65kW-R32 Medium- And High-temperature Commercial Heat Pump Unit",
the "Magnetic Levitation Ice Storage Chiller Unit", and the "Smart Building IoT Controller", were
recognized as "Innovative Products of the 2023 China Refrigeration Expo" by the Organizing
Committee of China Refrigeration Expo. Midea’s two technological achievements, “High-efficiency and
High-reliability Integrated Electromechanical Control Magnetic Levitation Variable Frequency
Centrifugal Unit” and “Key Technologies and Applications of Coordinated Optimisation Control and
Panoramic Smart Operation and Maintenance of Environmental Control System” were evaluated by the
expert team of academicians organised by China Machinery Industry Federation and recognised as
“Internationally Advanced”. Midea’s “Key Equipment and System Technology for Direct Evaporative
Cooling and Waste Heat Recovery in High-altitude Data Centres” completed in collaboration with Tibet
Ningsuan Technology Group Co., Ltd., Xi’an Polytechnic University and other units were evaluated by
the China Refrigeration and Air-Conditioning Industry Association and recognised as “Reaching the
Overall Internationally Advanced Level”. Midea’s “Ultra-efficient Intelligent Environmental Control
System for Rail Transit” and “Multi-agent Adaptive Energy-saving Control Technology” were
successfully selected into the Recommendation Catalog of Energy-saving Technologies and
Equipment (Products) of Guangdong Province (Version 2023) organised by the Energy Bureau of
Guangdong Province, providing technical support for promoting comprehensive green transformation of
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social and economic development and achieving the goals of carbon peaking and carbon neutrality.
Moreover, the "Magnetic Levitation Variable Frequency Centrifugal Ice Storage Dual-condition Unit"
and the "R32 All DC Variable Frequency High-efficiency Commercial Heat Pump" developed by Midea
Intelligent Building Technology won two Gold Awards and the "Air-cooled Variable Frequency Screw"
won a Bronze Award at the 48th Geneva International Inventions Exhibition. With respect to industry
standardization, Midea participated in the formulation or revision of multiple national standards, industry
standards, and group standards, including the national standards of the Water-source High
Temperature Heat Pumps Using The Vapor Compression Cycle and the Chiller (Heat Pump) Units for
Energy Storage Batteries, the industry standards of the Magnetic Levitation Centrifugal Compressors
with Refrigerants, the Air Conditioning Units for Enclosed Space of Communication Base Stations, and
the Technical Specification for Field Measurement of Energy Efficiency and Energy Saving of Multi-split
Air Conditioning System, and the group standards of the Green Intelligent Multi-split Air Conditioning
(Heat Pump) Units. Additionally, Midea Intelligent Building Technology won the title, 2023 Organization
with Outstanding Contribution to Heat Pump Standardization of the China Energy Conservation
Association.
I. Strengthened innovation in robotic product development, promoted high-performance
operations in the whole value chain and integration in the industrial chain, as well as
accelerated development of the robotics business for the China market
KUKA, a subsidiary of Midea, is a world-renown robotics manufacturer. Relying on its industry-leading
movement algorithm, KUKA can ensure superior movement performance of robotics products
throughout their life cycle, and its mature design concept can continuously give birth to new products
able to lead the market. In 2023, KUKA continued to promote the innovation of various products and
technologies. In the field of general industry, KUKA launched KR CYBERTECH series of robots, which
are suitable for processing and manufacturing scenarios from grip and handling to polish, oriented to
price sensitive markets, with multiple advantages such as lower costs, higher quality, and more
comprehensive functions, and thus easier for customers of small and medium-sized enterprises to
achieve automation upgrades. Among the series, KR CYBERTECH KR 20 E robots can operate under
different working conditions, with a payload up to 20 kg and an operation distance up to 1820 mm. At
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the International Foundry Trade Fair held in Germany in 2023 (GIFA 2023), KUKA showcased KUKA
cell4_premachining manufacturing cells and KR FORTEC ultra heavy-duty robots for customisable
automation. Among them, the cell4_premachining manufacturing cells have compact modular design,
can be applied in reprocessing casting scenarios such as polish and smoothing, saw cutting, milling,
cleaning, and grinding, and can achieve finishing treatments of different materials, parts, and
components with maximum flexibility and user-friendliness. The robotic manufacturing cells include KR
QUANTEC nano robot, library milling application, powerful motor spindle, quick tool-replacing
mechanism, KUKA three-axis positioner kp3-v2v-3, etc. At the Leading Exhibition for Smart Automation
and Robotics held in Munich in 2023 (Automatica 2023), KUKA displayed its latest version of KR
QUANTEC series robots. This series of products can save energy consumption up to 60%, with a
payload up to 300 kg and an operation distance up to 3,904 mm, and can be applied in many market
segments such as automobile, casting, and medicine, with such advantages as excellent performance,
economy, and flexibility. At the 2023 World Robot Conference, KUKA unveiled its new KR FORTEC-2
ultra series, representing KUKA’s fifth-generation heavy-duty robot series. With an impressive payload
of up to 800kg and a minimal weight of only 2.2 tons, it boasts an excellent payload-to-weight ratio.
With a maximum reach of 3.7 meters and a wide range of motion, it can be widely applied in fields such
as automotive, battery, and aerospace, offering advantages such as high precision, rigidity, and
reliability. In the field of human-robot collaboration, KUKA demonstrated its product mix of LBR iisy
collaborative robot and the new version of operating system iiQKA.OS, and also showcased such
products as KMR iisy mobile collaborative robot. Among the products, LBR iisy is a sensitive, precise,
and easy-to-operate collaborative robot. Its edgeless arm design allows personnel and collaborative
robots to work safely side by side, and all joints are equipped with integrated torque sensors that can
instantly detect the slightest touch. Featuring an ergonomic product design, and being easy to operate,
solid and durable, LBR iisy can carry a payload of 3-15 kg. In comparison, KMR iisy mobile
collaborative robot is a mix of collaborative robot and transport platform that are comprehensively
integrated, comprising LBR iisy collaborative robot with a payload of 11 or 15 kg, and KMP 1500P
mobile platform bearing an additional load up to 200 kg. Fast, safe, and mobile, KMR iisy can be
applied in various scenarios such as installation, internal logistics, and robotic service system. In the
medical field, KUKA displayed at the European Robotics Forum 2023 an innovative medical product
application, namely "Arthritis Ultrasound Robot", which helps physicians to quickly diagnose patients'
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rheumatoid arthritis through ultrasonic imaging by using KUKA's highly sensitive light-duty LBR Med
medical collaborative robotics. Besides, at the International Conference on Robotics and Automation
held in London in 2023 (ICRA 2023), KUKA and its partners demonstrated how the LBR Med robotics
could be applied in highly complex and sensitive medical scenarios such as brain tumour biopsies, by
simulating tumour biopsies in the real-time tracking models and enabling physicians to place biopsy
needles with the aid of the robotics. In addition, the extra flexible magnetic endoscopy provided by
Atlas Endoscopy can effectively overcome the defects of conventional colonoscopy such as discomfort,
sedation-related complications, and high variability of examination results, and this technique also
mainly applies KUKA LBR Med medical collaborative robotics to achieve operation and examination.
Italian startup Robota utilises KUKA’s KR 6 AGILUS robot in a surgical instrument sterilisation chamber.
It accurately identifies dental surgical instruments and performs disinfection operations on them,
enabling unmanned operation for 24 hours, significantly saving time for medical institutions. In 2023,
with respect to market development, KUKA and Siemens Healthineers further expanded their
cooperation in such fields as minimally invasive surgery, and in the next two years, KUKA will provide
Siemens Healthineers’ angiography system with 300 robots, of which, KUKA KR QUANTEC robots will
be the core components. Since 2016, globally there have been more than 550 hospitals using this set
of medical system. KUKA also intensified its cooperation with FAW-Volkswagen. In the latter’s
manufacturing base in southern China, which is capable of producing 300,000 sets of battery packs
annually, approximately 100 KUKA Robotics were applied in multiple manufacturing links of battery
pack product lines such as weld, bond, and assembly, involving KUKA's multiple series of robot
products such as KR QUANTEC, KR FORTEC, and KR titan. KUKA is also designing a CO2-neutral
battery assembly system for Finnish automotive parts supplier Valmet Automotive. Through this system
and leveraging KUKA’s industry experience and professional capabilities, Valmet Automotive aims to
set new standards in energy efficiency and is committed to achieving sustainable production of electric
vehicle battery systems.
KUKA continuously promotes the integration and expansion of resources in the Chinese market and
intensifies organizational reform and product iteration with a focus on industrial applications and key
customers. On the market front, in 2023, KUKA China continued to intensify its cooperation with
leading customers in the new energy sector by offering integrated solutions to major NEV
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manufacturers, which has been recognised and praised by customers. KUKA China was honoured with
awards such as BYD’s Annual Best Partner, Sunwoda’s Excellent Partner, and FAW-Volkswagen’s
Outstanding Partner. In the consumer electronics industry, KUKA achieved breakthrough progress,
with products such as six-axis robots and SCARA robots entering the supply chain systems of industry-
leading brands and being widely used. In the field of logistics automation, KUKA provided logistics
automation upgrade services to many enterprises including GAC Aion, Melaleuca, Neoperl, and VX
Logistics. In the medical industry, KUKA can provide one-stop intra-hospital logistics and pharmacy
automation solutions, and has provided intra-hospital smart logistics product services to hospitals such
as Jingzhou Central Hospital, Zhu Jiang Hospital, the Second Affiliated Hospital of Nanchang
University, Guowen (Changchun) International, Jinan Central Hospital, and West China Tianfu Hospital.
On the product development front, in 2023, KUKA China launched three series of five robot products,
including three SCARA KR20 robots adapted to CS box 2 controllers for the consumer electronics and
new energy industries, Delta KR3 SDR for the food, pharmaceutical, and electronics industries, and KR
Cybertech 20 E and other robot products. In addition, in 2023, KUKA China also completed the first
independently developed vision product, 2D vision lite, to assist SCARA products in achieving market
breakthroughs in the consumer electronics industry. KUKA participated in joint research and
development projects such as 3D vision applications and 2D vision applications to empower robot
system business. In terms of robot application integration, KUKA China continued to cultivate the DTC
model, closely meeting user needs, and providing continuous support for the automation transformation
of customers in different industries. For example, by providing humanoid broom-pan robots to help
customers achieve intelligent brewing of high-quality liquor, supporting ranches in achieving dairy
farming automation through the combination of KR IONTEC robots and 3D vision positioning systems,
and providing protein extraction automation solutions for biotechnology companies in collaboration with
Bioyond Robotics. With respect to manufacturing and supply chain, in 2023, the second phase of
Midea KUKA Intelligent Manufacturing Park (Shunde, Guangdong) has been put into full operation,
which comprehensively promoted the localization of robot supply, and supported manufacturing
automation and digital transformation. The park has also introduced suppliers covering a variety of key
components for robotics to improve the layout of the industrial chain. As such, a park with the most
complete industrial robotics industrial chain in China has taken shape. Moreover, the KUKA FORTEC-2
production line has been officially put into operation, further ramping up the capacity of heavy-duty
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robots. Furthermore, KUKA East China Manufacturing Base (Kunshan, Suzhou) has also been officially
put into use in 2023. As a manufacturing base for the integrated application products of KUKA China’s
industrial automation, Swisslog Logistics, and Swisslog Healthcare, among others, it has further
improved KUKA China's capacity layout. In 2023, the patented technology independently developed by
KUKA China, namely the "control method, device, computer equipment and storage media for robotics
motion", had the honour to win the 24th China Patent Excellence Award. The Intelligent Robotics
Industrial Design Centre under KUKA China has successfully entered the sixth list of national-level
industrial design centres by the Ministry of Industry and Information Technology. Furthermore, KUKA
also proactively assisted Midea Group in boosting its intelligent manufacturing. By the end of 2023, the
robot density of Midea reached 570 units per 10,000 persons, and Midea Group will further increase its
input to boost its intelligent manufacturing capacity.
J. Deepened the long-term incentive and protected the interests of shareholders
In 2023, Midea continued to encourage the core management to take responsibility for the Company’s
long-term development and growth by further enhancing its long-term incentive schemes. Midea has
launched nine stock option incentive schemes, seven restricted share incentive schemes, eight global
partner stock ownership schemes, five business partner stock ownership schemes and the 2023 stock
ownership scheme, which have helped, in a more effective manner, to align the long-term interests of
senior management and core business backbones with that of all shareholders. Midea Group protects
its shareholders’ interests by ensuring a consistent dividend policy. It shares its growth with
shareholders with a cumulative amount of cash dividend payouts that is about to exceed RMB107
billion (inclusive of the proposed 2023 final dividend) since the Group’s listing in 2013. In addition to the
consistent dividend payouts, the Company has carried out a string of share repurchase plans. To
further stabilize the market capitalization and protect the shareholders’ interests, the Company has
launched share repurchase plans for four consecutive years since 2019. And the repurchased shares
would be used for equity incentive schemes and employee stock ownership schemes.
3. Core Competitiveness Analysis
With the following core competitive edges, Midea is able to fully grasp development opportunities and
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achieve significant growth.
A leading global technology company in smart home and commercial and industrial solutions
As a leading global technology company in smart home and commercial and industrial solutions, Midea
provides services to customers in over 200 countries and regions. It leads the way in various markets,
including various household appliances and their key components, commercial air conditioners,
robotics and automation. In 2023, Midea Group’s revenue reached RMB373.7 billion, marking its eighth
consecutive year on the Fortune Global 500 list, demonstrating its global leadership and outstanding
performance. Midea persists in consolidating its market leadership in the global home appliance
industry. According to a report by Frost & Sullivan, based on sales volume and revenue in 2022, Midea
is the world’s largest home appliance supplier. Currently, Midea has an extensive brand matrix
targeting high-end, mass-market, and young consumer segments, and provides various smart home
appliance products. Based on sales volume in 2022, Midea’s products ranked first in six categories in
both online and offline markets in Mainland China. Furthermore, Midea has become a sizable provider
of commercial and industrial solutions, leading the way in multiple markets. According to production
volume, Midea ranked first in the residential AC compressor market in 2022, with a global market share
of 44%. Also, based on production volume, Midea ranked first in residential air conditioner and laundry
appliance motors, with global market shares of 39.0% and 17.5%, respectively. According to a report
by Frost & Sullivan, based on revenue in 2022, Midea is the largest commercial air conditioner supplier
in Mainland China and the fifth largest globally. Additionally, according to Frost & Sullivan’s report,
KUKA Group, a subsidiary of Midea, is one of the “Big Four” industrial robot companies globally and
the second largest heavy-duty robot company based on sales volume in 2022.
World-leading research and development capabilities for sustainable innovation
Midea possesses leading research and development capabilities and is committed to allocating
significant resources to R&D efforts. From 2021 to 2023, the total R&D investment exceeded RMB39
billion, with R&D spending surpassing RMB14 billion in 2023 alone, showing a continuous upward
trend. As of December 2023, Midea has over 23,000 R&D personnel worldwide, accounting for over 50%
of its non-production staff. According to a report by Frost & Sullivan, as of 31 December 31 2022,
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Midea ranks seventh globally in the total number of patent families and first among Chinese enterprises
and in the global home appliance industry, with over 28,000 invention patents.
Midea has established and continues to enhance its R&D system, including research units and teams
within the Corporate Research Centre (CRC) and various business divisions. Based on research on
technology, users, and markets, Midea has adopted a “Three Generations” R&D model and
continuously optimised the “Four-Tier R&D System”. This system relies on the CRC for cutting-edge,
basic, and common technologies, while business divisions focus on product technologies, collectively
constructing world-class R&D capabilities. Midea strengthens the operation mechanism of the “Three-
Tier Technical Committee System”, as well as drives the exploration of cutting-edge technologies,
breakthroughs in core technologies, and the layout of technology commercialisation projects. It also
promotes the alignment of technology strategies with medium and long-term product planning, driving
growth through the dual-wheel propulsion of technology and products. The building of a global R&D
network has been accelerated. The Group has set up a total of 33 R&D centers in 11 countries. With
the “2+4+N” global R&D network, it has gained the advantage of scale in R&D across the world.
Domestically, Midea Global Innovation Center in Shunde District, Foshan City and Midea Global
Innovation Center in Shanghai are the cores of Midea’s R&D arm. Overseas, with Midea America
Research Center, Midea Germany Research Center, Midea Japan Research Center and Midea Italy
Research Center as the cores, Midea makes use of the regional technological advantages, integrates
global R&D resources, and builds complementary global R&D capabilities. Following the strategy of
“Technology Leadership”, it attracts more and better talents, particularly top technology leaders and
talents, to build a competitive edge of talents.
While strengthening its global R&D network, Midea also works on constructing an open platform of
innovative ecosystems. Through deepening the implementation of technology projects to integrate
quality technological resources across the world, a global innovation system has been put in place. By
way of integrating various resources of large companies, technology companies, universities, research
institutes and innovation consulting agencies, a technology ecosystem has been put in place and
continuously expanded, which has access to enormous resources for technological innovation.
Additionally, a scientist system has been established with seven academician workstations/workshops
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and 18 academicians on more than 200 cooperation projects. These projects cover green, energy-
saving, health, intelligent, robotics, automaton, medical and energy technologies, among others. In
terms of basic research, the Group cooperates with domestic and foreign scientific research institutions,
such as the University of Illinois at Urbana-Champaign, Purdue University, The University of Sheffield,
University of Minnesota System, UC Berkeley, Tsinghua University, Shanghai Jiao Tong University,
Zhejiang University, the Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong
University, Huazhong University of Science and Technology and South China University of Technology,
in order to establish joint labs for deepening technological cooperation. The Group also upgrades and
make innovations on cooperation models by carrying out strategic cooperation with tech companies
such as BASF, Honeywell, 3M, and SCHOTT to build a global innovation ecosystem through multiple
channels. Midea continues to achieve major technological breakthroughs and product innovations
through R&D investment, and its R&D achievements continue to optimise its product portfolio and
refine its brand image, as well as contributing to the technological progress of the industry.
High-performance operations and digitisation throughout the value chain
Every operational link of enterprises, including supply chain, manufacturing, sales, and product
development, faces intricate processes and vast scales. Every year, Midea procures raw materials and
components worth hundreds of billions of RMB from over 8,000 suppliers and sells products across
more than 200 categories to tens of thousands of small and medium-sized retailers and other
customers. Therefore, digitisation is crucial for the Company’s operations. More than 5,000
professionals within the Group are dedicated to the digital transformation and upgrade of the Group.
In terms of the supply chain, Midea’s Integrated Supply Chain (ISC) management system sets an
example of excellent supply chain management operations. It provides a vital system architecture for
efficiently fulfilling customer orders and managing global supply chains, achieving intelligent
replenishment and faster inventory turnover, and enhancing the collaborative efficiency of production,
supply, and sales throughout the value chain. The ISC management system enables seamless
connection with suppliers and automation of the procurement process based on sales and inventory
data. Supported by an efficient supply chain and big data, inventory building and replenishment of the
entire warehouse product portfolio can be achieved in an efficient manner, greatly improving production
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efficiency.
With respect to intelligent manufacturing, leveraging digital technologies, Midea is committed to
building high-quality, flexible, green and efficient factories. Five factories have been recognised as
“Lighthouse Factories” by the World Economic Forum, representing significantly improved production
efficiency. After digital transformation, the residential AC factory in Nansha, Guangdong, has reduced
operating costs by 23% and increased production efficiency by 36%. The experience of Lighthouse
Factories is rapidly promoted across multiple production bases globally. Midea’s intelligent
manufacturing capabilities combined with efficient supply chains enable a rapid response to customer
demands, aligning production with customer needs, increasing production efficiency, and reducing
inventory.
In terms of market channels, Midea leverages digital technologies to directly connect with an extensive
network of small and medium-sized retailers, continuously optimising sales channel networks. Through
the “Midea Cloud Sales” platform, small and medium-sized retailers can directly order products,
promoting the sales of core products and new products. Midea continues to enhance the functionality
of “Midea Cloud Sales” and constructs the “Midea Cloud Sales+” ecosystem covering all tiers of
markets. As a core competitive edge, Midea possesses an exclusive store system that covers
extensive markets. And it says steadfast in promoting the enhancement and transformation of the
exclusive store system in service, operation, and comprehensive retailing, among other capabilities.
In terms of product development, Midea improves its product development capabilities through
digitisation. By establishing a digital product planning platform, Midea rapidly translates technology into
products that meet customer needs. It keeps advancing platform modularisation to increase the
accuracy of product planning. During the period from 2021 to 2023, the project development cycle
(calculated based on the average time from project initiation to completion) has been shortened by
approximately 16%. Leveraging its comprehensive product portfolio and considerable economies of
scale, combined with a digital consumer engagement model, Midea continuously enhances user
research and insight capabilities to assist in formulating efficient research and development strategies
and developing products and solutions that meet market demands.
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High-performance operations and economies of scale throughout the value chain has brought
operational efficiency advantages that are difficult to replicate. Midea’s “T+3” model, supported by
comprehensive digitisation, efficient supply chain management, and production and sales channel
operations, has led to improvements in multiple efficiency indicators year by year. For example, the
average cycle time from order placement to delivery in the domestic market decreased from 21 days in
2021 to 12.5 days in 2023, significantly lower than the industry average.
A comprehensive and continuously deepening global network
In the domestic market, with its continuous efforts over the years, Midea has formed a multi-channel
network which has a complete business layout and covers a wide range of areas, thus meeting the
purchase needs of online and offline consumers for household appliances. Midea continues to improve
its offline business layout around user needs, and has created a network layout of comprehensive
household appliance stores, specialty stores of self-owned products, traditional retailers and e-
commerce franchise stores, covering the entire market from first-tier cities to townships. It also provides
professional scenario-based solutions for corporate customers. Particularly, Midea boasts a unique
exclusive shop system in the industry with more than 20,000 outlets, where various needs of users
from new decoration to updates can be met in pre-decoration stores, flagship stores, professional
stores, combo stores and other stores. Midea continuously provides industry-leading digital platform
services to retail stores. It also focuses on expanding and constructing premium brand stores for
COLMO and Toshiba. Centred around "smart suite operation" and "entire-house renovation solutions",
Midea actively cooperates with home decoration, furniture, building materials, and design channels,
seeking to capture front-end traffic. The Company has built over 2,500 "home decoration + appliances"
deeply integrated brand stores. In 2023, the retail sales on the pre-decoration market saw a year-on-
year increase of over 80%. With exclusive stores as the core, the Company builds a “Midea Cloud
Sales +” ecosystem covering markets at all tiers, establishes an exclusive store system with core
competitiveness for various markets, as well as firmly promotes and transforms the exclusive store
service, operation, and all-product-category retailing capabilities, among others. In addition, Midea is
also accelerating the development of new channels such as Pinduoduo, Douyin, Kuaishou, and
Xiaohongshu. These efforts, together with membership operation, product suite promotion and
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The 2023 Annual Report of Midea Group Co., Ltd.
intelligent transformation, can drive sales and user growth.
In overseas markets, Midea has put in place a global network for research and development,
manufacturing, and marketing, representing the capability for global development. With 17 overseas
research and development centres in 10 countries, Midea integrates global R&D resources to build
complementary advantages in global technological research and development. Among the 40 major
production bases globally, 21 are located overseas. As such, Midea is able to realise global production
and delivery, seizing growth opportunities in overseas markets. Overseas sales contribute to over 40%
of Midea’s total sales, with products exported to over 200 countries and regions worldwide. In many
overseas markets, online and offline sales networks have been established, with approximately 5,000
after-sales service outlets. Continuously deepening the application of digital sales platforms in
overseas markets, over 9,000 retailers in Southeast Asia have joined Midea’s overseas sales platform.
As of 31 December 31 2023, Midea has over 30,000 overseas employees. Midea also continuously
deepens and expands its global business network through strategic acquisitions and joint ventures.
The rapid growth of Midea’s overseas original brand manufacture (OBM) business is evident, with OBM
revenue exceeding 40% of overseas smart home revenue in 2023. Mainly featuring Toshiba, Midea,
and Comfee brands, OBM products have demonstrated strong competitiveness in numerous overseas
markets. In 2023, on the Amazon platform in the United States, the market shares of Midea’s own-
brand window air conditioners and microwave ovens approached 30% and exceeded 40%, respectively.
Additionally, TLSC achieved a turnaround from loss to profit within approximately three years after the
acquisition, showcasing Midea’s capabilities in global business integration and global brand
management.
Sustained growth in the business of commercial and industrial solutions
Midea has established a rapidly growing business of commercial and industrial solutions. Revenue
from this business as a percentage of total revenue has increased from 18.5% in 2020 to over 26% in
2023, with revenue from the said business approaching RMB100 billion in 2023. Commercial and
industrial solutions have become one of the main engines driving the continuous growth in Midea’s
business.
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Midea Energy Solutions and Industrial Technology, with technology as the core driver, commands key
technologies in “green energy” and “key industrial components”. With a rich brand portfolio, it continues
to deepen cooperation with customers in high-growth areas such as consumer appliances, industrial
automation, photovoltaic energy storage, and intelligent transportation, among others. It provides global
pan-industrial customers with green, efficient and intelligent products and technological solutions. The
business group continues to increase investment in key and cutting-edge technologies. Through the
acquisition of new energy companies—CLOU Electronics and Hiconics, it has entered the energy
storage industry with tremendous market potential.
Midea Intelligent Building Technology offers integrated solutions for intelligent buildings in various fields,
including infrastructure, utilities, industrial parks, and agricultural facilities. Its comprehensive smart
solutions mainly cover smart low-carbon solutions, smart rail transit, smart hospitals, and smart parks.
With the digital platform iBUILDING at its core, it empowers building equipment and enhances the
operational and management efficiency of building facilities. It has successfully provided solutions for
landmark projects such as the Jakarta-Bandung High-Speed Railway in Indonesia and the National
Stadium (Bird’s Nest) in Beijing.
With KUKA Group at its core, the robotics and automation systems business, as one of the world-
renowned providers of intelligent robotic automation solutions, KUKA provides comprehensive products,
system integration, and services to customers in various industries such as automobile, electronics,
consumer goods, logistics/e-commerce, healthcare, and more. KUKA continues to consolidate and
enhance its market leadership in the field of robotics and automation solutions. In 2023, both revenue
and profit of KUKA Group hit record highs. Its business performance in China was particularly
outstanding, with revenue contribution from KUKA China increasing from 15% in 2020 to over 22% in
2022.
Midea possesses diversified commercial and industrial solutions, providing integrated solutions to
clients across multiple industries. In horizontal expansion, it consistently enriches product categories,
expands scale, and enhances efficiency advantages. In vertical expansion, it continuously develops
and iterates compressors, motors, and other key industrial components, and enters cutting-edge
technology fields through acquisitions, such as servo systems and industrial robots. Through both
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horizontal and vertical expansions, Midea creates industrial synergies, laying a solid foundation and
injecting strong momentum for the sustained growth of its business of commercial and industrial
solutions.
Advanced corporate governance and values
Midea is built to grow on the back of advanced governance mechanism, future-proof values, and
managerial mindset growth. Midea’s corporate governance emphasises the shared responsibilities,
rights and obligations, striving to establish an internal entrepreneurial group and fully inspire
entrepreneurial spirit. Midea has long been committed to creating maximum value for employees,
customers, shareholders, and society. To recognise employee contributions and acknowledge
performance, Midea has established a multi-tiered long-term incentive mechanism primarily based on
stock incentives. As of the end of 2023, Midea has launched nine Stock Option Incentive Schemes,
seven Restricted Share Incentive Schemes, and 14 Stock Ownership Schemes for its management
teams and key employees at different levels. Midea is committed to providing the best experience for
customers, striving to deeply understand their needs and preferences, and optimising product
development and business models accordingly. Over the years, Midea’s product portfolio has
continuously expanded to meet diverse customer needs. The trust and support from shareholders are
crucial to Midea’s development. Midea is dedicated to creating value for shareholders and sharing
growth with them. Since its listing in 2013, Midea has paid out a total of RMB86.7 billion in cash
dividends and implemented share repurchases totaling over RMB27.1 billion. Midea attaches great
importance to environmental and social responsibility, striving for sustainable development. It was
recognised as an Industry Benchmark for Sustainable Development Industrial Enterprises in the “2022
Forbes China Sustainable Development Industrial Enterprises Top 50 Selection”. In “Forbes China
2023 ESG Inspiring Cases” selection, it was recognised as one of the ESG Case Companies with
Practical Reference Significance.
4. Analysis of Main Business
4.1 Overview
See contents under the heading “2. Business Scope in the Reporting Period”.
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4.2 Revenues and Costs
4.2.1 Breakdown of operating revenue
Unit: RMB’000
2023 2022
As a percentage of As a percentage of YoY Change (%)
Amount total operating Amount total operating
revenue (%) revenue (%)
Total 372,037,280 100.00% 343,917,531 100.00% 8.18%
By business segment
Manufacturing 333,060,319 89.52% 305,846,997 88.93% 8.90%
By product category
HVAC 161,110,843 43.31% 150,634,586 43.80% 6.95%
Consumer
134,691,669 36.20% 125,284,737 36.43% 7.51%
appliances
Robotics,
automation
systems and other 37,257,807 10.01% 29,927,674 8.70% 24.49%
manufactured
products
By geographical segment
PRC 221,131,596 59.44% 201,272,589 58.52% 9.87%
Outside PRC 150,905,684 40.56% 142,644,942 41.48% 5.79%
By sales model
Online 77,330,838 20.79% 68,012,355 19.78% 13.70%
Offline 294,706,442 79.21% 275,905,176 80.22% 6.81%
Note: Consumer appliances in the table above primarily include refrigerators, laundry appliances, kitchen appliances and
small domestic appliances.
During the Reporting Period, the energy solutions and industrial technology revenue was RMB27.9
billion, up 29% year-on-year; the intelligent building technology revenue was RMB25.9 billion, up 14%
year-on-year; and the robotics & automation revenue was RMB31.1 billion, up 12% year-on-year.
4.2.2 Business segments, products, geographical segments or sales models contributing over
10% of the operating revenue or profit
√Applicable □N/A
Unit: RMB’000
YoY change of YoY change of YoY change of
Operating Gross profit
Cost of sales operating cost of sales gross profit
Revenue margin
revenue (%) (%) margin (%)
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The 2023 Annual Report of Midea Group Co., Ltd.
By business segment
Manufacturing 333,060,319 238,575,505 28.37% 8.90% 4.94% 2.70%
By product category
HVAC 161,110,843 119,912,866 25.57% 6.95% 3.17% 2.73%
Consumer
134,691,669 90,239,157 33.00% 7.51% 3.19% 2.80%
appliances
Robotics,
automation
systems and
37,257,807 28,423,482 23.71% 24.49% 20.11% 2.78%
other
manufactured
products
By geographical segment
PRC 221,131,596 163,562,521 26.03% 9.87% 7.93% 1.33%
Outside PRC 150,905,684 109,918,852 27.16% 5.79% 0.85% 3.57%
By sales model
Online 77,330,838 52,961,520 31.51% 13.70% 11.79% 1.17%
Offline 294,706,442 220,519,853 25.17% 6.81% 3.45% 2.43%
Under the circumstances that the statistical standards for the Company's main business data adjusted
in the Reporting Period, the Company's main business data in the recent year is calculated based on
adjusted statistical standards at the end of the Reporting Period
□Applicable √N/A
4.2.3 Whether revenue from physical sales is higher than service revenue
√Yes □No
Business
Item Unit 2023 2022 YoY Change (%)
segment
In thousand
Sales 597,163.1 547,765.0 9.02%
Home units/sets
appliances Output Ditto 580,947.3 539,852.5 7.61%
Inventory Ditto 92,512.9 87,067.8 6.25%
Reason for any over 30% YoY movements in the data above
□Applicable √N/A
4.2.4 Execution of significant sales and purchase contracts in the Reporting Period
□Applicable √N/A
4.2.5 Breakdown of cost of sales
Unit: RMB’000
2023 2022
Business As a percentage As a percentage YoY Change
Item
segment Amount of total cost of Amount of total cost of (%)
sales (%) sales (%)
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The 2023 Annual Report of Midea Group Co., Ltd.
Raw materials 175,242,843 83.39% 170,337,613 83.63% 2.88%
Home Labor costs 13,676,011 6.51% 12,746,704 6.26% 7.29%
appliances Depreciation 3,521,545 1.68% 3,242,335 1.59% 8.61%
Energy 2,886,391 1.37% 2,760,289 1.36% 4.57%
4.2.6 Changes in the scope of the consolidated financial statements for the Reporting Period
√Yes □No
The detailed information of changes in the consolidation scope in the current period is set out in Note 5
to the Financial Statements. Entities newly included in the consolidation scope in the current period
through acquisition mainly include ShenZhen CLOU Electronics Co., Ltd. and its subsidiaries (please
refer to Note 5(1)(a)), while details of those through incorporation can be found in Note 5(2)(a). The
detailed information of subsidiaries no longer included in the consolidation scope in the current period
is set out in Note 5(2)(b).
4.2.7 Major changes in the business, products or services in the Reporting Period
□Applicable √N/A
4.2.8 Main customers and suppliers
Major customers of the Company
Total sales to top five customers (RMB'000) 43,667,937
Total sales to top five customers as a percentage of the
11.74%
total sales for the year (%)
Total sales to related parties among top five customers
0
as a percentage of the total sales for the year (%)
Information about top five customers
As a percentage of the total
No. Customer Sales revenue (RMB'000)
sales revenue (%)
1 Customer A 25,454,192 6.84%
2 Customer B 7,330,760 1.97%
3 Customer C 5,046,912 1.36%
4 Customer D 3,230,985 0.87%
5 Customer E 2,605,088 0.70%
Total -- 43,667,937 11.74%
Other information about top five customers
□Applicable √N/A
Major suppliers of the Company
Total purchases from top five suppliers (RMB'000) 15,872,076
Total purchases from top five suppliers as a percentage
6.19%
of the total purchases for the year (%)
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The 2023 Annual Report of Midea Group Co., Ltd.
Total purchases from related parties among top five
suppliers as a percentage of the total purchases for the 0
year (%)
Information about top five suppliers of the Company
As a percentage of the total
No. Supplier Purchase (RMB'000)
purchases (%)
1 Supplier A 4,998,223 1.95%
2 Supplier B 4,568,479 1.78%
3 Supplier C 2,152,149 0.84%
4 Supplier D 2,119,501 0.83%
5 Supplier E 2,033,724 0.79%
Total -- 15,872,076 6.19%
Other information about top five suppliers
□Applicable √N/A
4.3 Expense
Unit: RMB'000
Reason for any significant
2023 2022 YoY Change (%)
change
Selling and
distribution 34,880,875 28,716,121 21.47%
expenses
General and
administrative 13,476,908 11,582,664 16.35%
expenses
Finance costs 3,261,656 3,387,491 -3.71%
Research and
development 14,583,311 12,618,506 15.57%
expenses
4.4 R&D investment
√Applicable □N/A
Information about R&D personnel
2023 2022 YoY Change (%)
Number of R&D personnel 23,242 20,782 11.84%
R&D personnel as a
percentage of total 11.69% 12.50% -0.81%
employees
Educational background of
—— —— ——
R&D personnel
Bachelor’s degree 12,633 12,353 2.27%
Master’s degree 5,115 4,457 14.76%
Doctoral degree 648 548 18.25%
Other 4,846 3,424 41.53%
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The 2023 Annual Report of Midea Group Co., Ltd.
Age structure of R&D
—— —— ——
personnel
Below 30 7,204 6,566 9.72%
30~40 11,842 11,208 5.66%
Over 40 4,196 3,008 39.49%
Note: “Other” under “Educational background of R&D personnel” in the table above includes personnel
under privacy protection.
Information about R&D investment
2023 2022 YoY Change (%)
R&D investment (RMB’000) 14,583,311 12,618,506 15.57%
R&D investment as a
percentage of operating 3.92% 3.67% 0.25%
revenue
Reasons for any significant change in the composition of R&D personnel and the impact
□Applicable √N/A
Reasons for any significant YoY change in the percentage of R&D investment in operating revenue
□Applicable √N/A
Reasons for any significant change in the percentage of capitalized R&D investment and rationale
□Applicable √N/A
4.5 Cash flow
Unit: RMB'000
Item 2023 2022 YoY Change (%)
Subtotal of cash inflows from
372,833,745 343,767,987 8.46%
operating activities
Subtotal of cash outflows due to
314,931,134 309,110,159 1.88%
operating activities
Net cash flows from operating
57,902,611 34,657,828 67.07%
activities
Subtotal of cash inflows from
122,203,235 102,953,948 18.70%
investing activities
Subtotal of cash outflows due to
153,423,090 116,463,458 31.73%
investing activities
Net cash flows from investing
-31,219,855 -13,509,510 -131.10%
activities
Subtotal of cash inflows from
37,112,135 54,739,462 -32.20%
financing activities
Subtotal of cash outflows due to
55,022,348 65,594,343 -16.12%
financing activities
Net cash flows from financing
-17,910,213 -10,854,881 -65.00%
activities
Net increase in cash and cash
8,755,292 10,581,929 -17.26%
equivalents
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Explanation of why the data above varied significantly
√Applicable □N/A
a. Primarily driven by an increase in cash received from sale of goods or rendering of services, net
cash flows from operating activities increased 67.07% from last year.
b. Primarily driven by an increase in cash paid to acquire investments, net cash flows from investing
activities decreased 131.10% from last year.
c. Primarily driven by a decrease in cash received from borrowings, net cash flows from financing
activities decreased 65.00% from last year.
d. Net increase in cash and cash equivalents decreased 17.26% from last year.
Explanation of main reasons leading to the material difference between net cash flows from operating
activities during the Reporting Period and net profit for the year
√Applicable □N/A
It is primarily due to the increased operating payables.
5. Analysis of Non-Core Business
□Applicable √N/A
6. Assets and Liabilities
6.1 Material changes of asset items
Unit: RMB'000
31 December 2023 1 January 2023
Change in
As a As a Explanation about any
percentage
percentage of percentage of material change
Amount Amount (%)
total assets total assets
(%) (%)
Cash at bank
81,673,846 16.80% 55,270,099 13.08% 3.72%
and on hand
Accounts
32,884,739 6.77% 28,237,973 6.68% 0.09%
receivable
Contract assets 4,045,925 0.83% 4,498,956 1.06% -0.23%
Inventories 47,339,255 9.74% 46,044,897 10.90% -1.16%
Investment
1,293,629 0.27% 809,936 0.19% 0.08%
properties
Long-term
equity 4,976,109 1.02% 5,188,817 1.23% -0.21%
investments
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The 2023 Annual Report of Midea Group Co., Ltd.
Fixed assets 30,937,963 6.37% 26,082,992 6.17% 0.20%
Construction in
4,681,220 0.96% 3,843,777 0.91% 0.05%
progress
Right-of-use
3,048,785 0.63% 2,339,878 0.55% 0.08%
assets
Short-term
8,819,176 1.81% 5,169,480 1.22% 0.59%
borrowings
Long-term
46,138,736 9.49% 50,685,948 12.00% -2.51%
borrowings
Contract
41,765,475 8.59% 27,960,038 6.62% 1.97%
liabilities
Lease liabilities 2,047,319 0.42% 1,507,480 0.36% 0.06%
Indicate whether overseas assets account for a larger proportion in total assets.
□Applicable √N/A
6.2 Assets and liabilities measured at fair value
√Applicable □N/A
Unit: RMB'000
Profit or Amount
loss from Cumulative provide
change in fair value d for Purchased
Opening Sold in Other Closing
Item fair value change impairm in the
balance the period changes balance
during recorded in ent in period
the equity the
period period
Financial assets
1. Financial assets held for
17,607,07
trading (excluding derivative 3,284,593 284,587 - 15,811,293 17,190 1,790,588
5
financial assets)
2. Derivative financial assets 752,451 -12,067 125,812 1,254,362 194,374 -255,430 1,670,754
13,330,00
3. Receivables financing 13,526,540 - - - 196,532 -
8
4. Other debt investments and 11,013,47
17,626,302 - - 30,000 7,253,610 610,784
other 6
5. Investments in other equity
41,359 - -1,025 - - -2,460 37,874
instruments
-
6. Other non-current financial
10,625,244 1,128,35 -266,696 172,008 2,597,153 964,885 7,769,938
assets
0
27,848,74 1,334,96 35,612,63
Sub-total of financial assets 45,856,489 -855,830 -141,909 17,267,663
4 9 8
Investment properties
Productive living assets
Others
27,848,74 1,334,96 35,612,63
Sub-total of the above 45,856,489 -855,830 -141,909 17,267,663
4 9 8
Financial liabilities 1,895,310 272,054 -38,001 150,077 520,924 3,662 1,762,178
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The 2023 Annual Report of Midea Group Co., Ltd.
6.3 Restricted asset rights as of the end of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of the
Company were sealed, distrained, frozen, impawned, pledged or limited in any other way.
7. Investment made
7.1 Total investment amount
√Applicable □N/A
Total investment amount of the Total investment amount of last year
YoY Change (%)
Reporting Period (RMB’000) (RMB’000)
153,423,090 116,463,458 31.73%
7.2 Significant equity investment made in the Reporting Period
□Applicable √N/A
7.3 Significant non-equity investments ongoing in the Reporting Period
□Applicable √N/A
7.4 Financial investments
7.4.1 Securities investments
√Applicable □N/A
Unit: RMB’000
Gain or
Cumula
Mea loss from
tive fair
Type sure change Gain or Fund
Code of Abbreviat Initial Opening value Purchas Sold in Closing
of men in fair loss in Accounting ing
securitie ion of investme carrying change ed in the the carrying
secur t value the title sour
s securities nt cost amount recorde period period amount
ities met during period ce
d in
hod the
equity
period
Fair
Over Financial
valu Own
seas XIAOMI- assets
1810 769,972 e 586,342 252,053 9,936 -59,180 254,576 791,674 fund
listed W held for
met s
stock trading
hod
Fair
Over Financial
valu Own
seas SoundHo assets
SOUN 157,203 e 51,889 10,395 920 - 10,395 63,204 fund
listed und AI held for
met s
stock trading
hod
Dom Fair Financial
Own
estica valu - assets
688165 EFORT 178,534 274,120 136,138 125,451 299,001 fund
lly e 100,570 held for
s
listed met trading
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The 2023 Annual Report of Midea Group Co., Ltd.
stock hod
Dom Fair
Financial
estica valu Own
assets
lly 688322 Orbbec 300,000 e 134,670 150,612 150,612 285,282 fund
held for
listed met s
trading
stock hod
Dom Fair
Other non-
estica valu Own
- - 1,455,24 current
lly 688249 Nexchip 1,000,00 e - 1,675,42 fund
220,185 220,185 4 financial
listed 0 met 9 s
assets
stock hod
Dom Fair
Financial Rais
estica valu
assets ed
lly 688159 Neoway 31,600 e 29,100 6,194 - -65,261 42,526 6,365
held for fund
listed met
trading s
stock hod
Dom Fair
Financial Rais
estica valu
assets ed
lly 688162 JEE 88,180 e 153,353 -41,135 - -41,135 112,218
held for fund
listed met
trading s
stock hod
Dom Fair
Financial Rais
estica valu
Real- assets ed
lly 301135 40,000 e 62,101 7,761 -1,017 8,213 69,297
Design held for fund
listed met
trading s
stock hod
Dom Fair
Other non- Rais
estica valu
current ed
lly 688097 BOZHON 55,000 e 89,746 24,341 - 24,341 114,087
financial fund
listed met
assets s
stock hod
Dom Fair
Highpow Financial Rais
estica valu
er assets ed
lly 001283 20,000 e 38,030 -14,299 -32,514 1,729 7,245
Technolo held for fund
listed met
gy trading s
stock hod
Dom Fair
Financial Debt
estica ST valu
assets restr
lly 002157 Zhengba 210 e - 0 210 0 210
held for uctur
listed ng met
trading ing
stock hod
2,640,69 - 1,419,35 1,675,63 - 3,203,82 - -
Total 311,875 10,856 356,523
9 1 9 258,542 7
7.4.2 Derivatives investments
√Applicable □N/A
A. Derivatives investments for hedging purposes in the Reporting Period
√Applicable □N/A
Unit: RMB'000
Closing
Gain or amount as
Cumulative
loss from a
Initial fair value Purchased Sold in
Type of Opening change in Closing percentage
investment change in the the
derivative amount fair value amount of the
amount recorded in period period
during the Company’s
equity
period closing net
assets
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The 2023 Annual Report of Midea Group Co., Ltd.
Futures
85,017 85,017 0 -3,925 0 0 81,092 0.0498%
contracts
Forex
352,895 352,895 -233,247 167,738 128,792 37,722 118,788 0.0729%
contracts
Cross-
currency
4,276,688 4,276,688 -815,482 -266,696 0 0 3,137,717 1.9264%
interest rate
swaps
Total 4,714,600 4,714,600 -1,048,729 -102,883 128,792 37,722 3,337,597 2.0491%
Explanation of significant changes in accounting
policies and specific financial accounting principles in
No change
respect of the Company's hedges for the period as
compared to the prior period
Actual loss from derivatives investments during the Reporting
Actual gain/loss in the period
Period was RMB-1,903.841 million.
The Company's major risks during the Reporting Period
included foreign exchange risk exposures and raw material
price risks. Foreign exchange risks included foreign currency-
denominated asset and liability exposures arising from
overseas sales, raw material purchases, financing and other
Results of hedges operations. And raw material price risks included exposures to
fluctuations in spot trading market prices for bulk material
purchases. These uncertainties arising from currency
fluctuations were effectively hedged against by buying
derivative contracts of the same amount and maturity but in
opposite directions.
Source of derivatives investment funds All from the Company’s own funds
For the sake of eliminating the cost risk of the Company's bulk
purchases of raw materials as a result of significant fluctuations
in raw material prices, the Company not only carried out futures
business for some of the bulk materials, but also made use of
bank financial instruments and promoted forex funds business,
with the purpose of avoiding the risks of exchange and interest
rate fluctuation, realizing the preservation and appreciation of
forex assets, reducing forex liabilities, as well as achieving
locked-in costs. The Company has performed sufficient
evaluation and control against derivatives investment and
position risks, details of which are described as follows:
1. Legal risk: The Company's futures business and forex funds
businesses shall be conducted in compliance with laws and
regulations, with clearly covenanted responsibility and
obligation relationship between the Company and the agencies.
Control measures: The Company has designated relevant
responsible departments to enhance learning of laws and
Risk analysis of positions held in derivatives during regulations and market rules, conducted strict examination and
the Reporting Period and explanation of control verification of contracts, defined responsibility and obligation
measures (Including but not limited to market risk, well, and strengthened compliance check, so as to ensure that
liquidity risk, credit risk, operational risk, legal risk, the Company's derivatives investment and position operations
etc.) meet the requirements of the laws and regulations and internal
management system of the Company.
2. Operational risk: Imperfect internal process, staff, systems
and external issues may cause the Company to suffer from loss
during the course of its futures business and forex funds
business.
Control measures: The Company has not only developed
relevant management systems that clearly defined the
assignment of responsibility and approval process for the
futures business and forex funds business, but also established
a comparatively well-developed monitoring mechanism, aiming
to effectively reduce operational risk by strengthening risk
control over the business, decision-making and trading
processes.
3. Market risk: Uncertainties caused by changes in the prices of
bulk commodity and exchange rate fluctuations in foreign
exchange market could lead to greater market risk in the
futures business and forex funds business. Meanwhile, inability
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The 2023 Annual Report of Midea Group Co., Ltd.
to timely raise sufficient funds to establish and maintain
hedging positions in futures operations, or the forex funds
required for performance in forex funds operations being unable
to be credited into account could also result in loss and default
risks.
Control measures: The futures business and forex funds
business of the Company shall always be conducted by
adhering to prudent operation principles. For futures business,
the futures transaction volume and application have been
determined strictly according to the requirements of production
& operations, and the stop-loss mechanism has been
implemented. Besides, to determine the prepared margin
amount which may be required to be supplemented, the futures
risk measuring system has been established to measure and
calculate the margin amount occupied, floating gains and
losses, margin amount available and margin amount required
for intended positions. As for forex funds business, a
hierarchical management mechanism has been implemented,
whereby the operating unit which has submitted application for
funds business should conduct risk analysis on the conditions
and environment affecting operating profit and loss, evaluate
the possible greatest revenue and loss, and report the greatest
acceptable margin ratio or total margin amount, so that the
Company can update operating status of the funds business on
a timely basis to ensure proper funds arrangement before the
expiry dates.
The Company carried out recognition and measurement
according to “Section VII Recognition of Fair Value” in the
Accounting Standard No. 22 for Business Enterprises—
Recognition and Measurement of Financial Instruments.
Changes in the fair value of derivatives were recognized at
Changes in market prices or fair value of derivative RMB-1,151.612 million during the Reporting Period.
products during the Reporting Period, specific 1. The fair value of futures contracts was determined on the
methods used and relevant assumption and basis of publicly quoted prices in the futures market.
parameter settings shall be disclosed for analysis of 2. The fair value of forex contracts was determined based on
fair value of derivatives banks’ quoted prices for foreign exchange products.
3. The main parameter assumptions used in the analysis of the
fair value of cross-currency interest rate swaps included interest
rate paid, interest rate received, frequency of interest received,
frequency of interest paid, interest rate curve, exchange rate
curve, etc.
Litigation involved (if applicable) N/A
Disclosure date of the announcement about the
29 April 2023
board’s consent for the derivative investment (if any)
Disclosure date of the announcement about the
general meeting’s consent for the derivative 20 May 2023
investment (if any)
The Company's independent directors are of the view that the
futures hedging business is an effective instrument for the
Company to eliminate price volatility and implement risk
prevention measures through enhanced internal control,
thereby improving the operation and management of the
Special opinions expressed by independent directors Company; the Company's foreign exchange risk management
concerning the Company's derivatives investment and capability can be further improved through the forex funds
risk control business, so as to maintain and increase the value of foreign
exchange assets and the abovementioned investment in
derivatives can help the Company to fully bring out its
competitive advantages. Therefore, it is practicable for the
Company to carry out derivatives investment business, and the
risks are controllable.
B. Derivatives investments for speculative purposes in the Reporting Period
□ Applicable √ N/A
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No such cases in the Reporting Period.
7.5 Use of funds raised
□ Applicable √ N/A
No such cases in the Reporting Period.
8. Sale of Major Assets and Equity Interests
8.1 Sale of major assets
□Applicable √N/A
No such cases in the Reporting Period.
8.2 Sale of major equity interests
□ Applicable √ N/A
9. Analysis of Major Subsidiaries
√Applicable □N/A
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Total Net Operating Operating
Net profit
Company Business Registered assets (in assets (in revenue profit (in
Company name (in RMB
type scope capital RMB RMB (in RMB RMB
million)
million) million) million) million)
Guangdong Midea Manufacturing
USD158.58
Kitchen Appliances Subsidiary of home 23,257 12,394 16,237 2,512 2,211
million
Manufacturing Co., Ltd. appliances
Chongqing Midea Air- Manufacturing
RMB50
Conditioning Equipment Subsidiary of home 15,000 1,623 25,802 1,737 1,493
million
Co., Ltd. appliances
Manufacturing
Wuxi Little Swan RMB732,48
Subsidiary of home 25,504 6,290 23,830 1,535 1,393
Electric Co., Ltd. 7,764
appliances
Manufacturing
GD Midea Heating &
of commercial RMB500
Ventilating Equipment Subsidiary 16,618 2,629 18,624 1,459 1,324
air million
Co., Ltd.
conditioners
Acquisition and disposal of subsidiaries during the Reporting Period
√Applicable □N/A
The detailed information of changes in the consolidation scope in the current period is set out in Note 5
to the Financial Statements. Entities newly included in the consolidation scope in the current period
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through acquisition mainly include ShenZhen CLOU Electronics Co., Ltd. and its subsidiaries (please
refer to Note 5(1)(a)), while details of those through incorporation can be found in Note 5(2)(a). The
detailed information of subsidiaries no longer included in the consolidation scope in the current period
is set out in Note 5(2)(b).
10. Structured Bodies Controlled by the Company
√Applicable □N/A
As of the end of the Reporting Period, one structured entity was included in the Group’s consolidated
financial statements, which is a private-equity fund controlled by the Group. As a manager and investor
of the structured entity, the Group has relevant management power in and variable returns from the
entity, and has the ability to exercise its management power to impact the returns.
11. Outlook for the Future Development of the Company
Development strategies of the Company
Midea adheres to the strategic focus of “Technology Leadership, Direct to Users, Digitization &
Intelligence Driven, and Global Impact”, focuses on “Comprehensive Digitalization and Comprehensive
Intellectualization”, drives balanced development of ToC and ToB businesses under the guidance of the
strategic focus, as well as builds a complementary cycle among diverse industries. The Company
drives profitability improvement through the enhancement of product strength and core technologies in
the ToC end, providing strategic support for the transformation of the ToB business. Also, it continues to
strengthen its globalisation capability, striving to transform from a China-based company to a global
one. While maintaining its superiority in efficiency, the Company drives growth through innovation and
builds product and technological advantages. Midea are built to grow on the back of advanced
governance mechanism, future-proof values, and managerial mindset growth. Midea will continuously
improve the governance mechanism by empowering responsibilities, rights and obligations, clarify
decentralization and authorization, constantly refine the agent mechanism, optimize the incentive and
constraint system, encourage entrepreneurship and boost organizational vitality, and establish a flat
and agile organization and optimization process. It will also adhere to the values of long-termism and
altruism, truly put employees, users, customers and partners at the center of all things, and improve the
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EHS governance and ESG rating. Additionally, the Management will endeavor to achieve all-round
growth both spiritually and intellectually. Meanwhile, Midea will continue to improve the talent structure,
build diverse teams that are inclusive and collaborative, and create a simple, straightforward, flat and
equal environment. In the meantime, it will constantly improve consistency management across the
Group, so as to achieve consistent operations, corporate culture and values and philosophies, which
will ensure the sustained and steady development of the Company.
With strategic certainty, Midea is well prepared for uncertainties in the future. It firmly upgrades its
business models. In terms of the home appliance business, the key is to achieve further growth through
business model upgrades such as the Chinese Market DTC reform and the Overseas OBM Priority
strategy, and to explore new approaches to continuously drive cost reduction and efficiency
improvement through the combination of the through-value-chain, no-breakpoint, seamless, and
people-never-see-people digitalisation capabilities and lean management. It is also important to insist
on structural upgrading, i.e. adjusting large structures, refining small structures, and creating new
structures. The key is to provide high-quality, differentiated products. The Company continues to invest
in and improve the "Three Generations" R&D system to increase added value and profitability of
products, better support technological research and development and structural upgrading, and
continue to invest in the future in order to achieve stable and sustained high-quality growth. In addition,
Midea insists on business upgrading. By further increasing investment in the ToB business,
continuously improving product strength, realising value chain autonomy, grasping opportunities to
quickly seize market share, the Company fully fires up the "Second Growth Engine". With the
customer-oriented principle as the root of corporate innovation and reform, the Company accelerates
DTC breakthroughs. Grasping capital flow, cargo flow, information flow and other information of the
whole value chain through direct contact with customers/users, the Company is able to deepen the
implementation of an online system for policies and visualisation of the whole order process. By doing
so, it can gather retail data in real time, and acquire first-hand information on customer needs for its
reform and innovation. Further, the Company shortens the factory-to-user process through the
development of online capabilities and the further online-offline integration, so that the products and
services can be delivered to the users at the lowest cost and the fastest speed.
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Key operation points in 2024:
In 2024, based on the core strategic focus with “Technology Leadership” as the core, Midea will adhere
to the operating principles of “enhancing value chain-wide efficiency alongside structural growth
through upgrades”. It will strive for a bigger business size through structural growth, globalised regional
expansion and upgrading of the ToB business. Continuous efforts will be made to optimise cash flow,
improve cost management and focus on developing competitive businesses at both the strategic and
operational levels. By working on overall efficiency improvement instead of partial fine-tuning, Midea is
in a position to better cope with market volatility and uncertainty. It will endeavour to achieve its annual
objectives in a steady and high-quality manner. Meanwhile, further efforts will be made to promote the
decentralisation and improvement of the governance mechanism, develop an internal entrepreneurial
group, and fully stimulate entrepreneurial spirit. Midea will strive to be the best it can be in a long cycle,
looking at its own problems and shortcomings in a calm and rational manner.
Midea will focus on "efficiency, performance and results". It will continue to drive business
breakthroughs, advance faster with innovation, as well as explore new approaches, models, products
and capabilities. On the product end, the Company will continue to strengthen the product structure
adjustment, the development of new product categories and breakthroughs in weak product categories;
on the channel end, efforts are being made to promote the expansion of new markets, the use of new
approaches, and the development of new business forms such as interest-based e-commerce; and on
the operation end, the Company will insist on controlling operating risks and expenses, balancing
investments and returns, driving higher profitability and improving cash flow. Key tasks for 2024 include:
a. Based on the core strategy of “Technology Leadership”, Midea will increase investment in R&D,
improve talent structure, carry out the tasks of technology innovation, product innovation, business
model innovation, and process innovation, as well as build a mechanism that can support “Technology
Leadership”. Midea will continue to promote the transformation of R&D organisations, enhance
research capabilities, establish the scientist system, attract global research talents and high-end R&D
personnel, improve the R&D network, accelerate the cultivation of overseas R&D capabilities,
strengthen the development and management of overseas R&D organisations, advance the planning
and implementation of overseas R&D centres by various business units, and focus on the construction
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of research organisations and overseas OBM R&D teams as well as talent structure to develop
differentiated products with potential brand effects. Through the implementation of the “Three
Generations” plan, it will promote the improvement of operational quality, establish a quantified
evaluation system for the “Three Generations,” use leading research projects and common technology
projects as leverage, and continuously build a future technological leadership moat from the
dimensions of technology, patents, and standards. It will continuously optimise the structure of projects
related to exploring cutting-edge technologies, breakthroughs in core technologies, and technology
transfer to promote the implementation of research results and enhance product capabilities. It will
continue to advance the product technology planning of dual high-end brands, guide the product
structure upgrade of relevant product business units with “big structures, small structures, and new
structures”, and further support business development through the layout and implementation of new
products.
b. Midea will keep a high-quality development direction and stick to organic, sustained and effective
organic growth. In the process of implementing new strategies to boost new growth areas, the key lies
in improving operational efficiency. Therefore, Midea will optimize the delivery cycle, enhance the
inventory turnover, improve the cash cycle, and implement the shared inventory system. Being
customer-oriented, Midea will strive to be “Direct to Users” through user research, user insight, product
plan transforming and user operation. Midea will promote the T+3 business model reform and high-
performance operations in the whole value chain in every link from product planning to after-sales
service, so as to increase efficiency in the whole value chain and the data-driven efficiency. Channel
reform will be firmly pushed forward for the front-end market. In order to win in competition, it is
important to develop high-end products to refine the product mix. Midea will plan for, establish and
refine business middle platforms, especially data and technology middle platforms. In the meantime, it
will maintain overall consistency by sticking to “One Midea, One System, One Standard”. In face of
common problems such as fluctuations in exchange rates and prices of bulk raw materials, as well as
sourcing management, Midea will firmly promote its internal coordination and sharing mechanism and
keep perfecting the relevant solutions. It will also maintain effective investments, control non-operating
expenses, increase labor productivity, improve human resource allocation efficiency, promote lean
management and provide fresh impetus for continual growth through relentless innovation.
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c. In the domestic market, based on the “Direct to Users” strategy, Midea will continue to deepen the
reform of its organisational structure, improve retail capacity, and develop user operation and back-end
capacity. Midea will also commit itself to intelligent experience terminals and user experience. In terms
of channel transformation, Midea will deepen DTC transformation, transform the value chain and
business model, focus on the development of retail capabilities and the enhancement of user
operations around customers and users, precisely and efficiently improving end-to-end experiences
such as services, products, and supply chains; at the customer-oriented M2b link, digital operation
empowerment will be carried out, delivery efficiency will be improved through mechanisms such as
visual delivery period, overdue compensation, simplified online policies, and empowered cloud
warehouses, customer liquidity will be increased, inventory sharing will be promoted, online and offline
product pools will be interconnected, and a shared inventory system of innovative shared business
models will be achieved, improving store inventory turnover efficiency; At the b2C link, focusing on
users, digital retail empowerment will be carried out, retail resources and policies will be optimised, a
model of operating multiple stores with one business will be promoted, and user experience will be
enhanced; Based on digital systems and tools, increased investment will be made in building a retail
middle platform, cultivating user operation capabilities and data analysis decision-making capabilities,
supporting retail transformation; enhancing the front-end category store user service capabilities and
cross-store customer service guidance and recommendation capabilities of shelf e-commerce
platforms, optimising the allocation of internal and external traffic resources, deepening internal traffic
special cooperation and developing KOLs and private domain traffic, while accelerating
content/interest-based e-commerce channel layout; strengthening the construction of online customer
ecosystem, focusing on cultivating stores for all categories and multiple categories of customers,
expanding customer scale, improving channel structure, enhancing online and offline integrated
business capabilities, unifying cross-category marketing, and promoting online and offline integration.
With respect to marketing, Midea will empower the retail end and customers through the refinement of
event operations, structured product marketing, and standardised retail experience. With consistent
online and offline branding, the Company will strengthen the node integrated marketing capability. By
integrated branding strategy, content and advertising, it is able to strengthen the quality of content and
branding effect, increase brand and product visibility, and reach customers effectively. Meanwhile, the
Company will continuously expand the base of private domain users to enhance user satisfaction and
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royalty. In terms of user operation and service, Media will, focusing on user experience, improve
product design iterations and purchasing service experiences, accelerate the establishment of two-way
communication channels with private domain users, optimise membership operation capabilities, and
improve user satisfaction and loyalty; through refined hierarchical management of service outlets and
engineer training certification systems, service capabilities and service quality will be enhanced; Media
will also expand sales customer service evaluation scenarios, realise intelligent analysis and closed-
loop management of evaluation results for service providers, and bridge the whole-scene evaluation
chain for service providers; through improving performance capabilities, optimising products, and
reshaping channels, a service product operation platform will be built to achieve commercial operation,
continuously promote service process restructuring, service-side sales diversion, and digital
transformation of services, providing users with a one-stop service experience. In terms of intelligence,
based on existing products, Midea will continue to develop its comprehensive smart home system,
focusing on the construction of a “wired + wireless” high-stability communication technology, an
integrated decision-making hub combining “cloud + edge”, and a deep integration control system of
“smart home + smart appliances”, establishing a leading comprehensive smart home system. Midea
will continue to invest in research and development, developing technologies such as smart sensing, AI
control strategies, and large-scale model applications, introducing smart products with differentiation
and leadership, continuously optimising key capabilities such as voice interaction, refining key products
such as intelligent control screens, and enhancing the competitiveness of comprehensive smart home
solutions. Midea will build exquisite sales experience scenarios, create ultimate user store journeys,
and establish highly standardised stores. By combining popular Stock Keeping Unit (SKU) with
packages, Midea will formulate different product marketing combinations, integrating home furnishings
and appliances to drive sales growth. Midea will optimise and upgrade digital tools, reduce the
threshold for store design services, and provide a complete experience of “product solutions +
standardised sales services + full-chain design and installation capabilities” to enhance user
satisfaction and brand presence.
d. In the overseas market, Midea will adhere to the front-end organisational system and regionalised
development as the core, accelerate the front-end infrastructure construction, build a front-end market
resource sharing platform, cultivate an international organisation and talent system, particularly
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emphasising the strengthening of localisation teams, and initiate the “Global Talent Development and
Reserve Plan”. Midea will firmly invest in the construction of its proprietary brands, focusing on
products, retail, and channels. On the product side, guided by user orientation, Midea will continuously
enhance product strength and structural upgrades, improve product efficiency, adhere to the “OBM
Priority” strategy, and promote the differentiation and competitiveness of proprietary brand products. On
the channel side, Midea will continue to focus on the development of overseas e-commerce, product-
centric, efficiency-oriented, actively exploring new models, embracing AI tools, focusing on the entire
value chain operation, achieving high-quality growth and sustainable development. On the logistics and
warehousing side, Midea will focus on customer needs, establish online process control towers, build
end-to-end logistics delivery capabilities for manufacturing, channels, and customer service for
overseas proprietary brands, deploy multi-level, multi-purpose, and globally covered warehouse
networks, achieve inventory sharing and short-chain delivery, establish manufacturing material
warehouses, multi-channel finished product sales warehouses, and post-sale spare parts warehouses,
establish a globally consistent customs compliance management system, and simultaneously promote
product data governance, and formulate standardised processes for import and export business at
overseas bases. On the service side, Midea will continue to build a global service system covering call
centres, spare parts warehouses, technical support, IT systems, and organisational capabilities, relying
on special funds to improve OBM infrastructure, benchmarking industry benchmarks, piloting the
development of comprehensive overseas service solutions in three countries. Midea will continue to
carry out basic service capacity building, promote the application of intelligent tools such as AIGC, and
access social media and brand official websites to improve the efficiency and quality of call centres.
Midea will optimise and promote the application of a global service knowledge base, establish training
centres in key markets, systematise training management, update service personnel’s knowledge and
skills, improve the quality of technical materials and intelligent applications, establish localised repair
capabilities in multiple scenarios and technologies, and improve network coverage and single-rate
completion in key markets. This aims to further enhance service quality, providing customers with
consistent and high-quality service experiences, and improving the digital capabilities of after-sales
service.
e. In 2024, Midea will continue to deepen the implementation of its dual high-end brands strategy,
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further strengthening the dual-engine power of COLMO and Toshiba brands. The COLMO brand will
advance the combination of territory retail and precision distribution, continue to expand brand store
construction, deepen cloud warehouse transformation, while focusing on crowd assets, layout sales
accounts, and achieve online and offline full-domain operations. COLMO will further evolve around
products and user experience, launching more product suites to consolidate and enhance the high-end
market position of air conditioners and refrigerators, and build a diversified portfolio of high-end
products around the comprehensive smart air and water heating solutions for the whole house. In the
field of comprehensive smart home, COLMO will launch products such as home smart hosts, smart
dimming drivers, and switch panels, and based on its self-developed large-scale model capabilities,
provide users with more complete, reliable, and intelligent smart home appliances and integrated home
solutions. To further enhance the brand store image and experience, COLMO will provide one-stop
purchase through entire-house smart home appliance solution design services, and enhance user
repurchase and recommendation rates through integrated delivery and installation, 1V1 manager
services, appliance cleaning, and other member rights and services.
Targeting the segmented high-end market, the Toshiba brand will continue to deploy multiple
categories such as refrigerators, laundry appliances, small domestic appliances, and kitchen
appliances, further expanding scenarios in entire-house water usage, heating, and kitchen. Meanwhile,
it will strengthen brand consistency, promote multi-category suite-based products to provide a refined
living experience, upgrade brand image and build brand mindset, and deeply focus on layer marketing
to strive for a dual breakthrough in customer base and scale. The Toshiba brand will complete
nationwide coverage of brand operators in the channel end and focus on key efforts in core cities,
relying on brand operators to build self-operated star-rated living halls. It is expected that the
cumulative number of star-rated living halls and brand joint halls will reach 1,000, focusing on retail and
emphasising the cultivation of retail teams to improve store output. In the e-commerce channel,
Toshiba will build a “2+5+8” customer system as a key growth driver. On the brand side, Toshiba will
establish an independent membership system, complete the supplementation of membership benefits,
achieve user precipitation, and strengthen multi-product integration and cultivate loyal users.
WAHIN will continue to differentiate and innovate around users, products and product accessories. It
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will build a multi-category product portfolio, pursue best product functions, promote product category
innovation, and provide consumers with smart, comfortable and scenario-based experience. It will
continue to promote marketing innovation, maintain its focus on forward-looking young consumers,
continuously target young groups through school-enterprise cooperation, and explore diversified cross-
field models during graduations and job-hunting seasons. Continued efforts will be made to improve the
conversion chain, promote synergy between sales and marketing, as well as empower the conversion
to e-commerce sales. Also, it will expand content-driven "virtual stores" based on “e-commerce
channels + new media”, create new shopping scenarios, and drive sales through branding.
f. Midea will continue to focus on the “Digitisation & Intelligence Driven” strategy, with a focus on three
main directions: enabling domestic DTC transformation, deepening overseas digitalisation 3.0, and
enhancing ToB data application to improve and perfect data application capabilities. In the domestic
market, Midea will promote the implementation of the DTC strategy, achieve retail-driven
transformation, improve end-to-end service, product, and supply chain experiences, achieve a shared
inventory system of full-channel inventory integration, enhance turnover efficiency, and meet the
growth in sales scale with minimal inventory. Midea will enhance the digital coordination capabilities of
new product launches and price management, deepen the application of big data and algorithms,
optimise the Midea Cloud Sales platform, and improve the efficiency of the domestic full value chain.
Further improvements in cloud warehouse construction will enhance the retail operational experience,
achieve accurate and comprehensive retail terminal data, and real-time online capabilities. In the
manufacturing sector, Midea will comprehensively enhance overseas manufacturing digitalisation,
deepen assembly production scheduling applications, achieve overseas mixed-flow production
applications and online assembly, improve the efficiency of overseas supply chain operations, shorten
supplier introduction cycles and improve distribution efficiency, integrate end-to-end order process
information, and establish scenarios such as integrated logistics automatic distribution and
manufacturing data operation. Domestically, Midea will promote integrated assembly solutions, achieve
integrated headquarters assembly scheduling and simplified logic, promote supplier sourcing
transformation, deepen the end-to-end application of bulk cutting demand to settlement, drive
inspection dynamicization and onlineization based on VOC/VOP, promote process digitisation to
shorten process design cycles, establish an EHS operations centre to achieve risk control and agile
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scheduling, deepen occupational health applications, optimise energy and carbon management
platforms, and develop standardised solutions for energy and carbon management and microgrid to
assist in year-round energy conservation and emission reduction. In the ToB business field, Midea will
continue to increase digital investment, comprehensively explore and establish project-based digital
business templates, lead in the implementation of intelligent building technology business to improve
order delivery performance, achieve end-to-end order visibility, enhance customer service quality, and
actively enable various ToB industries with digital capabilities.
Regarding intelligent ask-and-answer products, Midea will focus on the capabilities of intelligent
question-and-answer, intelligent tutoring, AI dialogues, etc., around the “knowledge + AIGC algorithm +
application”, targeting core scenarios. Midea will break through the bottlenecks of terminal customers
and overseas multilingual intelligent question-and-answer applications, establish data and knowledge
operation mechanisms, and improve response accuracy. The construction of the AI drawing platform
will cover the entire chain of “creative concept - material production - graphic processing”, striving to
achieve the efficiency improvement goals of AIGC application promotion. The plan for cloud-native
systems is to build a fully self-developed infrastructure platform based on container platform, host
platform, storage platform, network platform, monitoring platform, and middleware platform to meet the
availability and data reliability requirements of mainstream public clouds. Midea will enhance the depth
of the security defence system, solidifying the information security architecture of “preventing intrusion,
detecting, preventing leakage, ensuring compliance, and emphasising operation”, combining security
automation orchestration and security GPT technology to improve the automation and intelligence of
security operations. In the infrastructure field, focusing on cloud business migration and establishing a
rapid response emergency system, Midea will continue to focus on stability construction, strengthen
monitoring capabilities, achieve smooth migration of business systems, and ensure stable operation of
the business.
g. Midea aims to drive further growth in its energy solutions and industrial technology business,
continuously expand business boundaries, and accelerate growth. In 2024, in the field of green energy,
Midea will promote internal business integration, focus on the grid market, explore non-grid markets,
expand the new energy market, promote further integration of residential energy storage products with
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smart homes, and create efficient and safe integrated household energy storage solutions for home
scenarios. Leveraging overseas channel advantages, Midea will expand overseas market customers,
focus on large-scale energy storage as well as industrial and commercial energy storage markets in
Europe, strengthen the promotion of household energy storage in overseas markets, achieve global
layout of energy storage business, and accelerate the expansion of photovoltaic EPC business. Midea
will continue to promote platform-based research and development, optimise product processes,
accelerate overseas new product development and certification, continuously reduce costs and
improve efficiency, optimise inventory management capabilities, and enhance operational management
quality. Midea will increase investment to enhance intelligent manufacturing capabilities, further deploy
energy storage capacity, promote capacity expansion of the Yichun production line, and build
manufacturing bases in Anqing and Shunde. Focusing on the main business and accelerating the
growth of new industries, Midea will initially build differentiated competitive capabilities for the future. In
the field of smart transportation, integrating the innovative advantages of the Midea system, Midea will
accelerate the establishment of new energy vehicle components that meet customer needs in terms of
“quality, cost, and delivery (QCD)” capabilities, achieve comprehensive improvements in customers,
products, and manufacturing capabilities. Midea will continue to expand the market, explore more
domestic and foreign key customers, focus on leading new energy vehicle customers, enhance the
market coverage and market share of various thermal management products for different vehicle
models to ensure rapid growth in sales operating revenue. Simultaneously, Midea will increase product
technology investment, promote the product technology development of surface-mounted permanent
magnet synchronous motors (SPM) and interior permanent magnet synchronous motors (IPM), and
carry out the development of next-generation platform product technologies, gradually realising the
development path of “components-components-systems”. Midea will continuously improve
manufacturing capabilities, complete the expansion of electric power steering (EPS) motor production
lines, and achieve sustained capacity improvement. In the field of core components for consumer
appliances, Midea will continue to enhance digitalisation and data operations, increase investment in
R&D resources, improve the processes and mechanisms of technology and platform research,
optimise the product mix, and driving profitability. Also, it will make continuous breakthroughs in new
products, technologies, and applications, providing customers with eco-friendly, efficient, and intelligent
products and technology solutions. Continued breakthroughs will be driven in market segments, and
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mass production of valve, pump and other products will be promoted. Moreover, the Company will
improve production efficiency and strengthen product cost advantages, bolster its global supply chain
capabilities, as well as enhance global competitiveness by fully leveraging the local advantages of the
factories in India and Thailand. Aiming to establish an Industry 4.0 smart manufacturing demonstration
base, it will strive for comprehensive digital and intelligent transformation in the Foshan Xingtan
Industrial Park. Midea will create an overseas professional service platform, offering one-stop services
for small and medium-sized customers and specialised services for large customers, achieving
breakthroughs with overseas key customers and increasing the global market share of its products.
The Company continues to strengthen the competitiveness of its chips for home appliances. It is
developing high-quality industrial-grade chips for home appliances such as master control, touch
control, and variable frequency chips, in addition to driving integration of chips. Relying on the
advantages of the Group's industrial chain cluster, continuous efforts are also made to drive internal
sales and its percentage, as well as attract other major home appliance makers. In terms of industrial
automation, Midea will further consolidate its technological expertise in motion control, adapt to market
conditions and competitive strategies, utilise its technological advantages, and carry out differentiated
research and development. Focused on the iterations and upgrades of controllers and the combination
of controllers and drives, Midea will explore more product applications, and promote integrated
solutions. Additionally, it will further refine the layout of harmonic reducer product lines, develop more
top customers in the industry, and drive production and shipment breakthroughs for multiple products.
h. Midea will fully leverage the advantages of domestic rapid response and manufacturing capabilities,
continuously enhancing KUKA’s global competitiveness. In terms of research and development, Midea
will continue to increase research and development investment, accelerating the innovation of core
components and software systems through the collaboration of internal and external resources of
Chinese and German research teams. In terms of market development, Midea will actively cooperate
with leading enterprises in various industries to expand into new energy, general industry, electronics,
medical, logistics, and service sectors, accelerating the layout in new industries. In manufacturing,
Midea will improve the domestic manufacturing layout, leveraging domestic manufacturing bases to
accelerate the formation of advantages in the industrial robot industry chain, further enhancing
operational efficiency, shortening product delivery cycles. Simultaneously, Midea will initiate the Phase
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III ToB of the KUKA East China production base to provide basic support for integrated business and
establish collaborative robotic capacity. Through industry-education integration, Midea will accelerate
the layout of the KUKA education sector, expedite talent recruitment, strengthen the team size for pre-
sales, post-sale, and project implementation, and provide talent reserves for business expansion.
i. Midea will adhere to the value positioning of production logistics and continue to deepen digitisation
and greenisation. On one hand, Midea will achieve the integration of the upstream and downstream
value chains through digital connectivity, launching applications such as tag clouds and building a
digital collaboration platform for production logistics to assist small and medium-sized manufacturing
enterprises in digital transformation, and continuously promote the integration of the manufacturing
industry and the service sector. On the other hand, in the field of green circular packaging, Midea will
focus on building a more complete packaging circulation and recycling network around factories,
covering more regions and categories to continuously improve the utilisation rate of packaging
resources and practice a green and low-carbon development path. Also, it will continue to deepen the
warehouse and distribution b/C integrated business, release more operational vitality through deep
mechanism change, and actively explore new business models to provide services for more customers.
Annto is committed to using smart supply chains as a lever to enhance the full-chain value of enterprise
customers and improve the service experience of individual users, gradually transforming into a
digital/operational logistics enterprise, with a significant increase in the number and scale of external
customers year by year. First, Annto will enhance service quality, focus on user experience, and
achieve “online business, online service, online management” in whole scenes, creating an integrated
closed-loop service. Second, Annto will firmly move towards digitisation, introducing professional
talents and strengthening the construction of knowledge-based and technology-based teams,
increasing investment in the development of digital systems for full-chain operation platforms and
management platforms. Third, Annto will continue to promote standardisation and intelligence in
aspects such as warehouse optimisation, traffic integration, route operation, structural changes in
transportation capacity, and intelligent scheduling. Fourth, Annto will continue to deepen the
warehouse and distribution b/C integrated business, release more operational vitality through deep
mechanism change, and actively explore new business models.
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Risks Faced by the Company and Countermeasures:
a. Risk of macro economy fluctuation
The market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,
among other products, can be easily affected by the economic situation and macro control. If the global
economy encounters a heavy hit and consumer demand slows down in growth, the growth of the
industries in which the Company operates, may slow down accordingly, and as a result, this may affect
the product sales of Midea Group.
b. Risks in the fluctuation of production factors
The raw materials required by Midea Group to manufacture its consumer appliances and core
components primarily include different grades of copper, steel, plastics and aluminum. At present, the
household appliance manufacturing sector belongs to a labor intensive industry. If the price of raw
materials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,
electricity, and land) caused by a change to the macroeconomic environment and policy change, or the
cost reduction resulted from lean production and improved efficiency, as well as the sale prices of end
products cannot offset the total effects of cost fluctuations, the Company’s business will be influenced
to some degree.
c. Risk in global asset allocation and overseas market expansion
Internationalization and global operations is a long-term strategic goal of the Company. The Company
has built joint-venture manufacturing bases in many countries around the world. Progress has been
made day by day regarding the Company’s overseas operations and new business expansion.
However, its efforts in global resource integration may not be able to produce expected synergies; and
in overseas market expansion, there are still unpredictable risks such as local political and economic
situations, significant changes in law and regulation systems, and sharp increases in production costs.
d. Risk in foreign exchange losses caused by exchange rate fluctuation
As Midea carries on with its overseas expansion plan, its overseas sales have accounted for more than
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The 2023 Annual Report of Midea Group Co., Ltd.
40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative effects on
the overseas operations of the Company, but could also lead to exchange losses and increase its
finance costs.
e. Market risks brought by trade frictions and tariff barriers
Due to the rise of anti-globalization and trade protectionism, China will see more uncertainties in export
in 2023. The trade barriers and frictions of some major markets will affect the export business in the
short run, as well as marketing planning and investment in the medium and long run. Political and
compliance risks are rising in international trade. These can mainly be seen on compulsory safety
certificates, international standards and requirements, and product quality and management systems
certification, energy-saving requirements, the call for increasingly strict environmental protection
requirements, as well as with rigorous requirements for recycling household appliances waste. Trade
frictions caused by anti- dumping measures implemented by some countries and regions aggravate the
burden in costs and expenses for household appliance enterprises, and have brought about new
challenges to market planning and business expansion for enterprises.
In face of the complicated and changeable environment and risks at home and abroad, Midea will
strictly follow the Company Law, the Securities Law, the CSRC regulations and other applicable rules,
keep improving its governance structure for better compliance, and reinforce its internal control system
so as to effectively prevent and control various risks and ensure its sustained, steady and healthy
development.
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12. Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. in the Reporting Period
√Applicable □N/A
Index to main inquiry
Date Place Way of visit Type of visitor Visitor Discussions
information
ICBC Credit Suisse Asset
Management, Panjing Invest,
1. In terms of the continuous
BOCIM, Everbright Pramerica
improvement in the penetration rate of Log Sheet of Investor
Fund, Hwabao WP Fund, Taikang
residential commercial air conditioners, Relations Activities for
10 February Midea Group Asset, China Securities Capital
By phone Institution what are the Company's layouts in this 10 February 2023
2023 HQ Management, UBS SDIC,
field? 2. What achievements did the disclosed on
Tianhong Asset Management, TF www.cninfo.com.cn
Company make in the heat pump
Securities Asset Management,
business in 2022?
Oriental Alpha Fund, Rongtong
Fund
1. What are the Company's latest
developments in the automotive parts
Taiping Asset Management, UBS
field? 2. What achievements did the
SDIC, Hwabao WP Fund, HuaAn
Company make in research and Log Sheet of Investor
Fund, Maxwealth Fund, DH Fund
development in 2022? 3. It has been Relations Activities for
28 February Midea Group Management, Great Wall Fund,
By phone Institution noted that the Company's Building 28 February 2023
2023 HQ BNB Wealth Management, HSBC
Technology Division and Industrial disclosed on
Jintrust Fund Management, www.cninfo.com.cn
Technology Business Group participated
Zhong Ou Asset, Ping An Asset
in the 2023 AHR Expo. Could you
Management, China Universal
please provide some information about
this?
Pengyang Asset Management,
CITIC Securities, Orient Fund 1. Midea Building Technology Division
Management, Dajia Asset recently held the second TRUE Log Sheet of Investor
Management, Franklin Templeton Conference for Building Technology. Relations Activities for
Midea Group
17 March 2023 By phone Institution Sealand Fund Management, What are the new changes? 2. What are 17 March 2023
HQ
Generali China Asset the recent developments in cooperation disclosed on
between the Company and external www.cninfo.com.cn
Management, Tianhong Asset
Management, Gfund institutions?
Management, China Securities
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The 2023 Annual Report of Midea Group Co., Ltd.
Capital Management, Taikang
Asset, Minsheng Royal Asset
Management, Bosera Funds,
Bosera Funds
1. Questions for Mr. Fang Hongbo:
Regarding the acquisition of WDM, how
will you position WDM in the market and
within the Midea Group? What effects
does Midea hope to achieve through the
acquisition of WDM? 2. In 2022, the
main business gross profit margin was
25.1%, compared to 23.7% in 2021,
which increased significantly. What are
the main reasons for this increase? Is it
due to product price increases or
decreases in raw material prices? 3.
Please introduce the research and
development situation and future plans
of Midea Group. 4. The significant
increase in dividends in 2022 is because Log Sheet of Investor
Midea Group https://m.jhbs Institution and the Company's short-term cash flow Relations Activities for 6
6 May 2023 The Company's investors
HQ how.com/ individual situation is good or because there are May 2023 disclosed on
very good expectations for the future? 5. www.cninfo.com.cn
What is the development situation of
Midea in the field of cleaning
appliances? 6. In the continuous
expansion process of the ToB business
field, what are the key points of the
Company's development? 7. What were
the EBIT of KUKA and KUKA China in
2022? Thank you. 8. In Q4 2022, part of
the operating costs were adjusted to
selling expenses, resulting in a
significant year-on-year change in gross
profit margin. Has there been a change
in the new revenue criteria for
transportation and installation
expenses? Will this adjustment also
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occur in 2023? etc.
Wellington Management
Hongkong Limited, Morgan Stanly
Asia Limited, Fubon Fund 1. What are the Company's current
Management (Hong Kong) development status and future
Limited, PineBridge Investments development plans for high-end brands?
Asia Limited, Great Wall Fund 2. What progress has the Building
Management Limited, Haitong Technology Division made in
International Securities Limited, implementing the "Dual Carbon" Log Sheet of Investor
Midea Group Relations Activities for
13 June 2023 By phone Institution Industrial Securities International strategy and promoting the "Digitization"
HQ 13 June 2023 disclosed
Asset Management Limited, D. E. process? 3. What new initiatives has the on www.cninfo.com.cn
Shaw Investment Management Company taken in practicing corporate
(Shanghai) Limited, WT social responsibility and promoting
AssetManagement Limited, sustainable development? 4. What
Neuberger Berman Asia Limited, recent breakthroughs has the Company
T.Rowe Price HongKong Limited, made in the medical field?
Balyasny Asset Management
(Hong Kong) LTD
Capital Investment, Foresight 1. What are the Company's new
Fund, Morgan Stanley Huaxin initiatives in promoting smart
Log Sheet of Investor
Fund, New China Pension, Value manufacturing? 2. What new progress
Midea Group Relations Activities for
18 July 2023 By phone Institution Partners, New Thinking has the Company made in its "Global
HQ 18 July 2023 disclosed
Investment Management, China Impact" strategy this year? 3. What new on www.cninfo.com.cn
Asset Management, China collaborations has the Company
Merchants Securities Asset engaged in within the automotive parts
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The 2023 Annual Report of Midea Group Co., Ltd.
Management, BlackRock Asset sector? 4. What recent advancements
Management, Foresea Life has the Company made in the medical
Insurance, Golden Trust field?
Investment Management, Harvest
Fund, Bosera Funds, China Life
Insurance, Guotai Junan
Securities Asset Management,
BNB Wealth Management, HZ
Bank Wealth Management
Wideview Asset Management,
Dacheng Fund
1. Please introduce the development
situation and highlights of Midea
Group's ToB business in the first half of
the year. 2. What are the main new
products planned by Midea in the next
stage? 3. a) Will the high growth of air
conditioning this year affect demand
next year? b) What are the company's
sales growth expectations for the next 5
years? c) Has the Company's goal of Log Sheet of Investor
https://rs.p5w achieving a trillion-dollar target by 2027 Relations Activities for
19 September Midea Group Institution and
.net/html/134 The Company's investors in Building Technology and Industrial 19 September 2023
2023 HQ individual
915.shtml Technology business units changed? 4. disclosed on
Since the acquisition of CLOU www.cninfo.com.cn
Electronics by the Company, has the
operating performance of CLOU
Electronics improved from losses? Has
there been any improvement in the
ability to obtain energy storage orders?
No improvement. 5. How does Midea
plan to advance amidst the trend of
smartification? 6. How is the progress of
the investment in Hiconics? etc.
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The 2023 Annual Report of Midea Group Co., Ltd.
China Asset Management, China
Southern Asset Management,
Morgan Stanley, Ping An Fund
1. What are the reasons for the
Management, Zhongrong Fund,
Company's listing in Hong Kong? What
Foresea Life Insurance, Bosera
is the proportion of issuance? 2. What
Funds, Great Wall Fund, Log Sheet of Investor
are the latest achievements of the
Penghua Fund, E Fund, GF Fund Relations Activities for
16 November Midea Group Company in digital transformation? 3.
By phone Institution Management, Orient Securities 16 November 2023
2023 HQ How is KUKA advancing in the
Asset Management, Bank of disclosed on
integration and expansion of resources www.cninfo.com.cn
Communications Schroder Fund
in the Chinese market? 4. What are the
Management, Huatai-PineBridge
new developments in the Company's
Investments, AEGON-
global layout in the energy storage field?
INDUSTRIAL Fund, Foresight
Fund, Green Court, Canada
Pension
Penghua Fund, China Merchants
Fund, Ping An Fund
1. What new initiatives has the
Management, China Southern Log Sheet of Investor
Company taken in overseas expansion?
Asset Management, Baoying Relations Activities for
18 December Midea Group 2. What new progress has the Company
By phone Institution Fund Management, Springs 18 December 2023
2023 HQ made in smart manufacturing? 3. What
Capital, Great Wall Fund, disclosed on
achievements has Midea made in www.cninfo.com.cn
Wellington Fund, Dacheng Fund,
product carbon footprint management?
Invesco Great Wall Fund
Management
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The 2023 Annual Report of Midea Group Co., Ltd.
Section IV Corporate Governance
1. Basic Situation of Corporate Governance
Any incompliance with the applicable laws, administrative regulations, and regulations issued by the
CSRC governing the governance of listed companies
□Yes √No
No such cases in the Reporting Period.
The Company is constantly improving its corporate governance in strict accordance with the Company
Law, the Securities Law and the relevant regulations of the China Securities Regulatory Commission.
There are five special committees under the Board, namely the Strategy Committee, the Audit
Committee, the Nomination Committee, the Remuneration and Appraisal Committee, as well as the
ESG Committee. They were designed to provide consultation and advice to the Board and validate the
professionalization and efficiency of discussions and decision-making. The Company has established
clear rules of procedure for its shareholders' meeting, board of directors, Supervisory Committee and
special committees under the board, as well as the Work Rules for Company Secretary. It has also
established a set of standard documents including Information Disclosure Management System, Funds
Raising Management System, Connected Transaction Management System, Wealth Management
Entrustment Management System, Insider Registration System, External Guaranty Decision-making
System, Foreign Investment Management System, and Management System for Finance Flow with
Connected Parties, Internal Auditing System. The shareholders' meeting, the Board of Directors, the
Supervisory Committee and operations management departments have clear authority and
responsibility. Each performs its own functions and maintains its stability effectively. Their scientific
decision-making and coordinated operations have laid a firm foundation for the sustained, healthy and
steady development of the Company.
The Company has also launched core management team shareholding plans and equity incentive
plans for core research, quality control, technical, production and management staff, which helps to
develop a sound shareholding structure for the future growth of the Company.
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The 2023 Annual Report of Midea Group Co., Ltd.
2. Independence of assets, personnel, finance, organizations and businesses which
are separate from the controlling shareholder and the actual controller
The Company is totally autonomous with respect to business, personnel, assets, organizations, and
finance from Midea Holding Co., Ltd., the controlling shareholder of the Company, therefore
maintaining integrity and independency in both business and operations.
2.1 Business independence:
The Company has a complete industrial chain for its manufacturing business, a completely distinct
purchase and sales system, and an independent and comprehensive business operation capability.
2.2 Personnel independence:
The Company is completely autonomous from the controlling shareholder regarding its personnel. The
labor, personnel and remuneration management of the company are totally unrelated. All senior
management members received remuneration from the Company except those that hold only a
director’s position in the controlling shareholder.
2.3 Asset integrity:
The Company has its own independent production system as well as ancillary production systems and
facilities. Intangible assets such as industrial rights, trademark ownership and non-patent technology
are held by the Company.
2.4 Organization independence:
The Company has set up an independent organizational structure which maintains its independent
operation. The Company has the right to appoint or remove any personnel so there is no overlapping
with the controlling shareholder.
2.5 Financial independence:
The Company's financial management is independent from the controlling shareholder. The Company
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The 2023 Annual Report of Midea Group Co., Ltd.
has its own accounting department, accounting system, financial management system, and bank
accounts and independently makes financial decisions and pays its own taxes according to relevant
laws.
3. Horizontal Competition
□Applicable √N/A
4. Annual and Extraordinary General Meetings of Shareholders Convened during
the Reporting Period
4.1 General meetings of shareholders convened during the Reporting Period
Investor
Meeting Type participation Convened date Disclosure date Disclosure index
ratio
First
Extraordinary
Announcement No.
General
Extraordinary 56.9880% 6 January 2023 7 January 2023 2023-001, disclosed on
Meeting of
www.cninfo.com.cn
Shareholders
of 2023
2022 Annual
Announcement No.
General
Annual 57.7129% 19 May 2023 20 May 2023 2023-026, disclosed on
Meeting of
www.cninfo.com.cn
Shareholders
Second
Extraordinary
Announcement No.
General
Extraordinary 57.8273% 13 July 2023 14 July 2023 2023-057, disclosed on
Meeting of
www.cninfo.com.cn
Shareholders
of 2023
Third
Extraordinary
Announcement No.
General
Extraordinary 58.2956% 11 October 2023 12 October 2023 2023-082, disclosed on
Meeting of
www.cninfo.com.cn
Shareholders
of 2023
4.2 Extraordinary general meetings of shareholders convened at the request of preference
shareholders with resumed voting rights
□Applicable √N/A
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The 2023 Annual Report of Midea Group Co., Ltd.
5. Directors, Supervisors and Senior Management
5.1 General information
Shares Shares
Shares held Shares held Reason
Starting Ending increased decreased Other
Incumbent/ at the year- at the for
Name Gender Age Office title date of date of in the in the increase/decrease
Former begin period-end share
tenure tenure period period (share)
(share) (share) changes
(share) (share)
Chairman of
Fang
Male 56 the Board Incumbent 2012/8/25 2024/9/16 116,990,492 116,990,492
Hongbo
and CEO
He
Male 56 Director Incumbent 2012/8/25 2024/9/16 0 0
Jianfeng
Director and
Gu
Male 60 Vice Incumbent 2014/4/21 2024/9/16 0 0
Yanmin
President
Director and
Wang
Male 47 Vice Incumbent 2021/9/17 2024/9/16 0 0
Jianguo
President
Director Incumbent 2023/7/13 2024/9/16
Fu
Male 55 Vice 200,000 200,000
Yongjun Incumbent 2021/9/17 2024/9/16
President
Yu
Male 64 Director Incumbent 2018/9/26 2024/9/16 0 0
Gang
Xue Independent
Male 59 Incumbent 2018/9/26 2024/9/16 179,914 179,914
Yunkui Director
Guan Independent
Male 46 Incumbent 2018/9/26 2024/9/16 0 0
Qingyou Director
Han Independent
Female 51 Incumbent 2018/9/26 2024/9/16 0 0
Jian Director
Chairman of
Dong the
Male 38 Incumbent 2020/10/16 2024/9/16 0 0
Wentao Supervisory
Committee
Zhao Male 48 Supervisor Incumbent 2014/4/21 2024/9/16 0 0
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The 2023 Annual Report of Midea Group Co., Ltd.
Jun
Liang Employee
Female 40 Incumbent 2017/3/30 2024/9/16 0 0
Huiming Supervisor
Zhang Vice
Male 50 Incumbent 2018/4/23 2024/9/16 516,575 516,575
Xiaoyi President
Hu Vice
Male 66 Incumbent 2014/8/18 2024/9/16 400,000 400,000
Ziqiang President
Wang Vice
Male 56 Incumbent 2014/8/18 2024/9/16 420,000 -42,000 378,000
Jinliang President
Li Vice
Male 47 Incumbent 2020/7/3 2024/9/16 480,700 -40,000 440,700
Guolin President
Zhao Vice
Male 38 Incumbent 2023/12/26 2024/9/16 102,700 102,700
Lei President
Guan Vice
Male 44 Incumbent 2021/9/17 2024/9/16 535,000 535,000
Jinwei President
Vice
2022/12/1
President
Zhong
Female 42 CFO Incumbent 2022/2/22 2024/9/16 276,152 276,152
Zheng
Director of
2019/3/22
Finance
Chief
Zhao
Female 41 People Incumbent 2022/2/22 2024/9/16 480,000 -36,000 444,000
Wenxin
Officer
Vice
Bai Lin Male 43 Incumbent 2022/5/30 2024/9/16 95,079 95,079
President
Vice
President
Wei
Male 61 and Chief Incumbent 2022/8/29 2024/9/16 0 0
Chang
Technology
Officer
Jiang Board
Male 50 Incumbent 2013/10/30 2024/9/16 518,600 -24,000 494,600
Peng Secretary
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The 2023 Annual Report of Midea Group Co., Ltd.
Indicate whether any director, supervisor or senior management resigned before the expiry of their
tenures during the Reporting Period.
□ Yes √ No
Changes in directors, supervisors and senior management
√Applicable □N/A
Name Office title Type of change Date Reason
Fu Yongjun Director Elected 2023/7/13 -
Wei Chang Vice President Appointed 2023/12/27 -
Zhao Lei Vice President Appointed 2023/12/27 -
5.2 Brief biographies
Professional backgrounds, main work experience and current responsibilities in the Company of the
incumbent directors, supervisors and senior management
Mr. Fang Hongbo, male, holder of a Master's degree, is the Chairman of the Board and CEO of Midea
Group. He joined Midea in 1992 and previously served as the General Manager of Midea Air-
Conditioning Division, CEO of Midea Refrigeration Electric Appliances Group, Chairman of the Board
and CEO of GD Midea Holding Co., Ltd., etc.
Mr. He Jianfeng, male, holder of a Bachelor's degree, is a Director of Midea Group. He is also the
Chairman of the Board and President of Infore Group Co., Ltd.
Mr. Gu Yanmin, male, holder of a Doctoral degree, joined Midea in 2000 and has functioned as the
Head of Planning & Investment, Head of Overseas Strategy & Development, Vice President and Head
of Overseas Business Development of Midea Air-Conditioning & Refrigeration Group, Head of
Overseas Strategy of Midea Group. Currently he is a Director and Vice President of Midea Group, the
President of the Robotics & Automation Division, as well as the Chairman of the Supervisory
Committee of KUKA.
Mr. Wang Jianguo, male, a Master’s degree holder, joined Midea in 1999. He was once the Director of
the Supply Chain Management Department of Midea Group’s Residential Air Conditioner Division, the
Director of the Administration and Human Resources Department of Midea Group, and the General
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The 2023 Annual Report of Midea Group Co., Ltd.
Manager of Midea Group’s Refrigeration Division. Currently, he is a Director and Vice President of
Midea Group, the President of the Smart Home Business Group, and the President of Midea
International Business, in addition to being in charge of the TLSC Division, and legal affairs.
Mr. Fu Yongjun, male, holder of a Master’s degree, joined Midea in 1999 and previously worked as the
General Manager of Midea Environment Appliances Division, the General Manager of Midea
Component Division, and the President of Midea Electromechanical Division. He is now a Director, Vice
President, and the President of the Energy Solutions and Industrial Technology Business Group, of
Midea Group.
Mr. Yu Gang, male, holder of a Doctoral degree given by the Wharton School of the University of
Pennsylvania, is the Honorary Chairman and a co-founder of YHD.COM. He once served as the Global
Supply Chain Vice President of Amazon and the Global Procurement Vice President of Dell. He is now
a Director of Midea Group, as well as a co-founder and a Co-Chairman of the Board of Directors of 111,
Inc.
Mr. Xue Yunkui, male, is a holder of a Doctoral degree given by the Southwest University and a holder
of a Post-Doctoral degree given by the Shanghai University of Finance and Economics. He used to be
the associate dean and a doctoral supervisor at the School of Accountancy of Shanghai University of
Finance and Economics, a Founding Vice President of Shanghai National Accounting Institute and
Cheung Kong Graduate School of Business, the Secretary-General of China Association of Accounting
Professors, a Vice Chairman of the Steering Committee of the National Accounting Institute under the
Ministry of Finance, etc. He is now an accounting professor of Cheung Kong Graduate School of
Business, and an Independent Director of Midea Group.
Mr. Guan Qingyou, male, obtained a PhD degree in economics from Chinese Academy of Social
Sciences ("CASS") and Post-doctoral degree from Tsinghua University. He previously worked as
Program Director at the Institute for Contemporary China Studies, Tsinghua University, Division Chief of
the main office of China National Offshore Oil Corporation, Vice President of Minsheng Securities Co.,
Ltd., and Head of Minsheng Securities Research Institute. Other positions currently held by him include
Dean of Reality Institute of Advanced Finance, professor at School of Economics, Hainan University,
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The 2023 Annual Report of Midea Group Co., Ltd.
Chairman of China Institute of Private Sector, Director of China Society of Economic Reform, member
of APEC China Business Council Digital Economy Committee, Chief Economic Advisor of China
Fortune Securities, independent director of Midea Group Co. Ltd., Nanhua Futures Co., Ltd., Hangzhou
Hikvision DIGITAL Technology Co., Ltd., Shaanxi International Trust Co., Ltd., and Ucap Cloud
Information Technology Co., Ltd., and member of the Fiscal Reform and Development Think Tank
under the Ministry of Finance, Academic Committee of China Center for Urban Development under the
National Development and Reform Commission, and Expert Advisory Committee on Industrial
Economic Operation under the Ministry of Industry and Information Technology ("MIIT").
Ms. Han Jian, female, holder of a Doctoral degree given by the Cornell University, is a professor of
management in China Europe International Business School, a specialist of the World Economic
Forum, as well as an Independent Director of Midea Group.
Mr. Dong Wentao, male, a Master's degree graduate, joined Midea in 2016. And he once served in the
Legal Affairs Department, the Investor Relations Department, etc. of Midea Group, with over 10 years
of experience in legal affairs, risk control, market value management, capital operation, etc. He is now
the Chairman of the Supervisory Committee.
Mr. Zhao Jun, male, a Master's degree graduate, joined Midea in 2000 and has functioned as the
Director and the CFO of GD Midea Holding Co., Ltd. He is now a Supervisor of Midea Group, the
Executive President in Midea Holding Co., Ltd., as well as a Non-Executive Director of Midea Real
Estate Holding Limited.
Ms. Liang Huiming, female, is a holder of a Bachelor’s degree. Joining Midea in 2007, she used to
serve as the Chief Business Administration Commissioner in Midea Group’s Administration and Human
Resources Department. She is now the Chief Legal Entity Management Commissioner of the Investor
Relations Department and the Employee Supervisor of Midea Group.
Mr. Guan Jinwei, male, holder of a Master’s degree, joined Midea in 2002 and previously worked as
the Deputy General Manager of the Commercial Air Conditioner Division and the General Manager of
an overseas marketing company of Midea Group, as well as an Assistant to the President of Midea
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The 2023 Annual Report of Midea Group Co., Ltd.
International and the General Manager for the ASEAN region, among others. He is now a Vice
President, and the President of the Building Technologies Division, of Midea Group.
Mr. Bai Lin, male, holder of a Bachelor’s degree, joined Midea in 2002. He once served as the Asia
Pacific General Manager of the Refrigeration Group, the General Manager of the overseas marketing
company of the Refrigerator Division, the General Manager of the domestic marketing company of the
Refrigerator Division, and the President of the Refrigerator Division. And he is now a Vice President
and the China President of Midea Group.
Mr. Zhao Lei, male, holder of a Master’s degree, joined Midea Group in 2011. He used to serve as the
North China Director of the Residential Air Conditioner Division, China Retail Director, the General
Manager of the domestic marketing company of the Laundry Appliance Division, and President of the
Laundry Appliance Division. And he is now a Vice President of Midea Group and the President of its
Residential Air Conditioner Division.
Ms. Zhong Zheng, female, holder of a Master’s degree, joined Midea in 2002. She once was the
Director of Finance of the Financial Center and the Component Division, as well as the Audit Director of
Midea Group, etc. She is now a Vice President as well as the CFO and Director of Finance of Midea
Group.
Mr. Zhang Xiaoyi, male, is a holder of a Master’s degree. Joining Midea Group in 2010, he used to
serve as the head of the overseas process IT system, the head of the supply chain system, and the IT
Director of Midea Group, etc. He is now a Vice President and the CDO of Midea Group.
Mr. Li Guolin, male, holder of a Master’s degree, joined Midea in 1998 and previously worked as a
Vice President of the Residential Air Conditioner Division, and the President of the Small Domestic
Appliance Division of Midea Group. He is now a Vice President, CSO, and the Director of Quality and
Supply Chain of Midea Group.
Mr. Hu Ziqiang, male, holder of a Doctoral degree, joined Midea in 2012, and has formerly worked for
GE and Samsung and as a Vice GM in Wuxi Little Swan Co., Ltd. At present he is a Vice President of
Midea Group, in addition to being the Chairman of the Board of Beijing Wandong Medical Technology
130
The 2023 Annual Report of Midea Group Co., Ltd.
Co., Ltd., a listed company subordinate to Midea Group.
Mr. Wang Jinliang, male, holder of a Master’s degree, joined Midea in 1995 and previously worked as
the Vice President of China Marketing in Midea Group, and was GD Midea Holding’s Vice President
and Marketing Head. He is now a Vice President of Midea Group.
Mr. Wei Chang, male, holder of a Doctoral degree, joined Midea in 2022. He used to be the Technical
Director for Water Treatment and Polymers at the Global R&D Centre and the Greater China General
Manager for Water Treatment Products at General Electric. He also served as the Director of the
National Institute of Clean and Low-Carbon Energy of CHN Energy from 2014 to 2022. Currently, he is
a Vice President and the Chief Technology Officer of Midea Group.
Ms. Zhao Wenxin, female, holder of a Master’s degree, joined Midea in 2004. She used to be a
Deputy General Manager and the Overseas Marketing General Manager of the Residential Air
Conditioner Division in Midea Group, a Vice President of Midea International, etc. Currently, she is the
Chief People Officer and Director of Human Resources of Midea Group.
Mr. Jiang Peng, male, holder of a Master’s degree, joined Midea in 2007 and used to be the
Representative for Securities Affairs and Board Secretary for GD Midea Holding Co., Ltd. He is now the
Board Secretary and Director of Investor Relations of Midea Group.
Posts held in shareholding entities
√Applicable □N/A
Beginning Allowance from
Ending date of
Name Shareholding entity Position date of office the shareholding
office term
term entity
He Jianfeng Midea Holding Co., Ltd. President 2016-01 - No
Zhao Jun Midea Holding Co., Ltd. Executive President 2020-03 - Yes
Note N/A
Posts held in other entities
√Applicable □N/A
Beginning date Ending date of Allowance from
Name Other entity Position
of office term office term the entity
131
The 2023 Annual Report of Midea Group Co., Ltd.
Chairman of the
He Jianfeng Infore Group Co., Ltd. Board and 1995-06 - Yes
President
Executive
111, Inc. Chairman of the 2011-04 - Yes
Board
Yu Gang
Executive
Zall Smart Commerce Group Ltd. Director and 2015-08 - Yes
Co-Chairman
Independent
Ouyeel Co., Ltd. 2022-08 2025-08 Yes
Director
Zhuhai Wanda Commercial Independent
Xue Yunkui 2021-03 2024-03 Yes
Management Group Co., Ltd. Director
Independent
Bank of Shanghai Co., Ltd. 2021-01 2024-01 Yes
Director
Beijing Rushi Research Information Chairman of the
2017-12 - Yes
Consulting Service Co., Ltd. Board
Independent
Shaanxi International Trust Co., Ltd. 2022-07 2025-07 Yes
Director
Independent
Guan Qingyou Nanhua Futures Co., Ltd. Director
2019-02 2025-02 Yes
Ucap Cloud Information Technology Independent
2022-09 2025-09 Yes
Co., Ltd. Director
Hangzhou Hikvision Digital Independent
2021-03 2024-03 Yes
Technology Co., Ltd. Director
Note N/A
Punishments imposed in the recent three years by the securities regulators on the incumbent directors,
supervisors and senior management as well as those who left in the Reporting Period
□Applicable √N/A
5.3 Remuneration of directors, supervisors and senior management
The following describes the decision-making procedures, grounds on which decisions are made and
actual remuneration payment of directors, supervisors and senior management.
The decision-making remuneration procedure for directors, supervisors and senior management: The
remuneration is proposed by the Board Remuneration Committee and approved by the Board.
Decisions are made finally after the deliberation of shareholders' meeting.
The remuneration of directors, supervisors and senior management consist of basic annual payments
and performance-related annual payments according to the Salary Management System for the
Directors, Supervisors and Senior Management which has been approved by the Company. Basic
payment is determined based on the responsibility, risk and pressure of directors, supervisors and
senior management. The basic annual payment remains stable. Performance-related annual payment
132
The 2023 Annual Report of Midea Group Co., Ltd.
is related to the completion rate of corporate profit, the assessment result of target responsibility
system and the performance evaluation structure of their own department. The remuneration system
for directors, supervisors and senior management serves the Company's strategy, and shall be
adjusted with the Company's operating conditions in order to meet the Company’s development
requirements. The basis for adjusting the remuneration of directors, supervisors and senior
management are as follows:
a. Wage growth in the industry
b. Inflation
c. Corporate earnings
d. Organizational structure adjustment
e. Individual adjustment due to a change in position
Remuneration of directors, supervisors and senior management during the Reporting Period
Unit: RMB'000
Total before-tax Remuneration
Incumbent/ remuneration from related
Name Position Gender Age
Former from the parties of the
Company Company
Chairman of the Board
Fang Hongbo Male 56 Incumbent 13,540
and CEO
He Jianfeng Director Male 56 Incumbent 0 Yes
Director and Vice
Gu Yanmin Male 60 Incumbent 9,880
President
Director and Vice
Wang Jianguo Male 47 Incumbent 11,430
President
Director and Vice
Fu Yongjun Male 55 Incumbent 11,540
President
Yu Gang Director Male 64 Incumbent 450
Xue Yunkui Independent Director Male 59 Incumbent 450
Guan Qingyou Independent Director Male 46 Incumbent 450
Han Jian Independent Director Female 51 Incumbent 450
Chairman of the
Dong Wentao Male 38 Incumbent 960
Supervisory Committee
133
The 2023 Annual Report of Midea Group Co., Ltd.
Zhao Jun Supervisor Male 48 Incumbent 0 Yes
Liang Huiming Employee Supervisor Female 40 Incumbent 420
Guan Jinwei Vice President Male 44 Incumbent 11,780
Zhao Lei Vice President Male 38 Incumbent 15,480
Vice President, CFO and
Zhong Zheng Female 42 Incumbent 9,450
Director of Finance
Bai Lin Vice President Male 43 Incumbent 10,090
Zhang Xiaoyi Vice President Male 50 Incumbent 7,990
Hu Ziqiang Vice President Male 66 Incumbent 3,350
Li Guolin Vice President Male 47 Incumbent 6,490
Wang Jinliang Vice President Male 56 Incumbent 6,060
Vice President and Chief
Wei Chang Male 61 Incumbent 7,730
Technology Officer
Zhao Wenxin Chief People Officer Female 41 Incumbent 6,350
Jiang Peng Board Secretary Male 50 Incumbent 3,360
Total -- -- -- -- 137,700 --
Other information
□Applicable √N/A
6. Activities of Directors during the Reporting Period
6.1 Board meetings convened during the Reporting Period
Meeting Convened date Disclosure date Resolutions
See the Announcement on Resolutions of the 15th
Meeting of the Fourth Board of Directors
The 15th Meeting
(Announcement No. 2023-008), which has been
of the Fourth 27 April 2023 29 April 2023
disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 29 April 2023
See the Announcement on Resolutions of the 16th
Meeting of the Fourth Board of Directors
The 16th Meeting
(Announcement No. 2023-029), which has been
of the Fourth 20 June 2023 21 June 2023
disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 21 June 2023
See the Announcement on Resolutions of the 17th
Meeting of the Fourth Board of Directors
The 17th Meeting
(Announcement No. 2023-061), which has been
of the Fourth 21 July 2023 22 July 2023
disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 22 July 2023
See the Announcement on Resolutions of the 18th
The 18th Meeting Meeting of the Fourth Board of Directors
of the Fourth 28 July 2023 29 July 2023 (Announcement No. 2023-065), which has been
Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and Shanghai
134
The 2023 Annual Report of Midea Group Co., Ltd.
Securities News dated 29 July 2023
See the Announcement on Resolutions of the 19th
Meeting of the Fourth Board of Directors
The 19th Meeting
(Announcement No. 2023-071), which has been
of the Fourth 9 August 2023 10 August 2023
disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 10 August 2023
The 20th Meeting The Semi-Annual Report 2023, together with its
of the Fourth 30 August 2023 - summary, was approved with nine affirmative votes, 0
Board of Directors negative notes and 0 abstentions.
See the Announcement on Resolutions of the 21st
Meeting of the Fourth Board of Directors
The 21st Meeting
18 September 19 September (Announcement No. 2023-074), which has been
of the Fourth
2023 2023 disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 19 September 2023
See the Announcement on Resolutions of the 22nd
Meeting of the Fourth Board of Directors
The 22nd Meeting
(Announcement No. 2023-084), which has been
of the Fourth 30 October 2023 31 October 2023
disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 31 October 2023
See the Announcement on Resolutions of the 23rd
Meeting of the Fourth Board of Directors
The 23rd Meeting
26 December 27 December (Announcement No. 2023-091), which has been
of the Fourth
2023 2023 disclosed on http://www.cninfo.com.cn, China
Board of Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 27 December 2023
6.2 Attendance of directors in Board meetings and meetings of shareholders
Attendance of directors in Board meetings and meetings of shareholders
Presence
due at Presence Absence
Presence
Board Presence at Board at Board Absence from Board Presence at
at Board
meetings in meetings by meetings from Board meetings meetings of
Director meetings
the telecommunication through a meetings for two shareholders
on site
Reporting (times) proxy (times) consecutive (times)
(times)
Period (times) times
(times)
Fang
9 1 8 0 0 No 4
Hongbo
He
9 1 8 0 0 No 0
Jianfeng
Fu Yongjun 9 1 8 0 0 No 0
Gu Yanmin 9 1 8 0 0 No 0
Wang
9 1 8 0 0 No 0
Jianguo
Yu Gang 9 1 8 0 0 No 0
Xue Yunkui 9 1 8 0 0 No 0
Guan
9 1 8 0 0 No 1
Qingyou
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The 2023 Annual Report of Midea Group Co., Ltd.
Han Jian 9 1 8 0 0 No 0
6.3 Objections from directors on related issues of the Company
Were there any objections on related issues of the Company from directors
□Yes √No
No such cases in the Reporting Period.
6.4 Other information about the activities of directors
Were there any suggestions from directors adopted by the Company
√Yes □No
During the Reporting Period, in line with the Company Law, the Securities Law, the Rules for Stock
Listing of Shenzhen Stock Exchange, and other relevant laws and regulations, as well as the Articles of
Association, and the Rules of Procedure of the Board of Directors, directors of the Company actively
paid attention to the Company's production, operation, financial position, and the effects resulting from
the changes in the economic status on the Company, vetted miscellaneous information reports
provided by the Company in a timely manner, and voiced opinions and exercised their power at the
Board of Directors. In addition, they supervised and checked the information disclosure of the
Company and fulfilled the duties of directors faithfully and conscientiously. Based on the Company's
reality, they put forward relevant opinions and suggestions about corporate governance and operating
decisions, as well as supervised and promoted the execution and implementation of the resolutions of
the Board of Directors to ensure scientific, timely, and efficient decision-making and safeguard the
legitimate rights and interests of the Company and all shareholders.
7. Activities of Special Committees under the Board of Directors during the
Reporting Period
Substantial
Number
opinion Other
of Convened
Committee Members Topics and inform
meetings date
recommen ation
convened
dations
Xue The following proposals were approved:
Yunkui, The 2022 Annual Report and Its
Audit
Guan 4 2023-4-27 Summary, The Interim Report for the - -
Committee
Qingyou, First Quarter 2023, and The Proposal on
Han Re-appointment of CPA Firm.
136
The 2023 Annual Report of Midea Group Co., Ltd.
Jian, and The 2023 Semi-Annual Report and Its
Yu Gang 2023-8-30 - -
Summary was approved.
The Proposal on the Engagement of
2023-9-18 Independent Auditor for the Issuance and - -
Listing of the H-stock was approved.
2023-10- The Interim Report for the Third Quarter
- -
30 2023 was approved.
Guan The Proposal on Addition of Non-
2023-4-27 - -
Qingyou, Independent Director was approved.
Yu
The Proposal on Addition of Independent
Nomination Gang,
3 2023-9-18 Director for the Fourth Board of Directors - -
Committee Xue
was approved.
Yunkui,
and Han 2023-12- The Proposal on Appointment of Vice
Jian - -
26 President was approved.
The following proposals were approved:
The Remuneration Payment Standards
for Directors, Supervisors and Senior
Management for 2022, The Proposal on
2023-4-27 - -
the 2023 Restricted Share Incentive
Scheme (Draft) and Its Summary, and
The 2023 Stock Ownership Scheme
(Draft) of Midea Group Co., Ltd.
The following proposals were approved:
The Proposal on Matters Related to the
Stock Option Exercise for the Fourth
Exercise Period for the First Grant under
the Fifth Stock Option Incentive Scheme,
The Proposal on Matters Related to the
Stock Option Exercise for the Third
Exercise Period for Reserved Stock
Options of the Fifth Stock Option
Incentive Scheme, The Proposal on
Han Matters Related to the Stock Option
Jian, Yu Exercise for the Third Exercise Period of
Gang, the Sixth Stock Option Incentive Scheme,
Remuneration
Xue The Proposal on Matters Related to the
and Appraisal 2
Yunkui, Stock Option Exercise for the Third
Committee
and Exercise Period of the Seventh Stock
Guan Option Incentive Scheme, The Proposal
Qingyou on the Satisfaction of Unlocking
2023-6-20 - -
Conditions for the Fourth Unlocking
Period for the First Grant under the 2018
Restricted Share Incentive Scheme, The
Proposal on the Satisfaction of Unlocking
Conditions for the Third Unlocking Period
for Reserved Restricted Shares under
the 2018 Restricted Share Incentive
Scheme, The Proposal on the
Satisfaction of Unlocking Conditions for
the Third Unlocking Period of the 2019
Restricted Share Incentive Scheme, The
Proposal on the Satisfaction of Unlocking
Conditions for the Third Unlocking Period
of the 2020 Restricted Share Incentive
Scheme, and The Proposal on Unmet
Unlocking Conditions for the First
Unlocking Period of the 2021 Restricted
Share Incentive Scheme.
ESG Li The 2022 ESG Report of Midea Group
Guolin, 1 2023-4-27 - -
Committee was approved.
Zhong
137
The 2023 Annual Report of Midea Group Co., Ltd.
Zheng,
Zhao
Wenxin,
Jiang
Peng,
and Zhi
Shuai
8. Activities of the Supervisory Committee
Were there any risks to the Company identified by the Supervisory Committee when performing its
duties during the Reporting Period
□Yes √No
The Supervisory Committee of the Company had no objection to the matters of supervision during the
Reporting Period.
9. Employees
9.1 Number, functions and educational backgrounds of employees
Number of in-service employees of the Company at the period-end 961
Number of in-service employees of main subsidiaries at the period-end 197,652
Total number of in-service employees at the period-end 198,613
Total number of paid employees in the period 198,613
Number of retirees to whom the Company or its main subsidiaries need to pay
2,353
retirement pension
Functions
Function Number of employees
Production 154,046
Sales 14,063
Technical 23,242
Financial 2,762
Administrative 4,500
Total 198,613
Educational backgrounds
Educational background Number of employees
Master’s and doctoral degrees 7,252
Bachelor’s degree 31,265
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The 2023 Annual Report of Midea Group Co., Ltd.
Other 160,096
Total 198,613
Note: “Other” under “Educational backgrounds” in the table above includes personnel under privacy
protection.
9.2 Remuneration policy
Remunerations for employees are paid on time according to the remuneration system of the Company.
The Company decides the regular salaries of the employees according to the position’s value and
evaluation performances and decides the variable salary according to the Company's and employee’s
performance. The remuneration distribution shows more consideration for strategic talent and ensures
the market competitiveness in the salary of core talent. The Company shall make dynamic adjustments
to the staff remuneration policy according to regional differences, number of employees, staff turnover,
environment changes in the industry and paying ability of the Company.
9.3 Employee training
Focused on building the “Employee Growth Platform + Strategy Facilitation Platform + Knowledge
Management Platform”, Midea Academy consists of the Leadership Empowerment Center, the
Professionalism Empowerment Center, the Globalization Empowerment Center, and the Newcomer
Empowerment Center, in addition to a professional online learning platform—M-Learning, which
motivates employees to learn on their own through special learning courses and practical learning
functions. Meanwhile, Midea is building an offline three-tier empowerment system, linking the Group-
business units-departments, to comprehensively develop the job knowledge and skills required by
employees at each stage, taking into account personal development and corporate needs, and
supporting the learning and growth of all Midea employees.
Newcomer Empowerment Center: It provides new employees with onboarding training and
specialized position skill training or coaching. Through projects such as campus recruitment graduate
training camps, Jumei, Huimei, Chuangmei, etc., it helps new employees become familiar with
corporate culture and values, and accelerates their integration into a new environment. During the
Reporting Period, a total of 308 projects were carried out, with a total of 41,537 participations by
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The 2023 Annual Report of Midea Group Co., Ltd.
employees and a cumulative training time of 112,149.9 person-hours.
Leadership Empowerment Center: Around the management cadres talent training system, it
establishes a mature cadre training model, including the Sailor Project, the Voyager Project, the
Explorer Project and the Pilot Project, which are aimed at training talents in the middle and senior
management echelons. During the Reporting Period, a total of 55 cadre training projects were
promoted, with a total of 131,458 participations by employees and a cumulative training time of
199,595.30 person-hours.
Globalization Empowerment Center, Intelligent Manufacturing Empowerment Center, and Digital
Professional Empowerment Center: Based on Midea's strategy and business characteristics,
promote the diversified development of global talents and help industrial skill workers and R&D,
manufacturing, information technology, and other professional talents improve their skills. During the
Reporting Period, a total of 27 special empowerment projects were carried out by Media based on
actual business needs.
We encourage employees to learn autonomously and establish the M-Learning platform to
comprehensively help employees improve their professional capabilities. The M-Learning platform has
now formed a comprehensive integration of online learning, online exams, online live broadcasts,
learning journeys, and offline face-to-face teaching, realizing integrated management functions for
knowledge management, student management, lecturer management, and certificate management. At
the same time, we fully integrate training content on anti-corruption and integrity, environmental health
and safety into the M-Learning platform, require all new employees to carry out comprehensive
learning, and adopt an "online-based, offline-assisted" training mode to strengthen employees'
compliance, health, and safety concepts. (For more detailed content of employee training and
development, please refer to the Company's ESG report 2023).
9.4 Labor outsourcing
□Applicable √N/A
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The 2023 Annual Report of Midea Group Co., Ltd.
10. Profit Distribution and Converting Capital Surplus into Share Capital
The Company has strictly implemented the Shareholder Return Plan for 2022-2024, which specifies the
decision-making process for dividend standards, dividend ratios and profit distribution policies, ensures
a continual and consistent profit distribution policy from the mechanism perspective, and fully protects
the legitimate rights and interests of minority investors.
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, in the
Reporting Period
√Applicable □N/A
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of meeting of shareholders
Specific and clear dividend standards and ratios Yes
Complete decision-making process and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Minority shareholders are able to fully express their opinion and
Yes
desire and their legitimate rights and interests are fully protected
In case of adjusting or altering the cash dividend policy, the
conditions and process involved are in compliance with No adjustment was made to the cash dividend policy.
applicable regulations and transparent
The Company made a profit in the Reporting Period and the profit distributable to shareholders of the
Company (without subsidiaries) was positive, but it did not put forward a preliminary plan for cash
dividend distribution
□Applicable √N/A
Preliminary plan for profit distribution and converting capital surplus into share capital for the Reporting
Period
√ Applicable □ N/A
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax
30
included)
Additional shares converted from capital surplus
0
for every 10 shares (share)
Total shares as the basis for the preliminary
6,920,391,836
plan for profit distribution (share)
Cash dividends (RMB) (tax inclusive) 20,761,175,508
Cash dividends in other forms (such as share
0
repurchase) (RMB)
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The 2023 Annual Report of Midea Group Co., Ltd.
Total cash dividends (inclusive of those in other
20,761,175,508
forms) (RMB) (tax inclusive)
Distributable profits (RMB) 27,901,530,000
Percentage of total cash dividends (inclusive of
those in other forms) in the total distributed profit 100%
(%)
Cash dividend policy adopted
Where the Company is at a mature stage of development and has significant expenditure arrangements, cash
dividends shall account for at least 40% of the total distributed profit when carrying out profit distribution.
Details about the preliminary plan for profit distribution and converting capital surplus into share capital
According to the Auditor’s Report PwC ZT Shen Zi (2024) No. 10017 issued by PricewaterhouseCoopers Zhong Tian
LLP, the parent company realized a net profit of RMB17,326,161,000 for 2023. Plus undistributed profits at the
beginning of the year of RMB27,719,633,000 and minus the profit distributed in the year of RMB17,144,264,000, the
actual distributable profit would be RMB27,901,530,000.
11. Implementation of any Equity Incentive Scheme, Employee Stock Ownership
Scheme or Other Incentive Measures for Employees
√Applicable □N/A
11.1 Equity incentive schemes
Overview of the Fifth Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options in the First Grant under the Fifth
Stock Option Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of
Directors. As such, 79,180 stock options of 21 awardees that had been unexercised upon expiry were
retired.
b. At the above-mentioned meeting, the Proposal for the Retirement of Unexercised Reserved Stock
Options under the Fifth Stock Option Incentive Scheme upon Expiry was approved. As such, 38,500
stock options of four awardees that had been unexercised upon expiry were retired.
c. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. As the 2022 Annual Profit Distribution Plan had been
carried out, the exercise price for the first grant under the Fifth Stock Option Incentive Scheme was
revised from RMB50.21 to RMB47.71 per share, and the exercise price for the reserved stock options
under the said scheme was revised from RMB41.04 to RMB38.54 per share.
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The 2023 Annual Report of Midea Group Co., Ltd.
d. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. It was agreed to adjust the awardees and their exercisable stock options for the first grant
under the Fifth Stock Option Incentive Scheme due to the resignation, substandard business unit
performance, substandard individual performance, reassignment, violation of the Company’s “Red
Lines” or other factors of some awardees. Upon the adjustments, the number of locked-up stock
options for the first grant under the Fifth Stock Option Incentive Scheme was reduced from 9,195,000
to 7,325,333.
e. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Fourth Exercise Period for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. A total of 801 awardees who are eligible for the Fifth Stock Option Incentive Scheme have
been allowed to exercise 7,325,333 stock options in the fourth exercise period (ended 6 May 2024).
f. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Reserved Stock Options under the Fifth Stock Option Incentive
Scheme was approved. It was agreed to adjust the awardee list and their exercisable stock options for
the first grant under the Fifth Stock Option Incentive Scheme due to the resignation, substandard
individual performance, or other factors of some awardees. Upon the adjustments, the number of
locked-up stock options granted to them for the first grant under the Fifth Stock Option Incentive
Scheme was reduced from 9,195,000 to 7,325,333.
g. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Third Exercise Period for the Reserved Stock Options under the Fifth Stock Option Incentive
Scheme was approved. A total of 61 awardees who are eligible for the Fifth Stock Option Incentive
Scheme have been allowed to exercise 860,000 stock options in the third exercise period (ended 8
March 2024).
h. The Proposal for the Retirement of Unexercised Reserved Stock Options under the Fifth Stock
Option Incentive Scheme upon Expiry was approved at the 17th Meeting of the Fourth Board of
Directors. As such, 115,000 stock options of 11 awardees that had been unexercised upon expiry were
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The 2023 Annual Report of Midea Group Co., Ltd.
retired.
During the Reporting Period, 9,554,233 shares were exercised with respect to the first grant under the
Fifth Stock Option Incentive Scheme.
During the Reporting Period, 927,950 shares were exercised with respect to the reserved stock options
under the Fifth Stock Option Incentive Scheme.
Overview of the Sixth Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options under the Sixth Stock Option
Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors. As
such, 40,591 stock options of seven awardees that had been unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. According to the arrangements in the 2022 Annual
Profit Distribution, the exercise price for the Sixth Stock Option Incentive Scheme was revised from
RMB48.04 to RMB45.54 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Sixth Stock Option Incentive Scheme was approved. It was agreed to
adjust the awardees and their exercisable stock options under the Sixth Stock Option Incentive
Scheme due to the resignation, substandard business unit performance, substandard individual
performance, reassignment or other factors of some awardees. Upon the adjustments, the number of
locked-up stock options granted to them under the Sixth Stock Option Incentive Scheme was reduced
from 18,570,000 to 15,830,667.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Third Exercise Period for the Sixth Stock Option Incentive Scheme was approved. A total of 762
awardees who are eligible for the Sixth Stock Option Incentive Scheme have been allowed to exercise
7,339,417 stock options in the third exercise period (ended 29 May 2024).
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The 2023 Annual Report of Midea Group Co., Ltd.
During the Reporting Period, 9,231,056 shares were exercised under the Sixth Stock Option Incentive
Scheme.
Overview of the Seventh Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options under the Seventh Stock Option
Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors. As
such, 55,200 stock options of three awardees that had been unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. According to the arrangements of the 2022 Annual
Profit Distribution, the exercise price for the Seventh Stock Option Incentive Scheme was revised from
RMB47.19 to RMB44.69 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Seventh Stock Option Incentive Scheme was approved. It was
agreed to adjust the awardees and their exercisable stock options under the Seventh Stock Option
Incentive Scheme due to the resignation, substandard business unit performance, substandard
individual performance, reassignment or other factors of some awardees. Upon the adjustments, the
number of locked-up stock options granted to them under the Seventh Stock Option Incentive Scheme
was reduced from 28,680,000 to 20,867,916.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Third Exercise Period for the Seventh Stock Option Incentive Scheme was approved. A total of
1,047 awardees who are eligible for the Seventh Stock Option Incentive Scheme have been allowed to
exercise 20,867,916 stock options in the third exercise period (ended 4 June 2024).
During the Reporting Period, 18,776,931 shares were exercised under the Seventh Stock Option
Incentive Scheme.
Overview of the Eighth Stock Option Incentive Scheme
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The 2023 Annual Report of Midea Group Co., Ltd.
a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes
was approved at the 16th Meeting of the Fourth Board of Directors. According to the arrangements in
the 2022 Annual Profit Distribution, the exercise price for the Eighth Stock Option Incentive Scheme
was revised from RMB79.74 to RMB77.24 per share.
b. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Eighth Stock Option Incentive Scheme was approved. It was agreed
to adjust the awardee list and their exercisable stock options under the Eighth Stock Option Incentive
Scheme due to the resignation, unmet exercise conditions, violation of the Company’s “Red Lines” or
other factors of some awardees. Upon the adjustments, the number of locked-up stock options granted
to them under the Eighth Stock Option Incentive Scheme was reduced from 81,740,000 to 45,785,250.
Overview of the Ninth Stock Option Incentive Scheme
a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes
was approved at the 16th Meeting of the Fourth Board of Directors. According to the arrangements in
the 2022 Annual Profit Distribution, the exercise price for the Ninth Stock Option Incentive Scheme was
revised from RMB54.61 to RMB52.11 per share.
Overview of the 2018 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors
and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it
was agreed to repurchase and retire 218,958 restricted shares that had been granted to 14 awardees
but were still in lockup due to the resignation, reassignment, violation of the Company’s “Red Lines” or
other factors of these awardees. The retirement of the said restricted shares was completed on 18 April
2023.
b. The Proposal for the Adjustments to the Repurchase and Grant Prices and for the Restricted Share
Incentive Schemes was approved at the 16th Meeting of the Fourth Board of Directors. According to
the 2022 Annual Profit Distribution Plan, the repurchase prices for the first grant under the 2018
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The 2023 Annual Report of Midea Group Co., Ltd.
Restricted Share Incentive Scheme was revised from RMB21.44 to RMB18.94 per share, and the
repurchase price for the reserved restricted shares under the said scheme from RMB17.46 to
RMB14.96 per share.
c. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Fourth
Unlocking Period for the First Grant under the 2018 Restricted Share Incentive Scheme was approved.
A total of 172 awardees were eligible for this unlocking, with 2,566,396 restricted shares (0.0365% of
the Company’s total existing share capital) unlocked for public trading, of which 25,000 shares, 25,000
shares, 25,000 shares, and 20,000 shares were unlocked for senior management Guan Jinwei, Zhang
Xiaoyi, Hu Ziqiang, and Zhong Zheng, respectively.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the Reserved Restricted Shares under the 2018 Restricted Share Incentive
Scheme was approved. A total of 18 awardees were eligible for this unlocking, with 324,167 restricted
shares (0.0046% of the Company’s total existing share capital) unlocked for public trading, of which
25,000 shares were unlocked for senior management Zhao Wenxin.
e. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2018 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 233,146 restricted shares that had been granted to 29 awardees but
were still in lockup due to the resignation, reassignment, substandard 2022 individual/business unit
performance or other factors of these awardees. The retirement of the said restricted shares was
completed on 10 November 2023.
Overview of the 2019 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors
and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it
was agreed to repurchase and retire 431,250 restricted shares that had been granted to 14 awardees
but were still in lockup due to the resignation, reassignment or other factors of these awardees. The
147
The 2023 Annual Report of Midea Group Co., Ltd.
retirement of the said restricted shares was completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors. According to the 2022
Annual Profit Distribution Plan, the repurchase price for the granted restricted shares under the 2019
Restricted Share Incentive Scheme was revised from RMB20.96 to RMB18.46 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2019 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 694,532 restricted shares that had been granted to 62 awardees but
were still in lockup due to the resignation, reassignment, substandard 2022 individual or business unit
performance or other factors of these awardees. The retirement of the said restricted shares was
completed on 10 November 2023.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the 2019 Restricted Share Incentive Scheme was approved. A total of 308
awardees were eligible for this unlocking, with 4,897,510 restricted shares unlocked for public trading,
of which 30,000 shares, 25,000 shares and 25,000 shares were unlocked for senior management
Wang Jinliang, Zhao Wenxin, and Guan Jinwei, respectively.
Overview of the 2020 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors
and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it
was agreed to repurchase and retire 753,209 restricted shares that had been granted to 25 awardees
but were still in lockup due to the resignation, reassignment, violation of the Company’s “Red Lines” or
other factors of these awardees. The retirement of the said restricted shares was completed on 18 April
2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022 Annual Profit
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The 2023 Annual Report of Midea Group Co., Ltd.
Distribution Plan had been carried out, the repurchase price for the restricted shares granted under the
2020 Restricted Share Incentive Scheme was revised from RMB21.18 to RMB18.68 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2020 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 2,939,626 restricted shares that had been granted to 316 awardees
but were still in lockup due to the resignation, reassignment, substandard 2022 individual/business unit
performance and other factors of these awardees. The retirement of the said restricted shares was
completed on 10 November 2023.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the 2020 Restricted Share Incentive Scheme was approved. A total of 394
awardees were eligible for this unlocking, with 10,851,082 restricted shares unlocked for public trading,
of which 48,000 shares, 48,000 shares and 40,000 shares were unlocked for senior management
Wang Jinliang, Zhao Wenxin, and Li Guolin, respectively.
Overview of the 2021 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors
and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it
was agreed to repurchase and retire 824,500 restricted shares that had been granted to 18 awardees
but were still in lockup due to the resignation, reassignment or other factors of these awardees. The
retirement of the said restricted shares was completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022 Annual Profit
Distribution Plan had been carried out, the repurchase price for the 2021 Restricted Share Incentive
Scheme was revised from RMB38.25 to RMB35.75 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2021 Restricted Share Incentive Scheme was approved. As such, it was
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The 2023 Annual Report of Midea Group Co., Ltd.
agreed to repurchase and retire 2,576,500 restricted shares that had been granted to 112 awardees
but were still in lockup due to the resignation, reassignment, substandard company performance or
other factors of these awardees. The retirement of the said restricted shares was completed on 10
November 2023.
Overview of the 2022 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2022
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of Directors
and the First Extraordinary General Meeting of Shareholders of 2023 on 6 January 2023. As such, it
was agreed to repurchase and retire 270,000 restricted shares that had been granted to 10 awardees
but were still in lockup due to the resignation, reassignment or other factors of these awardees. The
retirement of the said restricted shares was completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase and Grant Prices for the Restricted Share
Incentive Schemes was approved at the 16th Meeting of the Fourth Board of Directors. As the 2022
Annual Profit Distribution Plan had been carried out, the repurchase price for the 2022 Restricted
Share Incentive Scheme was revised from RMB26.47 to RMB23.97 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2022 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 1,052,500 restricted shares that had been granted to 24 awardees but
were still in lockup due to the resignation, reassignment or other factors of these awardees. The
retirement of the said restricted shares was completed on 10 November 2023.
Overview of the 2023 Restricted Share Incentive Scheme
a. The 2023 Restricted Share Incentive Scheme (Draft) and its Abstract was approved at the 15th
Meeting of the Fourth Board of Directors. And the awardee list for the 2023 Restricted Share Incentive
Scheme (Draft) was reviewed at the Ninth Meeting of the Fourth Supervisory Committee.
b. The Proposal on the Adjustments to the Repurchase and Grant Prices for the Restricted Share
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The 2023 Annual Report of Midea Group Co., Ltd.
Incentive Schemes, the Proposal on the Determination of the Grant Date for the 2023 Restricted Share
Incentive Scheme, and the Proposal on Grant-related Matters for the 2023 Restricted Share Incentive
Scheme were approved at the 16th Meeting of the Fourth Board of Directors. According to the 2022
Annual Profit Distribution Plan, the grant price was revised from RMB28.39 to RMB25.89 per share.
c. On 20 June 2023, the Company granted 18,325,000 restricted shares to 415 awardees with the
grant price being RMB25.89 per share.
Equity incentives for directors and senior management
√Applicable □N/A
Unit: share
Restricted
Restricted Restricted
shares held Unlocked Grant price
shares shares held
at the shares in of the
granted in at the end of Retired
Name Office title beginning of the restricted
the the shares
the Reporting shares
Reporting Reporting
Reporting Period (RMB/share)
Period Period
Period
Zhang Vice
25,000 25,000 0
Xiaoyi President
Vice
Hu Ziqiang 25,000 25,000 0
President
Wang Vice
300,000 78,000 180,000 42,000
Jinliang President
Vice
Li Guolin 230,000 40,000 150,000 40,000
President
Vice
Guan Jinwei 75,000 50,000 25,000
President
Vice
President,
Zhong
CFO and 20,000 20,000 0
Zheng
Director of
Finance
Chief
Zhao
People 320,000 98,000 186,000 36,000
Wenxin
Officer
Board
Jiang Peng 160,000 0 136,000 24,000
Secretary
Vice
Zhao Lei 90,000 60,000 20,000 10,000
President
Total -- 1,245,000 396,000 0 -- 697,000 152,000
151
The 2023 Annual Report of Midea Group Co., Ltd.
1. A total of 2,566,396 shares were allowed for public trading in the Fourth Unlocking
Period for the First Grant of the 2018 Restricted Share Incentive Scheme on 3 July 2023,
of which senior management Guan Jinwei, Zhang Xiaoyi, Zhong Zheng and Hu Ziqiang
unlocked 25,000 shares, 25,000 shares, 20,000 shares and 25,000 shares, respectively.
2. A total of 324,167 shares were allowed for public trading in the Third Unlocking Period
for the Reserved Restricted Shares of the 2018 Restricted Share Incentive Scheme on 7
July 2023, of which senior management Zhao Wenxin unlocked 25,000 shares.
Remark (if any) 3. A total of 4,897,510 shares were allowed for public trading in the Third Unlocking
Period of the 2019 Restricted Share Incentive Scheme on 13 July 2023, of which senior
management Zhao Wenxin, Wang Jinliang and Guan Jinwei unlocked 25,000 shares,
30,000 shares and 25,000 shares, respectively.
4. A total of 10,851,082 shares were allowed for public trading in the Third Unlocking
Period of the 2020 Restricted Share Incentive Scheme on 18 July 2023, of which senior
management Zhao Wenxin, Li Guolin and Wang Jinliang unlocked 48,000 shares, 40,000
shares and 48,000 shares, respectively.
Appraisal mechanism and incentives for senior management
With respect to remunerations for directors and supervisors, the Remuneration and Appraisal
Committee under the Board of Directors formulates the relevant plan, which is submitted to the Board
of Directors for approval and then to the meeting of shareholders for final approval. As for
remunerations for senior management, the Remuneration and Appraisal Committee formulates the
relevant plan, which is submitted to the Board of Directors for final approval.
11.2 Employee stock ownership schemes
√Applicable □N/A
Outstanding employee stock ownership schemes during the Reporting Period
As a percentage
Scope of Number of Total shares held
Change of the Company’s Funding source
employees employees (share)
total share capital
Employees under
the Sixth Global
Special fund for the
Partner Stock 17 3,537,663 N/A 0.05%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Third Business
scheme and part of the
Partner Stock 46 1,873,559 N/A 0.03%
performance bonuses for
Ownership
senior management
Scheme
Employees under
the Seventh Global
Special fund for the
Partner Stock 15 2,436,518 N/A 0.03%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Fourth
scheme and part of the
Business Partner 44 1,985,611 N/A 0.03%
performance bonuses for
Stock Ownership
senior management
Scheme
Employees under 15 3,770,433 N/A 0.05% Special fund for the
152
The 2023 Annual Report of Midea Group Co., Ltd.
the Eighth Global scheme
Partner Stock
Ownership
Scheme
Employees under
Special fund for the
the Fifth Business
scheme and part of the
Partner Stock 55 2,826,759 N/A 0.04%
performance bonuses for
Ownership
senior management
Scheme
Employees under Employees’ legal income,
the 2023 Stock performance bonuses, or
147 9,946,276 N/A 0.14%
Ownership other sources allowed by
Scheme laws and regulations
Shares held by directors, supervisors and senior management under employee stock ownership
schemes during the Reporting Period
Shares held at the
Shares held at the end As a percentage of the
beginning of the
Name Office title of the Reporting Period Company’s total share
Reporting Period
(share) capital
(share)
Chairman of the Board
Fang Hongbo
and CEO
Director and Vice
Gu Yanmin
President
Director and Vice
Wang Jianguo
President
Director and Vice
Fu Yongjun
President
Zhang Xiaoyi Vice President
Zhao Lei Vice President
4,770,564 4,941,346 0.07%
Wang Jinliang Vice President
Li Guolin Vice President
Guan Jinwei Vice President
Bai Lin Vice President
Vice President, CFO
Zhong Zheng and Director of
Finance
Zhao Wenxin Chief People Officer
Jiang Peng Board Secretary
Change of asset management organizations during the Reporting Period
□Applicable √N/A
Equity changes incurred by disposal of shares by holders, etc. during the Reporting Period
□Applicable √N/A
Exercise of shareholder rights during the Reporting Period
153
The 2023 Annual Report of Midea Group Co., Ltd.
During the Reporting Period, holders under employee stock ownership schemes exercised the
shareholder rights to receive the cash dividends for 2022. Other than that, they did not exercise other
shareholder rights such as voting in a meeting of shareholders.
Other information about employee stock ownership schemes during the Reporting Period
□Applicable √N/A
Changes in members of the management committees for employee stock ownership schemes
□Applicable √N/A
Financial impact of employee stock ownership schemes on the Company during the Reporting Period
and the relevant accounting treatments
√Applicable □N/A
As per the Accounting Standard No. 11 for Business Enterprises—Share-based Payments, for equity-
settled share-based payments in exchange for services from employee that are exercisable when
services in the vesting period are completed or specified performance conditions are met, at every
balance sheet date during the vesting period, the services obtained in the current period are included in
the relevant costs/expenses and capital surplus at the fair value of the equity instruments at the grant
date based on the best estimate of the number of exercisable equity instruments. The expense
amortization of the Company’s share-based payment incentive schemes stood at RMB279,864
thousand for 2023, which was included in the relevant expense items and capital surplus.
Termination of employee stock ownership schemes during the Reporting Period
□Applicable √N/A
11.3 Other incentive measures for employees
□Applicable √N/A
12. Establishment and Implementation of the Internal Control System during the
Reporting Period
12.1 Establishment and implementation of the internal control system
During the Reporting Period, in line with the Basic Code for Internal Control of Enterprises and other
related regulations, the Company updated and improved the internal control system timely and
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The 2023 Annual Report of Midea Group Co., Ltd.
established a set of internal control systems which was designed scientifically and operated effectively.
Besides, an organization system for internal risk control and management comprising the Audit
Committee and the internal audit department was set up to supervise and assess the Company's
internal control management. Through the operation, analysis, and assessment of the internal control
system, the Company effectively prevented the risks in operations management and promoted the
realization of internal control objectives.
12.2 Serious internal control defects found in the Reporting Period
□Yes √No
13. The Company’s Management and Control of Subsidiaries during the Reporting
Period
Solution
Company Consolidation Consolidation Problems arising in Subsequent
Solutions taken implementation
name plan progress consolidation solutions
progress
N/A N/A N/A N/A N/A N/A N/A
14. Evaluation Report and Auditor’s Report on Internal Control
14.1 Evaluation report on internal control
Disclosure date of the internal control self-evaluation report 28 March 2024
For details, please refer to the 2023 Self-Evaluation
Index to the disclosed internal control self-evaluation report Report on Internal Control, which has been disclosed
on www.cninfo.com.cn
Ratio of the total assets of the appraised entities to the
70%
consolidated total assets
Ratio of the operating revenue of the appraised entities to the
70%
consolidated operating revenue
Defect identification standards
Type Financial-report related Non-financial-report related
For details, please refer to “(c) Basis for For details, please refer to “(c) Basis for
internal control evaluation and internal control evaluation and
identification standards for internal control identification standards for internal control
Nature standard defects” under Section III of The 2023 defects” under Section III of The 2023
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
disclosed on www.cninfo.com.cn dated 28 disclosed on www.cninfo.com.cn dated 28
March 2024. March 2024.
For details, please refer to “(c) Basis for For details, please refer to “(c) Basis for
internal control evaluation and internal control evaluation and
identification standards for internal control identification standards for internal control
Quantitative standard defects” under Section III of The 2023 defects” under Section III of The 2023
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
disclosed on www.cninfo.com.cn dated 28 disclosed on www.cninfo.com.cn dated 28
March 2024. March 2024.
Number of serious financial-
0
report-related defects
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The 2023 Annual Report of Midea Group Co., Ltd.
Number of serious non-financial-
0
report-related defects
Number of important financial-
0
report-related defects
Number of important non-
0
financial-report-related defects
14.2 Auditor’s report on internal control
√Applicable □N/A
Opinion paragraph in the auditor’s report on internal control
The internal control auditor holds the view that on 31 December 2023, Midea Group maintained an effective internal
control of a financial report in all significant aspects based on the General Specifications of Company Internal Control
and relevant specifications.
Auditor’s report on internal
Disclosed on www.cninfo.com.cn
control disclosed or not
Date of disclosing the full text of
the auditor’s report on internal 28 March 2024
control
Index to the disclosed full text of
For details, please refer to the 2023 Auditor’s Report on Internal Control, which has
the auditor’s report on internal
been disclosed on www.cninfo.com.cn
control
Type of the auditor’s opinion Standard & unqualified
Serious non-financial-report-
No
related defects
Whether any modified opinions are expressed by the accounting firm in its auditor’s report on the
Company’s internal control
□ Yes √ No
Whether the auditor’s report on the Company’s internal control issued by the accounting firm is
consistent with the self-evaluation report of the Board
√ Yes □ No
15. Remediation of Problems Identified by Self-inspection in the Special Action on
the Governance of Listed Companies
In accordance with the requirements of regulatory authorities, the Company launched a special self-
inspection of the governance of listed companies that would last four months on 17 December 2020,
which would review the corporate governance comprehensively from seven perspectives, namely the
basic information of the listed companies, the operation and decision-making of the organization,
controlling shareholder/Actual Controller and related parties, the establishment of the system for
standardizing the internal control, information disclosure and transparency, and institutional/overseas
investors. In addition, it identified problems and deficiencies by referring to regulations, Articles of
Association, and other normative documents, and saw the special self-inspection as an opportunity to
156
The 2023 Annual Report of Midea Group Co., Ltd.
improve the governance and protect the gains of investors.
This self-inspection found that the Company had no matters that had violated the national and CSRC
regulations, and the corporate governance was in compliance with the laws and regulations, such as
the Company Law, the Securities Law, the Guidelines on Standardized Operation of Listed Companies
on Shenzhen Stock Exchange, and the Guidelines for Articles of Association of Listed Companies.
Besides, the structure of the corporate governance was well-developed, and the operation was
standard. The Company will inspect and update the internal control system it has released in a timely
manner in accordance with the existing laws and regulations and continuously establish and improve
the internal control systems so that the systems can function effectively.
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The 2023 Annual Report of Midea Group Co., Ltd.
Section V Environmental and Social Responsibility
1. Major Environmental Issues
Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities
Yes □ No
Policies and industry standards for environmental protection
The Company has attached great importance to environmental protection. It has been strictly abiding by the Law of the People's Republic of China
on Environmental Protection, the Law of the People's Republic of China on Water Pollution Prevention and Control, the Law of the People's Republic
of China on Air Pollution Prevention and Control, the Law of the People's Republic of China on Noise Pollution Prevention and Control, the Law of
the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes, the Law of the People's Republic of China
on Environmental Impact Assessment, the Regulations on Administration of Discharge Permits as well as other applicable laws, administrative rules
and regulatory documents. The Company has been taking practical and effective environmental protection measures to protect the ecological
environment and fulfill its corporate responsibility.
In terms of pollutant management, the Company has been in compliance with the existing pollutant discharge standards and limits, which are
specified as follows:
With respect to wastewater management, the Company is subject to the Integrated Wastewater Discharge Standard (GB8978-1996), the Discharge
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The 2023 Annual Report of Midea Group Co., Ltd.
Limits of Water Pollutants (DB44/26-2001), the Discharge Standard of Water Pollutants for Electroplating (DB 44/1597-2015), and the Discharge
Limits of Water Pollutants of Guangdong Province (DB44/26-2001), among other standards.
With respect to waste gas management, the Company is subject to the Integrated Emission Standard of Air Pollutants (GB16297-1996), the
Emission Standard of Air Pollutants for Boiler (GB13271-2014), the Emission Control Standard of Volatile Organic Compounds for Industrial
Enterprises (DB13/2322-2016), the Emission Standard of Pollutants for Synthetic Resin Industry (GB31572-2015), the Emission Limits of Air
Pollutants (DB44/27-2001), the Emission Standard of Volatile Organic Compounds for Furniture Manufacturing Operations (DB44/814-2010), and
the Emission Standard of Air Pollutants for Industrial Kiln and Furnace (GB 9078-1996), among other standards.
With respect to noise management, the Company is subject to the Emission Standard for Industrial Enterprises Noise at Boundary (GB12348-2008).
With respect to treatments of solid and hazardous waste, the Company has been in strict compliance with the Law on the Prevention and Control of
the Environmental Pollution of Solid Waste, disposing of solid and hazardous waste in a compliant manner.
Administrative permits in relation to environmental protection
According to the requirements of the applicable environmental protection laws and regulations, all construction projects of the Company fulfill the
procedures of environmental impact assessment and other administrative licensing procedures for environmental protection, strictly abide by the
environmental requirements for construction projects, and implement environmental treatment. After the completion of the project construction,
according to the requirements of the environmental impact assessment documents, the Company commissions a third-party monitoring organisation
to test the project's wastewater, waste gas, noise and other indicators, and applies for a discharge permit in accordance with the Regulations on the
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The 2023 Annual Report of Midea Group Co., Ltd.
Administration of Discharge Permits and other regulations and standards.
During the Reporting Period, the existing discharge permits of the Company's subsidiaries were all within the validity period. During the validity
period of the discharge permits, if there are matters such as changes in the basic information of the discharge permits, implementation of revisions in
pollutant discharge standards, changes in the total pollutant discharge limits, etc., the subsidiaries of the Company shall, in accordance with the
relevant requirements, submit an application for change of the discharge permits to the local competent environmental protection authorities within a
specified period of time.
Industry standards for discharges and discharges of pollutants in production and operation activities
Num
Name
ber
of the Approve
Type of Name of of Concentration Total
Compa Distribution of discharge Pollutant discharge d total Excess
major major Discharge method disch of the discharge
ny or outlets standards discharg discharge
pollutant pollutant arge discharge (ton)
subsidi e (ton)
outlet
ary
s
Physical
and
comprehens COD 130mg/L 58.97 70.898 No
Wuhu
ive
Midea
indicators
Kitchen
& Bath Inorganic Ammonia- Integrated Wastewater
Applian pollutants nitrogen Discharge after being treated by 3.1mg/L Discharge Standard 1.41 2.496 No
Western gate of the Wuhu
ces (NH3-N) wastewater treatment system and 1 (GB8978-1996)
plant
Mfg. reaching the standard
Physical
Co., and
Ltd. comprehens Five-day
27.35mg/L 12.4 / No
BOD
ive
indicators
Oil Petroleum <0.06mg/L 0.027 / No
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The 2023 Annual Report of Midea Group Co., Ltd.
Total
Inorganic
phosphor 0.43mg/m 0.2 / No
pollutants
us (by P)
Inorganic Fluoride
0.73mg/m 0.32 / No
pollutants (by F-)
Particles Soot 4.6mg/m 9.27 / No
Gaseous
Sulfur
inorganic <3mg/m Emission Standard of Air 1.9 / No
dioxide
substances 15m high altitude discharge Pollutants for Boiler
(GB13271-2014)
Gaseous
inorganic Oxynitride 6.3mg/m 1.9 / No
substances
Particles Dust 4.3mg/m Integrated Emission 3.76 / No
45 Plants at each workshop Standard of Air Pollutants
Aromatic
Xylene <0.01 mg/m (GB16297-1996) 0.0002 / No
compounds
Fatty High altitude discharge after being
hydrocarbon Overall treated by waste gas treatment station
Emission Control Standard
s and volatile
for Industrial Enterprises
halogenated organic 5.77mg/m 8.08 / No
Volatile Organic Compounds
fatty compound
(DB13-2322- 2016)
hydrocarbon s (VOCs)
s
Physical /
and
comprehens COD 130mg/L 24.34 No
Wuhu ive
Midea indicators
Smart Western gate of the Wuhu
Kitchen Inorganic Ammonia- /
nitrogen Discharge after being treated by plant 3.1mg/L Integrated Wastewater 0.59 No
Applian pollutants
(NH3-N) wastewater treatment system and 1 (Shared kitchen and Discharge Standard
ces
reaching the standard bathroom wastewater (GB8978-1996)
Manufa Physical
cturing treatment plant)
and
Co., Five-day
comprehens 27.35mg/L 5.11 / No
Ltd. BOD
ive
indicators
Oil Petroleum <0.06mg/L 0.01 / No
161
The 2023 Annual Report of Midea Group Co., Ltd.
Total
Inorganic
phosphor 0.43mg/m 0.08 / No
pollutants
us (by P)
Inorganic Fluoride
0.73mg/m 0.14 / No
pollutants (by F-)
Particles Soot 10 4.9mg/m 5.52 / No
Gaseous
Sulfur
inorganic 6 <3mg/m Emission Standard of Air 0.89 / No
dioxide
substances 15m high altitude discharge Pollutants for Boiler
(GB13271-2014)
Gaseous
inorganic Oxynitride 6 13.3 mg/m 1.48 / No
substances
Particles Dust 6 4.9mg/m Integrated Emission 1.7 / No
Plants at each workshop Standard of Air Pollutants
Aromatic <0.0015
Xylene 2 (GB16297-1996) 0.00035 / No
compounds mg/m
Fatty
hydrocarbon Overall High altitude discharge after being
treated by waste gas treatment station Emission Control Standard
s and volatile
for Industrial Enterprises
halogenated organic 13 6.4mg/m 8.18 / No
Volatile Organic Compounds
fatty compound
(DB13-2322- 2016)
hydrocarbon s (VOCs)
s
Physical
and
comprehens COD 67.25mg/L 8.119
Hefei ive
Midea indicators Takeover Standards for
Heatin Ammonia- Sewage Treatment Plants in
g& Inorganic
nitrogen 1.18mg/L Western Clusters of Hefei 1.047
Ventilat pollutants (NH3-N) Discharge after being treated by City
The eastern side of 1#
ing wastewater treatment system and 1 / No
plant Integrated Wastewater
Equipm Physical reaching the standard
and Discharge Standard
ent Five-day (GB8978-1996), Level 3
Co., comprehens BOD
16.76mg/L 2.688
Ltd. ive
indicators
Total
Inorganic
nitrogen 17.2mg/L 1.929
pollutants
(by N)
162
The 2023 Annual Report of Midea Group Co., Ltd.
Total
Inorganic phosphor
0.07mg/L 0.138495
pollutants us (by P)
(by P)
Other Anionic
0.17mg/L 0.053443
indicators surfactant
Physical
and
Suspende
comprehens 17.08mg/L 2.692
d matters
ive
indicators
Oil Petroleum 0.06mg/L 0.0444
Physical
and
comprehens pH value 5.64 /
ive
indicators
Fatty 2 1 set in 3# plant and 1 unit
RO equipment 1.91mg/m 0.08895
hydrocarbon in 4# plant
s and Non- 3 2 sets at 1# plant and 1
halogenated methane Water spray and activated carbon 14.91mg/m 0.57868
set at 2# plant / No
fatty hydrocarb Integrated Emission
hydrocarbon ons 9 3 at 1# plant, 2 at 2# plant,
Two-stage activated carbon Standard of Air Pollutants
s 1 at 3# plant, 2 at 4# plant 7.394mg/m 1.67152
equipment GB16279-1996 Level 2
and 1 cyclopentane
2 at 1# plant, 3 at 2# plant,
Particles Soot Filter cartridge dust collector 8 2 at 3# plant and 1 at 4# 4.908mg/m 3.3 / No
plant
Hefei Physical
and The eastern side of Takeover Standards for
Midea Sewage Treatment Plants in
Laundr comprehens COD wastewater treatment 48 mg/L 6.154 58.150 No
ive station Western Clusters of Hefei
y Discharge after being treated by City
1
Applian indicators wastewater treatment station
Integrated Wastewater
ce Co., Inorganic Ammonia- The eastern side of
nitrogen wastewater treatment 0.692mg/L Discharge Standard 0.089 / No
Ltd. pollutants
(NH3-N) station (GB8978-1996), Level 3
(monito
163
The 2023 Annual Report of Midea Group Co., Ltd.
red by Total
the suspende
munici d
pal particulate High altitude discharge after being
govern matter treated by cyclone + filter cartridge
ment) (TSP) dust collector/High altitude discharge
Particles Plants at each workshop 0.8mg/m 1.47 / No
(aerodyna after being treated by water spraying
mic + demister + activated carbon + Table 5 of the Emission
activated carbon Standard of Pollutants for
diameter
15 Synthetic Resin Industry (GB
below 31572-2015): Special
100μm) Emission Limit Requirements
Fatty
High altitude discharge after being
hydrocarbon
Non- treated by water spraying + demister +
s and
methane activated carbon + activated
halogenated Plants at each workshop 1.73mg/m 1.96 / No
hydrocarb carbon/High altitude discharge after
fatty
ons being treated by the two-stage
hydrocarbon
activated carbon
s
Physical
and
comprehens COD 48 mg/L 2.92 9.59 No
ive
indicators
Ammonia-
GD Inorganic
nitrogen Discharge after being treated by The southeastern side of 1.082mg/L Discharge Limits of Water 0.023 / No
Midea pollutants 1
Air- (NH3-N) wastewater treatment station 4# plant Pollutants (DB44/26-2001)
Conditi Physical
oning and
Suspende
Equipm comprehens 14mg/L 0.451 / No
d matters
ent ive
Co., indicators
Ltd. Oil Petroleum 0.32mg/L 0.005 / No
Physical
and
Discharge after being treated by The eastern side of 2# Discharge Limits of Water
comprehens COD 1 108mg/L 3.66 9.59 No
wastewater treatment station plant Pollutants (DB44/26-2001)
ive
indicators
164
The 2023 Annual Report of Midea Group Co., Ltd.
Physical
and
Suspende
comprehens 47mg/L 0.46 / No
d matters
ive
indicators
Ammonia-
Inorganic
nitrogen 1.832mg/L 0.013 / No
pollutants
(NH3-N)
Oil Petroleum 1.99mg/L 0.003 / No
Total
Emission Standard of
volatile
Other 15m high altitude discharge after Volatile Organic Compounds
organic
organic being treated by spray tower + 3 4# plant 15.94mg/m for Furniture Manufacturing 0.77 14 No
compound
compounds activated carbon (DB44/814-2010) the second
s (spray
time period
powder)
Overal
volatile Emission Standard of
Other 15m high altitude discharge after
organic Volatile Organic Compounds
organic being treated by environmental 4 1# and 9# plants 3.81mg/m 0.56 / No
compound for Printing Industry
compounds protection equipment
s (screen (DB44/815-2010)
printing)
Overall
volatile
Emission Standard of
Other organic 15m high altitude discharge after
Volatile Organic Compounds
organic compound being treated by environmental 2 10# plants 1.65mg/m 4.11 / No
for Printing Industry
compounds s protection equipment
(DB44/815-2010)
(electronic
s)
Fatty
hydrocarbon
Non-
s and 15m high altitude discharge after Emission Limits of Air
methane
halogenated being treated by environmental 5 2#, 5# plants 2.52mg/m Pollutants (DB44/27- 2001) 1.88 / No
hydrocarb
fatty protection equipment the second time period
ons
hydrocarbon
s
Wuhu Physical
Integrated Wastewater
Maty and Discharge after treatment by the
The northern side of the Discharge Standard
Air- comprehens COD sewage and wastewater station to 1
park
77.65mg/L
(GB8978-1996) Table 4,
3.99 7.5 No
Conditi ive meet the standards
Level 3
oning indicators
165
The 2023 Annual Report of Midea Group Co., Ltd.
Equipm Physical
ent and
Co., comprehens Suspende 42.35mg/L 2.166 / No
Ltd. d matters
ive
indicators
Physical
and
Five-day
comprehens 11.755mg/L 1.86 / No
BOD
ive
indicators
Ammonia-
Inorganic
nitrogen 20.923mg/L 0.598 0.675 No
pollutants
(NH3-N)
Oil Petroleum 1.46mg/L 0.075 / No
Integrated Emission
Particles Soot 11 1#、2#、3#、4# plants ND Standard of Air Pollutants 6.03 / No
(GB16297-1996)
Fatty
hydrocarbon
Non- Emission Control Standard
s and
methane for Industrial Enterprises
halogenated 10 1#、2#、3#、4# plants 5.642mg/m3 7.327 / No
hydrocarb 15m high altitude discharge after Volatile Organic Compounds
fatty
ons being treated by environmental (DB13-2322- 2016)
hydrocarbon
protection equipment
s
Gaseous
inorganic Oxynitride 3 3# plant 5.485mg/m3 1.348 2.209 No
Integrated Emission
pollutants
Standard of Air Pollutants
Gaseous
Sulfur (GB16297-1996)
inorganic 3 3# plant 3mg/m3 0.468 / No
dioxide
pollutants
Physical
Guang and
dong comprehens COD 32.5mg/L 12.0708 16.28 No
Meizhi ive
Precisi indicators Near the wastewater Discharge Standard of Water
Discharge after being treated by
on- 1 treatment station in the Pollutants for Electroplating
wastewater treatment station
Manufa Physical north side of the plant DB 44/1597-2015 No
cturing and
Suspende
Co., comprehens d matters 20mg/L 7.7064 /
Ltd. ive
indicators
166
The 2023 Annual Report of Midea Group Co., Ltd.
Oil Petroleum 0.48mg/L 0.161384 / No
Total No
Inorganic
phosphor 0.15mg/L 0.10913 /
pollutants
us (by P)
Metals and No
metal Total zinc ND 0.01296 /
compounds
Physical No
and
comprehens pH value 7.06mg/L / /
ive
indicators
Inorganic Total No
2.85mg/L 0.88044 /
pollutants nitrogen
Ammonia- No
Inorganic
nitrogen 0.799mg/L 0.2754872 2.034
pollutants
(NH3-N)
Discharge Limits of Water No
Pollutants in Guangdong
Inorganic Fluoride DB44/26-2001
0.15mg/L 0.050388 /
pollutants (by F-)
Total No
suspende
d
particulate Emission Limits of Air
matter Pollutants (DB44/27-2001) /
15m high altitude discharge after
Particles (TSP) being treated by environmental 7 Roof of the plant Emission Standard of Air 8.69166 /
(aerodyna protection equipment 14.4mg/m Pollutants for Industrial Kiln
mic and Furnace (GB 9078-
diameter 1996)
below
100μm)
Gaseous 15m high altitude discharge after No
Sulfur
inorganic being treated by environmental 4 Roof of the plant 3.5mg/m 0 0.436
dioxide Emission Standard of Air
pollutants protection equipment
Pollutants for Boiler
Gaseous 15m high altitude discharge after (DB44/765-2019) No
inorganic Oxynitride being treated by environmental 4 Roof of the plant 15mg/m 1.946 2.039
pollutants protection equipment
167
The 2023 Annual Report of Midea Group Co., Ltd.
Overall No
Other volatile 15m high altitude discharge after
organic organic being treated by environmental 10 Roof of the plant 5.005mg/m 3.6412 4.553
compounds compound protection equipment
s (VOCs) Emission Standard of
Volatile Organic Compounds
15m high altitude discharge after No
Aromatic for Surface Coating of
Benzene being treated by environmental Roof of the plant 0.05mg/m 0.1056 /
compounds Automobile Manufacturing
protection equipment
Industry (DB44/816-2010)
Total 2 No
15m high altitude discharge after
Aromatic toluene
being treated by environmental Roof of the plant 0.46mg/m 0.205 /
compounds and
protection equipment
xylene
Guang
Physical
dong
and
Meizhi
comprehens COD 42 mg/L 3.6 6.046 No
Compr
ive
essor
indicators
Limited
Physical
and
Suspende
comprehens 13 mg/L 5.25 / No
d matters
ive
indicators
Discharge Standard of Water
Oil Petroleum Near the wastewater 0.43 mg/L Pollutants for Electroplating 0.104 / No
Discharge after being treated by 1
Total treatment station in the of Guangdong Province DB-
Inorganic wastewater treatment station
phosphor north side of the plant 0.18mg/L 441597-2015, before 1 0.041 / No
pollutants
us (by P) September 2012
Oil Metals and
metal Total zinc 0.05mg/L 0.008 / No
compounds
Physical
and
comprehens pH value 7.2mg/L / No
ive
indicators /
Inorganic Total
3.03mg/L 0.94 / No
pollutants nitrogen
168
The 2023 Annual Report of Midea Group Co., Ltd.
Ammonia-
Inorganic
nitrogen 0.856mg/L 0.168 0.756 No
pollutants
(NH3-N)
Inorganic Fluoride
0.071 mg/L 0.032 / No
pollutants (by F-)
Metals and
Total
metal ND 0 0.024 No
nickel
compounds
Total
suspende
d 1Lmg/m
particulate Discharge Limits of Air
(calculated as Pollutants (DB44/27-2001)/
matter 15m high altitude discharge after half the
(TSP) Roof of main plant and Emission Standard of Air
Particles being treated by environmental 17 detection limit 1.2348 8.705 No
(aerodyna metal plate workshop Pollutants for Industrial Kiln
protection equipment when below
mic the detection and Furnace (GB9078-
diameter limit) 1996)
below
100μm)
3Lmg/m
(calculated as
Gaseous 15m high altitude discharge after half the
Sulfur Roof of main plant and
inorganic being treated by environmental 11 detection limit 0.588 0.799 No
dioxide metal plate workshop Emission Standard of Air
pollutants protection equipment when below
the detection Pollutants for Boiler
limit) (DB44/765-2019)
Gaseous 15m high altitude discharge after
Roof of main plant and
inorganic Oxynitride being treated by environmental 11 11.6mg/m 7.4 7.814 No
metal plate workshop
pollutants protection equipment
15m high altitude discharge after
Aromatic Roof of main plant and
Benzene being treated by environmental 2 0.21mg/m Emission Standard of 0.1056 / No
compounds metal plate workshop
protection equipment Volatile Organic Compounds
Total for Surface Coating of
15m high altitude discharge after Automobile Manufacturing
Aromatic toluene Roof of main plant and
being treated by environmental 2 0.695mg/m Industry (DB44/816-2010) 0.172 / No
compounds and metal plate workshop
protection equipment
xylene
169
The 2023 Annual Report of Midea Group Co., Ltd.
Overall
Other volatile 15m high altitude discharge after
Roof of main plant and
organic organic being treated by environmental 7 3.5205mg/m 2.93 5.718 No
metal plate workshop
compounds compound protection equipment
s (VOCs)
Physical
and
comprehens COD 40.75 5.721 16.87 No
ive Discharge after being treated by Discharge Standard of Water
indicators wastewater treatment system and 1 Sewage treatment station Pollutants for Electroplating
reaching the standard (DB44/1597-2015)
Oil Petroleum 0.29 0.040 / No
Ammonia-
Inorganic
nitrogen 5.5 1.913 2.11 No
pollutants
(NH3-N)
Total
Waste gas sprayers 1 and Table 1 of the Emission
Aromatic toluene High altitude discharge after being
2 at 3# plant, outlets 1, 2 0.165 Standard of Volatile Organic 0.522 / No
Foshan compounds and treated by waste gas treatment station
and 3 for waste gas from Compounds for Furniture
Shund xylene
14 wave-soldering, painting Manufacturing (DB44/814-
e Overall and drying at 6# plant, 2010): Discharge Limits for
Midea Other volatile
High altitude discharge after being outlets 1 and 2 for waste VOCs through Exhaust
Electric organic organic (May 20) 20.655 36.43 No
treated by waste gas treatment station gas from reflow soldering Funnel/for Time Period II
al compounds compound at 6# plant
Heatin s (VOCs)
g
Fatty
Applian Outlet of injection molding
hydrocarbon Table 4 of the Emission
ces Non- waste gas in the south
s and Standard of Pollutants for
Manufa methane High altitude discharge after being side of 1# plant, outlet of
halogenated 3 1.335 Synthetic Resin Industry (GB 0.877 / No
cturing hydrocarb treated by waste gas treatment station injection molding waste
fatty 31572- 2015): Emission
Co., ons gas in the south side of 9#
hydrocarbon Limits of Air Pollutants
Ltd. plant
s
Inhalable
particles
(aerodyna Outlets 1 and 2 of sanding
mic waste gas at 3# plant, Table 2 of the Emission
Particles Pulse bag dust collecting 10 21.15 Limits of Air Pollutants 23.94 No
diameter outlets 1 and 2 of polishing
10 waste gas at 3# plant (DB44/27-2001): Emission
below Limits of Industrial Waste
100μm) Gas (Time Period 2), Level 2
Gaseous High altitude discharge after being Oxidation wire roof of 3#
Sulfur 7
inorganic treated by waste gas treatment station plant, Drying furnace of 3# 5.31 0.108 0.78 No
dioxide
pollutants plant
170
The 2023 Annual Report of Midea Group Co., Ltd.
Gaseous
inorganic Oxynitride 19.91 0.942 10.17 No
pollutants
Emission Standard of
Discharge after being treated by South and north section
Particles Fume 2 0.213 Cooking Fume (Trial) (GB 0.132 / No
waste gas treatment station canteens
18483-2001)
Physical
and Takeover Standards for
comprehens COD 28mg/L Sewage Treatment Plants in 5.02809 / No
The western side of the Western Clusters of Hefei
ive Discharge after being treated by
comprehensive City
indicators wastewater treatment system and 1
wastewater treatment
reaching the standard Integrated Wastewater
Ammonia- station
Inorganic Discharge Standard
nitrogen 2.56 mg/L (GB8978-1996), Level 3 1.173665 / No
pollutants
(NH3-N)
No. 1 workshop welding
soot discharge outlet for 1.2mg/m
waste gas Integrated Emission
Standard of Air Pollutants
No.3 workshop discharge (GB16297-1996)
outlet for the welding 1.2mg/m
Anhui waste gas
Meizhi Waste gas outlet of 1#
Compr Total heat-treating furnace at 3.1mg/m
essor suspende No. 2 workshop Emission Standard of Air
Co., d Pollutants for Industrial Kiln
particulate Waste gas outlet of 2# and Furnace (GB9078-1996)
Ltd.
matter heat-treating furnace at 9.3mg/m
(TSP) Collected by gas trap hood + 15m No. 2 workshop
Particles 10 9.625365 65.45 No
(aerodyna high exhaust cylinder
Integrated Emission
mic Waste gas outlet for die
3.4mg/m Standard of Air Pollutants
casting at No. 2 workshop
diameter (GB16297-1996)
below Waste gas outlet for die Integrated Emission
100μm) 5.1mg/m
casting at No. 4 workshop Standard of Air Pollutants
Waste gas outlet of 1# (GB16297-1996)
heat-treating furnace at 4.5mg/m Emission Standard of Air
No. 4 workshop Pollutants for Industrial Kiln
and Furnace (GB9078-1996)
Waste gas outlet of 2# Emission Standard of Air
heat-treating furnace at 1.8mg/m Pollutants for Industrial Kiln
No. 4 workshop and Furnace (GB9078-1996)
171
The 2023 Annual Report of Midea Group Co., Ltd.
Waste gas outlet for Integrated Emission
electrophoresis and drying 4.5mg/m Standard of Air Pollutants
at No. 1 workshop (GB16297-1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 3.7mg/m Standard of Air Pollutants
at No.3 workshop (GB16297-1996)
Outlet of 1# heat-treating
23mg/m
furnace at No.2 workshop
Outlet of 2# heat-treating
43mg/m
furnace at No.2 workshop
Waste gas outlet for die Integrated Emission
Gaseous 10mg/m
Sulfur Collected by gas trap hood + 15m casting at No. 2 workshop Standard of Air Pollutants
inorganic 6 31.780093 112.2 No
dioxide high exhaust cylinder (GB16297-1996) Standard
pollutants Outlet of 1# heat-treating
50mg/m Level 2
furnace at No.4 workshop
Outlet of 2# heat-treating
12mg/m
furnace at No.4 workshop
Waste gas outlet for die
<3mg/m
casting at No.4 workshop
Outlet of 1# heat-treating
6mg/m
furnace at No.2 workshop
Outlet of 2# heat-treating
6mg/m
furnace at No.2 workshop
Waste gas outlet for die Integrated Emission
Gaseous 6mg/m
Collected by gas trap hood + 15m casting at No. 2 workshop Standard of Air Pollutants
inorganic Oxynitride 6 10.429364 33.24 No
high exhaust cylinder Outlet of 1# heat-treating (GB16297-1996) Standard
pollutants 10mg/m
furnace at No.4 workshop Level 2
Outlet of 2# heat-treating
22mg/m
furnace at No.4 workshop
Waste gas outlet for die
5mg/m
casting at No.4 workshop
Waste gas outlet of the
Overall Collected by gas trap hood + 15m drying furnace at No. 1 5.97mg/m Emission Control Standard
Other volatile high exhaust cylinder workshop for Industrial Enterprises
organic organic 4 1.27347 21.6 No
Direct-fired waste gas incinerator + Waste gas outlet of 1# Volatile Organic Compounds
compounds compound
15m high exhaust cylinder drying furnace at No. 3 1.80 mg/m (DB12/ 524-2020)
s (VOCs)
workshop
172
The 2023 Annual Report of Midea Group Co., Ltd.
Die casting at No. 2
1.24mg/m
workshop
Die casting at No. 4
0.87mg/m
workshop
Emission Standard of
Volatile Organic Compounds
Aromatic Waste gas outlet around
Benzene Zeolite drum + RO 1 0mg/m for Furniture Manufacturing 0.00 / No
compounds plant C
(DB44/814-2010) the second
Guang time period
dong
Emission Standard of
Welling Total
Volatile Organic Compounds
Motor Aromatic toluene Waste gas outlet around
Zeolite drum + RO 1 0 mg/m for Furniture Manufacturing 0.00 / No
Manufa compounds and plant C
(DB44/814-2010) the second
cturing xylene
time period
Co.,
Ltd. Overall Emission Standard of
Other volatile Volatile Organic Compounds
Waste gas outlet around
organic organic Zeolite drum + RO 1 14mg/m for Furniture Manufacturing 3.972 17.09 No
plant C
compounds compound (DB44/814-2010) the second
s (VOCs) time period
Physical Discharge Limits of Water
and Pollutants in Guangdong DB-
comprehens COD 32mg/L 44/26-2001 13.05 22.77 No
ive Discharge to the municipal sewage The eastern side of
Emission Standard of
indicators system after being treated by 1 wastewater treatment
Guang Volatile Organic Compounds
wastewater treatment system station in Malong base
dong Ammonia- for Furniture Manufacturing
Inorganic (DB44/814-2010)/ Emission
Midea pollutants nitrogen 1.2mg/L 0.258 4.554 No
Kitchen (NH3-N) Standard of Volatile Organic
Applian Particles Compounds for Surface
Soot 0.34mg/m Coating of Automobile 0.7 / No
ces
26 outlets at A1 plant, 47 Manufacturing Industry
Manufa Gaseous Sulfur outlets at A2 plant, 21 (DB44/816-2010)/ Emission
cturing inorganic dioxide
3mg/m 0.87 1.055 No
pollutants outlets at B2 plant, 9 Standard of Pollutants for
Co., 20m high altitude discharge after
outlets at C2 plant, 2 Synthetic Resin Industry (GB
Ltd. Gaseous being treated by waste gas treatment 112
outlets at C3 plant, 1 outlet 31572-2015)/ Guangdong
inorganic Oxynitride equipment and reaching the standard at wastewater treatment 4mg/m 5.44 10.314 No
Province Emission Limits of
pollutants station and 6 outlets at Air Pollutants (DB44/27-
Aromatic canteen 2001)/ Emission Standard of
Benzene 0.06mg/m 0.21 / No
compounds Volatile Organic Compounds
173
The 2023 Annual Report of Midea Group Co., Ltd.
Total for Printing Industry
Aromatic toluene (DB44/815-2010)/ Emission
4.65mg/m Standard of Cooking Fume 1.34 / No
compounds and
xylene (on Trial) (GB 18483-2001)
Overall
Other volatile
organic organic 10.48mg/m 10.2 35.051 No
compounds compound
s (VOCs)
Fatty
hydrocarbon
Non-
s and
methane
halogenated 2.73mg/m 0.82 / No
hydrocarb
fatty
ons
hydrocarbon
s
Aromatic Ethylbenz
0.09mg/m 0.342 / No
compounds ene
15m high altitude discharge after
Particles Fume being treated by oil fume purification 0.4mg/m 0.198 / No
facility and reaching the standard
Physical
and
comprehens COD 106.66mg/L 104.8 175.5 No
ive
indicators
Anhui Ammonia-
Meizhi Inorganic nitrogen 9.04mg/L 8.49 9.3 No
Precisi pollutants (NH3-N) The south side of Building Integrated Wastewater
on Discharge after being treated by 6 for night shift at the north Discharge Standard
Manufa Physical wastewater treatment system and 2
and side of the plant area (GB8978-1996) Table 4,
cturing Five-day reaching the standard
Co., comprehens (General outlet) 147.3mg/L Level 3 89.5 / No
BOD
Ltd. ive
indicators
Physical
and
Suspende
comprehens 30.5mg/L 23.95 / No
d matters
ive
indicators
174
The 2023 Annual Report of Midea Group Co., Ltd.
Oil Petroleum 3.285mg/L 1.5 / No
Integrated Wastewater
Metals and
Total Discharge Standard
metal 0.115mg/L 0.07 0.1 No
nickel (GB8978-1996), the first
compounds Outlet in the sewage class pollutant standard
station
Metals and Integrated Wastewater
metal Total zinc 0.565mg/L Discharge Standard 0.122 1.25 No
compounds (GB8978-1996)
Outlet for molybdenum-
29.15mg/m3
containing waste gas 1
Collected by gas trap hood + 21m Outlet for molybdenum-
3 16.95 No
high exhaust cylinder containing waste gas 2
Outlet for molybdenum-
9.89mg/m3
containing waste gas 3
1# Outlet for waste gas
19.875mg/m3
from machining
2# Outlet for waste gas
14.55mg/m3
from machining
3# Outlet for waste gas
9.54mg/m3
Fatty from machining
hydrocarbon 4# Outlet for waste gas Relevant standard limit
s and Non- 7 20.97mg/m3
from machining requirements in Table 1 of
halogenated methane
Shanghai Integrated 31.1014
hydrocarb 5# Outlet for waste gas /
fatty 10.36mg/m3 Emission Standard of Air
ons from machining
hydrocarbon Pollutants (DB31/933-2015)
s Collected by gas trap hood + 25m 6# Outlet for waste gas
6.3mg/m3 No
high exhaust cylinder from machining
7# Outlet for waste gas
13.18mg/m3
from machining
Outlet for waste gas from
20.28mg/m3
coating 1
Outlet for waste gas from
14.015mg/m3
coating 2
4
Outlet for waste gas from
10.135mg/m3
coating 3
Outlet for waste gas from
23.04mg/m3
coating 4
Particles Total Collected by gas trap hood + 25m 22 Outlet for heat treatment 1 12.5mg/m3 Comprehensive Control Plan 25.2677 / No
175
The 2023 Annual Report of Midea Group Co., Ltd.
suspende high exhaust cylinder Outlet for heat treatment 2 11.45mg/m3 for Air Pollution of Industrial
d Furnaces (H.D.Q. [2019] No.
particulate Outlet for heat treatment 3 11.3mg/m3 56)
matter Outlet for heat treatment 4 11.5mg/m3
(TSP)
Outlet for heat treatment 5 9.65mg/m3
(aerodyna
mic Outlet for heat treatment 6 10.4mg/m3
diameter Outlet for heat treatment 7 9.45mg/m3
below 100 Outlet for heat treatment 8 8.4mg/m3
μm)
Outlet for heat treatment 9 4.65mg/m3
Outlet for heat treatment
5.45mg/m3
10
Outlet for heat treatment
11.6mg/m3
11
Outlet for heat treatment
9.9mg/m3
12
Outlet for heat treatment
9.35mg/m3
13
Outlet for heat treatment
11.3mg/m3
14
Outlet for heat treatment
11.5mg/m3
15
1# outlet for waste gas
from pre-coating treatment 10.5 mg/m3
and kiln
2# outlet for waste gas
from pre-coating treatment 9.45mg/m3
and kiln
3# outlet for waste gas
from pre-coating treatment 4.55mg/m3
and kiln
3rd stage sintering furnace
4.5mg/m3
outlet
5th stage coating sintering
9.65mg/m3
furnace outlet
Outlet for waste gas from
7.95mg/m3
aluminum melting 1
176
The 2023 Annual Report of Midea Group Co., Ltd.
Outlet for waste gas from
7.1mg/m3
aluminum melting 2
Outlet for the welding
8.8mg/m3
waste gas 1
Outlet for the welding
8mg/m3
waste gas 2
Outlet for the welding
6.5mg/m
waste gas 3
Outlet for the welding
4.55mg/m3
Collected by gas trap hood + 21m waste gas 4
8
high exhaust cylinder Outlet for the welding
3.6mg/m3
waste gas 5
Outlet for the welding
9.6mg/m3
waste gas 6
Outlet for the welding
9.1mg/m3
waste gas 7
Outlet for the welding
3.95mg/m3
waste gas 8
Outlet for heat treatment 1 <3mg/m
Outlet for heat treatment 2 <3mg/m
Outlet for heat treatment 3 <3mg/m
Outlet for heat treatment 4 <3mg/m
Outlet for heat treatment 5 7mg/m3
Outlet for heat treatment 6 6mg/m3
Outlet for heat treatment 7 3.5mg/m3
Comprehensive Control Plan
Gaseous
Sulfur Collected by gas trap hood + 25m Outlet for heat treatment 8 64mg/m3 for Air Pollution of Industrial
inorganic 22 11.7129 / No
dioxide high exhaust cylinder Outlet for heat treatment 9 67mg/m3 Furnaces (H.D.Q. [2019] No.
pollutants
56)
Outlet for heat treatment
73.5mg/m3
10
Outlet for heat treatment
39mg/m3
11
Outlet for heat treatment
6mg/m3
12
Outlet for heat treatment
<3mg/m
13
177
The 2023 Annual Report of Midea Group Co., Ltd.
Outlet for heat treatment
<3mg/m
14
Outlet for heat treatment
<3mg/m
15
1# outlet for waste gas
from pre-coating treatment 3.5mg/m3
and kiln
2# outlet for waste gas
from pre-coating treatment 9.5mg/m3
and kiln
3# outlet for waste gas
from pre-coating treatment 5mg/m3
and kiln
3rd stage sintering furnace
4.5mg/m3
outlet
5th stage coating sintering
7.5mg/m3
furnace outlet
Outlet for waste gas from
55mg/m3
aluminum melting 1
Outlet for waste gas from
<3mg/m
aluminum melting 2
Outlet for heat treatment 1 8.5mg/m3
Outlet for heat treatment 2 14.5mg/m3
Outlet for heat treatment 3 14mg/m3
Outlet for heat treatment 4 17mg/m3
Outlet for heat treatment 5 14mg/m3
Outlet for heat treatment 6 14mg/m3
Comprehensive Control Plan
Gaseous Outlet for heat treatment 7 5mg/m3
Collected by gas trap hood + 25m for Air Pollution of Industrial
inorganic Oxynitride 22 10.6089 / No
high exhaust cylinder Outlet for heat treatment 8 11mg/m3 Furnaces (H.D.Q. [2019] No.
pollutants
56)
Outlet for heat treatment 9 10mg/m3
Outlet for heat treatment
17.5mg/m3
10
Outlet for heat treatment
10mg/m3
11
Outlet for heat treatment
20.5mg/m3
12
178
The 2023 Annual Report of Midea Group Co., Ltd.
Outlet for heat treatment
7.5 mg/m3
13
Outlet for heat treatment
5mg/m3
14
Outlet for heat treatment
7mg/m3
15
1# outlet for waste gas
from pre-coating treatment ＜3mg/m3
and kiln
2# outlet for waste gas
from pre-coating treatment 6mg/m3
and kiln
3# outlet for waste gas
from pre-coating treatment 4mg/m3
and kiln
3rd stage sintering furnace
18mg/m
outlet
5th stage coating sintering
16mg/m3
furnace outlet
Outlet for waste gas from
6mg/m3
aluminum melting 1
Outlet for waste gas from
8.5mg/m3
aluminum melting 2
GD Emission Standard of
Other Gas trap hood + dry filtering + UV +
Midea During the screen printing Volatile Organic Compounds
organic Overall activated carbon + 15m high altitude 1 15.3mg/m 1.15619 / No
Environ compounds volatile process of the south plant for Printing Industry
discharge
ment (DB44/815-2010)
organic
Applian compound Gas trap hood + dry filtering + UV + Emission Standard of
ces Other
s (VOCs) activated carbon + 15m high altitude During the screen printing Volatile Organic Compounds
Mfg. organic 1 12.63mg/m 3.33580 / No
process of the north plant for Printing Industry
Co., compounds discharge
(DB44/815-2010)
179
The 2023 Annual Report of Midea Group Co., Ltd.
Ltd. Fatty
hydrocarbon
Exhaust funnel for waste Emission Standard of
s and Gas trap hood + dry filtering + UV +
gas from the baking and Pollutants for Synthetic
halogenated activated carbon + 15m high altitude 6 5.28mg/m 13.59469 / No
injection molding Resin Industry (BG 31572-
fatty discharge
processes 2015)
hydrocarbon
s
Fatty
hydrocarbon
Exhaust funnel for waste Emission Standard of
s and Gas trap hood + dry filtering + UV +
gas from the baking and Pollutants for Synthetic
halogenated activated carbon + 15m high altitude 2 5.60mg/m 2.03391 No
injection molding Resin Industry (BG 31572-
fatty discharge
processes 2015)
hydrocarbon
s
Fatty
hydrocarbon
Emission Standard of
s and Gas trap hood + dry filtering + UV +
Metal plate dusting waste Pollutants for Synthetic
halogenated activated carbon + 15m high altitude 3 7.54mg/m 3.78561 / No
gas exhaust cylinder Resin Industry (BG 31572-
fatty discharge
2015)
hydrocarbon Non-
s methane
Fatty hydrocarb
hydrocarbon ons
Outlet for waste gas from
s and Dry filtering + direct combustion of
dip coating, drying and Emission Limits of Air
halogenated natural gas + 15m high altitude 1 4.98mg/m 0.91463 / No
hardening of the north Pollutants (DB44/27-2001)
fatty discharge
plant
hydrocarbon
s
Fatty
hydrocarbon
Outlet for waste gas from
s and
Dry filtering + RCO + 15m high dip coating, drying and Emission Limits of Air
halogenated 1 13.6mg/m 0.2272 / No
altitude discharge hardening of the south Pollutants (DB44/27-2001)
fatty
plant
hydrocarbon
s
Fatty
hydrocarbon
s and Metal spray painting, Emission Limits of Air
Water spray + dry separation +
halogenated 1 outlet for waste gas from 8.165mg/m Pollutants (DB44/27-2001): 2.32220 No
activated carbon device
fatty drying Time Period 2, Level 2
hydrocarbon
s
180
The 2023 Annual Report of Midea Group Co., Ltd.
Fatty Emission Limits of Air
hydrocarbon Pollutants (DB44/27-2001):
Outlet for waste gas from
s and Time Period 2, Level 2
Water spray + dry separation + ceramic spraying, drying,
halogenated 1 11.4mg/m 0.754 No
activated carbon device sandblasting, powder
fatty
spraying and hardening
hydrocarbon
s
Gas trap hood + water spraying + dry Emission Limits of Air
Metal plate dusting, waster
Particles filtering + UV + activated carbon + 1 5.25mg/m Pollutants (DB44/27-2001): 0.53984 / No
gas hardening
15m high altitude discharge Time Period 2, Level 2
Outlet for waste gas from Emission Limits of Air
Gas trap hood + Water wash spray
Particles 1 aluminum casting machine 10mg/m Pollutants (DB44/27-2001): 1.46311 / No
+15m high exhaust
Total polishing and grinding Time Period 2, Level 2
suspende
Emission Standard of Air
d Gas trap hood + Water wash spray + Outlet for waste gas from
Particles 1 3.7mg/m Pollutants for Casting 0.62215 / No
particulate Oil fume purifie + 15m high exhaust die casting
Industry (GB 39726-2020)
matter
(TSP) Gas collection hood + Energy-saving
Outlet for furnace at Emission Standard of Air
(aerodyna cooling device + Cyclone plate tower
Particles 1 machine side and natural 3.55mg/m Pollutants for Casting 0.2239 / No
mic + Wet electrostatic precipitator + 15m
gas and waste gas Industry (GB 39726-2020)
diameter high exhaust
below 100 Water spray + dry separation + 1 Metal spray painting, 3.55mg/m Emission Limits of Air
Particles μm) activated carbon device outlet for waste gas from Pollutants (DB44/27-2001): 0.75546 No
drying Time Period 2, Level 2
Water spray + dry separation + 1 Outlet for waste gas from 10mg/m Emission Limits of Air
activated carbon device ceramic spraying, drying, Pollutants (DB44/27-2001):
Particles 0.6614 No
sandblasting, powder Time Period 2, Level 2
spraying and hardening
Emission Standard of
Fume hood + electrostatic range hood Cooking fume outlet at
Particles Fume 7 0.13mg/m Cooking Fume GB18483- 0.0338 / No
+ 15m high altitude discharge canteen
2001
Physical
and
Suspende
comprehens 2.75mg/L Discharge Standard of 0.1354 No
d matters
ive Pollutants for Municipal
indicators Oil separation and slagging - Wastewater Treatment Plant
Domestic wastewater
hydrolysis and acidification - contact 1 GB18918-2002
Physical treatment station
oxidation - MBR
and Emission standard
comprehens COD 12.58mg/L GB18918-2002 0.7246 / No
ive
indicators
181
The 2023 Annual Report of Midea Group Co., Ltd.
Animal
and
Oil 0.41mg/L 0.0264 / No
vegetable
oil
Ammonia-
Inorganic
nitrogen 0.08755mg/L 0.003494 / No
pollutants
(NH3-N)
Physical
and
comprehens pH value 6.6 / / No
ive
indicators
Physical
and
Five-day
comprehens 5.4mg/L 0.2703 / No
BOD
ive
indicators
Metals and
metal Total zinc 0.0045 mg/L 0.00066921 0.08 No
compounds
Physical
and
comprehens COD 6.28mg/L 1.007231 3.9191 No
ive
indicators
Physical
and Coagulation and sedimentation + Discharge Standard of Water
Suspende Production wastewater
comprehens hydrolysis and acidification + aeration 1 5.5mg/L Pollutants for Electroplating 1.420196 / No
d matters treatment station
ive + biological tank + MBR + water reuse DB 44/1597-2015
indicators
Physical
and
comprehens pH value 7.5 / / No
ive
indicators
Total
Inorganic
phosphor 0.02mg/L 0.0023563 / No
pollutants
us (by P)
182
The 2023 Annual Report of Midea Group Co., Ltd.
Ammonia- 0.82mg/L No
Inorganic
nitrogen 0.0164762 0.6279
pollutants
(NH3-N)
Oil Petroleum 0.064mg/L 0.0211041 / No
Metals and 0.11mg/L
metal Aluminum 0.0139012 / No
compounds
Metals and 0.0725mg/L 0.0102071
metal Total iron / No
compounds
Physical
and
comprehens COD 68mg/L 11.6071062 15 No
ive
indicators
Ammonia-
Inorganic
nitrogen 12.3mg/L 2.21459096 2.5 No
pollutants
(NH3-N)
Physical
and
Five-day Integrated Wastewater
comprehens Discharge to municipal domestic Outlets for domestic 27.5mg/L 7.28871048 / No
COD 1 Discharge Standard
ive sewage network sewage at the plant
(GB8978-1996)
Hubei indicators
Midea Physical
Refrige and
Suspende
rator comprehens 12.3mg/L 2.0792318 / No
d matters
Co., ive
Ltd. indicators
Animal
and
Oil 1.03mg/L 0.23554422 / No
vegetable
oil
Physical
and
comprehens COD After deep treatment by industrial 96mg/L 3.106086 15 No
Integrated Wastewater
ive waste water treatment station,
1 Freezer waste water outlet Discharge Standard
indicators discharge to municipal industrial
(GB8978-1996)
Ammonia- sewage network
Inorganic
nitrogen 0.185mg/L 0.01278339 2.5 No
pollutants
(NH3-N)
183
The 2023 Annual Report of Midea Group Co., Ltd.
Physical
and
Five-day
comprehens 23.2mg/L 1.3381255 / No
COD
ive
indicators
Physical
and
Suspende
comprehens 35mg/L 0.424141 / No
d matters
ive
indicators
Oil Petroleum 3.25mg/L 0.10638157 / No
Animal
and
Oil 1.03mg/L 0.08450638 / No
vegetable
oil
First installation branch
1 0.91mg/m / No
waste gas outlets
After photo-catalytic oxidation + 1 Second installation branch
1.28mg/m / No
activated carbon, 15m high altitude waste gas outlets
discharge 1 Waste gas outlets at the
injection molding 0.99mg/m / No
workshop
After dry filtering + photo-catalytic
Waste gas outlets at the
oxidation + activated carbon, 15m 1 1.03mg/m / No
extrusion workshop
high altitude discharge
Fatty V photocatalysis + activated carbon, 1 New injection molding
0.98mg/m / No
hydrocarbon 15m high altitude discharge outlet
Non-
s and Cooling and dehumidification + UV 1 Integrated Emission / No
methane
halogenated photocatalysis + activated carbon, Foam outlet 0.94mg/m Standard of Air Pollutants 16.23147
hydrocarb
fatty 15m high altitude discharge (GB16297-1996)
ons
hydrocarbon Dry filter + two-stage activated 1 Two-door gallbladder / No
0.94mg/m
s carbon, 15m high altitude discharge molding outlet
After wet scrubber + rotating-stream- 1 / No
Waste gas outlets at the
tray scrubber + demister + activated 0.54mg/m
freezer branch
carbon, 15m high altitude discharge
Dry filter + two-stage activated 1 One-box gallbladder / No
0.88mg/m
carbon, 15m high altitude discharge molding outlet
Dry filter + two-stage activated 1 Two-box gallbladder / No
0.73mg/m
carbon, 15m high altitude discharge molding outlet
Rotating-stream-tray scrubbe + dry 1 / No
filter + two-stage activated carbon, Freezer No.2 # plant outlet 0.53mg/m
15m high altitude discharge
184
The 2023 Annual Report of Midea Group Co., Ltd.
Dry filter + two-stage activated 1 / No
carbon, 15m high altitude discharge Injection molding machine
Rotating-stream-tray scrubbe + dry 1 and injection granulation 0.56mg/m / No
filter + activated carbon, 15m high outlet
altitude discharge
Rotating-stream-tray scrubbe + dry 1 / No
filter + activated carbon, 15m high Extruder outlet 0.81mg/m
altitude discharge
Dry filter + two-stage activated 1 / No
Molding machine outlet 0.66mg/m
carbon, 15m high altitude discharge
Rotating-stream-tray scrubbe + dry 1 / No
Molding and extrusion
filter + activated carbon, 15m high 0.98mg/m
granulation outlet
altitude discharge
Dry filter + two-stage activated 1 / No
Door foam outlet 0.95mg/m
carbon, 15m high altitude discharge
Dry filter + two-stage activated 1 / No
Box foam outlet 0.95mg/m
carbon, 15m high altitude discharge
Total Cartridge dust removal, 15m high 1 Molding and extrusion / No
10mg/m
suspende altitude discharge crushing outlet
d Cartridge dust removal, 15m high 1 / No
Injection crushing outlet 10mg/m
particulate altitude discharge
matter After wet scrubber + rotating-stream- 1 Waste gas outlets at the
Particles (TSP) tray scrubber + demister + activated freezer branch 1.32314
(aerodyna carbon, 15m high altitude discharge
mic 4.1mg/m / No
diameter
below 100
μm)
Physical
and
Wuxi comprehens COD 125mg/L 50.848 123.9074 No
Little ive
Integrated Wastewater
Swan indicators Discharge to municipal sewage Exit at the middle gate of
1 Discharge Standard
Electric Physical network the plant
(GB8978-1996)
Co., and
Suspende
Ltd. comprehens 43.5mg/L 15.352 87.2553 No
d matters
ive
indicators
185
The 2023 Annual Report of Midea Group Co., Ltd.
Animal
and
Oil 1.54mg/L 0.752 10.7034 No
vegetable
oil
Total
Inorganic
phosphor 2.17mg/L 0.765 1.0701 No
pollutants
us (by P)
Inorganic Total
25.13mg/L 8.579 11.2612 No
pollutants nitrogen
Ammonia-
Inorganic
nitrogen 20.2mg/L 6.267 6.6906 No
pollutants
(NH3-N)
Total
suspende
d Water spraying + UV photocatalysis +
particulate activated carbon + filter cartridge dust
matter collection + high altitude
Particles (TSP) discharge/Two-stage activated carbon Plants at each workshop 3.05mg/m 0.3076 2.0696 No
(aerodyna + high altitude discharge/Filter Integrated Emission
mic cartridge dust collection + high altitude Standard of Air Pollutants
diameter discharge/High altitude discharge (GB16297-1996)/
below 100 Tianjin Emission Control
μm) Standard for Industrial
Enterprises Volatile Organic
Water spraying + UV photocatalysis +
Fatty Compounds (DB12/524-
activated carbon + filter cartridge dust 11
hydrocarbon 2014)/
Non- collection + high altitude
s and Emission Standard of
methane discharge/Zeolite + CO + high altitude
halogenated Plants at each workshop 5.62mg/m Pollutants for Synthetic 1.1984 1.2199 No
hydrocarb discharge/Dry filtering + electrostatic
fatty Resin Industry (GB 31572-
ons oil removal + high altitude
hydrocarbon 2015)/ Emission Standard of
discharge/Two-stage activated carbon
s Air Pollutants for Boiler
+ high altitude discharge
(GB13271-2014)
Gaseous No
Sulfur Natural gas for the metal
inorganic Hight altitude discharge 2.07mg/m 0.0695 0.624
dioxide plate process
pollutants
Gaseous
Natural gas for the metal
inorganic Oxynitride Hight altitude discharge 5.12mg/m 0.1655 3.38 No
plate process
pollutants
186
The 2023 Annual Report of Midea Group Co., Ltd.
Integrated Emission
Bag + activated carbon + high altitude 0.32 Standard of Air Pollutants
Particles Soot discharge/Activated carbon + high Buildings A and B 0.173 0.2859 No
mg/m (GB16297-1996) for particles
Wuxi altitude discharge
and chemical compounds
Filin
Electro Fatty
hydrocarbon 4 Subject to Tianjin Emission
nics Non-
Co., s and Activated carbon + high altitude 0.975 Control Standard for
methane
Ltd. halogenated hydrocarb discharge/Bag + activated carbon + Buildings A and B
mg/m
Industrial Enterprises Volatile 1.358 2.6389 No
fatty high altitude discharge Organic Compounds
ons
hydrocarbon (DB12/524-2014)
s
Total
suspende
d
particulate
matter Integrated Emission
(TSP) 1#: Two-stage activated carbon; DA007, DA008, and
Particles 2.4 7mg/m Standard of Air Pollutants 0.55 2.697 No
(aerodyna 5#: Grade 3 filtering + honeycomb DA009
(GB16297-1996)
Huaian mic zeolite + CO;
Welling diameter 6#: Electrostatic demisting + grade 2
Motor below 100 filtering + activated carbon;
Manufa μm) 7
7#: Spray tower + plasma;
cturing
Co., Fatty 8#: Grade 2 filtering + two-stage
Ltd. hydrocarbon activated carbon;
Non- DA001、DA005、
s and 9#: Bag filtering; Integrated Emission
methane
halogenated 10#: Two-stage activated carbon. DA006、DA008、 2．12mg/m Standard of Air Pollutants 1.13 1.3853 No
hydrocarb
fatty DA010、DA003 (GB16297-1996)
ons
hydrocarbon
s
Aromatic Emission Standards for Odor
Styrene DA005、DA008、DA003 7.11mg/m 1.25 / No
compounds Pollutants (GB14554-93)
Midea Physical
Integrated Wastewater
Group and Main sewage outlet on the
Discharge after treatment at the Discharge Standard
Wuhan comprehens pH value sewage treatment plant
1 west side of the factory 7.5
(GB8978-1996)
/ / No
Refrige ive area
ration indicators
187
The 2023 Annual Report of Midea Group Co., Ltd.
Equipm Physical
ent and
Co., comprehens COD 38mg/L 1.722 9.951 No
Ltd. ive
indicators
Ammonia-
Inorganic
nitrogen 0.543mg/L 0.0314 1.002 No
pollutants
(NH3-N)
Physical
and
Suspende
comprehens ND 0.373 / No
d matters
ive
indicators
Oil Petroleum 0.97mg/L 0.023 / No
Total
Inorganic
phosphor ND 0.003 / No
pollutants
us (by P)
Inorganic Fluoride
7.82mg/L 0.172 / No
pollutants (by F-)
Metals and
metal Total zinc 2.94mg/L 0.087 / No
compounds
Physical
and
Five-day
comprehens 9.7mg/L 0.384 / No
BOD
ive
indicators
1# plant, 3# plant, 4#
Particles Soot 20 6.6mg/m 0.178 / No
plant, 5# plant
Gaseous
Sulfur
inorganic 16 3mg/m 1.63 / No
dioxide
pollutants Integrated Emission
Gaseous Discharge after being treated by Standard of Air Pollutants
inorganic Oxynitride environmental protection equipment 16 3mg/m (GB16297-1996) 1.847 / No
pollutants
Metal Tin and its
elements compound
3 3# plant 0.004mg/m 0.4215 / No
and their s
compounds
188
The 2023 Annual Report of Midea Group Co., Ltd.
Other Acrylonitril
organic e 1 5# plant 0.0002mg/m 0.044 / No
compounds
Aromatic Styrene
1 0.145 mg/m 0.0324 / No
compounds
Overall
Other volatile
organic organic 7 1# plant, 3# plant, 4# plant 8.12mg/m 0.054 / No
compounds compound
s (VOCs)
Fatty 1) Non-methane
hydrocarbon hydrocarbons:
Non-
s and Implementation of the
methane
halogenated 9 1#, 2# plants 10.21mg/m emission concentration limits 11.347 / No
hydrocarb
fatty on organic chemicals in
ons
hydrocarbon Table 1 of Emission Control
s Standard for Industrial
Particles Soot 2 1# plant 2.58mg/m Enterprises Volatile Organic 1.526 7.135 No
Gaseous Compounds (DB13/2322-
inorganic Oxynitride 2 1# plant 6.0mg/m 2016) 2.773 9.369 No
Handa pollutants
2) Sulfur dioxide/ nitrogen
n Gaseous 15m high altitude discharge after
Sulfur oxides/ particles:
Midea inorganic being treated by environmental 2 1# plant 2.92mg/m 1.425 9.408 No
dioxide Implementation of the new
Air- pollutants protection equipment
furnace standards in Table 1
Conditi
and Table 2 of Emission
oning
Standard of Air Pollutants for
Equipm
Industrial Kiln and Furnace
ent
Metal (DB13/1640-2012)
Co., Tin and its
elements 3) Tin and its compounds:
Ltd. compound 4 2# plant 0.01mg/m 0.0043 / No
and their Implementation of the
s requirements of Level 2 in
compounds
the Integrated Emission
Standard of Air Pollutants
(GB16297-1996)
Physical Requirements for inflow
and Discharge after being treated by water quality of wastewater
North side of the power
comprehens COD wastewater treatment system and 1 128.33mg/L treatment plant in Handan 2.94 9.42 No
house
ive reaching the standard Economic and Technological
indicators Development Zone
189
The 2023 Annual Report of Midea Group Co., Ltd.
Ammonia-
Inorganic
nitrogen 3.07mg/ L 0.076 0.7 No
pollutants
(NH3-N)
Physical
and
comprehens pH 7.17 / / No
ive
indicators
Physical
and
Suspende
comprehens 36mg/L 0.876 / No
d matters
ive
indicators
Oil Petroleum 0.47mg/L 0.011 / No
Inorganic Fluoride
5.45mg/L 0.129 / No
pollutants (by F-)
Physical
and
comprehens pH value 6.933 / / No
ive
indicators
Physical
and
Suspende
Chong comprehens d matters 13mg/l 0.9719 / No
qing ive
Midea indicators
Genera Physical
Integrated Wastewater
l and Discharge to municipal wastewater
General sewage discharge Discharge Standard
Refrige comprehens COD treatment plant after being treated by 1 109mg/l 8.1490 / No
exit of plant areas (GB8978-1996) Table 4,
ration ive the wastewater treatment system
Level 3
Equipm indicators
ent
Co., Ammonia-
Inorganic
Ltd. nitrogen 6.817mg/l 0.5096 / No
pollutants
(NH3-N)
Oil Petroleum 1.364mg/l 0.1384 / No
Physical
and
Five-day
comprehens 34.667mg/l 2.5917 / No
BOD
ive
indicators
190
The 2023 Annual Report of Midea Group Co., Ltd.
Other Anionic
0.217mg/l 0.0162 / No
indicators surfactant
Inorganic Phosphat
0.117mg/l 0.0087 / No
pollutants e
Inorganic Fluoride
2.265 mg/L 0.1693 / No
pollutants (by F-)
Metals and
Total
metal 0.013mg/l 0.0010 / No
copper
compounds
Total
suspende
d
particulate
matter
Particles (TSP) 10.226mg/m 2.5886 / No
(aerodyna
mic
diameter Integrated Emission
below 100 High altitude discharge after being 5
2 sets for paint waste gas Standard of Air Pollutants
μm) treated by waste gas treatment station of 1# and 4# plants each DB 50/418-2016 Table 1
Central Downtown
Fatty
hydrocarbon
s and Non-
halogenated methane
fatty 2.817mg/m 0.8687 / No
hydrocarb
hydrocarbon ons
s
Sulfuric
Particles Lye spray towers (one is out of 1.080mg/m Integrated Emission 0.0024 No
acid mist Acid pickling waste gas /
service, and the other one is used for Standard of Air Pollutants
Gaseous 2 outlets for 1# and 4#
Hydrogen occasional emergency cleaning of DB 50/418-2016 Table 1
inorganic plants 8.053mg/m 0.0098 No
chloride abnormal materials) Central Downtown
pollutants /
191
The 2023 Annual Report of Midea Group Co., Ltd.
Total
suspende
d
particulate
matter
Particles (TSP) 5.943mg/m 0.5886 No
(aerodyna
mic
diameter
below 100
μm) Integrated Emission /
Gaseous Standard of Air Pollutants
Sulfur DB 50/418-2016 Table 1
inorganic 4.443mg/m 0.4282 No
dioxide Central Downtown
pollutants Volatile oil drying waste /
1 set of RO 1
Gaseous gas outlet Emission Standard of Air
inorganic Oxynitride 12.223mg/m Pollutants for Industrial Kiln 1.2018 No
pollutants and Furnace DB 50/659- /
Fatty 2016 Table 1/2
hydrocarbon
s and Non-
halogenated methane
fatty 2.853mg/m 0.2638 No
hydrocarb
hydrocarbon ons
s
/
Ringelma
Physical
nn / No
indicator
emittance <1 /
Physical
Chong and
qing comprehens pH value 7.6 / / No
ive
Midea
indicators
Air- Integrated Wastewater
Conditi Physical Treatment by waste water treatment Discharge Standard
1 West gate
oning and station and reaching the standard (GB8978-1996) Table 4,
Equipm comprehens COD 165mg/L Level 3 6.241 76.63 No
ent ive
Co., indicators
Ltd.
Physical Suspende 38mg/L 1.362 / No
and d matters
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The 2023 Annual Report of Midea Group Co., Ltd.
comprehens
ive
indicators
Ammonia-
Inorganic
nitrogen 23.6mg/L 0.865 5.32 No
pollutants
(NH3-N)
Oil Petroleum 0.16mg/L 0.008 / No
Inorganic Fluoride
1mg/L 0.1914 / No
pollutants (by F-)
Physical
and
Five-day
comprehens 50.9mg/L 1.767 / No
BOD
ive
indicators
Other Anionic
0.104mg/L 0.007 / No
indicators surfactant
Metals and
metal Total zinc 0.024mg/L 0.005 / No
compounds
Animal
and
Oil 0.24mg/L 0.056 / No
vegetable
oil
Particles Particles 9.5mg/m 10.492 / No
Gaseous
Sulfur
inorganic 4mg/m 1.052 / No
dioxide
pollutants
Gaseous
inorganic Oxynitride 8mg/m 1.521 / No
pollutants
After treatment by environmental Integrated Emission
Metal protection and treatment facilities and East, west, south and Standard of Air Pollutants
Tin and its 10
elements reaching the standard, 25m high north corners of the plant DB 50/418-2016 Table 1
compound 9.47mg/m 2.048 / No
and their altitude discharge Central Downtown
s
compounds
Fatty
hydrocarbon Non-
s and methane
11.1mg/m 4.7447 / No
halogenated hydrocarb
fatty ons
hydrocarbon
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The 2023 Annual Report of Midea Group Co., Ltd.
s
Waste
mineral
oil, waste
oil-
containing
liquid,
Guang
waste
zhou
packaging
Hualing
, waste
Refrige
activated Treatment entrusted to third-party
rating N/A N/A N/A N/A N/A 175.158 / No
carbon, qualified enterprises
Equipm
waste
ent
lead
Co.,
battery,
Ltd.
waste
filter
cotton,
waste
circuit
board, etc
Treatment of pollutants
During the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no major
environmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,
supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste
during the production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary,
which is in compliance with the relevant requirements of the environment administrations.
Environment self-monitoring plans
All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, which include: 1)
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Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis. Major
discharge points are equipped with an online pollution discharge monitoring system for stationary pollution sources to produce and upload real-time
data to Midea Environmental Protection Online Monitoring Platform; 2) Waste water pollution source monitoring: Samples are fetched at intake and
outlet ports of waste water treatment stations to monitor changes of pollution source of waste water and up-to-standard emission of waste water
after being treated at the waste water treatment stations. Monitoring items include CODcr, SS and petroleum, etc. The data is uploaded to the
governmental monitoring authority online and the government authority conducts real-time monitoring; 3) Noise monitoring: Noise monitoring points
are set at noise sensitive points and on the border of factories. Noise is monitored once in spring and summer respectively and at daytime and at
nighttime respectively each time; 4) Solid waste pollution source monitoring: Hazardous waste produced from the subsidiaries is handed over to the
units with qualifications for treatment, monitoring systems are established, and related management forms and accounts are set up.
Contingency plans for environmental accidents
All subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms for
environmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents
has been enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote a
comprehensive, coordinated and sustainable development of the society.
According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,
commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.
Spending on environmental management and protection and payment of environmental protection tax
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All subsidiaries strictly observe the laws and regulations governing environmental protection, and all construction projects are in compliance with the
environmental effect requirements and other rules, with no misdeeds during the Reporting Period. Once a construction project is finished, a third-
party testing institution is hired to examine indexes including waste water, waste gas and noise, and the compilation and approval of the
environmental effect evaluation report is finished in time.
Measures taken to reduce carbon emissions during the Reporting Period and the results
√ Applicable □ N/A
a. The Group Carbon Management Measures has been published to further clarify the processes and requirements for organizational carbon
management, product carbon management, and carbon asset management.
b. Energy-saving projects were carried out, with over 1,300 energy-saving projects undertaken in the year 2023. Among them, the distributed
photovoltaic green electricity generation reached 230 million kWh, representing a 9.52% increase compared to 2022.
c. The green development of manufacturing bases was furthered in an orderly manner in accordance with the medium- and long-term plans. Based
on the green manufacturing plan, continuously improve the green manufacturing system and promote the enhancement of green manufacturing
capabilities. In 2023, Midea's residential air conditioner factory in Thailand was awarded the national-level title of Green Factory by the Thai
government. The Laundry Appliance Division’s factory in Hefei achieved a green electricity usage ratio of 31% and obtained certifications as a
national-level green factory and Anhui province-level green factory. As of the end of the Reporting Period, Midea has a total of 28 national-level
green factories.
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The 2023 Annual Report of Midea Group Co., Ltd.
d. Further promote carbon reduction across the entire value chain, including green design, green procurement, green logistics, and green recycling.
In 2023, Midea's R290 technology for air conditioners achieved new breakthroughs, with the Efficlima new product having energy efficiency far
exceeding the highest A+++ level. The Laundry Appliance Division established a closed-loop recycling system for the product lifecycle, significantly
reducing carbon emissions. The unit also completed research on washing detergent box components containing 50% recycled materials, obtaining
certification from the Global Recycling Standard (GRS). Utilizing automation and other technologies to create an intelligent production logistics
system, achieving standardization, intelligence, and unmanned operation in various logistics processes. Midea Group innovated in packaging
materials for residential air conditioners, developing high-density polyethylene (HDPE) and expanded polypropylene (EPP) packaging materials that
can be conveniently recycled. In regions where there is no recycling and reuse capability, Midea developed compostable and degradable packaging
materials based on polybutylene adipate terephthalate (PBAT). Midea achieved its annual target of recycling 2.6 million discarded home appliances
ahead of schedule, representing a 151% increase compared to 2022. These achievements lay a solid foundation for exploring broader pathways for
carbon reduction across the value chain.
Administrative penalties received during the Reporting Period due to environmental issues
□Applicable √N/A
No such cases during the Reporting Period.
Other environment-related information that should be made public
None
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The 2023 Annual Report of Midea Group Co., Ltd.
Other environment-related information
None
2. Corporate Social Responsibility (CSR)
The Company has voluntarily disclosed its CSR activities. Attaching great importance to protecting the legal rights and interests of its shareholders,
employees, consumers and business partners, as well as the government, the community and other stakeholders, the Company sticks to
harmonious common growth with them, honors its commitments, abides by law and moral principles, and continue to contribute to the sustainable
development of the society and the environment. For further information, see the Company’s ESG Report 2023 released on www.cninfo.com.cn.
3. Efforts in Poverty Alleviation and Rural Revitalization
3.1 Exploring new models for rural revitalisation
In this May, Midea Group organised a staff visit to the First Primary School of Guansuo Street, Guanling Buyi and Miao Autonomous County, Anshun
City, Guizhou Province, to carry out public welfare activities under the theme of "Build Dreams together with Midea through Technology". At the event,
Midea Group donated funds to assist in the construction of a science laboratory at the school and provided 600 science experiment kits to the local
community.
In addition, Midea Group continued to implement the East China and West China coordination mechanism. It spent RMB1 million in Qiandongnan
Prefecture, Guizhou Province as awards for teachers and students, motivating them to bear in mind the original mission of education, and driving
high-quality development in the local education.
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3.2 Keeping to the plan of “Talent First, Education First”
In this April, Midea Group donated RMB70 million to support the introduction of the Second Affiliated Midea High School of the East China Normal
University into Beijiao, Shunde. As such, Midea has established cooperation with the East China Normal University on high-quality education from
primary school, middle school, to high school. When the school is put into use, it will provide more than 6,000 places in the primary, middle, and high
schools to meet the local demand for quality education resources and make a greater contribution to the local economic and scientific and
technological development.
On October 21, Midea Group organized a public welfare event with the theme "Join Midea to Make Dreams Come True with Technology" at Midea
Global Innovation Center. More than 40 middle school students from Shunde District engaged in discussions on technology-related topics with three
Midea technology celebrities, experiencing the charm of science together. During the event, Midea's technology stars answered questions from the
children and imparted scientific knowledge through practical examples. After the event, the organizers also provided the children with "Midea
Science Experiment Kits", planting a seed of technology in their hearts through this event.
3.3 Subsequent plans
It is Midea Group’s vision to “Bring Great Innovations to Life”. The Company hopes to deliver the power of science and technology through public
welfare activities, keep to the plan of “Talent First, Education First”, adhere to the sustainable long-termism, as well as promote both rural
revitalisation and talent development, so as to play its part in creating more value for society.
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The 2023 Annual Report of Midea Group Co., Ltd.
Section VI Significant Events
1. Performance of Undertakings
1.1 Undertakings of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other
commitment makers fulfilled in the Reporting Period or ongoing at the period-end
√ Applicable □ N/A
Underta Type of
Undertaki Undertaking
king undertaki Details of undertaking Term Particulars on the performance
ng date
giver ng
1. Midea Holding and He Xiangjian have undertaken as
follows: He Xiangjian, Midea Holding and their controlled
Controll enterprises will remain independent from Midea Group in
ing respect of personnel, finance, assets, business and institutions,
Maintena
shareho in accordance with relevant laws and regulations and
nce of 28 March 1. There has been no violation of this
lder and regulatory documents. They will faithfully fulfill the above Long-standing
independ 2013 undertaking.
actual undertaking, and assume the corresponding legal liability. If
ence
Undertaki controll they fail to fulfill their obligations and responsibilities conferred
ng made er by the undertaking, they will bear the corresponding legal
in offering liabilities according to relevant laws, rules, regulations and
document regulatory documents.
s or
sharehold 2. In order to avoid possible competition within the industry
ing between Midea Group and Midea Holding and its controlled
alternatio enterprises as well as He Xiangjian, his immediate family and
Controll his controlled companies, Midea Holding and He Xiangjian
n
ing Avoiding have undertaken as follows:
document
shareho competiti
s 28 March 2. There has been no violation of this
lder and on within (1) None of the entities or individuals mentioned above is or will Long-standing
actual the be engaged in the same or similar business as the existing 2013 undertaking.
controll industry main business of Midea Group and its controlled companies.
er They are not or will not be engaged or participate in such
business that is competitive to the existing main business of
Midea Group and its controlled companies by controlling other
economic entities, institutions or economic organizations;
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The 2023 Annual Report of Midea Group Co., Ltd.
(2) If Midea Group and its controlled companies expand their
business on the basis of the existing ones to those where the
above mentioned related entities or individuals are already
performing such production and operations, as long as He
Xiangjian is still the actual controller of Midea Group, and
Midea Holding the controlling shareholder, they will agree on
solving the problem of competition within the industry arising
therefrom within a reasonable period;
(3) If Midea Group and its controlled companies expand their
business scope on the basis of the existing ones to those
where the above mentioned related subjects have not gone
into production or operation, as long as He Xiangjian is still the
actual controller of Midea Group, and Midea Holding the
controlling shareholder, they would undertake as not to engage
in competitive business to the new ones of Midea Group and
its controlled companies;
(4) In accordance with effective laws, regulations or other
regulatory documents of People's Republic of China, as long
as Midea Holding is identified as the controlling shareholder of
Midea Group, and He Xiangjian the actual controller, they will
not change or terminate this undertaking.
(5) Midea Holding and He Xiangjian shall faithfully fulfill the
above undertaking, and assume the corresponding legal
responsibilities. If they fail to fulfill their obligations and
responsibilities conferred by the undertaking, they would bear
the corresponding legal responsibilities according to relevant
laws, rules, regulations and regulatory documents.
3. In order to regulate matters of related transactions that may
occur in the future between Midea Group and Midea Holding
and its controlled companies as well as He Xiangjian, his
Controll immediate family and his controlled companies, Midea Holding
ing Regulatio and He Xiangjian have undertaken as follows:
shareho n of
lder and related (1) They will regulate any related transactions with Midea 28 March Long-standing
3. There has been no violation of this
2013 undertaking.
actual transactio Group and its controlled companies using their utmost efforts
controll ns to reduce them. For unavoidable related transactions with
er Midea Group and its controlled companies, including but not
limited to commodity trading, providing services to each other
or as agent, they will sign legal normative agreements with
Midea Group, and go through approval procedures in
accordance with related laws, regulations, rules, other
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regulatory documents, and relevant provisions of the Articles of
Association of Midea Group. They guarantee to offer fair prices
for related transactions, and fulfill the information disclosure
obligations in respect of the related transactions according to
related laws, regulations, rules, other regulatory documents,
and relevant provisions of the Articles of Association of Midea
Group. They also guarantee not to illegally transfer the funds or
profits from Midea Group, or damage the interests of its
shareholders at their advantages during the related
transactions.
(2) They shall fulfill the obligation of withdrawing from voting
that involves the above mentioned related transactions at the
general meeting of Midea Group;
(3) The related subject mentioned above shall not require
Midea Group to offer more favorable conditions than those to
any independent third party in any fair market transactions.
(4) In accordance with effective laws, regulations or other
regulatory documents of People's Republic of China, as long
as Midea Holding is identified as the controlling shareholder of
Midea Group, and He Xiangjian the actual controller, they shall
not change or terminate this undertaking.
(5) Midea Holding and He Xiangjian will faithfully fulfill the
above undertaking and assume the corresponding legal
liabilities. If they fail to fulfill their obligations and
responsibilities conferred by the undertaking, they will bear the
corresponding legal responsibilities according to relevant laws,
rules, regulations and regulatory documents.
4. On 4 January 2001, the Midea Trade Union Committee
On Midea
signed the "Equity Transfer Contract" with five people, namely
Trade
He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning
Controll Union
and Liang Jieyin, where it transferred all its limited equity of
ing Committe
Midea Group (22. 85%) respectively to those five people. 4. So far, this shareholding transfer has not
shareho e
According to the confirmation letter issued by members of the 28 March brought about any loss caused by any dispute
lder and transferri Long-standing
Midea Trade Union Committee at that time, the equity transfer 2013 or potential disputes. There has been no
actual ng its
price was determined after mutual discussion on the basis of violation of this undertaking.
controll limited
their true opinions, therefore there was no dispute or potential
er equity of
dispute.
Midea
Group On 28 June 2013, Foshan Shunde Beijiao General Union,
superior department of Midea Trade Union Committee, issued
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The 2023 Annual Report of Midea Group Co., Ltd.
a confirmation letter to the fact that the Midea Trade Union
Committee funded the establishment of Midea Group Co., Ltd.
In addition the letter also confirmed that the council of Midea
Trade Union Committee is entitled to dispose any property of
the committee, and such property disposal does not need any
agreement from all staff committee members.
Midea Holding and He Xiangjian, respectively the controlling
shareholder and actual controller of Midea Group Co., Ltd.
have undertaken as follows: For any loss to Midea Group
caused by any dispute or potential dispute arising from the
matters of equity transfer mentioned above, they are willing to
assume full liability for such loss.
Issues
about
Payment 5. Midea Holding and He Xiangjian have undertaken to be
of the liable for (1) paying such expenses and related expenses on
Staff time based on the requirements of relevant state departments
Controll
Social if Midea Group is required to be liable for the payment of staff
ing 5. So far, the payment of the staff social
Insurance social insurance, housing provident fund and the payment
shareho insurance and the housing provident fund has
and the required by relevant state authorities prior to this merger, (2) 28 March
lder and Long-standing not brought about any controversy or potential
Housing paying corresponding compensation for all direct and indirect 2013
actual disputes. There has been no violation of this
Provident losses incurred by Midea Group and its subsidiaries due to this
controll undertaking.
Fund merger, (3) indemnifying and holding harmless Midea Group
er
involved and its subsidiaries in time from such expenses when Midea
in Midea Group and its subsidiaries are required to pay them in
Group's advance.
Overall
Listing
Issues 6. Undertakings on issues about asset alteration, asset flaw
about and house leasing of Midea Group and its subsidiaries
asset
Midea Holding and He Xiangjian have undertaken as follows:
Controll alteration, 6. So far, the issues about asset alteration,
ing asset (1) Midea Holding will do its utmost to assist and urge Midea asset flaw and house leasing of Midea Group
shareho flaw and Group (including its subsidiaries) to complete renaming 28 March and its subsidiaries have not brought about
lder and house procedures of related assets, such as land, housing, 2013 Long-standing any controversy or potential disputes. There
actual leasing of trademarks, patents and stock rights, declared in the related has been no violation of this undertaking. And
controll Midea files of this merger. Midea Holding will be liable for all Midea Holding shall honor this undertaking
er Group compensations of losses caused by issues about renaming before its expiration.
and its procedures of related assets mentioned above to Midea Group.
subsidiari
es (2) Midea Holding shall do its utmost to assist Midea Group
(including its subsidiaries) to apply for ownership certificates of
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The 2023 Annual Report of Midea Group Co., Ltd.
land and housing or property declared in related files of this
merger.
(3) Midea Holding shall assist Midea Group (including its
subsidiaries) to re-apply for corresponding construction
procedures and apply for their ownership certificates for
houses without complete procedures, as happened in the past,
to apply for the ownership certificate. If the competent
authorities requires Midea Group to dismantle buildings that
cannot acquire the re-application for real estate registration
procedures, Midea Holding shall do its utmost to provide
assistance and be liable for any related expenses used in
dismantling such buildings by Midea Group (including its
subsidiaries).
(4) Under any circumstances that Midea Group suffers from
losses incurred from no longer using these properties or
presently using the land or house above due to failing to obtain
or collect in time the ownership certificates of the land or house
above or any losses caused by any other reasons, Midea
Holding shall compensate any loss for these reasons in time
and in full. Midea Holding shall compensate the actual loss
Midea Group suffers from any circumstances above resulting in
penalties subjected to from competent authorities or through
claims from any other third party.
(5) Based on issues of defective house leasing declared in
related files of this merger, Midea Holding shall provide
sufficient compensations for all economic losses incurred by
Midea Group (including its subsidiaries) where the leasehold
relations above become invalid or other disputes occur, which
are caused by rights claims from a third party or by means of
an administrative authority exercising a right and therefore
results in any economic losses due to eviction from rental
houses, or any penalties subjected to by competent
government departments or any recourse from related parties.
(6) Based on the issues of defective land leasing declared in
related files of this merger, when leasehold relations become
invalid caused by defects of land leasing or when other
disputes occur, resulting in any economic losses to Midea
Group (including its subsidiaries) or through any penalties
administered by competent government departments. Likewise
if the lessor cannot compensate for losses caused by such
defective leasing, Midea Holding shall compensate Midea
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The 2023 Annual Report of Midea Group Co., Ltd.
Group for losses caused by such defective land leasing.
Midea Holding has further undertaken that where a violation of
guarantees and undertakings referred to previously occurs or
such guarantees and undertakings are not consistent with the
reality and Midea Group has suffered any loss therefrom,
Midea Holding shall compensate in cash or make up for Midea
Group’s loss upon Midea Group’s notice in writing within 30
days when the loss occurs and the loss amount is definite.
Whether
the
undertaki
Yes
ng is
fulfilled
on time
Specific
reasons
for failing
to fulfill
any
N/A
undertaki
ng and
plan for
the next
step
1.2 Where any earnings forecast was made for any of the Company’s assets or projects and the Reporting Period is still within the
forecast period, the Company shall explain whether the performance of the asset or project reaches the earnings forecast and why
□Applicable √N/A
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The 2023 Annual Report of Midea Group Co., Ltd.
2. Occupation of the Company’s Capital by the Controlling Shareholder or Its
Related Parties for Non-Operating Purposes
□Applicable √N/A
No such cases in the Reporting Period.
3. Illegal Provision of Guarantees for External Parties
□ Applicable √ N/A
No such cases in the Reporting Period.
4. Explanation of the Board of Directors Regarding the Last "Non-standard Audit
Opinion"
□ Applicable √ N/A
5. Explanation of the Board of Directors, the Supervisory Committee and
Independent Directors (If Any) Regarding the "Non-standard Audit Opinion" for the
Reporting Period
□Applicable √N/A
6. Changes in Accounting Policies and Accounting Estimates as Compared to the
Financial Report for the Prior Year, as well as Correction of Material Accounting
Errors
□Applicable √N/A
7. Reason for Changes in Scope of the Consolidated Financial Statements as
Compared to the Financial Report for the Prior Year
√ Applicable □ N/A
The detailed information of major subsidiaries included in the consolidation scope in the current period
is set out in Note 6 to the Financial Statements. Entities newly included in the consolidation scope in
the current period mainly include CLOU Electronics (please refer to Note 5(1) and Note 5(2)(a)). The
detailed information of subsidiaries no longer included in the consolidation scope in the current period
is set out in Note 5(2)(b).
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8. Engagement and Disengagement of CPA Firm
CPA firm at present
Name of the domestic CPA firm PricewaterhouseCoopers Zhong Tian LLP
The Company’s payment to the domestic CPA firm RMB8.925 million
Consecutive years of the audit service provided by the
Nine years
domestic CPA firm
Names of the certified public accountants from the
Yao Wenping and Wu Fangfang
domestic CPA firm
Consecutive years of the audit service provided by the
Four years and three years respectively
certified public accountants from the domestic CPA firm
Whether the CPA firm was changed in the current period
□Yes √No
Engagement of any CPA firm for internal control audit, financial advisor or sponsor
√ Applicable □ N/A
During the year, the Company engaged PricewaterhouseCoopers Zhong Tian LLP as the auditor of the
Company's internal control and financial statements for the year 2023.
9. Possibility of Delisting after Disclosure of this Report
□Applicable √N/A
10. Bankruptcy and Reorganization
□Applicable √N/A
No such cases in the Reporting Period.
11. Material Litigation and Arbitration
□Applicable √N/A
No such cases in the Reporting Period.
12. Punishments and Rectifications
□Applicable √N/A
No such cases in the Reporting Period.
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The 2023 Annual Report of Midea Group Co., Ltd.
13. Credit Conditions of the Company as well as Its Controlling Shareholder and
Actual Controller
□Applicable √N/A
14. Significant Related Transactions
14.1 Continuing related transactions
√Applicable □N/A
Proporti
on in Obtaina
the ble
total Approv market Index
Transact
Related Type of Content amount ed Mode price to the
Pricing Transa ion Over Disclos
transac Relatio the s of the s of transac of for the disclo
principl ction amount approv ure
tion n transac transac transac tion line settlem transac sed
e price (RMB’00 ed line date
party tion tion tion of (RMB’0 ent tion of inform
0)
the 00) the ation
same same
kind kind
(%)
Controll
ed by
Orinko family
Advanc membe www.
Procure Payme
ed r of Procure Market 1,419,68 1,900,0 29 April cninfo
ment of - 0.55% No nt after -
Plastics Compa ment price 0 00 2023 .com.
goods delivery
Co., ny’s cn
Ltd. actual
controll
er
Controll
Midea ed by
www.
Real Compa Payme
Sale of Market 720,53 29 April cninfo
Estate ny’s Sale - 300,900 0.08% No nt after -
goods price 0 2023 .com.
Holding actual delivery
cn
Limited controll
er
Details of any sales return of a
Zero
large amount
Give the actual situation in the
Reporting Period (if any) where a
The line for continuing related transactions between the Company and the related
forecast had been made for the
parties and their subsidiaries did not exceed the total amount of continuing related
total amounts of continuing
transactions estimated by the Company by type.
related-party transactions by type
to occur in the current period
Reason for any significant
difference between the
N/A
transaction price and the market
reference price (if applicable)
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The 2023 Annual Report of Midea Group Co., Ltd.
14.2 Related transactions regarding purchase or sales of assets or equity interests
□Applicable √N/A
No such cases in the Reporting Period.
14.3 Related transactions arising from joint investments in external parties
□Applicable √N/A
No such cases in the Reporting Period.
14.4 Credits and liabilities with related parties
□Applicable √N/A
No such cases in the Reporting Period.
14.5 Transactions with related finance companies
□Applicable √N/A
The Company did not make deposits in, receive loans or credit from and was not involved in any other
finance business with any related finance company.
14.6 Transactions between finance companies controlled by the Company and related parties
□Applicable √N/A
No related parties made deposits in, received loans or credit from or was involved in any other finance
business with any finance company controlled by the Company.
14.7 Other significant related transactions
□Applicable √N/A
No such cases in the Reporting Period.
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The 2023 Annual Report of Midea Group Co., Ltd.
15. Significant Contracts and Their Execution
15.1 Trusteeship, contracting and leasing
15.1.1 Trusteeship
□Applicable √N/A
No such cases in the Reporting Period.
15.1.2 Contracting
□Applicable √N/A
No such cases in the Reporting Period.
15.1.3 Leasing
□Applicable √N/A
No such cases in the Reporting Period.
15.2 Major guarantees
√Applicable □N/A
Unit: RMB'000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Guar
Disclosure Actual
antee
date of the occurrence Term
Line of Actual for a
guarantee date (date Type of of Due
Guaranteed party guarante guarante relate
line of guarantee guara or not
e e amount d
announce agreement ntee
party
ment signing)
or not
No such cases
Total actual external
Total external guarantee line approved during the
0 guarantee amount during 0
Reporting Period (A1)
the Reporting Period (A2)
Total actual external
Total approved external guarantee line at the end of guarantee balance at the
0 0
the Reporting Period (A3) end of the Reporting
Period (A4)
Guarantees provided by the Company for its subsidiaries
Guar
Disclosure Actual
antee
date of the occurrence Term
Line of Actual for a
guarantee date (date Type of of Due
Guaranteed party guarante guarante relate
line of guarantee guara or not
e e amount d
announce agreement ntee
party
ment signing)
or not
210
The 2023 Annual Report of Midea Group Co., Ltd.
2,000,00 One
Midea Group Finance Co., Ltd. 2023/4/29 2023/1/30 - Joint liability No No
0 year
GD Midea Air-Conditioning Equipment 12,400,0 3,871,27 One
2023/4/29 2023/1/6 Joint liability No No
Co., Ltd. 00 0 year
Guangzhou Hualing Refrigerating 2,400,00 One
2023/4/29 2023/1/6 50,380 Joint liability No No
Equipment Co., Ltd. 0 year
Foshan Midea Carrier Air-Conditioning One
2023/4/29 350,000 2023/1/6 - Joint liability No No
Equipment Co., Ltd. year
GD Midea Group Wuhu Air- 4,100,00 One
2023/4/29 - Joint liability No No
Conditioning Equipment Co., Ltd. 0 year
Wuhu Maty Air-Conditioning Equipment One
2023/4/29 600,000 2023/1/6 58,490 Joint liability No No
Co., Ltd. year
Midea Group Wuhan Refrigeration One
2023/4/29 550,000 - Joint liability No No
Equipment Co., Ltd. year
Guangdong Midea Precision Molding One
2023/4/29 50,000 - Joint liability No No
Technology Co., Ltd. year
Handan Midea Air-Conditioning One
2023/4/29 500,000 - Joint liability No No
Equipment Co., Ltd. year
Chongqing Midea Air-Conditioning One
2023/4/29 850,000 2023/4/25 650 Joint liability No No
Equipment Co., Ltd. year
Midea Group Wuhan Heating & One
2023/4/29 150,000 - Joint liability No No
Ventilating Equipment Co., Ltd. year
Foshan Welling Washer Motor One
2023/4/29 170,000 2023/4/21 - Joint liability No No
Manufacturing Co., Ltd. year
Guangdong Welling Motor 1,070,00 One
2023/4/29 2023/1/17 70 Joint liability No No
Manufacturing Co., Ltd. 0 year
Welling (Wuhu) Motor Manufacturing One
2023/4/29 130,000 - Joint liability No No
Co., Ltd. year
Huaian Welling Motor Manufacturing One
2023/4/29 110,000 - Joint liability No No
Co., Ltd. year
1,900,00 One
Wuhu Welling Motor Sales Co., Ltd. 2023/4/29 2023/2/27 - Joint liability No No
0 year
One
Hainan Welling Motor Sales Co., Ltd. 2023/4/29 500,000 - Joint liability No No
year
One
Anhui Welling Auto Parts Co., Ltd. 2023/4/29 150,000 - Joint liability No No
year
One
Anqing Welling Auto Parts Co., Ltd. 2023/4/29 200,000 - Joint liability No No
year
1,130,00 One
Guangdong Meizhi Compressor Limited 2023/4/29 2023/1/17 12,300 Joint liability No No
0 year
Guangdong Meizhi Precision- One
2023/4/29 515,000 2023/4/18 - Joint liability No No
Manufacturing Co., Ltd. year
One
Anhui Meizhi Compressor Co., Ltd. 2023/4/29 420,000 2023/1/30 - Joint liability No No
year
Anhui Meizhi Precision Manufacturing One
2023/4/29 50,000 - Joint liability No No
Co., Ltd. year
4,500,00 One
Zhejiang Meizhi Compressor Co., Ltd. 2023/4/29 2023/2/23 - Joint liability No No
0 year
Guangdong Midea Environmental One
2023/4/29 20,000 - Joint liability No No
Technologies Co., Ltd. year
Guangdong Midea Intelligent One
2023/4/29 150,000 - Joint liability No No
Technologies Co., Ltd. year
One
Dorna Technology Co., Ltd. 2023/4/29 50,000 - Joint liability No No
year
Guangdong Midea Electromechanical 2023/4/29 150,000 - Joint liability One No No
211
The 2023 Annual Report of Midea Group Co., Ltd.
Technology Co., Ltd. year
Guangdong Jiya Precision Machinery One
2023/4/29 150,000 - Joint liability No No
Technology Co., Ltd. year
MiSiliconn SemiConductor One
2023/4/29 60,000 - Joint liability No No
Technologies Co., Ltd. year
Servotronix Motion Technology One
2023/4/29 50,000 - Joint liability No No
Development (Shenzhen) Ltd. year
Guangdong Midea Kitchen Appliances 6,417,97 One
2023/4/29 2023/1/4 521,560 Joint liability No No
Manufacturing Co., Ltd. 0 year
Guangdong Witol Vacuum Electronic One
2023/4/29 85,000 2023/2/24 20 Joint liability No No
Manufacture Co., Ltd. year
Jiangsu Midea Cleaning Appliances One
2023/4/29 760,000 2023/1/9 - Joint liability No No
Co., Ltd year
Wuhu Midea Kitchen Appliances 2,000,00 One
2023/4/29 - Joint liability No No
Manufacturing Co., Ltd. 0 year
GD Midea Heating & Ventilating 4,370,00 One
2023/4/29 2023/1/12 125,680 Joint liability No No
Equipment Co., Ltd. 0 year
Hefei Midea Heating & Ventilating One
2023/4/29 45,000 - Joint liability No No
Equipment Co., Ltd. year
Chongqing Midea General Refrigeration One
2023/4/29 160,000 2023/2/20 14,260 Joint liability No No
Equipment Co., Ltd. year
Meitong Energy Technology One
2023/4/29 120,000 2023/9/18 660 Joint liability No No
(Chongqing) Co., Ltd. year
Guangdong MeiKong Intelligent One
2023/4/29 80,000 - Joint liability No No
Building Co., Ltd. year
Shanghai M-BMS Intelligent One
2023/4/29 80,000 - Joint liability No No
Construction Co., Ltd. year
One
Winone Elevator Company Limited 2023/4/29 790,000 2023/1/12 50,760 Joint liability No No
year
Hubei Midea Building Technology Co., One
2023/4/29 30,000 - Joint liability No No
Ltd. year
Ningbo Midea United Materials Supply 5,040,00 One
2023/4/29 2023/1/10 69,910 Joint liability No No
Co. Ltd. 0 year
Guangzhou Kaizhao Commercial and One
2023/4/29 20,000 - Joint liability No No
Trading Co., Ltd year
Guangdong Midea Consumer Electric One
2023/4/29 200,000 2023/1/9 - Joint liability No No
Manufacturing Co., Ltd. year
Foshan Shunde Midea Electrical
1,670,00 One
Heating Appliances Manufacturing Co., 2023/4/29 2023/1/9 30 Joint liability No No
0 year
Ltd.
GD Midea Environment Appliances Mfg. 1,400,00 One
2023/4/29 2023/1/9 16,930 Joint liability No No
Co., Ltd. 0 year
Wuhu Midea Life Appliances Mfg Co., 2,200,00 One
2023/4/29 2023/2/23 609,300 Joint liability No No
Ltd. 0 year
Foshan Midea Chungho Water One
2023/4/29 130,000 - Joint liability No No
Purification Equipment. Co., Ltd. year
Foshan Shunde Midea Washing 2,500,00 One
2023/4/29 2023/1/30 81,360 Joint liability No No
Appliances Manufacturing Co., Ltd. 0 year
Wuhu Midea Kitchen & Bath Appliances 2,400,00 One
2023/4/29 2023/1/13 387,400 Joint liability No No
Mfg. Co., Ltd. 0 year
Wuhu Midea Smart Kitchen Appliance One
2023/4/29 66,000 2023/2/21 - Joint liability No No
Manufacturing Co., Ltd. year
Foshan Shunde Midea Water Dispenser One
2023/4/29 310,000 2023/3/8 10,160 Joint liability No No
Manufacturing Company Limited year
Hubei Midea Laundry Appliance Co.,
2023/4/29 50,000 - Joint liability One No No
Ltd.
212
The 2023 Annual Report of Midea Group Co., Ltd.
year
Hefei Midea Laundry Appliance Co., 1,930,00 One
2023/4/29 2023/1/16 490,000 Joint liability No No
Ltd. 0 year
One
Wuxi Filin Electronics Co., Ltd. 2023/4/29 200,000 - Joint liability No No
year
4,345,00 One
Wuxi Little Swan Electric Co., Ltd. 2023/4/29 2023/1/10 146,750 Joint liability No No
0 year
3,000,00 One
Hefei Midea Refrigerator Co., Ltd. 2023/4/29 2023/1/13 582,980 Joint liability No No
0 year
One
Hefei Hualing Co., Ltd. 2023/4/29 700,000 2023/1/30 82,310 Joint liability No No
year
One
Hubei Midea Refrigerator Co., Ltd. 2023/4/29 520,000 2023/12/25 65,700 Joint liability No No
year
Guangzhou Midea Hualing Refrigerator One
2023/4/29 700,000 2023/3/22 92,700 Joint liability No No
Co., Ltd. year
Little Swan (Jing Zhou) Sanjin One
2023/4/29 50,000 - Joint liability No No
Electronic Appliances Limited year
Toshiba Home Appliances One
2023/4/29 100,000 - Joint liability No No
Manufacturing (Nanhai) Co., Ltd year
One
Midea Group E-Commerce Co., Ltd. 2023/4/29 160,000 - Joint liability No No
year
Guangdong Midea Smart Link One
2023/4/29 390,000 2023/1/1 - Joint liability No No
Technologies Co., Ltd. year
One
Reis Robotics (Kunshan) Co., Ltd. 2023/4/29 200,000 2023/1/16 19,380 Joint liability No No
year
One
KUKA Systems (China) CO., Ltd. 2023/4/29 400,000 2023/1/5 188,920 Joint liability No No
year
KUKA Robotics Manufacturing China One
2023/4/29 100,000 - Joint liability No No
Co., Ltd. year
One
KUKA Robotics Guangdong Co., Ltd 2023/4/29 200,000 - Joint liability No No
year
One
KUKA Robotics (Shanghai) Co.,Ltd. 2023/4/29 300,000 2023/1/1 2,050 Joint liability No No
year
One
Shanghai Swisslog Healthcare Co., Ltd. 2023/4/29 65,000 2023/2/22 820 Joint liability No No
year
Guangdong Swisslog Technology Co., One
2023/4/29 40,000 - Joint liability No No
Ltd. year
One
Swisslog (Shanghai) Co., Ltd. 2023/4/29 80,000 2023/1/1 - Joint liability No No
year
Shanghai Swisslog Technology Co., One
2023/4/29 200,000 2023/1/6 67,140 Joint liability No No
Ltd. year
Guangdong Midea Intelligent Robotics One
2023/4/29 100,000 - Joint liability No No
Co., Ltd. year
Guangdong Midea-SIIX Electronics Co., One
2023/4/29 100,000 2023/1/1 370 Joint liability No No
Ltd. year
One
Hefei Midea-SIIX Electronics Co., Ltd. 2023/4/29 150,000 - Joint liability No No
year
Guangdong Meichuangxi Technology One
2023/4/29 500,000 - Joint liability No No
Co., Ltd. year
Guangdong Meicloud Technology Co., One
2023/4/29 120,000 - Joint liability No No
Ltd. year
One
Foshan Meicloud Technology Co., Ltd. 2023/4/29 30,000 - Joint liability No No
year
Guangdong Yueyun Industrial Internet One
2023/4/29 10,000 - Joint liability No No
Innovative Technology Co., Ltd. year
213
The 2023 Annual Report of Midea Group Co., Ltd.
Midea International Corporation 15,705,0 11,735,5 One
2023/4/29 2023/1/1 Joint liability No No
Company Limited 00 20 year
Midea Investment Development 8,100,00 3,187,22 One
2023/4/29 2023/1/1 Joint liability No No
Company Limited 0 0 year
One
Welling International (Hong Kong) Ltd 2023/4/29 250,000 - Joint liability No No
year
Midea International Trading Company One
2023/4/29 650,000 - Joint liability No No
Limited year
Midea Electric Trading (Singapore) 6,375,00 One
2023/4/29 - Joint liability No No
Co.,Pte. Ltd. 0 year
Toshiba Lifestyle Products & Services 1,154,40 One
2023/4/29 2023/1/1 289,590 Joint liability No No
Corporation 0 year
One
Toshiba Thailand Co., Ltd 2023/4/29 152,400 - Joint liability No No
year
Toshiba Vietnam Consumer Products One
2023/4/29 66,190 2023/2/23 - Joint liability No No
Co., Ltd year
Toshiba Lifestyle Electronics Trading One
2023/4/29 10,090 2023/1/1 790 Joint liability No No
Co., Ltd year
Toshiba consumer products (Thailand) One
2023/4/29 243,310 2023/1/1 7,940 Joint liability No No
Co.,ltd year
One
Thai Toshiba Electric Industries Co., Ltd 2023/4/29 17,760 2023/1/1 14,960 Joint liability No No
year
One
Control Component Co., Ltd 2023/4/29 14,310 2023/1/1 250 Joint liability No No
year
One
Clivet S.p.A. 2023/4/29 100,000 - Joint liability No No
year
Midea (Egypt) Kitchen & water heater One
2023/4/29 70,000 - Joint liability No No
appliances Co., Ltd year
25,000,0 23,631,3 One
Midea Electric Netherlands (I) B.V. 2023/4/29 2023/1/1 Joint liability No No
00 00 year
Total actual guarantee
Total guarantee line for subsidiaries approved amount for subsidiaries
138,947,430 63,628,640
during the Reporting Period (B1) during the Reporting
Period (B2)
Total actual guarantee
Total approved guarantee line for subsidiaries at the balance for subsidiaries
138,947,430 46,487,880
end of the Reporting Period (B3) at the end of the
Reporting Period (B4)
Guarantees between subsidiaries
Guar
Disclosure Actual
antee
date of the occurrence Term
Line of Actual for a
guarantee date (date Type of of Due
Guaranteed party guarante guarante relate
line of guarantee guara or not
e e amount d
announce agreement ntee
party
ment signing)
or not
One
Toshiba Sales & Services Sdn. Bhd. 2023/4/29 202,500 2023/1/5 20 Joint liability No No
year
One
Toshiba Home Technology Corporation 2023/4/29 7,630 2023/1/1 1,130 Joint liability No No
year
400,000. One
Midea America Corp. 2023/4/29 Joint liability No No
00 year
One
Midea America (Canada) Corp 2023/4/29 67,500 Joint liability No No
year
One
Midea Mexico, S. DE R.L. DE C.V. 2023/4/29 168,750 2023/2/28 31,210 Joint liability No No
year
214
The 2023 Annual Report of Midea Group Co., Ltd.
One
Midea Consumer Appliances DMCC 2023/4/29 33,750 Joint liability No No
year
Orient Household Appliances One
2023/4/29 202,500 Joint liability No No
Ltd.(Orient) year
One
Midea Italia S.r.l. 2023/4/29 13,500 Joint liability No No
year
One
Midea Europe GmbH 2023/4/29 67,500 Joint liability No No
year
One
Midea Electrics France 2023/4/29 13,500 Joint liability No No
year
One
Midea Home Appliances UK Ltd 2023/4/29 13,500 Joint liability No No
year
One
Midea Electrics Egypt 2023/4/29 175,500 Joint liability No No
year
One
Midea Electric Espana S.R.L. 2023/4/29 13,500 Joint liability No No
year
One
Concepcion Midea Inc. 2023/4/29 50,000 Joint liability No No
year
Midea Scott & English Electronics Sdn. One
2023/4/29 120,000 Joint liability No No
Bhd year
One
Pt. Midea Planet Indonesia 2023/4/29 102,900 Joint liability No No
year
One
Midea (Japan) Co., Ltd. 2023/4/29 20,250 Joint liability No No
year
One
MC Innovation Center Co., Ltd. 2023/4/29 20,250 Joint liability No No
year
One
Midea Electronics Australia Co Pty Ltd 2023/4/29 13,500 Joint liability No No
year
One
Meco Innovations Technology, LLC 2023/4/29 6,700 Joint liability No No
year
One
Midea India Private Limited 2023/4/29 33,750 Joint liability No No
year
GMCC and Welling Appliance One
2023/4/29 40,000 Joint liability No No
Component (Thailand) Co., Ltd. year
One
Wuhu Midea Annto Logistics Co., Ltd. 2023/4/29 800,000 2023/1/5 11,300 Joint liability No No
year
One
Ningbo Annto Logistics Co., Ltd. 2023/4/29 300,000 Joint liability No No
year
Hainan Annto Logistics Supply Chain One
2023/4/29 200,000 Joint liability No No
Management Co., Ltd. year
Total actual guarantee
Total line for guarantees between subsidiaries amount between
3,086,980 283,640
approved during the Reporting Period (C1) subsidiaries during the
Reporting Period (C2)
Total actual guarantee
Total approved line for guarantees between balance between
3,086,980 43,660
subsidiaries at the end of the Reporting Period (C3) subsidiaries at the end of
the Reporting Period (C4)
Guarantees provided with the Company’s asset pool
Guar
Disclosure Actual
antee
date of the occurrence Term
Line of Actual for a
guarantee date (date Type of of Due
Guaranteed party guarante guarante relate
line of guarantee guara or not
e e amount d
announce agreement ntee
party
ment signing)
or not
Hefei Midea Refrigerator Co., Ltd. 2023/10/31 1,906,00 2023/7/21 1,167,00 Joint liability One No No
215
The 2023 Annual Report of Midea Group Co., Ltd.
0 0 year
Ningbo Midea United Materials Supply 1,200,00 One
2023/10/31 2023/6/29 773,490 Joint liability No No
Co. Ltd. 0 year
Foshan Shunde Midea Washing One
2023/4/29 665,000 2023/4/26 474,830 Joint liability No No
Appliances Manufacturing Co., Ltd. year
Wuhu Midea Kitchen & Bath Appliances One
2023/10/31 635,000 2023/8/1 332,400 Joint liability No No
Mfg. Co., Ltd. year
One
Midea Group E-Commerce Co., Ltd. 2023/4/29 53,000 Joint liability No No
year
Guangdong Midea Smart Link One
2023/4/29 268,000 2023/11/2 40,000 Joint liability No No
Technologies Co., Ltd. year
MiSiliconn SemiConductor One
2023/4/29 30,240 Joint liability No No
Technologies Co., Ltd. year
One
Anqing Welling Auto Parts Co., Ltd. 2023/4/29 30,240 Joint liability No No
year
Guangdong Jiya Precision Machinery One
2023/4/29 75,600 Joint liability No No
Technology Co., Ltd. year
One
Dorna Technology Co., Ltd. 2023/4/29 30,240 Joint liability No No
year
1,088,24 One
Zhejiang Meizhi Compressor Co., Ltd. 2023/10/31 2023/4/27 998,000 Joint liability No No
0 year
One
Wuhu Welling Motor Sales Co., Ltd. 2023/4/29 756,020 2023/5/23 750,000 Joint liability No No
year
One
Anhui Welling Auto Parts Co., Ltd. 2023/4/29 30,240 2023/12/27 5,920 Joint liability No No
year
Wuhu Maty Air-Conditioning Equipment One
2023/10/31 418,000 Joint liability No No
Co., Ltd year
Midea Group Wuhan Refrigeration 1,000,00 One
2023/10/31 2023/9/21 739,160 Joint liability No No
Equipment Co.,Ltd. 0 year
GD Midea Air-Conditioning Equipment 4,188,00 3,108,62 One
2023/10/31 2023/2/15 Joint liability No No
Co.,Ltd. 0 0 year
GD Midea Group Wuhu Air- 1,000,00 One
2023/10/31 Joint liability No No
Conditioning Equipment Co.,Ltd. 0 year
Guangdong Midea Intelligent Robotics One
2023/4/29 30,000 Joint liability No No
Co., Ltd. year
One
Shanghai Swisslog Healthcare Co., Ltd. 2023/4/29 20,000 2023/8/30 16,750 Joint liability No No
year
One
Reis Robotics (Kunshan) Co., Ltd. 2023/10/31 50,000 2023/11/24 30,520 Joint liability No No
year
GD Midea Heating & Ventilating One
2023/10/31 100,000 Joint liability No No
Equipment Co., Ltd. year
Foshan Shunde Midea Electrical
One
Heating Appliances Manufacturing Co., 2023/10/31 600,000 2023/11/27 270,230 Joint liability No No
year
Ltd.
GD Midea Environment Appliances Mfg. One
2023/10/31 600,000 2023/4/27 295,480 Joint liability No No
Co.,Ltd. year
Wuhu Midea Life Appliances Mfg Co., One
2023/10/31 596,180 2023/10/25 200,000 Joint liability No No
Ltd. year
Guangdong Midea Kitchen Appliances 1,664,00 1,219,76 One
2023/10/31 2023/4/12 Joint liability No No
Manufacturing Co., Ltd. 0 0 year
Jiangsu Midea Cleaning Appliances One
2023/4/29 454,000 2023/4/25 245,920 Joint liability No No
Co., Ltd year
Wuhu Midea Kitchen Appliances One
2023/10/31 151,000 2023/11/20 32,820 Joint liability No No
Manufacturing Co., Ltd. year
Hefei Midea Laundry Appliance Co., 1,000,00
2023/10/31 Joint liability One No No
Ltd. 0
216
The 2023 Annual Report of Midea Group Co., Ltd.
year
1,361,00 One
Wuxi Little Swan Electric Co., Ltd. 2023/4/29 2023/5/15 738,800 Joint liability No No
0 year
Hainan Annto Logistics Supply Chain One
2023/4/29 150,000 Joint liability No No
Management Co., Ltd. year
One
Ningbo Annto Logistics Co., Ltd. 2023/4/29 100,000 2023/2/2 Joint liability No No
year
Shenyang Annto Logistics Technology One
2023/4/29 20,000 Joint liability No No
Co., Ltd. year
Guiyang Annto Logistics Technology One
2023/4/29 20,000 Joint liability No No
Co., Ltd. year
Wuhan Annto Logistics Technology Co., One
2023/4/29 20,000 Joint liability No No
Ltd. year
One
Nanjing Meian Logistics Co., Ltd. 2023/4/29 20,000 Joint liability No No
year
Shanghai Annto Logistics Supply Chain One
2023/4/29 20,000 2023/4/25 220 Joint liability No No
Technology Co., Ltd. year
Jingzhou Meian Warehousing and One
2023/4/29 20,000 Joint liability No No
Transportation Co., Ltd. year
Qihe Annto Logistics Technology Co., One
2023/4/29 20,000 Joint liability No No
Ltd. year
Hefei Annto Logistics Technology Co., One
2023/4/29 20,000 Joint liability No No
Ltd. year
Tianjin Annto Logistics Technology Co., One
2023/4/29 20,000 Joint liability No No
Ltd. year
Xuzhou Annto Logistics Technology One
2023/4/29 20,000 Joint liability No No
Co., Ltd. year
Zhengzhou Annto Logistics Technology One
2023/4/29 20,000 Joint liability No No
Co., Ltd. year
Chongqing Annto Logistics Technology One
2023/4/29 20,000 Joint liability No No
Co., Ltd. year
One
Wuhu Midea Annto Logistics Co., Ltd. 2023/4/29 160,000 2023/1/13 92,750 Joint liability No No
year
Total actual guarantee
Total line for guarantees provided with the amount provided with the
Company’s asset pool approved during the 20,650,000 Company’s asset pool 15,696,320
Reporting Period (D1) during the Reporting
Period (D2)
Total actual guarantee
Total approved line for guarantees provided with the balance provided with the
Company’s asset pool at the end of the Reporting 20,650,000 Company’s asset pool at 11,532,670
Period (D3) the end of the Reporting
Period (D4)
Total guarantee amount (total of the above-mentioned four kinds of guarantees)
Total actual guarantee
Total guarantee line approved during the Reporting amount during the
162,684,410 79,608,600
Period (A1+B1+C1+D1) Reporting Period
(A2+B2+C2+D2)
Total actual guarantee
Total approved guarantee line at the end of the balance at the end of the
162,684,410 58,064,210
Reporting Period (A3+B3+C3+D3) Reporting Period
(A4+B4+C4+D4)
Proportion of the total actual guarantee amount (A4+B4+C4+D4) in net
35.65%
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and
0
their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a
54,267,530
liability-to-asset ratio over 70% (E)
217
The 2023 Annual Report of Midea Group Co., Ltd.
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total amount of the three kinds of guarantees above (D+E+F) 54,267,530
Joint responsibilities possibly borne for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if
N/A
any)
15.3 Entrusted cash management
15.3.1 Entrusted asset management
□ Applicable √ N/A
No such cases in the Reporting Period.
15.3.2 Entrusted loans
□ Applicable √ N/A
No such cases in the Reporting Period.
15.4 Other significant contracts
□ Applicable √ N/A
No such cases in the Reporting Period.
16. Other Significant Events
√Applicable □ N/A
The 21st meeting of the 4th Board of Directors and the 13th meeting of the 4th Supervisory Committee
of the Company reviewed and approved the proposal and related proposals on the issuance of H
shares and listing on the Hong Kong Stock Exchange. The above proposal was also approved by the
Company's 2024 third extraordinary general meeting of shareholders.
The Company has submitted an application for listing to the Hong Kong Stock Exchange (see the
announcement on the issuance and listing of H shares submitted to the Hong Kong Stock Exchange
and the publication of application materials on the Juchao Information Network on 25 October 2023
(Announcement No. 2023-083)), and has submitted the filing materials for this issuance to the China
Securities Regulatory Commission (CSRC). The relevant materials for this issuance have been filed
and reviewed by the CSRC and the Hong Kong Stock Exchange, and the Company is actively
promoting related filing and review matters.
218
The 2023 Annual Report of Midea Group Co., Ltd.
17. Significant Events of Subsidiaries
□ Applicable √ N/A
219
The 2023 Annual Report of Midea Group Co., Ltd.
Section VII Changes in Shares and Information about
Shareholders
1. Changes in Shares
1.1 Changes in shares
Unit: share
Increase/decrease in the Reporting Period
Before After
(+/-)
Percen Percen
Shares tage New issue Others Subtotal Shares tage
(%) (%)
1. Restricted shares 143,615,016 2.05 -10,051,926 -10,051,926 133,563,090 1.90
1.1 Shares held by the
state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic 141,131,474 2.02 -9,208,384 -9,208,384 131,923,090 1.88
investors
Among which: Shares
held by domestic 2,363,601 0.03 0 2,363,601 0.03
corporations
Shares held by
138,767,873 1.98 -9,208,384 -9,208,384 129,559,489 1.84
domestic individuals
1.4 Shares held by
2,483,542 0.04 -843,542 -843,542 1,640,000 0.02
foreign investors
Among which: Shares
held by foreign
corporations
Shares held by
2,483,542 0.04 -843,542 -843,542 1,640,000 0.02
foreign individuals
2. Non-restricted shares 6,853,658,060 97.95 38,490,170 57,705 38,547,875 6,892,205,935 98.10
2.1 RMB common
6,853,658,060 97.95 38,490,170 57,705 38,547,875 6,892,205,935 98.10
shares
2.2 Domestically listed
foreign shares
2.3 Overseas listed
foreign shares
2.4 Other
3. Total shares 6,997,273,076 100.00 38,490,170 -9,994,221 28,495,949 7,025,769,025 100.00
Reasons for the changes in shares
220
The 2023 Annual Report of Midea Group Co., Ltd.
√Applicable □N/A
a. The 2,566,396 restricted shares of a total of 172 eligible awardees for the fourth unlocking period of
the first grant under the 2018 Restricted Share Incentive Scheme were unlocked on 3 July 2023,
including 169,750 restricted shares of foreign employees.
b. The 324,167 restricted shares of a total of 18 eligible awardees for the third unlocking period of the
reserved restricted shares under the 2018 Restricted Share Incentive Scheme were unlocked on 7 July
2023.
c. The 4,897,510 restricted shares of a total of 308 eligible awardees (inclusive of 132,250 such shares
of foreign awardees) for the third unlocking period of the 2019 Restricted Share Incentive Scheme were
unlocked on 13 July 2023.
d. The 10,851,082 restricted shares of a total of 394 eligible awardees (inclusive of 557,500 such
shares of foreign awardees) for the third unlocking period of the 2020 Restricted Share Incentive
Scheme were unlocked on 18 July 2023.
e. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 18 April 2023, the Company retired a total of 2,497,917 restricted
shares (inclusive of 72,500 such shares of foreign awardees) under the 2018 Restricted Share
Incentive Scheme, the 2019 Restricted Share Incentive Scheme, the 2020 Restricted Share Incentive
Scheme, the 2021 Restricted Share Incentive Scheme, and the 2022 Restricted Share Incentive
Scheme.
f. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 10 November 2023, the Company retired a total of 7,496,304 restricted
shares (inclusive of 266,542 such shares of foreign awardees) under the 2018 Restricted Share
Incentive Scheme, the 2019 Restricted Share Incentive Scheme, the 2020 Restricted Share Incentive
Scheme, the 2021 Restricted Share Incentive Scheme, and the 2022 Restricted Share Incentive
Scheme.
221
The 2023 Annual Report of Midea Group Co., Ltd.
g. In the Reporting Period, the awardees of stock options chose to exercise 38,490,170 shares, which
have been registered into the Company’s share capital.
h. In the Reporting Period, locked-up shares held by senior management increased by 256,450 shares.
Approval of share changes
□ Applicable √ N/A
Transfer of share ownership
□ Applicable √ N/A
Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and the last Reporting
Period
□Applicable √N/A
Other contents that the Company considers necessary or is required by the securities regulatory
authorities to disclose
□Applicable √N/A
1.2 Changes in restricted shares
√ Applicable □ N/A
Unit: share
Opening Unlocked in Increased in Closing
Name of Repurchased
restricted current current restricted Reason for change Date of unlocking
shareholder and retired
shares period period shares
Awardees of the
first grant of 2018 Locked up
Restricted Share 2,947,667 2,566,396 381,271 0 according to the 3 July 2023
Incentive Scheme
Scheme
Awardees of
reserved
Locked up
restricted shares
715,000 324,167 70,833 320,000 according to the 7 July 2023
under 2018
Scheme
Restricted Share
Incentive Scheme
Awardees of 2019 Locked up
Restricted Share 11,301,167 4,897,510 1,125,782 5,277,875 according to the 13 July 2023
Incentive Scheme Scheme
Awardees of 2020 Locked up
Restricted Share 14,543,917 10,851,082 3,692,835 0 according to the 18 July 2023
Incentive Scheme Scheme
222
The 2023 Annual Report of Midea Group Co., Ltd.
Awardees of 2021 Locked up
Restricted Share 8,550,000 3,401,000 5,149,000 according to the -
Incentive Scheme Scheme
Awardees of 2022 Locked up
Restricted Share 12,152,500 1,322,500 10,830,000 according to the -
Incentive Scheme Scheme
Awardees of 2023 Locked up
Restricted Share 0 18,325,000 18,325,000 according to the -
Incentive Scheme Scheme
Locked up for
Zhong Zheng 187,114 20,000 207,114 senior -
management
Locked up for
Zhao Wenxin 60,000 78,000 138,000 senior -
management
Locked up for
Zhang Xiaoyi 362,431 25,000 387,431 senior -
management
Locked up for
Wang Jinliang 35,000 58,000 93,000 senior -
management
Locked up for
Li Guolin 0 20,000 20,000 senior -
management
Locked up for
Jiang Peng 248,950 20,000 228,950 senior -
management
Locked up for
Guan Jinwei 326,250 50,000 376,250 senior -
management
Locked up for
Hu Ziqiang 275,000 25,000 300,000 senior -
management
Locked up for
Yin Bitong 1,582,241 450 1,582,691 former senior -
management
Total 53,287,237 18,659,155 18,601,450 9,994,221 43,235,311 -- --
2. Issuance and Listing of Securities
2.1 Securities (excluding preference shares) issued in the Reporting Period
□Applicable √N/A
2.2 Changes in total shares of the Company and the shareholder structure, as well as the asset
and liability structures
□Applicable √N/A
223
The 2023 Annual Report of Midea Group Co., Ltd.
2.3 Existing staff-held shares
□Applicable √N/A
3. Shareholders and Actual Controller
3.1 Total number of shareholders and their shareholdings
Unit: share
Total number of common Total number of common shareholders at
shareholders at the period- 318,676 the prior month-end before the disclosure 282,456
end date of the annual report
5% or greater common shareholders or top 10 common shareholders
Shareh Total Increase/d Number of Shares in pledge or
Number of
olding common ecrease non- frozen
Name of Nature of restricted
percent shares held during the restricted
shareholder shareholder common
age at the period- Reporting common Status Shares
shares held
(%) end Period shares held
Domestic
Midea Holding Co., non-state- 2,169,178,71 2,169,178,71
30.87% - 0
Ltd. owned 3 3
corporation
Hong Kong
Foreign 1,338,736,02 - 1,338,736,02
Securities Clearing 19.05% 0
corporation 3 93,978,553 3
Company Limited
Domestic
China Securities non-state-
2.82% 198,145,134 - 0 198,145,134
Finance Co., Ltd. owned
corporation
Domestic
Fang Hongbo 1.67% 116,990,492 - 87,742,869 29,247,623
individual
State-
Central Huijin Asset
owned 1.26% 88,260,460 - 0 88,260,460
Management Ltd.
corporation
Domestic
Huang Jian 1.23% 86,170,000 30,000 0 86,170,000
individual
Canada Pension
Plan Investment Foreign -
0.70% 48,842,446 0 48,842,446
Board－ own funds corporation 13,071,457
(stock exchange)
Foreign
Li Jianwei 0.65% 45,591,545 -673,000 0 45,591,545
individual
Domestic
Yuan Liqun 0.52% 36,792,400 -2,422,519 0 36,792,400
individual
Industrial and
Commercial Bank
of China Limited－
Huatai-PineBridge Foreign 0.52% 36,737,633 16,692,560 0 36,737,633
CSI 300 Traded corporation
Open-ended Index
Securities
Investment Fund
Strategic investors or general
corporations becoming top-ten
N/A
common shareholders due to
placing of new shares
224
The 2023 Annual Report of Midea Group Co., Ltd.
Related-parties or acting-in-
concert parties among the N/A
shareholders above
Explain if any of the
shareholders above was
involved in entrusting/being N/A
entrusted with voting rights or
waiving voting rights
Special account for repurchased 118,366,752 shares (or 1.68% of the Company’s total share capital) were held in the
shares among the top 10 special account for repurchased shares of Midea Group Co., Ltd. at the end of the
shareholders Reporting Period.
Top 10 non-restricted common shareholders
Number of non-restricted common shares held at Type of shares
Name of shareholder
the period-end Type Shares
2,169,178,7
Midea Holding Co., Ltd. 2,169,178,713 RMB common stock
13
Hong Kong Securities Clearing 1,338,736,0
1,338,736,023 RMB common stock
Company Limited 23
China Securities Finance Co.,
198,145,134 RMB common stock 198,145,134
Ltd.
Central Huijin Asset
88,260,460 RMB common stock 88,260,460
Management Ltd.
Huang Jian 86,170,000 RMB common stock 86,170,000
Canada Pension Plan
Investment Board－own funds 48,842,446 RMB common stock 48,842,446
(stock exchange)
Li Jianwei 45,591,545 RMB common stock 45,591,545
Yuan Liqun 36,792,400 RMB common stock 36,792,400
Industrial and Commercial Bank
of China Limited－Huatai-
PineBridge CSI 300 Traded 36,737,633 RMB common stock 36,737,633
Open-ended Index Securities
Investment Fund
Temasek Fullerton Alpha Pte Ltd 36,142,685 RMB common stock 36,142,685
Related-parties or acting-in-
concert parties among the top
ten non-restricted common
shareholders and between the N/A
top ten non-restricted common
shareholders and the top ten
common shareholders
Explanation on the top 10 The Company’s shareholder Yuan Liqun holds 6,002,100 shares in the Company
common shareholders through her common securities account and 30,790,300 shares in the Company
participating in securities margin through her account of collateral securities for margin trading, representing a total
trading holding of 36,792,400 shares in the Company.
Top 10 shareholders involved in refinancing shares lending
√Applicable □N/A
Top 10 shareholders involved in refinancing shares lending
Shares in the common Shares lent in Shares in the common Shares lent in
account and credit refinancing and not yet account and credit refinancing and not yet
Full name of account at the period- returned at the period- account at the period- returned at the period-
shareholder begin begin end end
Total shares As % Total shares As % Total shares As % Total shares As %
225
The 2023 Annual Report of Midea Group Co., Ltd.
of total of total of total of total
share share share share
capital capital capital capital
Industrial and
Commercial
Bank of
China Limited
－Huatai-
PineBridge
20,045,073 0.29% 10,000 0.00% 36,737,633 0.52% 10,100 0.00%
CSI 300
Traded Open-
ended Index
Securities
Investment
Fund
Changes in shares that the top 10 shareholders lend in refinancing compared with the prior period
√Applicable □N/A
Changes in shares that the top 10 shareholders lend in refinancing compared with the end of the prior period
Shares in the common account and
Shares lent in refinancing and not credit account plus shares lent in
Newly added to or
yet returned at the period-end refinancing and not yet returned at the
exiting the top 10
Full name of period-end
such shareholders
shareholder As % of As % of
in the Reporting
total total
Period Total shares Total shares
share share
capital capital
Industrial and
Commercial Bank of
China Limited－
Huatai-PineBridge Newly added 10,100 0.00% 36,737,633 0.52%
CSI 300 Traded
Open-ended Index
Securities
Investment Fund
Merrill Lynch
Exiting 0 0% 9,155,286 0.13%
International
Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the
Company conduct any promissory repurchase during the Reporting Period
□Yes √No
3.2 Controlling shareholder
Nature of the controlling shareholder: Controlled by individual
Type of the controlling shareholder: Corporation
Legal
Date of
Name of controlling representativ
establishm Organization code Main business scope
shareholder e / company
ent
principal
Manufacture and commerce investment;
domestic commerce and materials supply
5 August
Midea Holding Co., Ltd. He Xiangjian 914406067429989733 and marketing industry (excluding state-
2002
designated monopoly); CP software and
hardware development; industrial product
226
The 2023 Annual Report of Midea Group Co., Ltd.
design; information technology consulting
services, providing investment consultant
and consulting services; installation,
maintenance and after-sales service of
electric appliances; real estate intermediary
service and forwarding agent service.
Shareholdings of the
controlling shareholder
in other controlled or
Apart from a direct control over the Company, Midea Holding does not directly control or have
non-controlled listed
shares in other listed companies at home or abroad.
companies at home or
abroad during the
Reporting Period
Change of the controlling shareholder during the Reporting Period
□Applicable √N/A
3.3 Actual controller and acting-in-concert parties thereof
Nature of the actual controller: Domestic individual
Type of the actual controller: Individual
Relationship with Right of residence in other countries or
Name of the actual controller Nationality
the actual controller regions
Actual controller The People's
He Xiangjian No
himself Republic of China
Main occupation and duty Incumbent board chairman of Midea Holding Co., Ltd.
Midea Group (000333.SZ), Hiconics (300048.SZ), WDM (600055.SH), CLOU
Domestically and overseas listed
Electronics (002121.SZ), Midea Real Estate (3990.HK), KUKA (KU2.DE) (delisted in
companies controlled in the last
2022), Little Swan (A: 000418.SZ; B: 200418) (delisted in 2019), and Welling
10 years
Holding (00382.HK) (delisted in 2018)
Change of the actual controller during the Reporting Period
□Applicable √N/A
Ownership and control relations between the actual controller and the Company
He Xiangjian
94.55%
0.45%
Midea Holding Co., Ltd.
30.87%
Midea Group Co., Ltd.
The actual controller controls the Company via trust or other ways of asset management
□Applicable √N/A
227
The 2023 Annual Report of Midea Group Co., Ltd.
3.4 Indicate whether the cumulative shares of the controlling shareholder or the largest
shareholder and their acting-in-concert parties that are in pledge account for 80% or greater of
their shareholdings in the Company
□Applicable √N/A
3.5 Other corporate shareholders with a shareholding percentage above 10%
□Applicable √N/A
3.6 Limits on the Company’s shares held by its controlling shareholder, actual controller,
reorganizer and other commitment subjects
□Applicable √N/A
4. Share Repurchases during the Reporting Period
Progress of any share repurchase
√ Applicable □ N/A
Shares
repurchase
d as a
Number of As a percentage
Number of
Disclosure shares to percentage of the total
Amount to Repurchase shares
date of the be of the total Purpose target
be used period repurchase
scheme repurchase share number of
d
d capital the equity
incentive
scheme (if
any)
No more
No more
than
than
71,428,571
1.0208%
shares and For use in
and no less
no less than No more equity
than
35,714,285 than RMB5 incentive
0.5104%
shares billion and 2022.03.10- and/or
2022.03.12 based on 48,558,888 -
based on no less than 2023.03.10 employee
the
the RMB2.5 stock
repurchase
repurchase billion ownership
price ceiling
price ceiling schemes
of
of
RMB70/sha
RMB70/sha
re
re
Progress of any repurchased share reduction through centralized price bidding
□ Applicable √ N/A
228
The 2023 Annual Report of Midea Group Co., Ltd.
Section VIII Preference Shares
□ Applicable √ N/A
No such cases in the Reporting Period.
229
The 2023 Annual Report of Midea Group Co., Ltd.
Section IX Bonds
√ Applicable □ N/A
1. Enterprise Bonds
□ Applicable √ N/A
No such cases in the Reporting Period.
2. Corporate Bonds
√ Applicable □ N/A
2.1 General information on corporate bonds
Way of
principal
Outstandi
Bond Bond Date of Interest repaymen Place of
Abbr. Value date Maturity ng
name code issuance rate t and trading
balance
interest
payment
Midea Interest
Investmen payable
t on a half-
Developm year
MIDEAZ The Stock
ent ISIN basis, with
2.88% 2022-02- 2022-02- 2027-02- USD450 Exchange
Company XS243213 2.88% the
02/24/202 16 24 24 million of Hong
Limited 0453 principal
7 Kong
2.88% repayable
Secured in full
Notes upon
2027 maturity
Investor eligibility arrangements (if
N/A
any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue bonds
□ Applicable √ N/A
230
The 2023 Annual Report of Midea Group Co., Ltd.
2.2 Triggering and execution of issuer or investor option clauses and investor protection
clauses
□ Applicable √ N/A
2.3 Intermediary agencies
Accountant
Intermediary
Bond name Office address writing Contact person Tel.
agency
signatures
55/F, Cheung
Kong Centre, 2
Bank of America
Queen’s Road - Lin Yin +852 3508 7994
Securities
Central, Hong
Kong
15/F, Two
International
Standard
Finance Centre, - Chen Junda +852 3983 0769
Chartered Bank
Central, Hong
Kong
30/F, Two Pacific
Crédit Agricole
Place, 88
Corporate and - Fang Lei +852 2826 7396
Queensway,
Investment Bank
Hong Kong
22/F, Bank of
China Tower, 4
Bank of China - He Fan +65 6412 9815
Battery Road,
Singapore
Midea
28/F, China
Investment
Construction
Development China
Bank Building, 3
Company Construction - Huang Hai +852 3918 6312
Connaught Road
Limited 2.88% Bank (Asia)
Central, Hong
Secured Notes
Kong
2027
10/F, The Center,
Development
99 Queen’s
Bank of - Lin Huixin +852 3668 9137
Road Central,
Singapore
Hong Kong
Industrial and 28/F, ICBC
Commercial Tower, 3 Garden
- Chen Jiaqi +852 3510 3522
Bank of China Road, Central,
(Asia) Hong Kong
11/F, Alexandra
House, Chater
Linklaters LLP - Liu Kecheng +852 2901 5257
Road, Hong
Kong
27/F, Beijing
Kerry Center
North Tower, 1 +86 10 5769
Fangda Partners - Jiang Xueyan
Guanghua Road, 5627
Chaoyang
District, Beijing,
231
The 2023 Annual Report of Midea Group Co., Ltd.
China
27/F, Jardine
House, 1
Clifford Chance
Connaught - Wang Yanlin +852 2826 2457
LLP
Place, Central,
Hong Kong
34/F, Office
Building No. 3,
Jingtian & Huamao Center, +86 10 5809
- Ling Tezhi
Gongcheng LLP 77 Jianguo 1279
Road, Chaoyang
District, Beijing
11/F, Central
Tower, 28
OBC Law Firm Queen’s Road - Huang Ying +852 3656 6073
Central, Hong
Kong
19/F, Man Yee
Building, 68 Des
Guo Shu／Wang
Fitch Ratings Voeux Road - +852 2263 9608
Sai
Central, Hong
Kong
3/F and 4/F,
S&P Global Three Exchange
Shen Xi／Xie
Ratings Hong Square, 8 +852 2263 9992
-
Connaught Manqi
Kong Limited
Place, Central,
Hong Kong
Change of the agencies in the table above during the Reporting Period
□ Yes √ No
2.4 Use of raised funds
Unit: RMB
In compliance
Rectification
Status of the with the
for any
special purpose, use
Total amount Amount irregularity (if
Bond name Amount used account for plan and other
raised unused any) in the
raised funds information
use of raised
(if any) stated in the
funds
prospectus
The raised
Midea
funds account
Investment
has been
Development
USD450 USD450 established to No
Company 0 Yes
million million ensure the irregularities
Limited 2.88%
funds will be
Secured
used as
Notes 2027
stated.
Use of raised funds in construction projects
□ Applicable √ N/A
232
The 2023 Annual Report of Midea Group Co., Ltd.
Indicate whether the raised funds were re-purposed during the Reporting Period
□ Applicable √ N/A
2.5 Changes in credit ratings in the Reporting Period
□ Applicable √ N/A
2.6 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of debt
instrument holders
□ Applicable √ N/A
3. Debt Instruments as a Non-financial Enterprise
□ Applicable √ N/A
No such cases in the Reporting Period.
4. Convertible Corporate Bonds
□ Applicable √ N/A
No such cases in the Reporting Period.
5. Consolidated Loss of the Reporting Period Over 10% of Net Assets as at the End
of Last Year
□ Applicable √ N/A
6. Interest-bearing Liabilities Other than Bonds that Were Overdue at the End of the
Reporting Period
□ Applicable √ N/A
7. Irregularities during the Reporting Period
□ Yes √ No
8. Key Financial Information of the Company in the Past Two Years
Unit: RMB’000
233
The 2023 Annual Report of Midea Group Co., Ltd.
Item 31 December 2023 31 December 2022 Change
Current ratio 111.97% 126.54% -14.57%
Debt/asset ratio 64.14% 64.05% 0.09%
Quick ratio 87.95% 98.38% -10.43%
2023 2022 Change
Net profit before non-
33,122,326 28,801,052 15.00%
recurring gains and losses
EBITDA/debt ratio 52.32% 46.38% 5.94%
Interest cover (times) 15.34 20.09 -23.64%
Cash-to-interest cover
30.88 23.06 33.91%
(times)
EBITDA-to-interest cover
17.96 23.65 -24.06%
(times)
Loan repayment ratio (%) 100.00% 100.00% 0.00%
Interest payment ratio (%) 100.00% 100.00% 0.00%
234
Section X Financial Report
1. Auditor’s report
Type of the auditor’s opinion Unqualified opinion
Signing date of the auditor’s report 26 March 2024
Name of the auditor PricewaterhouseCoopers Zhong Tian LLP
No. of the auditor’s report PwC ZT Shen Zi (2024) No. 10017
Names of certified public accountants Yao Wenping and Wu Fangfang
- 235 -
[English Translation for Reference Only]
Auditor’s Report
PwC ZT Shen Zi (2024) No. 10017
(Page 1 of 6)
To the Shareholders of Midea Group Co., Ltd.,
Opinion
What we have audited
We have audited the accompanying financial statements of Midea Group Co., Ltd. (hereinafter “the
Group”), which comprise:
the consolidated and company balance sheets as at 31 December 2023;
the consolidated and company income statements for the year then ended;
the consolidated and company cash flow statements for the year then ended;
the consolidated and company statements of changes in shareholders’ equity for the year then
ended; and
notes to the financial statements.
Our opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated and company’s financial position of the Group as at 31 December 2023, and their financial
performance and cash flows for the year then ended in accordance with the requirements of the
Accounting Standards for Business Enterprises (“CASs”).
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the Code of Ethics for Professional Accountants
of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other
ethical responsibilities in accordance with the CICPA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
Revenue recognition of heating & ventilation and as well as air-conditioner (hereinafter
referred to as “HVAC”) and consumer appliances
Impairment assessment of goodwill
PwC ZT Shen Zi (2024) No. 10017
(Page 2 of 6)
Key Audit Matters (Cont’d)
Key Audit Matters How our audit addressed the Key Audit Matters
Revenue recognition of HVAC and We have performed the following procedures to
consumer appliances address this key audit matter:
Refer to Note 2(26)(a) of accounting policy of 1. Interviewed management to understand the
“Revenue - sales of goods” and Note 4(48) necessary details of sales processes of all
“Operating revenue and cost of sales” to the distribution channels and evaluate the internal
financial statements. control of processes relating to the revenue from
sales of HVAC and consumer appliances designed
The Group recognises relevant revenue at the by management and tested the operating
amount of the consideration which the Group effectiveness of key controls;
is expected to receive when the customer
obtains control over relevant goods or 2. Reviewed household appliance sales contract
services. In 2023, the Group’s consolidated template entered into by and between the Group
operating revenue was approximately RMB and the clients from all distribution channels, and
372,037,280,000 and the revenue from analysed and evaluated the appropriateness of the
HVAC and consumer appliances was Group’s accounting policies on the revenue from
approximately RMB 323,430,039,000. sales of HVAC and consumer appliances based on
our interview with management, understanding of
We identified this as a key audit matter due to the Group’s business operation and audit
the large size of both domestic and overseas experience;
customer base and high volume of sales
through various distribution channels, the 3. Performed fluctuation analysis of monthly sales
amount of revenue recognised from HVAC and gross margin by product;
and consumer appliances is material to the
financial statements, completing the 4. Reviewed the consistency between book records of
necessary audit procedures required our product sales revenue and supporting documents
focuses and substantial audit resources. relevant to revenue recognition on a sample basis,
including sales contracts, orders, rebate agreement,
sales invoices, shipping orders, acknowledgement
of goods receipts signed by customers and billing
agreements with customers;
5. Validated the revenue from sales of products by
external confirmation on a sampling basis;
6. Evaluated whether or not the sales of products
occurred near year end was recorded in the proper
period by reconciling the book records of product
sales revenue to the supporting documents which
include records of revenue from sales of products,
acknowledgement of goods receipts signed by
customers, billing agreements with customers or
other supporting documents.
Based on the work performed, the Group’s revenue
recognition of HVAC and consumer appliances were
supported by the available evidence.
-2-
PwC ZT Shen Zi (2024) No. 10017
(Page 3 of 6)
Key Audit Matters (Cont’d)
Key Audit Matters How our audit addressed the Key Audit Matters
Impairment assessment of goodwill We have performed the following procedures to
address this key audit matter:
Refer to Note 2(19) of accounting policy of
“Impairment of long-term assets”, Note 1. Understood the internal controls and evaluation
2(31)(i) “Critical accounting estimates and process relating to goodwill impairment
judgements - Provision for impairment of assessment, and assessed the inherent risks of
goodwill” and Note 4(21) “Goodwill” to the material misstatement by considering the degree of
financial statements. estimation uncertainty and the level of other
inherent risk factors, such as complexity,
As at 31 December 2023, the carrying amount subjectivity, changes and susceptibility to
of goodwill of the Group amounted to management’s bias and fraud;
approximately RMB30,858,237,000,
including goodwill of RMB22,364,486,000 2. Evaluated and tested the operating effectiveness of
and RMB2,338,037,000 arising from key controls relevant to the goodwill impairment
business acquisition of KUKA assessment, including review and approval of key
Aktiengesellschaft and its subsidiaries assumptions applied and internal control over
(“KUKA Group”) and Toshiba Lifestyle calculating recoverable amounts of the cash
Products & Services Corporation (“TLSC”), generating unit and cash generating units;
respectively.
3. Assessed the reasonableness of the identification of
Management performs the goodwill the cash generating unit and cash generating units;
impairment assessment in accordance with
the accounting policy stated in Note 2(19) to 4. Compared the historical actual results to prior year
the financial statements. The recoverable budgets and forecasts to assess whether there are
amount of the goodwill is determined based management bias in the process and
on fair value less costs of disposal or value-in- reasonableness;
use calculations (whichever is the higher).
The assessment result indicated that the 5. Evaluated the key assumptions used in the
recoverable amount of the cash generating impairment assessment, including forecast period
unit and cash generating units, to which the revenue annual growth rate, gross profit margin,
goodwill was allocated, exceeded its carrying perpetual annual growth rate and pre-tax discount
value and therefore no impairment was rate by considering the Company’s historical
recorded. The recoverable amount of cash operating performance, future operation plan and
generating unit and cash generating units was market developments;
determined based on value-in-use using cash
flow projections. The key assumptions used 6. Tested the mathematical accuracy of the calculation
in the goodwill impairment assessment process of the impairment assessment;
included forecast period revenue annual
growth rate, gross profit margin, perpetual 7. Evaluated the appropriateness of the goodwill
annual growth rate and pre-tax discount rate. impairment assessment model and pre-tax
discount rate by involving our internal valuation
We identified this as a key audit matter due to experts.
the significance of the goodwill balance
arising from the business acquisition of Based on the work performed, the management’s
KUKA Group and TLSC, and the significant judgements as adopted in the goodwill impairment
accounting estimates and judgements in key assessment of KUKA Group and TLSC were supported
assumptions used in the impairment by the available evidence.
assessment.
-3-
PwC ZT Shen Zi (2024) No. 10017
(Page 4 of 6)
Other Information
Management of the Group is responsible for the other information. The other information comprises
all of the information included in 2023 annual report of the Group other than the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management of the Group is responsible for the preparation and fair presentation of these financial
statements in accordance with the CASs, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing these financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
-4-
PwC ZT Shen Zi (2024) No. 10017
(Page 5 of 6)
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether these financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that
an audit conducted in accordance with CSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in these financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, (including the disclosures), structure and content of the
financial statements, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
-5-
PwC ZT Shen Zi (2024) No. 10017
(Page 6 of 6)
Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
PricewaterhouseCoopers Zhong Tian LLP Signing CPA
—————————
Yao Wenping
(Engagement Partner)
Shanghai, the People’s Republic of China Signing CPA
26 March 2024 —————————
Wu Fangfang
-6-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 31 December 31 December 31 December
ASSETS Note 2023 2022 2023 2022
Consolidated Consolidated Company Company
Current assets
Cash at bank and on
hand 4(1) 81,673,846 55,270,099 30,260,602 28,492,401
Financial assets held
for trading 4(2) 1,790,588 3,284,593 299,001 274,120
Derivative financial
assets 1,278,161 665,484 - -
Notes receivable 4(3) 5,521,960 4,758,129 - -
Accounts receivable 4(4) 32,884,739 28,237,973 - -
Receivables financing 4(6) 13,330,008 13,526,540 - -
Advances to suppliers 4(7) 3,316,194 4,367,211 81,244 34,724
Contract assets 4(8) 4,045,925 4,498,956 - -
Loan receivables 4(9) 14,296,958 14,138,756 - -
Other receivables 4(5), 18(1) 2,181,878 2,211,177 19,614,359 26,175,101
Inventories 4(10) 47,339,255 46,044,897 - -
Current portion of non-
current assets 4(11) 10,760,577 37,553,078 9,363,826 33,168,421
Other current assets 4(12) 62,900,891 46,542,378 43,712,760 33,476,601
Total current assets 281,320,980 261,099,271 103,331,792 121,621,368
Non-current assets
Other debt investments 4(13) 6,319,047 11,094,259 3,334,059 7,215,301
Long-term receivables 4(14) 250,519 614,598 - -
Loan receivables 4(9) 975,272 693,294 - -
Long-term equity
investments 4(15), 18(2) 4,976,109 5,188,817 75,957,844 73,103,569
Investments in other
equity instruments 37,874 41,359 - -
Other non-current
financial assets 4(16) 7,769,938 10,625,244 285,170 347,698
Investment properties 1,293,629 809,936 393,988 386,435
Property, plant and
equipment 4(17) 30,937,963 26,082,992 1,300,998 1,223,553
Construction in
progress 4(18) 4,681,220 3,843,777 749,934 504,757
Right-of-use assets 4(19) 3,048,785 2,339,878 1,683 8,040
Intangible assets 4(20) 18,457,736 16,908,915 583,714 653,320
Goodwill 4(21) 30,858,237 28,548,653 - -
Long-term prepaid
expenses 4(22) 1,736,199 1,579,899 72,745 85,109
Deferred tax assets 4(23) 12,771,150 10,244,296 289,426 327,251
Other non-current
assets 4(24) 80,603,526 42,840,079 71,132,070 35,423,939
Total non-current assets 204,717,204 161,455,996 154,101,631 119,278,972
TOTAL ASSETS 486,038,184 422,555,267 257,433,423 240,900,340
-1-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
LIABILITIES AND 31 December 31 December 31 December 31 December
SHAREHOLDERS’ EQUITY Note 2023 2022 2023 2022
Consolidated Consolidated Company Company
Current liabilities
Short-term borrowings 4(27) 8,819,176 5,169,480 400,000 -
Customer deposits and
deposits from banks
and other financial
institutions 88,960 77,469 - -
Financial liabilities held
for trading 4(28) 1,346,674 1,580,771 - -
Derivative financial
liabilities 257,668 234,606 - -
Notes payable 4(29) 21,707,608 25,572,421 - -
Accounts payable 4(30) 72,530,465 64,233,225 - -
Contract liabilities 4(31) 41,765,475 27,960,038 - -
Employee benefits
payable 4(32) 9,076,027 7,152,217 169,349 173,824
Taxes payable 4(33) 5,455,102 4,955,335 411,715 718,181
Other payables 4(34) 4,442,928 4,322,025 170,693,950 159,953,351
Current portion of non-
current liabilities 4(35) 14,457,710 7,240,626 6,621,910 5,896,701
Other current liabilities 4(36) 71,297,928 57,843,528 147,552 77,066
Total current liabilities 251,245,721 206,341,741 178,444,476 166,819,123
Non-current liabilities
Long-term borrowings 4(37) 46,138,736 50,685,948 16,600,000 15,619,900
Debentures payable 4(38) 3,217,969 3,163,616 - -
Lease liabilities 4(39) 2,047,319 1,507,480 - 2,350
Provisions 782,539 394,977 - -
Deferred income 4(40) 1,734,932 1,721,092 157,917 152,548
Long-term employee
benefits payable 4(41) 1,433,874 1,488,456 - -
Deferred tax liabilities 4(23) 5,098,280 4,647,673 - -
Other non-current
liabilities 39,165 680,482 - -
Total non-current
liabilities 60,492,814 64,289,724 16,757,917 15,774,798
Total liabilities 311,738,535 270,631,465 195,202,393 182,593,921
Shareholders’ equity
Share capital 4(42) 7,025,769 6,997,273 7,025,769 6,997,273
Capital surplus 4(44) 21,243,156 19,693,139 29,479,180 27,826,208
Less: Treasury stock 4(43) (12,871,738) (14,933,944) (12,871,738) (14,933,944)
Other comprehensive
income 4(45) (164,202) 108,289 (6,639) (5,679)
General risk reserve 642,525 671,999 - -
Special reserve 16,040 16,350 - -
Surplus reserve 4(46) 10,702,928 10,702,928 10,702,928 10,702,928
Undistributed profits 4(47) 136,284,347 119,679,202 27,901,530 27,719,633
Total equity attributable to
shareholders of the
Company 162,878,825 142,935,236 62,231,030 58,306,419
Minority interests 11,420,824 8,988,566 - -
Total shareholders’ equity 174,299,649 151,923,802 62,231,030 58,306,419
TOTAL LIABILITIES AND
SHAREHOLDERS’
EQUITY 486,038,184 422,555,267 257,433,423 240,900,340
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-2-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2023 2022 2023 2022
Consolidated Consolidated Company Company
Total revenue 373,709,804 345,708,706 1,028,572 1,385,528
Including: Operating revenue 4(48), 18(3) 372,037,280 343,917,531 1,028,572 1,385,528
Interest income 4(49) 1,671,908 1,790,454 - -
Fee and commission
income 616 721 - -
Less: Cost of sales 4(48) (273, 481,373) (260,538,701) (40,060) (42,071)
Interest costs 4(49) (31,660) (49,461) - -
Fee and commission
expenses (3,572) (7,681) - -
Taxes and surcharges 4(50) (1,816,502) (1,565,884) (41,009) (32,814)
Selling and distribution
expenses 4(51) (34,880,875) (28,716,121) - -
General and
administrative
expenses 4(52) (13, 476,908) (11,582,664) (1,465,397) (1,125,438)
Research and
development
expenses 4(53) (14,583,311) (12,618,506) - -
Financial income 4(54) 3, 261,656 3,387,491 1,864,380 2,204,154
Including: Interest
expenses 2,808,104 1,830,915 2,994,928 2,645,223
Interest
income 6,951,446 5,837,713 4,870,697 4,859,955
Add: Other income 4(60) 2,082,382 1,896,113 37,934 26,642
Investment income 4(58), 18(4) 463,561 208,054 15,968,890 10,917,956
Including: share of profit
of associates
and joint
ventures 680,759 608,278 157,844 260,651
(Losses)/Gains on
changes in fair value 4(57) (226,492) (251,171) 78,018 (512,502)
(Losses on)/Reversal of
credit impairment 4(56) (198,624) (513,686) 1,175 9,884
Asset impairment losses 4(55) (439,777) (533,363) - -
(Losses)/Gains on
disposal of assets 4(59) (60,868) (59,854) 1,269 (276)
Operating profit 40,317,441 34,763,272 17,433,772 12,831,063
Add: Non-operating income 453,397 395,406 57,573 34,465
Less: Non-operating expenses (493,675) (202,747) (553) (10,490)
Total profit 40,277,163 34,955,931 17,490,792 12,855,038
Less: Income tax expenses 4(61) (6,531,811) (5,145,700) (164,631) (324,773)
Net profit 33,745,352 29,810,231 17,326,161 12,530,265
(1) Classified by continuity of
operations
Net profit from continuing
operations 33,745,352 29,810,231 17,326,161 12,530,265
Net profit from
discontinued
operations - - - -
(2) Classified by ownership of
the equity
Attributable to
shareholders of the
Company 33,719,935 29,553,507 17,326,161 12,530,265
Minority interests 25,417 256,724 - -
-3-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT'D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2023 2022 2023 2022
Consolidated Consolidated Company Company
Other comprehensive income, net of
tax (249,457) 1,892,922 (960) 1,616
Other comprehensive income
attributable to shareholders of the
Company, net of tax (272,491) 1,865,886 (960) 1,616
(1) Other comprehensive income
items which will not be
reclassified subsequently to
profit or loss (85,764) 207,457 - -
1) Changes arising from
remeasurement of defined
benefit plan (87,280) 208,349 - -
2) Changes in fair value of
investments in other equity
instruments 1,516 (892) - -
(2) Other comprehensive income
items which will be
reclassified subsequently to
profit or loss (186,727) 1,658,429 (960) 1,616
1) Other comprehensive income
that will be transferred
subsequently to profit or
loss under the equity
method 7,751 17,391 (960) 1,616
2) Cash flow hedging reserve (135,204) 395,617 - -
3) Differences on translation of
foreign currency financial
statements (84,307) 1,175,539 - -
4) Others 25,033 69,882 - -
Other comprehensive income
attributable to minority
shareholders, net of tax 23,034 27,036 - -
Total comprehensive income 33,495,895 31,703,153 17,325,201 12,531,881
Attributable to shareholders of the
Company 33,447,444 31,419,393 17,325,201 12,531,881
Minority interests 48,451 283,760 - -
Earnings per share
Basic earnings per share (in RMB
Yuan) 4(62) 4.93 4.34 Not applicable Not applicable
Diluted earnings per share (in RMB
Yuan) 4(62) 4.92 4.33 Not applicable Not applicable
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-4-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2023 2022 2023 2022
Item Note Consolidated Consolidated Company Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of
services 356,076,005 316,997,825 - -
Net decrease in loan receivables - 6,660,035 - -
Net increase in customer deposits and deposits from
banks and other financial institutions 11,491 - - -
Net decrease in deposits with the Central Bank - 91,309 - -
Cash received from interest, fee and commission 1,691,771 1,788,062 - -
Refund of taxes and surcharges 7,332,726 10,934,799 - -
Cash received relating to other operating activities 4(63)(a) 7,721,752 7,295,957 19,249,193 18,834,797
Sub-total of cash inflows 372,833,745 343,767,987 19,249,193 18,834,797
Cash paid for goods and services (216,446,770) (221,345,706) - -
Net increase in loan receivables (333,557) - - -
Net decrease in customer deposits and deposits from
banks and other financial institutions - (711) - -
Net increase in deposits with the Central Bank (86,661) - - -
Net decrease in borrowings from the Central Bank - (178,878) - -
Cash paid for interest, fee and commission (35,232) (57,141) - -
Cash paid to and on behalf of employees (38,605,604) (35,674,963) (436,207) (549,897)
Payments of taxes and surcharges (18,488,931) (17,387,253) (545,928) (379,098)
Cash paid relating to other operating activities 4(63)(b) (40,934,379) (34,465,507) (750,616) (2,959,364)
Sub-total of cash outflows (314,931,134) (309,110,159) (1,732,751) (3,888,359)
Net cash flows from operating activities 4(63)(h) 57,902,611 34,657,828 17,516,442 14,946,438
2. Cash flows used in investing activities
Cash received from disposal of investments 4(63)(c) 116,074,693 98,564,716 81,562,000 58,600,000
Cash received from returns on investments 5,336,233 3,800,095 20,097,443 13,491,657
Net cash received from disposal of property, plant and
equipment, intangible assets and other long-term
assets 391,359 239,226 5,281 53
Net cash received from disposal of subsidiaries and
other business units 27,134 14,829 18,000 422,024
Cash received relating to other investing activities 373,816 335,082 - -
Sub-total of cash inflows 122,203,235 102,953,948 101,682,724 72,513,734
Cash paid to acquire property, plant and equipment,
intangible assets and other long-term assets (6,314,051) (7,352,115) (872,027) (518,305)
Cash paid to acquire investments 4(63)(d) (146,998,174) (108,149,195) (101,234,356) (73,645,090)
Net cash paid to acquire subsidiaries and other business
units (712) (962,148) - -
Cash paid relating to other investing activities (110,153) - - -
Sub-total of cash outflows (153,423,090) (116,463,458) (102,106,383) (74,163,395)
Net cash flows used in investing activities (31,219,855) (13,509,510) (423,659) (1,649,661)
3. Cash flows used in financing activities
Cash received from capital contributions 2,357,841 1,348,283 2,312,260 1,321,468
Including: Cash received from capital contributions by
minority shareholders of subsidiaries 45,581 26,815 - -
Cash received from borrowings 33,888,703 46,476,320 8,000,000 9,000,000
Cash received from issuance of debentures - 2,845,196 - -
Cash received from issuance of short-term financing
bonds - 3,999,500 - 3,999,500
Cash received relating to other financing activities 865,591 70,163 312,438 -
Sub-total of cash inflows 37,112,135 54,739,462 10,624,698 14,320,968
Cash repayments of borrowings (33,114,644) (40,920,787) (5,890,000) (90,000)
Cash payments for redemption of short-term financing
bonds - (4,000,000) - (4,000,000)
Cash payments for interest expenses and distribution of
dividends or profits (19,643,828) (13,740,037) (20,155,665) (14,753,066)
Including: Cash payments for dividends or profit to
minority shareholders of subsidiaries (333,316) (279,216) - -
Cash payments relating to other financing activities 4(63)(e) (2,263,876) (6,933,519) (292,887) (2,827,492)
Sub-total of cash outflows (55,022,348) (65,594,343) (26,338,552) (21,670,558)
Net cash flows used in financing activities (17,910,213) (10,854,881) (15,713,854) (7,349,590)
4. Effect of foreign exchange rate changes on cash
and cash equivalents (17,251) 288,492 - -
5. Net increase in cash and cash equivalents 4(63)(h) 8,755,292 10,581,929 1,378,929 5,947,187
Add: Cash and cash equivalents at the beginning of the
year 51,131,968 40,550,039 27,904,229 21,957,042
6. Cash and cash equivalents at the end of the year 4(63)(i) 59,887,260 51,131,968 29,283,158 27,904,229
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-5-
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Attributable to shareholders of the Company
Less: Other Total
Share Capital Treasury comprehensiv General risk Special Surplus Undistributed Minority shareholders’
capital surplus stock e income reserve reserve reserve profits interests equity
(Note 4(42)) (Note 4(44)) (Note 4(43)) (Note 4(45)) (Note 4(46)) (Note 4(47))
Balance at 1 January 2022 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Movements for the year
ended 31 December 2022
Total comprehensive income
Net profit - - - - - - - 29,553,507 256,724 29,810,231
Other comprehensive
income, net of tax - - - 1,865,886 - - - - 27,036 1,892,922
Total comprehensive income - - - 1,865,886 - - - 29,553,507 283,760 31,703,153
Capital contribution and
withdrawal by shareholders
Ordinary shares invested by
shareholders 18,602 1,123,649 - - - - - - 26,815 1,169,066
Business combinations - - - - - - - - 89,520 89,520
Share-based payment
included in shareholders’
equity - 765,914 - - - - - - 45,583 811,497
Others (7,893) (1,209,146) (889,394) - - - - - (1,131,616) (3,238,049)
Profit distribution
Reversal of general risk
reserve - - - - (47,923) - - 47,923 - -
Appropriation to surplus
reserve - - - - - - 1,253,027 (1,253,027) - -
Profit distribution to
shareholders - - - - - - - (11,652,025) (291,638) (11,943,663)
Special reserve
Appropriation in the current
period - - - - - 3,313 - - 828 4,141
Use in the current period - - - - - (2,505) - - (626) (3,131)
Others - (1,504,208) - 1,351 - - - 61 8,988 (1,493,808)
Balance at 31 December 2022 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
-6-
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Attributable to shareholders of the Company
Less: Other Total
Share Capital Treasury comprehensiv General risk Special Surplus Undistributed Minority shareholders’
capital surplus stock e income reserve reserve reserve profits interests equity
(Note 4(42)) (Note 4(44)) (Note 4(43)) (Note 4(45)) (Note 4(46)) (Note 4(47))
Balance at 1 January 2023 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
Movements for the year
ended 31 December 2023
Total comprehensive income
Net profit - - - - - - - 33,719,935 25,417 33,745,352
Other comprehensive
income, net of tax - - - (272,491) - - - - 23,034 (249,457)
Total comprehensive income - - - (272,491) - - - 33,719,935 48,451 33,495,895
Capital contribution and
withdrawal by shareholders
Ordinary shares invested by
shareholders 38,490 2,317,783 - - - - - - 45,581 2,401,854
Business combinations - - - - - - - - 2,563,374 2,563,374
Share-based payment
included in shareholders’
equity - 671,456 - - - - - - 37,361 708,817
Others (9,994) (1,373,096) 2,062,206 - - - - - 12,666 691,782
Profit distribution
Appropriation to general risk
reserve - - - - 19,678 - - (19,678) - -
Reversal of general risk
reserve - - - - (49,152) - - 49,152 - -
Profit distribution to
shareholders - - - - - - - (17,144,264) (349,745) (17,494,009)
Special reserve
Appropriation in the current
period - - - - - 7,227 - - 11,500 18,727
Use in the current period - - - - - (7,537) - - (11,464) (19,001)
Others - (66,126) - - - - - - 74,534 8,408
Balance at 31 December 2023 7,025,769 21,243,156 (12,871,738) (164,202) 642,525 16,040 10,702,928 136,284,347 11,420,824 174,299,649
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-7-
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Share Capital Less: Treasury comprehensive Surplus Undistributed shareholders’
Item capital surplus stock income reserve profits equity
Balance at 1 January 2022 6,986,564 27,105,153 (14,044,550) (7,295) 9,449,901 28,094,420 57,584,193
Movements for the year ended 31
December 2022
Total comprehensive income
Net profit - - - - - 12,530,265 12,530,265
Other comprehensive income, net of
tax - - - 1,616 - - 1,616
Total comprehensive income - - - 1,616 - 12,530,265 12,531,881
Capital contribution and withdrawal by
shareholders
Ordinary shares invested by
shareholders 18,602 1,123,649 - - - - 1,142,251
Share-based payment included in
shareholders’ equity - 789,849 - - - - 789,849
Others (7,893) (1,209,146) (889,394) - - - (2,106,433)
Profit distribution
Appropriation to surplus reserve - - - - 1,253,027 (1,253,027) -
Profit distribution to shareholders - - - - - (11,652,025) (11,652,025)
Others - 16,703 - - - - 16,703
Balance at 31 December 2022 6,997,273 27,826,208 (14,933,944) (5,679) 10,702,928 27,719,633 58,306,419
-8-
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Share Capital Less: Treasury comprehensive Surplus Undistributed shareholders’
Item capital surplus stock income reserve profits equity
Balance at 1 January 2023 6,997,273 27,826,208 (14,933,944) (5,679) 10,702,928 27,719,633 58,306,419
Movements for the year ended 31
December 2023
Total comprehensive income
Net profit - - - - - 17,326,161 17,326,161
Other comprehensive income, net of
tax - - - (960) - - (960)
Total comprehensive income - - - (960) - 17,326,161 17,325,201
Capital contribution and withdrawal by
shareholders
Ordinary shares invested by
shareholders 38,490 2,317,783 - - - - 2,356,273
Share-based payment included in
shareholders’ equity - 708,290 - - - - 708,290
Others (9,994) (1,375,573) 2,062,206 - - - 676,639
Profit distribution
Profit distribution to shareholders - - - - - (17,144,264) (17,144,264)
Others - 2,472 - - - - 2,472
Balance at 31 December 2023 7,025,769 29,479,180 (12,871,738) (6,639) 10,702,928 27,901,530 62,231,030
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-9-
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
1 General information
The principal business activities of Midea Group Co., Ltd. (hereinafter referred to as “the
Company”) and its subsidiaries (hereinafter collectively referred to as “the Group”) include
residential air-conditioner, central air-conditioner, heating and ventilation systems, kitchen
appliances, refrigerators, washing machines, various small appliances, elevators, variable
frequency drives, medical imaging products and robotics and automation system. Other
services include the smart supply chain; sales, wholesale and processing of raw materials
of household electrical appliances, and financial business involving customer deposits,
interbank lendings and borrowings, consumption credits, buyer’s credits and finance leases.
The Company was set up by the Council of Trade Unions of GD Midea Group Co., Ltd. and
was registered in Market Safety Supervision Bureau of Shunde District, Foshan on 7 April
2000, with its headquarters located in Foshan, Guangdong. On 30 August 2012, the
Company was transformed into a limited liability company. On 29 July 2013, the Company
was approved to merge and acquire Guangdong Midea Electric Co., Ltd., which was listed
on Shenzhen Stock Exchange. On 18 September 2013, the Company’s shares were listed
on Shenzhen Stock Exchange.
As at 31 December 2023, the Company’s share capital was RMB 7,025,769,025, and the
total number of shares in issue was 7,025,769,025, of which 133,563,090 shares were
restricted tradable A shares and 6,892,205,935 shares were unrestricted tradable A shares.
The detailed information of principal subsidiaries included in the consolidation scope in the
current year is set out in Note 6. Subsidiaries newly included in the consolidation scope in
the current year mainly include Shenzhen CLOU Electronics Co., Ltd. （hereafter “CLOU
Electronics”）and etc, and are detailed in Note 5(1) and Note 5(2)(a); subsidiaries no longer
included in the consolidation scope in the current year are detailed in Note 5(2)(b).
These financial statements were authorised for issue by the Company’s Board of Directors
on 26 March 2024.
2 Summary of significant accounting policies and accounting estimates
The Group determines specific accounting policies and accounting estimates based on the
features of production and operation, mainly including the measurement of expected credit
loss (“ECL”) on receivables and contract assets (Note 2(10)(a)), valuation method of
inventory (Note 2(11)), depreciation of property, plant and equipment, amortisation of
intangible assets and right-of-use assets (Note 2(14), (17), (29)), impairment of long-term
assets (Note 2(19)), and recognition and measurement of revenue (Note 2(26)).
Key judgements and critical accounting estimates and key assumptions applied by the
Group on the determination of significant accounting policies are set out in Note 2(31).
- 10 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for
Business Enterprises - Basic Standard, and the specific accounting standards and other
relevant regulations issued by the Ministry of Finance on 15 February 2006 and in
subsequent periods (hereinafter collectively referred to as the “Accounting Standards for
Business Enterprises” or “CASs”) and the disclosure requirements in the Preparation
Convention of Information Disclosure by Companies Offering Securities to the Public No. 15
- General Rules on Financial Reporting issued by the China Securities Regulatory
Commission (“CSRC”).
The financial statements are prepared on a going concern basis.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2023 are in
compliance with the Accounting Standards for Business Enterprises, and truly and
completely present the consolidated and company’s financial position of the Company as at
31 December 2023 and their financial performance, cash flows and other information for the
year ended.
(3) Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Functional currency
The functional currency of the Company is Renminbi (“RMB”). The subsidiaries determine
their functional currency based on the primary economic environment in which the business
is operated, mainly including EUR, JPY, USD and HKD, etc. The financial statements are
presented in RMB.
(5) The determination method and selection basis of materiality criteria
The Group determined the materiality of financial information in terms of the nature and
amount of a item in accordance with the specific environment in which it operates. In
determining the significance of the nature of a item, the Group mainly considers whether the
item is a routine business operations in nature and whether it significantly affects the Group's
financial position, financial performance and cash flows. In determining the significance of
the amount of a item, the Group considers the proportion of the amount to the amount of
directly related items such as total assets, total liabilities, total shareholders' equity,
operating revenue, costs of sales, net profit and total comprehensive income, or the
proportion of the amount of the financial statement line item separately.
- 11 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(6) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the Group in a business combination are
measured at the carrying amount. If the absorbed party was bought by the ultimate controller
from a third party in prior years, the value of its assets and liabilities (including goodwill
generated due to the combination) are based on the carrying amount in the ultimate
controller’s consolidated financial statements. The difference between the carrying amount
of the net assets obtained by the Group and the carrying amount of the consideration paid
for the combination is treated as an adjustment to capital surplus (share premium). If the
capital surplus (share premium) is not sufficient to absorb the difference, the remaining
balance is adjusted against retained earnings. Costs directly attributable to the combination
are included in profit or loss in the period in which they are incurred. Transaction costs
associated with the issue of equity or debt securities for the business combination are
included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the Group in a business
combination are measured at fair value at the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognised as goodwill; where the cost of combination is lower than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference
is recognised in profit or loss for the current period. Costs directly attributable to the
combination are included in profit or loss in the period in which they are incurred. Transaction
costs associated with the issue of equity or debt securities for the business combination are
included in the initially recognised amounts of the equity or debt securities.
For business combinations achieved by stages involving enterprises not under common
control, previously-held equity in the acquiree is remeasured at its fair value at the
acquisition dates. For the equity interest held in the acquiree before the acquisition date
under equity method, the difference between its fair value and carrying amount is recognised
as investment income for the current period; for the other comprehensive income under the
equity method and shareholders’ equity changes other than those arising from the net profit
or loss, other comprehensive income and profit distribution, the related other comprehensive
income and other shareholders' equity changes are transferred into profit or loss for the
current period to which the acquisition dates belong, excluding those arising from changes
in the investee's remeasurements of net liability or net asset related to the defined benefit
plan, and those arising from accumulative changes in fair value of investments in equity
instruments not held for trading that are held by investees and designated as at fair value
through other comprehensive income. For previously-held equity in the acquiree
categorised as financial assets at fair value through profit or loss, the difference between its
fair value and carrying amount is transferred to investment income under the cost method;
for previously-held equity in the acquiree categorised as investments in equity instruments
not held for trading at fair value through other comprehensive income, its accumulative
changes in fair value that are originally recognised in other comprehensive income are
directly reclassified to retained earnings. The excess of the sum of fair value of the
previously-held equity and fair value of the consideration paid at the acquisition date over
share of fair value of identifiable net assets acquired from the subsidiary is recognised as
goodwill.
- 12 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(7) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company
and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-
consolidated from the date that such control ceases. For a subsidiary that is acquired in a
business combination involving enterprises under common control, it is included in the
consolidated financial statements from the date when it, together with the Company, comes
under common control of the ultimate controlling party. The portion of the net profits realised
before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial
statements of the subsidiaries are adjusted in accordance with the accounting policies and
the accounting period of the Company. For subsidiaries acquired from business
combinations involving enterprises not under common control, the individual financial
statements of the subsidiaries are adjusted based on the fair value of the identifiable net
assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of subsidiaries’ shareholders’ equity and the
portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not
attributable to the Company are recognised as minority interests, net profit attributed to
minority interests and total comprehensive income attributed to minority interests and
presented separately in the consolidated financial statements under shareholders’ equity,
net profit and total comprehensive income respectively. Where the loss for the current period
attributable to the minority shareholders of the subsidiaries exceeds the share of the minority
interests in the opening balance of owners’ equity, the excess is deducted against minority
interests. Unrealised profits and losses resulting from the sales of assets by the Company
to its subsidiaries are fully eliminated against net profit attributable to shareholders of the
parent company. Unrealised profits and losses resulting from the sales of assets by a
subsidiary to the Company are eliminated and allocated between net profit attributable to
shareholders of the parent company and net profit attributable to minority interests in
accordance with the allocation proportion of the parent company in the subsidiary.
Unrealised profits and losses resulting from the sales of assets by one subsidiary to another
are eliminated and allocated between net profit attributable to shareholders of the parent
company and net profit attributable to minority interests in accordance with the allocation
proportion of the parent company in the subsidiary.
If the accounting treatment of a transaction is inconsistent in the financial statements at the
Group level and at the Company or its subsidiary level, adjustment will be made from the
perspective of the Group.
(8) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on
demand, and short-term and highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
- 13 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Foreign currency translation
(a) Foreign currency transactions
Foreign currency transactions are translated into functional currency using the exchange
rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated
into functional currency using the spot exchange rates on the balance sheet date. Exchange
differences arising from these translations are recognised in profit or loss for the current
period, except for those attributable to foreign currency borrowings that have been taken
out specifically for acquisition or construction of qualifying assets, which are capitalised as
part of the cost of those assets. Non-monetary items denominated in foreign currencies that
are measured at historical costs are translated at the balance sheet date using the spot
exchange rates at the date of the transactions. The effect of exchange rate changes on cash
is presented separately in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at
the spot exchange rates on the balance sheet date. Among the equity items, the items other
than undistributed profits are translated at the spot exchange rates of the transaction dates.
The income and expense items in the income statements of overseas operations are
translated at the spot exchange rates of the transaction dates. The differences arising from
the above translation are recognised in other comprehensive income. The cash flows of
overseas operations are translated at the spot exchange rates on the dates of the cash
flows. The effect of exchange rate changes on cash is presented separately in the cash flow
statement.
(10) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. A financial asset, a financial liability
or an equity instrument is recognised when the Group becomes a party to the contractual
provisions of the instrument.
(a) Financial assets
(i) Classification and measurement
Based on the Group’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets, financial assets are classified as: (1)
financial assets at amortised cost; (2) financial assets at fair value through other
comprehensive income; (3) financial assets at fair value through profit or loss.
The financial assets are measured at fair value at initial recognition. Related transaction
costs that are attributable to the acquisition of the financial assets are included in the initially
recognised amounts, except for the financial assets at fair value through profit or loss, the
related transaction costs of which are recognised directly in profit or loss for the current
period. Accounts receivable or notes receivable arising from sales of products or rendering
of services (excluding or without regard to significant financing components) are initially
recognised at the consideration that is entitled to be charged by the Group as expected.
- 14 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-1) Debt instruments
The debt instruments held by the Group refer to the instruments that meet the definition of
financial liabilities from the perspective of the issuer, and are measured in the following three
ways:
Measured at amortised cost:
The objective of the Group’s business model is to hold the financial assets to collect the
contractual cash flows, and the contractual cash flow characteristics are consistent with a
basic lending arrangement, which gives rise on specified dates to the contractual cash flows
that are solely payments of principal and interest on the principal amount outstanding. The
interest income of such financial assets is recognised using the effective interest rate
method. Such financial assets mainly comprise cash at bank and on hand, loan receivables,
notes receivable, accounts receivable, other receivables, other current assets, debt
investments, long-term receivables and other non-current assets. Debt investments and
long-term receivables that are due within one year (inclusive) as from the balance sheet
date are included in the current portion of non-current assets; debt investments with
maturities of no more than one year (inclusive) at the time of acquisition are included in other
current assets.
Measured at fair value through other comprehensive income:
The objective of the Group’s business model is to hold the financial assets to both collect
the contractual cash flows and sell such financial assets, and the contractual cash flow
characteristics are consistent with a basic lending arrangement. Such financial assets are
measured at fair value through other comprehensive income, except for the impairment
gains or losses, foreign exchange gains and losses, and interest income calculated using
the effective interest rate method which are recognised in profit or loss for the current period.
Such financial assets mainly include receivables financing and other debt investments.
Other debt investments of the Group that are due within one year (inclusive) as from the
balance sheet date are included in the current portion of non-current assets; other debt
investments with maturities no more than one year (inclusive) at the time of acquisition are
included in other current assets.
Measured at fair value through profit or loss:
Debt instruments held by the Group that are not divided into those at amortised cost, or
those measured at fair value through other comprehensive income, are classified as
financial assets at fair value through profit or loss. At initial recognition, the Group designates
a portion of financial assets as at fair value through profit or loss to eliminate or significantly
reduce an accounting mismatch. Financial assets that are due over one year as from the
balance sheet date and are expected to be held over one year are included in other non-
current financial assets. Others are included in financial assets held for trading.
- 15 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-2) Equity instruments
Investments in equity instruments, over which the Group has no control, joint control or
significant influence, are measured at fair value through profit or loss under financial assets
held for trading; investments in equity instruments expected to be held over one year as
from the balance sheet date are included in other non-current financial assets.
In addition, at initial recognition, a portion of certain investments in equity instruments not
held for trading are designated as financial assets at fair value through other comprehensive
income under investments in other equity instruments. The relevant dividend income of such
financial assets is recognised in profit or loss for the current period.
(i-3) Derivative financial instruments
The derivative financial instruments held by the Group are mainly used in controlling risk
exposures. Derivative financial instruments are initially recognised at fair value on the day
when derivatives transaction contract was signed, and subsequently measured at fair value.
The derivative financial instruments are recorded as assets when they have a positive fair
value and as liabilities when they have a negative fair value.
The method for recognising changes in fair value of the derivative financial instrument
depends on whether the derivative financial instrument is designated as a hedging
instrument and meets the requirement for it, and if so, the nature of the item being hedged.
For derivative financial instruments that are not designated as hedging instruments and fail
to meet requirements on hedging instruments, including those held for the purpose of
providing hedging against specific risks in interest rate and foreign exchange but not
conforming with requirements of hedge accounting, the changes in fair value are recorded
in gains or losses on changes in fair value in the consolidated income statement.
Cash flow hedge
At the inception of the hedge, the Group has completed relevant hedge documents,
including the relationship between hedged items and hedging instruments, and risk
management objectives and strategies corresponding to various hedging transactions. At
the inception of the hedge and in subsequent periods, the Group continuously records
whether the hedge is effectively evaluated, that is, whether the hedging instruments can
largely offset the changes in the fair value or cash flows of hedged items.
- 16 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-3) Derivative financial instruments (Cont’d)
Cash flow hedge (Cont’d)
The effective portion of changes in fair value on hedging instruments is recognised in other
comprehensive income as cash flow hedging reserve, while the gains or losses related to
the ineffective portion of the hedge are recognised in profit or loss for the current period.
Where the hedge is a forecast transaction which subsequently results in the recognition of
a non-financial asset or liability, the amount originally recognised in other comprehensive
income is transferred and included in the initially recognised amount of the asset or liability.
For cash flow hedge beyond the foregoing scope, the amount originally recognised in other
comprehensive income is transferred and included in profit or loss for the current period
during the same time in which the profit or loss is influenced by the hedged expected cash
flow. However, if all or part of net loss recognised directly in other comprehensive income
will not be recovered in future accounting periods, the amount not expected to be recovered
should be transferred to profit or loss for the current period. When the Group revokes the
designation of a hedge, a hedging instrument expires or is sold, terminated or exercised, or
the hedge no longer meets the criteria for hedge accounting, the Group will discontinue the
hedge accounting treatments prospectively. Where the Group discontinues the hedge
accounting treatment for cash flow hedging, for hedged future cash flows that will still
happen, the accumulated gains or losses that have been recognised in other comprehensive
income are retained and subject to accounting treatment under the subsequent treatment
method of aforesaid cash flow hedging reserve; for hedged future cash flows that the
forecast transaction will never happen, the accumulated gains or losses that have been
recognised in other comprehensive income are transferred immediately and included in
profit or loss for the current period.
(ii) Impairment
Loss provision for financial assets at amortised cost, investments in debt instruments at fair
value through other comprehensive income, as well as contract assets and lease
receivables is recognised on the basis of ECL.
Giving consideration to reasonable and supportable information on past events, current
conditions, forecasts of future economic conditions that is available without undue cost or
effort at the balance sheet date, and weighted by the risk of default, the Group recognises
the ECL as the probability-weighted amount of the present value of the difference between
the cash flows receivable from the contract and the cash flows expected to collect.
- 17 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
For notes receivable, accounts receivable, receivables financing, lease receivables and
contract assets arising from sales of goods and rendering of services in the ordinary course
of operating activities, the Group recognises the lifetime ECL provision regardless of
whether there exists a significant financing component. Since contract assets are mainly
related to work on the stage of completion without invoice, essentially, their credit risk
characteristics are similar to the accounts receivable for the same kind of contracts.
Therefore, the ECL rate of the contract assets is an approximation to that of accounts
receivable.
Except for the above notes receivable, accounts receivable, receivables financing, lease
receivables and contract assets, at each balance sheet date, the ECL of financial
instruments at different stages are measured respectively. 12-month ECL provision is
recognised for financial instruments in Stage 1 that have not had a significant increase in
credit risk since initial recognition; lifetime ECL provision is recognised for financial
instruments in Stage 2 that have had a significant increase in credit risk yet without credit
impairment since initial recognition; and lifetime ECL provision is recognised for financial
instruments in Stage 3 that have had credit impairment since initial recognition.
For the financial instruments with lower credit risk on the balance sheet date, the Group
assumes there is no significant increase in credit risk since initial recognition. The Group
treats them as financial instruments in Stage 1 and recognises a 12-month ECL.
For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest
income by applying the effective interest rate to the book balance (before deduction of the
impairment provision). For the financial instruments in Stage 3, the interest income is
calculated by applying the effective interest rate to the amortised cost (after deduction of the
impairment provision from the book balance).
In case the ECL of an individually assessed financial asset cannot be evaluated with
reasonable cost, the Group divides the receivables and contract assets into certain
groupings based on credit risk characteristics, then pursuant to which, calculates the ECL.
Basis and provision method for determining groupings are as follows:
- 18 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
Grouping of notes receivable 1 Bank acceptance notes grouping
Grouping of notes receivable 2 Trade acceptance notes grouping
Grouping of accounts receivable 1 Overseas business grouping
Grouping of accounts receivable 2 Domestic business grouping
Grouping of contract assets 1 Overseas business grouping
Grouping of contract assets 2 Domestic business grouping
Grouping of other receivables 1 Security deposit and guarantee receivables grouping
Grouping of other receivables 2 Receivables from related parties grouping
Grouping of other receivables 3 Other receivables grouping
Grouping of long-term receivables Finance lease receivables grouping
Grouping of loan receivables Loans business grouping
The Group, on the basis of the exposure at default and the lifetime ECL rate, calculates the
ECL of notes receivable and receivables financing that are classified into groupings with
consideration to historical credit losses experience, current conditions and forecasts of
future economic conditions.
With consideration to historical credit loss experience, current conditions and forecasts of
future economic conditions, the Group prepares the cross-reference between the number
of overdue days of accounts receivable and the lifetime ECL rate, and calculates the ECL
of accounts receivable that are classified into groupings.
The Group, on the basis of the exposure at default and the 12-month or lifetime ECL rate,
calculates the ECL of other receivables, loan receivables that are classified into groupings
with consideration to historical credit losses experience, the current conditions and forecasts
of future economic conditions.
The Group recognises the loss provision made or reversed into profit or loss for the current
period. For debt instruments held at fair value through other comprehensive income, the
Group adjusts other comprehensive income while the impairment loss or gain is recognised
in profit or loss for the current period.
- 19 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(iii) Derecognition of financial assets
A financial asset is derecognised when: (1) the contractual rights to the cash flows from the
financial asset expire, (2) the financial asset has been transferred and the Group transfers
substantially all the risks and rewards of ownership of the financial asset to the transferee,
or (3) the financial asset has been transferred and the Group has not retained control of the
financial asset, although the Group neither transfers nor retains substantially all the risks
and rewards of ownership of the financial asset.
When a financial asset is derecognised, the difference between the carrying amount and
the sum of the consideration received and the cumulative changes in fair value that are
previously recognised directly in other comprehensive income is recognised in profit or loss
for the current period, except for those as investments in other equity instruments, the
difference aforementioned is recognised in retained earnings instead.
(b) Financial liabilities
Financial liabilities are classified as financial liabilities at amortised cost and financial
liabilities at fair value through profit or loss at initial recognition.
Financial liabilities of the Group mainly comprise financial liabilities at amortised cost,
including notes payable, accounts payable, other payables, borrowings, debentures payable
and short-term financing bonds payable in other current liabilities, customer deposits and
deposits from banks and other financial institutions, borrowings from the Central Bank, and
long-term payables. Such financial liabilities are initially recognised at fair value, net of
transaction costs incurred, and subsequently measured using the effective interest rate
method. Financial liabilities that are due within one year (inclusive) are classified as current
liabilities; those with maturities over one year but are due within one year (inclusive) as from
the balance sheet date are classified as current portion of non-current liabilities. Others are
classified as non-current liabilities.
A financial liability is derecognised or partly derecognised when the underlying present
obligation is discharged or partly discharged. The difference between the carrying amount
of the derecognised part of the financial liability and the consideration paid is recognised in
profit or loss for the current period.
- 20 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Financial instruments (Cont’d)
(c) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at
the quoted price in the active market. The fair value of a financial instrument that is not
traded in an active market is determined by using a valuation technique. In valuation, the
Group adopts valuation techniques applicable in the current situation and supported by
adequate available data and other information, selects inputs with the same characteristics
as those of assets or liabilities considered in relevant transactions of assets or liabilities by
market participants, and gives priority to the use of relevant observable inputs. When
relevant observable inputs are not available or feasible, unobservable inputs are adopted.
(11) Inventories
(a) Classification of inventories
Inventories, including finished goods, raw materials, work in progress, consigned processing
materials and low value consumables, are measured at the lower of cost and net realisable
value.
(b) Costing of inventories
Cost is determined using the first-in, first-out method when issued. The cost of finished
goods and work in progress comprises raw materials, direct labour and systematically
allocated production overhead based on the normal production capacity.
(c) Basis for determining net realisable values of inventories and method for making provision
for decline in the value of inventories
Inventories are initially measured at cost. The cost of inventories comprises purchase cost,
processing cost and other expenditures to bring the inventories to current site and condition.
On the balance sheet date, inventories are measured at the lower of cost and net realisable
value.
Net realisable value is determined based on the estimated selling price in the ordinary
course of business, less the estimated costs to completion and estimated contract fulfilment
costs and costs necessary to make the sale and related taxes.
Provision for decline in the value of inventories is determined at the excess amount of the
cost as calculated based on the classification of inventories over their net realisable value,
and are recognised in profit or loss for the current period.
- 21 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Inventories (Cont'd)
(d) Inventory system
The Group adopts the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Low value consumables are expensed in full when issued and recognised in cost of related
assets or in profit or loss for the current period.
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its
subsidiaries, and the Group’s long-term equity investments in its associates and joint
ventures.
Subsidiaries are the investees over which the Company is able to exercise control. A joint
venture is a joint arrangement which is structured through a separate vehicle over which the
Group has joint control together with other parties and only has rights to the net assets of
the arrangement based on legal forms, contractual terms and other facts and circumstances.
An associate is an investee that the Group has significant influence on their financial and
operating policies.
Investments in subsidiaries are presented in the Company’s financial statements using the
cost method, and are adjusted to the equity method when preparing the consolidated
financial statements. Investments in associates and joint ventures are accounted for using
the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination involving
enterprises under common control, the investment cost shall be the absorbing party’s share
of the carrying amount of owners’ equity of the party being absorbed at the combination
date; for long-term equity investment acquired through a business combination involving
enterprises not under common control, the investment cost shall be the combination cost.
For business combinations achieved by stages involving enterprises not under common
control, the initial investment cost accounted for using the cost method is the sum of carrying
amount of previously-held equity investment and additional investment cost. For previously-
held equity investments accounted for using the equity method, the accounting treatment of
related other comprehensive income from disposal of the equity is carried out on a same
basis with the investee’s direct disposal of related assets or liabilities. Owners’ equity, which
is recognised due to changes in investee’s owners’ equity other than those arising from the
net profit or loss, other comprehensive income and profit distribution, is accordingly
transferred into profit or loss for the period in which the investment is disposed.
- 22 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(12) Long-term equity investments (Cont’d)
(a) Determination of investment cost (Cont’d)
For the investments in previously-held equity without significant influence or common control
that previously recognised as financial assets at fair value through profit or loss, the
difference between the fair value and carrying amount is transferred to investment income
for the current period under cost method; for the investments previously recognised as
investments in equity instruments not held for trading at fair value through other
comprehensive income, the difference between the fair value and carrying amount and
accumulated changes in fair value previously recognised in other comprehensive income
are directly transferred to retained earnings.
For long-term equity investments acquired not through a business combination, the long-
term equity investments acquired by payment in cash, the initial investment cost shall be
the purchase price actually paid; for long-term equity investments acquired by issuing equity
securities, the initial investment cost shall be the fair value of the equity securities issued.
(b) Subsequent measurement and recognition methods of gains and losses
For long-term equity investments accounted for using the cost method, they are measured
at the initial investment costs, and cash dividends or profit distribution declared by the
investees are recognised as investment income in profit or loss for the current period.
For long-term equity investments accounted for using the equity method, where the initial
investment cost of a long-term equity investment exceeds the Group’s share of the fair value
of the investee’s identifiable net assets at the acquisition date, the long-term equity
investment is measured at the initial investment cost; where the initial investment cost is
less than the Group’s share of the fair value of the investee’s identifiable net assets at the
acquisition date, the difference is included in profit or loss and the cost of the long-term
equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group
recognises the investment income according to its share of net profit or loss of the investee.
The Group discontinues recognising its share of the net losses of an investee after the
carrying amount of the long-term equity investment together with any long-term interests
that in substance form part of the investor’s net investment in the investee are reduced to
zero. However, if the Group has obligations for additional losses and the criteria with respect
to recognition of provisions are satisfied, the Group continues recognising the investment
losses and the provisions at the amount it expects to undertake. The changes of the Group’s
share in investee’s owners’ equity other than those arising from the net profit or loss, other
comprehensive income and profit distribution are recognised in capital surplus with a
corresponding adjustment to the carrying amount of the long-term equity investment. The
carrying amount of the investment is reduced by the Group’s share of the profit distribution
or cash dividends declared by the investees.
- 23 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(12) Long-term equity investments (Cont’d)
(b) Subsequent measurement and recognition methods of gains and losses (Cont’d)
The unrealised profits or losses arising from the transactions between the Group and its
investees are eliminated in proportion to the Group’s equity interest in the investees, based
on which the investment gains or losses of the Company’s financial statements are
recognised. When preparing consolidated financial statements, for the portion of unrealised
profits or losses of internal transactions attributable to the Group arising from downstream
transactions in which the Group invests in or sells assets to the investees, the Group shall,
on the basis of offsetting the Company's financial statements, offset the portion of unrealised
income and costs or asset disposal gains or losses attributable to the Group, and adjust
investment income accordingly; for the unrealised profits or losses of internal transactions
attributable to the Group arising from the upstream transactions in which the investees
invest in or sell assets to the Group, the Group shall, on the basis of offsetting the Company's
financial statements, offset the portion of unrealised profits or losses of internal transactions
attributable to the Group included in the carrying amount of the relevant assets, and adjust
the carrying amount of long-term equity investments accordingly. Any losses resulting from
transactions between the Group and its investees attributable to asset impairment losses
are not eliminated.
(c) Basis for determining existence of control, joint control, significant influence over investees
Control is the power to govern an investee and obtain variable returns from participating the
investee’s activities, and the ability to utilise the power of an investee to affect its returns.
Joint control is the contractually agreed sharing of control over an arrangement, and relevant
economic activity can be arranged upon the unanimous approval of the Group and other
participants sharing of control rights.
Significant influence is the power to participate in the financial and operating policy decisions
of the investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries, associates and joint
ventures are reduced to the recoverable amounts when the recoverable amounts are below
their carrying amounts (Note 2(19)).
(13) Investment properties
Investment properties, including land use rights that have already been leased out, buildings
that are held for the purpose of leasing and buildings that are being constructed or
developed for future use for leasing, are measured initially at cost. Subsequent expenditures
incurred in relation to an investment property are included in the cost of the investment
property when it is probable that the associated economic benefits will flow to the Group
and their costs can be reliably measured; otherwise, the expenditures are recognised in
profit or loss for the period in which they are incurred.
- 24 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(13) Investment properties (Cont’d)
The Group adopts the cost model for subsequent measurement of investment properties.
Buildings and land use rights are depreciated or amortised to their estimated net residual
values over their estimated useful lives. The estimated useful lives, the estimated net
residual values that are expressed as a percentage of cost and the annual depreciation
(amortisation) rates of investment properties are as follows:
Estimated useful Estimated net Annual depreciation
lives residual values (amortisation) rates
Buildings 20 to 40 years 5% 2.38% to 4.75%
Land use rights 30 to 50 years - 2% to 3.33%
When an investment property is transferred to owner-occupied properties, it is reclassified
as property, plant and equipment or intangible asset at the date of the transfer. When an
owner-occupied property is transferred out for earning rentals or for capital appreciation, the
property, plant and equipment or intangible asset is reclassified as investment properties at
the date of the transfer. At the time of transfer, the property is recognised based on the
carrying amount before transfer.
The investment properties’ estimated useful lives, the estimated net residual values and the
depreciation (amortisation) methods applied are reviewed and adjusted as appropriate at
each year-end.
An investment property is derecognised on disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The net amount of proceeds from sale, transfer, retirement or damage of an
investment property after its carrying amount and related taxes and expenses is recognised
in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the
recoverable amount is below the carrying amount.
(14) Property, plant and equipment
(a) Recognition and initial measurement of property, plant and equipment
Property, plant and equipment comprise buildings, overseas land, machinery and
equipment, motor vehicles, electronic equipment and others.
Property, plant and equipment are recognised when it is probable that the related economic
benefits will flow to the Group and the cost can be reliably measured. The initial cost of
purchased property, plant and equipment include purchase price, related taxes and
expenditures that are attributable to the assets incurred before the assets are ready for their
intended use. The initial cost of self-constructed property, plant and equipment is determined
based on Note 2(15).
Subsequent expenditures incurred for a property, plant and equipment are included in the
cost of the property, plant and equipment when it is probable that the associated economic
benefits will flow to the Group and the related cost can be reliably measured. The carrying
amount of the replaced part is derecognised. All the other subsequent expenditures are
recognised in profit or loss for the period in which they are incurred.
- 25 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(14) Property, plant and equipment (Cont’d)
(b) Depreciation method of property, plant and equipment
Property, plant and equipment are depreciated using the straight-line method to allocate the
cost of the assets to their estimated net residual values over their estimated useful lives. For
the property, plant and equipment that have been provided for impairment loss, the related
depreciation charge is prospectively determined based upon the adjusted carrying amounts
over their remaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of
cost and the annual depreciation rates of the Group’s property, plant and equipment are as
follows:
Estimated useful Estimated net Annual depreciation
Categories lives residual values rates
Buildings 15 to 50 years 0% to 10% 6.7% to 1.8%
Machinery and
equipment 2 to 25 years 0% to 10% 50% to 3.6%
Motor vehicles 2 to 20 years 0% to 10% 50% to 4.5%
Electronic equipment
and others 2 to 20 years 0% to 10% 50% to 4.5%
Overseas land Permanent Not applicable Not applicable
The estimated useful lives and the estimated net residual values of the Group’s property,
plant and equipment and the depreciation methods applied to the assets are reviewed, and
adjusted as appropriate at each year-end.
(c) The carrying amount of a property, plant and equipment is reduced to the recoverable
amount when the recoverable amount is below the carrying amount (Note 2(19)).
(d) Disposal of property, plant and equipment
Property, plant and equipment are derecognised on disposal or when no future economic
benefits are expected from its use or disposal. The amount of proceeds from disposals on
sale, transfer, retirement or damage of property, plant and equipment net of their carrying
amount and related taxes and expenses is recognised in profit or loss for the current period.
(15) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction
costs, installation costs, borrowing costs that are eligible for capitalisation and other costs
necessary to bring the construction in progress ready for their intended use. Construction in
progress is transferred to property, plant and equipment when the assets are ready for their
intended use, and depreciation begins from the following month. The carrying amount of
construction in progress is reduced to the recoverable amount when the recoverable amount
is below its carrying amount (Note 2(19)).
- 26 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(16) Borrowing costs
The borrowing costs that are directly attributable to acquisition and construction of a
property, plant and equipment that needs a substantially long period of time for its intended
use commence to be capitalised and recorded as part of the cost of the asset when
expenditures for the asset and borrowing costs have been incurred, and the activities
relating to the acquisition and construction that are necessary to prepare the asset for its
intended use have commenced. The capitalisation of borrowing costs ceases when the
asset under acquisition or construction becomes ready for its intended use and the
borrowing costs incurred thereafter are recognised in profit or loss for the current period.
Capitalisation of borrowing costs is suspended during periods in which the acquisition or
construction of an asset is interrupted abnormally and the interruption lasts for more than 3
months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a property, plant
and equipment qualifying for capitalisation, the amount of borrowing costs eligible for
capitalisation is determined by actual interest expenses deducting any interest income
earned from depositing the unused specific borrowings in the banks or any investment
income arising on the temporary investment of those borrowings during the capitalisation
period.
For the general borrowings obtained for the acquisition or construction of a property, plant
and equipment qualifying for capitalisation, the amount of general borrowing costs eligible
for capital property, plant and equipmentisation is determined by applying the weighted
average effective interest rate of general borrowings, to the weighted average of the excess
amount of cumulative expenditures on the asset over the amount of specific borrowings.
The effective interest rate is the rate at which the future cash flows during the period of
expected duration of the borrowings or applicable shorter period are discounted to the initial
amount of the borrowings.
(17) Intangible assets
Intangible assets include land use rights, patents and non-patent technologies, trademark
rights, trademark use rights and others, are measured at cost.
(a) Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of
30 to 50 years. If the acquisition costs of the land use rights and the buildings located
thereon cannot be reasonably allocated between the land use rights and the buildings, all
of the acquisition costs are recognised as property, plant and equipment.
(b) Patents and non-patent technologies
Patents are amortised on a straight-line basis over the statutory period of validity, the period
as stipulated by contracts or the beneficial period of 2 to 20 years.
- 27 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(17) Intangible assets (Cont’d)
(c) Trademark rights
The trademark rights are measured at cost when acquired and are amortised over the
estimated useful life of 4 to 30 years. The cost of trademark rights obtained in the business
combinations involving enterprises not under common control is measured at fair value. As
some of the trademarks are expected to attract net cash inflows injected into the Group,
management considers that these trademarks have an indefinite useful life and are
presented based upon the carrying amount after deducting the provision for impairment
(Note 4(20)).
(d) Trademark use rights
The trademark use rights are measured at cost when acquired. The cost of trademark use
rights obtained in the business combinations involving enterprises not under common
control is measured at fair value, and is amortised over the estimated useful life of 40 years.
(e) Other intangible assets
Other tangible assets mainly are customers relationships, franchises and software,
measured at cost when acquired or at fair value, and amortized over the estimated useful
life of 2 to 25 years.
(f) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation
method is performed at each year-end, with adjustment made as appropriate.
(g) Research and development (R&D)
The Group's R&D expenditure mainly includes the expenditure on materials consumed in
conducting the Group's R&D activities, employee benefits in the R&D department,
depreciation and amortisation of assets such as equipment and software used in R&D, R&D
testing expenses, R&D technical service expenses and licensing expenses.
Expenditure on the planned investigation, evaluation and selection for the research of
production processes or products is categorised as expenditure on the research phase, and
it is recognised in profit or loss when it is incurred. Expenditure on design and test for the
final application of the development of production processes or products before mass
production is categorised as expenditure on the development phase, which is capitalised
only if all of the following conditions are satisfied:
The development of production processes or products has been fully justified by
technical team;
The budget on the development of production processes or products has been
approved by management;
There is market research analysis that demonstrates the product produced by the
production process or product has the ability of marketing;
There are sufficient technical and financial resources to support the development of
production processes or products and subsequent mass production; and
Expenditure attributable to the development of production processes or products can
be reliably measured.
- 28 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(17) Intangible assets (Cont’d)
(g) R&D (Cont’d)
Other development expenditures that do not meet the conditions above are recognised in
profit or loss in the period in which they are incurred. Development costs previously
recognised as expenses are not recognised as an asset in a subsequent period. Capitalised
expenditure on the development phase is presented as development costs in the balance
sheet and transferred to intangible assets at the date that the asset is ready for its intended
use.
(h) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the
recoverable amount is below the carrying amount (Note 2(19)).
(18) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to right-of-use
assets, and other expenditures that have been incurred but should be recognised as
expenses over more than one year in the current and subsequent periods. Long- term
prepaid expenses are amortised on the straight-line basis over the expected beneficial
period and are presented at actual expenditure net of accumulated amortisation.
(19) Impairment of long-term assets
Property, plant and equipment, construction in progress, right-of-use assets, intangible
assets with finite useful lives, investment properties measured using the cost model and
long-term equity investments in subsidiaries, associates and joint ventures are tested for
impairment if there is any indication that the assets may be impaired at the balance sheet
date. Intangible assets not ready for their intended use, intangible assets with infinite useful
lives and overseas land are tested at least annually for impairment, irrespective of whether
there is any indication that it may be impaired. If the result of the impairment test indicates
that the recoverable amount of an asset is less than its carrying amount, a provision for
impairment and an impairment loss are recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and the present value of the future cash flows expected
to be derived from the asset. Provision for asset impairment is determined and recognised
on the individual asset basis. If it is not possible to estimate the recoverable amount of an
individual asset, the recoverable amount of a group of assets to which the asset belongs is
determined. A group of assets is the smallest group of assets that is able to generate
independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually
for impairment, irrespective of whether there is any indication that it may be impaired. In
conducting the test, the carrying value of goodwill is allocated to the related asset group or
groups of asset groups which are expected to benefit from the synergies of the business
combination. If the result of the test indicates that the recoverable amount of an asset group
or a group of asset groups, including the allocated goodwill, is lower than its carrying
amount, the corresponding impairment loss is recognised. The impairment loss is first
deducted from the carrying amount of goodwill that is allocated to the asset group or group
of asset groups, and then deducted from the carrying amounts of other assets within the
asset group or group of asset groups in proportion to the carrying amounts of assets other
than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value
recovered in the subsequent periods.
- 29 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(20) Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group
in exchange for service rendered by employees or for termination of employment
relationship, which include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits.
(a) Short-term employee benefits
Short-term employee benefits include wages and salaries, bonus, allowances and
subsidies, staff welfare, premiums or contributions on medical insurance, work injury
insurance, maternity insurance, housing funds, labour union funds and employee education
funds, and short-term paid absences. The short-term employee benefits actually occurred
are recognised as a liability in the accounting period in which the service is rendered by the
employees, with a corresponding charge to the profit or loss for the current period or the
cost of relevant assets. Non-monetary benefits are measured at fair value.
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under
which the Group pays fixed contributions into a separate fund and will have no obligation to
pay further contributions; and defined benefit plans are post-employment benefit plans other
than defined contribution plans. During the reporting period, the Group’s defined contribution
plans mainly include basic pensions and unemployment insurance, while the defined benefit
plans are Toshiba Lifestyle Products & Services Corporation (“TLSC”) and its subsidiaries
(“TLSC Group”) and KUKA Aktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA Group”)
provide supplemental retirement benefits beyond the national regulatory insurance system.
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by
local authorities of Ministry of Human Resource and Social Security. Monthly payments of
premiums on the basic pensions are calculated according to prescribed bases and
percentage by the relevant local authorities. When employees retire, the relevant local
authorities are obliged to pay the basic pensions to them. The amounts based on the above
calculations are recognised as liabilities in the accounting period in which the service has
been rendered by the employees, with a corresponding charge to the profit or loss for the
current period or the cost of relevant assets.
Supplementary retirement benefits
The liability recognised in the balance sheet in respect of defined benefit pension plans is
the present value of the defined benefit obligations less the fair value of the plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method at the interest rate of treasury bonds with similar obligation term
and currency. The charges related to supplementary retirement benefits (including current
service costs, historical service costs and gains or losses on settlement) and net interest
are recognised in profit or loss for the current period or included in the cost of an asset, and
the changes arising from remeasurement in net liabilities or net assets of defined benefit
plans are recognised in other comprehensive income.
- 30 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(20) Employee benefits (Cont’d)
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with
employees before the end of the employment contracts or as an offer to encourage
employees to accept voluntary redundancy before the end of the employment contracts.
The Group recognises a liability arising from compensation for termination of the
employment relationship with employees, with a corresponding charge to profit or loss for
the current period at the earlier of the following dates: 1) when the Group cannot unilaterally
withdraw an employment termination plan or a curtailment proposal; 2) when the Group
recognises costs or expenses related to a restructuring that involves the payment of
termination benefits.
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security
contributions to be paid to and for the employees who accept voluntary retirement before
the normal retirement date prescribed by the State, as approved by management. The
Group pays early retirement benefits to those early retired employees from the early
retirement date until the normal retirement date. The Group accounts for the early retirement
benefits in accordance with the treatment for termination benefits, in which the salaries and
social security contributions to be paid to and for the early retired employees from the off-
duty date to the normal retirement date are recognised as liabilities with a corresponding
charge to the profit or loss for the current period. The differences arising from the changes
in the respective actuarial assumptions of the early retirement benefits and the adjustments
of benefit standards are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date
are classified as current liabilities.
(21) General risk reserve
General risk reserve is the reserve appropriated from undistributed profits to cover part of
unidentified potential losses, on the basis of the estimated potential risk value of risk assets
assessed by the standardised approach, which is deducted from recognised provision for
impairment losses on loans. Risk assets include loan receivables, long-term equity
investments, deposits with banks and other financial institutions and other receivables of
subsidiaries engaged in financial business.
(22) Dividend distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by
the shareholders’ meeting.
- 31 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(23) Provisions
Provisions for product warranties, onerous contracts, etc. are recognised when the Group
has a present obligation, it is probable that an outflow of economic benefits will be required
to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the
related present obligation. Factors surrounding a contingency, such as the risks,
uncertainties and the time value of money, are taken into account as a whole in reaching
the best estimate of a provision. Where the effect of the time value of money is material, the
best estimate is determined by discounting the related future cash outflows. The increase in
the discounted amount of the provision arising from passage of time is recognised as
interest expenses.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to
reflect the current best estimate.
The provisions expected to be settled within one year since the balance sheet date are
classified as current liabilities.
(24) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from employees
as consideration for equity instruments of the entity or by incurring liabilities for amounts
based on the equity instruments. Equity instruments include equity instruments of the
Company, its parent company or other accounting entities of the Group. Share-based
payments are divided into equity-settled and cash-settled payments. The Group’s share-
based payments are equity-settled payments.
Equity-settled share-based payment
The Group’s equity-settled share-based payment contains stock option incentive plan,
restricted share incentive schemes and stock ownership schemes. These plans are
measured at the fair value of the equity instruments at grant date and the equity instruments
are tradable or exercisable when services in vesting period are completed or specified
performance conditions are met. In the vesting period, the services obtained in the current
period are included in relevant cost and expenses at the fair value of the equity instruments
at grant date based on the best estimate of the number of tradable or exercisable equity
instruments, and capital surplus is increased accordingly. If the subsequent information
indicates the number of tradable or exercisable equity instruments differs from the previous
estimate, an adjustment is made and, on the exercise date, the estimate is revised to equal
to the number of actual vested equity instruments.
- 32 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(24) Share-based payment (Cont'd)
(b) Determination of fair value of equity instruments
The Group determines the fair value of stock options using option pricing model, which is
Black-Scholes option pricing model.
The fair value of other equity instruments is based on the share prices, which exclude the
price that incentive objects pay, and the number of the shares on the grant date, taking into
account the effects of clause of the Group’s relevant plans.
(c) Basis for determining best estimate of tradable or exercisable equity instruments
As at each balance sheet date in the vesting period, the Group would make best estimate
in accordance with the newly acquired information such as changes in the number of
employees entitled with exercisable or tradable equity instruments, and amend the
estimated number of exercisable or tradable equity instruments. On the exercise or
desterilisation date, the final number of estimated exercisable or tradable equity instruments
is consistent with the actual number of exercisable or tradable equity instruments.
(25) Treasury stock
The Group’s treasury stock mainly comes from the repurchase of equity instruments and
the issuance of restricted shares, etc.
Consideration and transaction costs paid by the Group for repurchasing equity instruments
are deducted from owners’ equity and not recognised as financial assets. The
considerations paid by the Group for repurchasing equity instruments are presented as
treasury stock, and the related transaction costs are recognised in owners’ equity.
On the deregistration day of shares, relevant share capital and treasury stock are reversed
with the difference included in capital surplus (share premium) based on actual
deregistration results.
On the grant day of restricted shares, the Group recognises bank deposits when receiving
subscription from the employees and measures the repurchase obligation as liability. On the
day of release of restricted shares, relevant treasury stocks, liabilities and capital surplus
recognised in the vesting period are reversed based on the actual vesting results.
(26) Revenue
The Group recognises revenue at the amount of the consideration which the Group is
expected to receive when the customer obtains control over relevant goods or services.
Revenue is stated net of discounts, rebates and returns.
- 33 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Revenue (Cont’d)
When any of the following conditions is met, the Group is subject to performance obligations
within a period of time; otherwise, at a point in time:
(1) Customers obtain and consume economic benefits coming from the Group’s
performance of contract while the Group performs the contract.
(2) Customers can control goods under construction during the Group’s performance
of contract.
(3) Goods produced during the Group’s performance of contract are irreplaceable.
During the whole contract period, the Group is entitled to collect payments for those
which have been accumulated up to now.
For a contract obligation within a period of time, the Group recognises the revenue based
on the progress of the obligation fulfilment within that period of time, except where the
progress of the obligation fulfilment cannot be determined reasonably.
Where the status of completion cannot be reasonably determined, revenue is recognised at
the amount of cost incurred if it is predicted that the cost can be compensated till the
progress of the obligation fulfilment can be reasonably determined.
For a contract obligation at a point in time, the Group recognises the revenue when a
customer is in control of the underlying goods.
(a) Sales of goods
The Group are principally engaged in the designing, manufacturing and selling residential
air conditioner, central air-conditioner, heating and ventilation systems, kitchen appliances,
refrigerators, washing machines, various small appliances, elevators, variable frequency
drives, robotics, medical imaging equipment, automation system and sales of products and
materials to buyers.
Revenue from domestic sales of goods is recognised when the Group has delivered
products to the location specified in the sales contract and the buyer has confirmed the
acceptance of the products, and the delivery order is signed by both parties. Upon
confirming the acceptance, the buyer has the right to sell the products at its discretion and
takes the risks of any price fluctuations and obsolescence and loss of the products.
Revenue from overseas goods sale is recognised when the products have been declared
to the customs and shipped out of the port in accordance with the sales contract.
- 34 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Revenue (Cont’d)
(a) Sales of goods (Cont’d)
The credit period granted to distributors by the Group is determined based on their credit
risk characteristics, which is consistent with industry practice, and there is no significant
financing component. The Group makes estimates based on past sales returns and takes
into account the type of customer, type of transaction and characteristics of each
arrangement.
The Group provides distributors with sales discount, and the relevant revenue is recognised
at contract consideration net of the discount amount estimated.
The periods and terms of product quality warranty are provided in accordance with the laws
and regulations related to the products. The Group has not provided any additional services
or product quality warranty, so the product quality warranty does not constitute a separate
performance obligation.
The rights to receive considerations for transferring goods to the customer (and such rights
depend on factors other than the passage of time) are recognised as contract assets. The
Group’s obligation to transfer products to customers for consideration received or receivable
is presented as contract liabilities.
(b) Rendering of services
The Group provides robotics and automation system construction service, intelligent
logistics integration solution, storage services, delivery services, installation services and
transportation service, which are recognised in a certain period of time based on the stage
of completion. On the balance sheet date, the Group re-estimates the stage of completion
to reflect the actual status of contract performance.
When the Group recognises revenue based on the stage of completion, the amount with
unconditional collection right obtained by the Group is recognised as accounts receivable,
and the rest is recognised as contract assets. Meanwhile, loss provision for accounts
receivable and contract assets are recognised on the basis of ECL (Note 2(10)). If the
contract price received or receivable exceeds the amount for the completed service, the
excess portion will be recognised as contract liabilities. Contract assets and contract
liabilities under the same contract are presented on a net basis.
- 35 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Revenue (Cont’d)
(b) Rendering of services (Cont’d)
Contract costs include contract performance costs and contract acquisition costs. The costs
incurred by the Group for the provision of services are recognised as contract performance
costs. The recognised revenue is carried forward to the cost of sales from main operations
based on the stage of completion. Incremental costs incurred by the Group for the
acquisition of contract are recognised as the costs to obtain a contract. For the costs to
obtain a contract with the amortisation period within one year, the costs are charged to profit
or loss when incurred. For the costs to obtain a contract with the amortisation period beyond
one year, the costs are charged in the current profit or loss on the same basis as aforesaid
revenue of rendering of services recognised under the relevant contract. If the carrying
amount of the contract costs is higher than the remaining consideration expected to be
obtained by rendering of the service net of the estimated cost to be incurred, the Group
makes provision for impairment on the excess portion and recognises it as asset impairment
losses. As at the balance sheet date, based on whether the amortisation period of the costs
to fulfil a contract is more than one year when initially recognised, the amount of the Group’s
costs to fulfil a contract net of related provision for asset impairment is presented as
inventories or other non-current assets. For costs to obtain a contract with amortisation
period beyond one year at the initial recognition, the amount net of related provision for
asset impairment is presented as other non-current assets.
(c) Interest income
Interest income from financial instruments is calculated by effective interest rate method and
recognised in profit or loss for the current period. Interest income comprises premiums or
discounts, or the amortisation based on effective rates of other difference between the initial
carrying amount and the due amount of interest-earning assets.
The effective interest rate method is a method of calculating the amortised cost of a financial
asset or liability and the interest income or interest costs based on effective rates. The
effective interest rate is the rate at which the estimated future cash flows during the period
of expected duration of the financial instruments or applicable shorter period are discounted
to the current carrying amount of the financial instruments. When calculating the effective
interest rate, the Group estimates cash flows by considering all contractual terms of the
financial instrument (e.g., early repayment options, similar options, etc.), but without
considering future credit losses. The calculation includes all fees and interest paid or
received that are an integral part of the effective interest rate, transaction costs, and all other
premiums or discounts.
Interest income from impaired financial assets is calculated at the interest rate that is used
for discounting estimated future cash flow when measuring the impairment loss.
(d) Dividend income
Dividend income is recognised when the right to receive dividend payment is established.
(e) Rental income
Rental income from investment prosperities is recognised in the income statement on a
straight-line basis over the lease period.
- 36 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Revenue (Cont’d)
(f) Fee and commission income
Fee and commission income is recognised in profit or loss for the current period when the
service is provided. The Group defers the initial charge income or commitment fee income
arising from the forming or acquisition of financial assets as the adjustment to effective
interest rate. If the loans are not lent when the loan commitment period is expired, related
charges are recognised as fee and commission income.
(27) Government grants
Government grants are transfers of monetary or non-monetary assets from the government
to the Group at nil consideration, including refund of taxes and financial subsidies.
A government grant is recognised when the conditions attached to it can be complied with
and the government grant can be received. For a government grant in the form of transfer
of monetary assets, the grant is measured at the amount received or receivable. For a
government grant in the form of transfer of non-monetary assets, it is measured at fair value;
if the fair value is not reliably determinable, the grant is measured at nominal amount.
Government grants related to assets are grants that are acquired by the Group and used
for acquisition, construction or forming long-term assets in other ways. Government grants
related to income refer to the government grants other than those related to assets.
Government grants related to assets are either deducted against the carrying amount of the
assets, or recorded as deferred income and recognised in profit or loss on a systemic basis
over the useful lives of the assets.
For government grants related to income, where the grant is a compensation for related
expenses or losses to be incurred by the Group in the subsequent periods, the grant is
recognised as deferred income, and included in profit or loss over the periods in which the
related costs are recognised; where the grant is a compensation for related expenses or
losses already incurred by the Group, the grant is recognised directly in profit or loss for the
current period.
The same kind of government grants are presented with the same method.
Those related to ordinary activities are recorded into operating profit while the other in non-
operating income and expenses.
Loans to the Group at political preferential rate are recorded at the actual amount received,
and the related loan expenses are calculated based on the principal and the political
preferential rate. Finance discounts directly received offset related loans expenses.
- 37 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(28) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the
differences arising between the tax bases of assets and liabilities and their carrying amounts
(temporary differences). Deferred tax asset is recognised for the deductible losses that can
be carried forward to subsequent years for deduction of the taxable profit in accordance with
the tax laws. No deferred tax liability is recognised for a temporary difference arising from
the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised
for the temporary differences resulting from the initial recognition of assets or liabilities due
to a transaction other than a business combination, which affects neither accounting profit
nor taxable profit (or deductible losses) and whose initially recognised assets and liabilities
do not result in equal taxable temporary differences and deductible temporary differences.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at
the tax rates that are expected to apply to the period when the asset is realised or the liability
is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible
losses and tax credits to the extent that it is probable that taxable profit will be available in
the future against which the deductible temporary differences, deductible losses and tax
credits can be utilised.
Deferred tax liabilities are recognised for temporary differences arising from investments in
subsidiaries, associates and joint ventures, except where the Group is able to control the
timing of reversal of the temporary difference, and it is probable that the temporary difference
will not reverse in the foreseeable future. When it is probable that the temporary differences
arising from investments in subsidiaries, associates and joint ventures will be reversed in
the foreseeable future and that the taxable profit will be available in the future against which
the temporary differences can be utilised, the corresponding deferred tax assets are
recognised.
Deferred tax assets and deferred tax liabilities are offset when:
the deferred tax assets and deferred tax liabilities are related to the same tax payer
within the Group and the same taxation authority; and,
that tax payer within the Group has a legally enforceable right to offset current tax assets
against current tax liabilities.
(29) Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
- 38 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(29) Leases (Cont’d)
The Group as the lessee
At the lease commencement date, the Group recognises the right-of-use asset and
measures the lease liability at the present value of the lease payments that are not paid at
that date. Lease payments include fixed payments, the exercise price of a purchase option
if the lessee is reasonably certain to exercise that option, and payments of penalties for
terminating the lease if the lessee exercises an option to terminate the lease. Variable lease
payments in proportion to sales are excluded from lease payments and recognised in profit
or loss as incurred. Lease liabilities that are due within one year (inclusive) as from the
balance sheet date are included in the current portion of non-current liabilities.
Right-of-use assets of the Group comprise leased buildings, machinery and equipment,
motor vehicles, etc. Right-of-use assets are measured initially at cost which comprises the
amount of the initial measurement of lease liabilities, any lease payments made at or before
the commencement date and any initial direct costs, less any lease incentives received. If
there is reasonable certainty that the Group will obtain ownership of the underlying asset
by the end of the lease term, the asset is depreciated over its remaining useful life; otherwise
the asset is depreciated over the shorter of the lease term and its remaining useful life. The
carrying amount of the right-of-use asset is reduced to the recoverable amount when the
recoverable amount is below the carrying amount.
For short-term leases with a term of 12 months or less and leases of an individual asset
(when new) of low value, the Group chooses to include the lease payments in the cost of
the underlying assets or in the profit or loss for the current period on a straight-line basis
over the lease term, instead of recognising right-of-use assets and lease liabilities.
The Group accounts for a lease modification as a separate lease if both: (1) the modification
increases the scope of the lease by adding the right to use one or more underlying assets;
(2) the consideration for the lease increases by an amount commensurate with the stand-
alone price for the increase in scope and any appropriate adjustments to that stand-alone
price to reflect the circumstances of the contract.
For a lease modification that is not accounted for as a separate lease, the Group
redetermines the lease term at the effective date of the lease modification, and remeasures
the lease liability by discounting the revised lease payments using a revised discount rate,
except the contract changes that may apply the practical expedient as specified by the
Ministry of Finance. For a lease modification which decreases the scope of the lease or
shortens the lease term, the Group correspondingly decreases the carrying amount of the
right-of-use asset, and recognises in profit or loss any gain or loss relating to the partial or
full termination of the lease. For other lease modifications which lead to the remeasurement
of lease liabilities, the Group correspondingly adjusts the carrying amount of the right-of-
use asset.
For the qualified rent concessions agreed on existing lease contracts, the Group applies
the practical expedient and records the undiscounted concessions in profit or loss when the
agreement is reached to discharge the original payment obligation with corresponding
adjustment of lease liabilities.
- 39 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(29) Leases (Cont’d)
The Group as the lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. An operating lease is a lease other than a
finance lease.
(a) Operating leases
Where the Group leases out self-owned buildings, machinery and equipment, and motor
vehicles under operating leases, rental income therefrom is recognised on a straight-line
basis over the lease term. Variable rental that is linked to a certain percentage of sales is
recognised in rental income as incurred.
For the qualified rent concessions agreed on existing lease contracts, the Group applies the
practical expedient to account for the concessions as variable lease payments and record
the concessions in profit or loss during the waiving period.
Except the above qualified contract changes that are accounted for by applying the practical
expedient, for a lease modification, the Group accounts for it as a new lease from the
effective date of the modification, and considers any lease payments received in advance
and receivable relating to the lease before modification as receivables of the new lease.
(b) Finance leases
At the commencement date, the Group recognises the lease payments receivable under a
finance lease and derecognises relevant assets. The lease payments receivable under a
finance lease are presented as long-term receivables; the lease payments receivable under
a finance lease due within one year (inclusive) as from the balance sheet date are included
in the current portion of non-current assets.
(30) Segment information
The Group identifies operating segments based on the internal organisation structure,
management requirements and internal reporting system, and discloses segment
information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following
conditions: (1) the component is able to earn revenue and incur expenses from its ordinary
activities; (2) whose operating results are regularly reviewed by the Group’s management
to make decisions about resources to be allocated to the segment and to assess its
performance, and (3) for which the information on financial position, operating results and
cash flows is available to the Group. Two or more operating segments that have similar
economic characteristics and satisfy certain conditions can be aggregated into one single
operating segment.
- 40 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(31) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements
applied based on historical experience and other factors, including expectations of future
events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next
accounting year are outlined below:
(i) Provision for impairment of goodwill
The Group tests at least annually whether goodwill has suffered any impairment. The
recoverable amount of the asset group or group of asset groups that contain the apportioned
goodwill is determined by the higher value between the present value of the future cash
flows and the net value that is calculated by the fair value less the disposal costs. Accounting
estimate is required for the calculation of the recoverable amount. The impairment testing
is performed by assessing the recoverable amount of the asset group or group of asset
groups containing the relevant goodwill, based on the present value of cash flows forecasts.
Key assumptions adopted in the impairment testing of goodwill included forecast period
revenue annual growth rate, gross margin, perpetual annual growth rate and pre-tax
discount rate, etc. which involved critical accounting estimates and judgement.
If management revises the forecast period revenue annual growth rate and perpetual annual
growth rate that are used in the calculation of the future cash flows of asset groups or groups
of asset groups, and the revised rates are lower than the current rates, the Group will need
to recognise further impairment against goodwill.
If management revises the gross margin that is used in the calculation of the future cash
flows of asset groups or groups of asset groups, and the revised gross margin is lower than
the current one, the Group will need to recognise further impairment against goodwill.
If management revises the pre-tax discount rate applied to the discounted cash flows, and
the revised pre-tax discount rate is higher than the one currently applied, the Group will
need to recognise further impairment against goodwill.
If the actual revenue annual growth rate, perpetual annual growth rate and gross margin are
higher or the actual pre-tax discount rate is lower than management’s estimates, the
impairment loss of goodwill previously provided for is not allowed to be reversed by the
Group.
- 41 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(31) Critical accounting estimates and judgements (Cont’d)
(ii) Income tax and deferred income tax
The Group is subject to enterprise income tax in numerous jurisdictions. There are many
transactions and events for which the ultimate tax determination is uncertain during the
ordinary course of business. Significant judgement is required from the Group in determining
the provision for income taxes in each of these jurisdictions. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such differences will
impact the income tax and deferred tax provisions in the period in which such determination
is made.
As stated in Note 3(1), some subsidiaries of the Group are high-tech enterprises. The “High-
Tech Enterprise Certificate” is effective for three years. Upon expiration, application for high-
tech enterprise assessment should be submitted again to the relevant government
authorities. Based on the past experience of reassessment for high-tech enterprise upon
expiration and the actual condition of the subsidiaries, the Group considers that the
subsidiaries are able to obtain the qualification for high-tech enterprises in future years, and
therefore a preferential tax rate of 15% is used to calculate the corresponding deferred
income tax. If some subsidiaries cannot obtain the qualification for high-tech enterprise upon
expiration, then the subsidiaries are subject to a statutory tax rate of 25% for the calculation
of the income tax, which further influences the recognised deferred tax assets, deferred tax
liabilities and income tax expenses.
Deferred tax assets are recognised for the deductible tax losses that can be carried forward
to subsequent years to the extent that it is probable that taxable profit will be available in the
future against which the deductible tax losses can be utilised. Taxable profit that will be
available in the future includes the taxable profit that will be realised through normal
operations and the taxable profit that will be increased upon the reversal of taxable
temporary differences incurred in prior periods. Judgements and estimates are required to
determine the time and amounts of taxable profit in the future. Any difference between the
reality and the estimate may result in adjustment to the carrying amount of deferred tax
assets.
(iii) Fair value assessment of financial instruments at level 3 fair value hierarchy
Financial instruments subject to Level 3 fair value hierarchy include unlisted equity
investments at fair value of other non-current financial assets, investments in other equity
instruments and trading financial liabilities. The fair value of these financial instruments is
determined using valuation techniques, and the assumptions of valuation model is based
on unobservable inputs, where changes in assumptions and estimates may have an impact
on the fair value of these investments. These valuation techniques, unobservable inputs
and related assumptions are detailed in Note16(1).
- 42 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(32) Significant changes in accounting policies
The Ministry of Finance released the Circular on Issuing Interpretation No. 16 of Accounting
Standards for Business Enterprises in 2022, which stipulates that deferred income taxes
related to assets and liabilities arising from individual transactions are not applicable to initial
recognition exemption and this is effective from 1 January 2023. The Ministry of Finance
released the Q&A on Implementation of Accounting Standards for Business Enterprises in
2023. The financial statements for the year ended 31 December 2023 and for the year
ended 31 December 2022 have been prepared by the Group and the Company in
accordance with the above interpretation and Q&A, which have no significant impacts on
the financial statements of the Group and the Company.
3 Taxation
(1) Main tax category and rate
Category Tax base Tax rate
Enterprise income tax Levied based on taxable income Note (a)
Value-added tax Taxable value-added amount (Tax payable is Note (b)
(“VAT”) calculated using the taxable sales amount
multiplied by the applicable tax rate less
deductible input VAT of the current period)
City maintenance and The amount of VAT paid 1% or 5% or 7%
construction tax
Educational surcharge The amount of VAT paid 3% or 5%
Local educational The amount of VAT paid 2%
surcharge
Property tax Price-based property is subject to a 1.2% tax 1.2% or 12%
rate after a 30% cut in the original price of
property; rental- based property is subject to
a 12% tax rate for the rental income.
- 43 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
in 2023 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
Certificate:
Taxpayer High-tech Enterprise Certificate Validity
Certificate number acquisition date
Wuhu Midea Kitchen & Bath Appliances Mfg.
Co., Ltd. GR202134003382 18 September 2021 3 years
Changsha Sunye Electric Co., Ltd. GR202143000846 18 September 2021 3 years
Anhui Welling Auto Parts Corporation Limited GR202134002578 18 September 2021 3 years
Hefei Hualing Co., Ltd. GR202134000541 18 September 2021 3 years
Anhui Meizhi Precision Manufacturing Co., Ltd. GR202134004969 18 September 2021 3 years
Hefei Midea Laundry Appliance Co., Ltd. GR202134003561 18 September 2021 3 years
MR Semiconductor Ltd. GR202131000701 10 September 2021 3 years
Reis Robotics (Kunshan) Co., Ltd. GR202132000238 3 November 2021 3 years
Wuxi Filin Electronics Co., Ltd. GR202132000964 3 November 2021 3 years
Welling (Wuhu) Motor Manufacturing Co., Ltd. GR202134003666 18 November 2021 3 years
Beijing Huatairunda Energy Saving Co., Ltd. GR202111004112 17 December 2021 3 years
Guangdong Midea Intelligent Technologies Co.,
Ltd. GR202144008039 20 December 2021 3 years
WINONE ELEVATOR COMPANY LIMITED GR202144006432 20 December 2021 3 years
Guangdong Midea Environmental Technologies
Co., Ltd. GR202144004692 20 December 2021 3 years
Meicloud Technology Co., Ltd. GR202144008715 20 December 2021 3 years
Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. GR202144008574 20 December 2021 3 years
GD Midea Heating & Ventilating Equipment Co.,
Ltd. GR202144001270 20 December 2021 3 years
Guangdong Swisslog Technology Co., Ltd. GR202144005648 20 December 2021 3 years
Toshiba HA Manufacturing (Nanhai) Co., Ltd. GR202144002672 20 December 2021 3 years
Guangdong Meizhi Precision- Manufacturing
Co., Ltd. GR202144003890 20 December 2021 3 years
Shenzhen Hongzhi Software Co., Ltd. GR202144200284 23 December 2021 3 years
Shenzhen CLOU Precision Measurement Co.,
Ltd. GR202144202249 23 December 2021 3 years
Shenzhen Clou Intelligence Industry Co., Ltd. GR202144200806 23 December 2021 3 years
CLOU Global Technology Co., Ltd. GR202144206543 23 December 2021 3 years
Foshan Shunde Midea Electrical Heating
Appliances
Manufacturing Co., Ltd. GR202144012791 31 December 2021 3 years
Foshan Midea Chungho Water Purification
Equipment. Co., Ltd. GR202144010400 31 December 2021 3 years
Hefei Midea Heating & Ventilating Equipment
Co., Ltd. GR202234002343 18 October 2022 3 years
Anhui Meizhi Compressor Co., Ltd. GR202234002700 18 October 2022 3 years
WDM Esaote(Suzhou)Medical Technology Co.,
Ltd. GR202232006635 18 November 2022 3 years
Midea Group Wuhan Heating Ventilation
Equipment Co.,Ltd. GR202242004390 29 November 2022 3 years
Wuhan TTium Motor Technology Co., Ltd. GR202242004712 29 November 2022 3 years
Huaian Welling Motor Manufacturing Co., Ltd. GR202232018102 12 December 2022 3 years
KUKA Robotics Manufacturing China Co., Ltd. GR202231004961 14 December 2022 3 years
Shenzhen Midea Payment Technology Co., Ltd. GR202244208053 19 December 2022 3 years
Foshan Shunde Midea Electric Science and
Technology Co., Ltd. GR202244002733 19 December 2022 3 years
Guangzhou Midea Hualing Refrigerator Co., Ltd. GR202244004828 19 December 2022 3 years
- 44 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax
rates(Cont’d)
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
in 2023 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
Certificate(Cont’d):
Name of taxpayer No. of the High-tech Term of
Enterprise Certificate Dates of issuance validity
Guangdong Yueyun Industrial Internet Innovation
Technology Co., Ltd. GR202244006484 22 December 2022 3 years
GD Midea Environment Appliances Mfg. Co.,Ltd. GR202244008573 22 December 2022 3 years
Wanliyun Medical Information Technology (Beijing) Co.,
Ltd. GR202211008024 30 December 2022 3 years
Hubei Midea Laundry Appliance Co., Ltd. GR202342000522 16 October 2023 3 years
Sichuan CLOU Energy Electric Co., Ltd. GR202351003347 16 October 2023 3 years
Hubei Midea Building Technology Co., Ltd. GR202342000405 16 October 2023 3 years
MiSiliconn Semiconductor Technologies Co., Ltd. GR202351100902 16 October 2023 3 years
Handan Midea Air-Conditioning Equipment Co., Ltd. GR202313000973 28 December 2023 3 years
Chongqing Midea General Refrigeration Equipment Co.,
Ltd. GR202351101572 26 October 2023 3 years
Hubei Midea Refrigerator Co., Ltd. GR202342000311 16 October 2023 3 years
Hiconics Eco-energy Drive Technology Co., Ltd. GR202311003112 26 October 2023 3 years
Wuxi Little Swan Electric Co., Ltd. GR202332003281 6 November 2023 3 years
Suzhou CLOU-MGE Electric Co., Ltd. GR202332003299 6 November 2023 3 years
Jiangsu Midea Cleaning Appliances Co., Ltd. GR202332002439 6 November 2023 3 years
Midea Group Wuhan Refrigeration Equipment Co., Ltd. GR202342003400 14 November 2023 3 years
Midea Network Information Services (Shenzhen) Co., Ltd. GR202344206239 15 November 2023 3 years
Kuka Systems (China) Co., Ltd. GR202331002862 15 November 2023 3 years
Shenzhen CLOU Electronics Co., Ltd. GR202344204605 15 November 2023 3 years
Midea Intelligent Lighting & Controls Technology Co., Ltd. GR202336001435 22 November 2023 3 years
Beijing Wandong Medical Technology Co.,Ltd. GR202311003930 30 November 2023 3 years
Wuhu Maty Air-Conditioning Equipment Co., Ltd. GR202334004899 30 November 2023 3 years
Wuhu Midea Smart Kitchen Appliance Manufacturing Co.,
Ltd. GR202334006446 30 November 2023 3 years
Shanghai Swisslog Healthcare Technology Co., Ltd. GR202331005355 12 December 2023 3 years
Midea Welling Motor Technology (Shanghai) Co., Ltd. GR202331003851 12 December 2023 3 years
Guangdong Midea Precision Mould Technology Co., Ltd. GR202344005048 28 December 2023 3 years
KUKA Robotics Guangdong Co., Ltd. GR202344010905 28 December 2023 3 years
Guangdong Shunkai Switch Co., Ltd. GR202344003261 28 December 2023 3 years
Guangdong Witol Vacuum Electronic Manufacture Co.,
Ltd. GR202344003728 28 December 2023 3 years
Foshan Shunde Midea Washing Appliances
Manufacturing Co., Ltd. GR202344017927 28 December 2023 3 years
Guangdong Welling Motor Manufacturing Co., Ltd. GR202344008685 28 December 2023 3 years
Foshan Welling Washer Motor Manufacturing Co., Ltd. GR202344007566 28 December 2023 3 years
GD Midea Air-Conditioning Equipment Co., Ltd. GR202344001853 28 December 2023 3 years
Guangzhou Hualing Refrigerating Equipment Co., Ltd. GR202344003947 28 December 2023 3 years
Guangdong Meizhi Compressor Limited GR202344005746 28 December 2023 3 years
Guangdong Midea Consumer Electric Manufacturing Co.,
Ltd. GR202344008924 28 December 2023 3 years
Foshan Shunde Midea Water Dispenser Manufacturing
Co., Ltd. GR202344017783 28 December 2023 3 years
- 45 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-2) According to the Notice of the Ministry of Finance, the State Taxation Administration on
Preferential Enterprise Income Tax Policies for Hainan Free-trade Port (Cai Shui [2020] No.
31), the Company’s certain subsidiary in Hainan is subject to enterprise income tax at a rate
of 15% from 1 January 2020 to 31 December 2024.
(a-3) Pursuant to the Notice on Extending the Preferential Enterprise Income Tax Policies for
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen,
enterprises that meet the notice requirements are subject to a reduced enterprise income
tax rate of 15%. Therefore, Midea Commercial Factoring Co., Ltd., a subsidiary of the
Company, is subject to enterprise income tax at a rate of 15% from 1 January 2021 to 31
December 2025.
(a-4) According to the Announcement on Continuing the Enterprise Income Tax Policies for the
Development of Western China jointly issued by the Ministry of Finance, the State Taxation
Administration and the National Development and Reform Commission on 23 April 2020,
Chongqing Midea Air-Conditioning Equipment Co., Ltd., Chongqing Midea Commercial
Factoring Co., Ltd., Chongqing Annto Logistics Technology Co., Ltd. and Guiyang Annto
Logistics Technology Co., Ltd., subsidiaries of the Company, are subject to enterprise
income tax at a rate of 15% from 1 January 2021 to 31 December 2030.
(a-5) According to the Announcement of the Ministry of Finance and the State Administration of
Taxation on Implementing the Preferential Income Tax Policies for the Development of Small
and Micro Enterprises (Announcement [2022], No. 13) and the Announcement of the
Ministry of Finance and the State Administration of Taxation on Implementing the
Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial
and Commercial Households (Announcement [2023], No. 6) and Announcement of the
General Administration of Taxation of the Ministry of Finance on Further Supporting the
Development of Small and Micro Enterprises and Individual Industrial and Commercial
Households (Announcement [2023], No. 12) jointly issued by the Ministry of Finance and
the State Taxation Administration, for Shenzhen Midea Capital Corporation Limited,
Shanghai Andezhilian Supply Chain Technology Co., Ltd., Foshan Annto Logistics
Technology Co., Ltd., Shenzhen Annto Intelligent Technology Co., Ltd., Tianjin Annto
Network Technology Co., Ltd., Jingzhou Meian Storage and Transportation Co., Ltd.,
Chongqing Wanxiang Medical Equipment Co., Ltd, Shanghai Wandong Yingrui Medical
Technology Co., Ltd, and Suzhou Wanying Medical Technology Co., Ltd, subsidiaries of the
Company and qualified as small low-profit enterprises, in 2023, EIT is based on a 20% rate
applied to 25% of its taxable income amount.
(a-6) The Company's subsidiaries in the Chinese mainland other than those mentioned in (a-1)
to (a-5) are subject to enterprise income tax at the rate of 25%.
(a-7) In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,
was awarded with the Certificate of Honour for Development and Expansion (No. 587) by
the Singapore Economic Development Board and is subject to the applicable preferential
income tax rate of 6% for 2023. Lifestyle Orchestra Co.Pte.Ltd. and Little Swan International
(Singapore) Co., Pte. LTD., the Company's subsidiaries, are subject to enterprise income
tax at the rate of 17%.
- 46 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-8) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate
of 16.5%. Such subsidiaries include Midea International Trading Company Limited, Midea
International Corporation Company Limited, Midea Home Appliances Investments (Hong
Kong) Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited,
Midea Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling International
Hong Kong Ltd., Chairing Holding Limited, Main Power Electrical Factory Limited and Midea
Investment (Asia) Company Limited.
(a-9) The Company's subsidiaries in BVI and Cayman Islands are exempted from enterprise
income tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni Investments
Development Ltd., Midea Investment Holding (BVI) Limited, Midea Electric Investment (BVI)
Limited, Welling Holding (BVI) Ltd., Midea Holding (Cayman Islands) Limited and Midea
Investment Development Company Limited.
(a-10) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise
income tax at the rate of 34%.
(a-11) Some subsidiaries of TLSC, the Company's subsidiary in Japan, are subject to Japan
enterprise income tax at the rate of 34.01%.
(a-12) Clivet S.P.A (“Clivet”), the Company's subsidiaries in Italy, are subject to Italy enterprise
income tax at the rate 24%.
(a-13) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise
income tax at the rate of 32%.
(a-14) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to
Israel enterprise income tax at the rate of 23%.
(a-15) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's
subsidiary in Egypt, is subject to Egypt enterprise income tax at the rate of 22.5%.
(a-16) Midea America Corp., the Company's subsidiary in the USA, is subject to USA enterprise
income tax at the rate of 21%.
(a-17) Midea Consumer Electric (Vietnam) CO., LTD., the Company's subsidiary in Vietnam, is
subject to Vietnam enterprise income tax at the rate of 20%.
(a-18) Midea Refrigeration Equipment (Thailand) Co., Ltd., the Company's subsidiary in Thailand,
is exempt from enterprise income tax under the investment promotion policy of the Thailand
Board of Investment.
- 47 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(b) Notes to the VAT rate of the principal tax payers with different tax rates
(b-1) Pursuant to relevant provisions of the Announcement on Relevant Policies for Deepening
Value-Added Tax Reform (Announcement [2019] No. 39) jointly issued by the Ministry of
Finance, the State Taxation Administration and the General Administration of Customs and
relevant regulations, the applicable tax rate of revenue arising from sales of goods and
rendering of repairing and replacement services of the Company’s certain subsidiaries is
13% from 1 April 2019, and that of revenue arising from real estate leasing and
transportation services of the Company’s certain subsidiaries is 9%.
(b-2) Financial services, consulting services and storage services provided by the Company and
certain subsidiaries are subject to VAT at the rate of 6%.
(b-3) Rental revenue of the Company’s certain subsidiaries is subject to easy levy of VAT at the
rate of 5%.
(b-4) Pursuant to relevant provisions of the Announcement on Clarifying the Value-added Tax
Reduction and Exemption Policies for Small-scale Value-added Tax Taxpayers and Other
Policies (Announcement [2023] No. 1) issued by the Ministry of Finance and the State
Taxation Administration, certain subsidiaries of the Company engaged in the production
service sector are eligible for a 5% additional VAT deduction based on deductible input VAT
in the current year from 1 January 2023 to 31 December 2023.
(b-5) Pursuant to relevant provisions of the Announcement on Relevant Tax Policies for Further
Supporting the Business Startup and Employment of Priority Groups (Announcement [2023]
No. 15) issued by the Ministry of Finance, the State Taxation Administration, the Ministry of
Human Resources and Social Security and the Ministry of Agriculture and Rural Affairs, for
certain subsidiaries of the Company that employ the people who have been lifted out of
poverty and those who have been registered as unemployed for more than half a year and
hold the Certificate of Employment and Start-up or the Registration Certificate of
Employment and Unemployment (stating “tax policy for business absorption”), since the
month of signing the labour contracts of more than 1 year and paying the social security
contributions, their VAT, city maintenance and construction tax, educational surcharge, local
educational surcharge and enterprise income tax will be deducted in sequence and based
on quota in accordance with the actual number of employees in 3 years from 1 January
2023 to 31 December 2027.
- 48 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(b) Notes to the VAT rate of the principal tax payers with different tax rates (Cont’d)
(b-6) Pursuant to the Notice on the Additional Value-added Tax Credit Policy for Advanced
Manufacturing Enterprises (Announcement [2023] No. 43) issued by the Ministry of Finance
and the State Taxation Administration, advanced manufacturing enterprises are eligible for
a 5% additional VAT deduction based on deductible input VAT in the current year from 1
January 2023 to 31 December 2027. The following subsidiaries of the Group are approved
as advanced manufacturing enterprises for 2023 which can enjoy the above policy:
KUKA Robotics Guangdong Co., Ltd. Handan Midea Air-Conditioning Equipment Co., Ltd.
Midea Group Wuhan Refrigeration Equipment Co.,
Guangdong Swisslog Technology Co., Ltd. Ltd.
Midea Group Wuhan Heating Ventilation Equipment
Kuka Robotics Manufacturing China Co., Ltd. Co.,Ltd.
Reis Robotics (Kunshan) Co., Ltd. Guangzhou Hualing Refrigerating Equipment Co., Ltd.
Hefei Hualing Co., Ltd. GD Midea Air-Conditioning Equipment Co., Ltd.
Hubei Midea Refrigerator Co., Ltd. Hefei Midea Heating & Ventilating Equipment Co., Ltd.
Guangzhou Midea Hualing Refrigerator Co., Ltd. WINONE ELEVATOR COMPANY LIMITED
Toshiba HA Manufacturing (Nanhai) Co., Ltd. GD Midea Heating & Ventilating Equipment Co., Ltd.
Chongqing Midea General Refrigeration Equipment
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. Co., Ltd.
Foshan Shunde Midea Washing Appliances Guangdong Midea Consumer Electric Manufacturing
Manufacturing Co., Ltd. Co., Ltd.
Foshan Shunde Midea Water Dispenser Manufacturing Foshan Shunde Midea Electrical Heating Appliances
Co., Ltd. Manufacturing Co., Ltd.
Foshan Midea Chungho Water Purification Equipment.
Co., Ltd. GD Midea Environment Appliances Mfg. Co., Ltd.
Hiconics Eco-energy Drive Technology Co., Ltd. Jiangsu Midea Cleaning Appliances Co., Ltd.
Guangdong Witol Vacuum Electronic Manufacture
Huaian Welling Motor Manufacturing Co., Ltd. Co., Ltd.
Guangdong Midea Kitchen Appliances Manufacturing
Dorna Technology Co., Ltd. Co., Ltd.
Anhui Meizhi Compressor Co., Ltd. Wuxi Filin Electronics Co., Ltd.
Anhui Welling Auto Parts Corporation Limited Wuxi Little Swan Electric Co., Ltd.
Anhui Meizhi Precision Manufacturing Co., Ltd. Hefei Midea Laundry Appliance Co., Ltd.
Welling (Wuhu) Motor Manufacturing Co., Ltd. Hubei Midea Laundry Appliance Co., Ltd.
Guangdong Meizhi Compressor Limited Shenzhen CLOU Electronics Co., Ltd.
Guangdong Welling Motor Manufacturing Co., Ltd. Shenzhen CLOU Precision Measurement Co., Ltd.
Foshan Welling Washer Motor Manufacturing Co., Ltd. Shenzhen Clou Intelligence Industry Co., Ltd.
Guangdong Meizhi Precision- Manufacturing Co., Ltd. CLOU Global Technology Co., Ltd.
Guangdong Midea Intelligent Technologies Co., Ltd. Guangdong Shunde Switch Factory Co., Ltd.
Guangdong Midea Environmental Technologies Co., Ltd. Hubei Midea Building Technology Co., Ltd.
Changsha Sunye Electric Co., Ltd. MiSiliconn SemiConductor Technologies Co., Ltd.
Wuhan TTium Motor Technology Co., Ltd.
- 49 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
31 December 2023 31 December 2022
Cash on hand 1,603 1,645
Cash at bank (a) 44,521,913 28,581,529
Other cash balances (b) 4,072,963 1,688,278
Statutory reserve with the Central
Bank (c) 415,070 328,409
Surplus reserve with the Central
Bank (d) 147,971 172,394
Deposits with banks and other
financial institutions (e) 32,064,267 24,287,610
Interest receivable 450,059 210,234
81,673,846 55,270,099
Including: Total amounts deposited
with banks overseas
(including Singapore,
Japan, Hong Kong,
China, Germany, Egypt
and the USA), etc. 11,058,467 7,133,785
(a) As at 31 December 2023, cash at bank included fixed deposits with the term of over 3
months and due within 1 year, amounting to RMB 16,848,494,000 (31 December 2022:
RMB 1,911,210,000).
(b) Other cash balances mainly include letter of bank acceptance notes, letters of guarantee
and letters of credit.
(c) Statutory reserve with the Central Bank represents the statutory reserve deposited in
People’s Bank of China by the financial enterprise in accordance with relevant regulations.
They are restricted cash and are not available for use in the Group’s daily operations.
(d) Surplus reserve with the Central Bank represents the excess over the required statutory
reserve paid by financial institutions in the Central Bank, and it is bank deposit that can be
readily drawn on demand.
(e) As at 31 December 2023 and 31 December 2022, deposits with banks and other financial
institutions included no fixed deposits with the term of over 3 months.
- 50 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(2) Financial assets held for trading
31 December 2023 31 December 2022
Structural deposits (a) 53,750 1,606,608
Investments in equity instrument
held for trading (b) 1,726,584 1,264,595
Others 10,254 413,390
1,790,588 3,284,593
(a) Structural deposits were deposits with financial institutions due within 1 year, which were
measured at fair value through profit or loss.
(b) Investments in equity instrument held for trading referred to equity investments in listed
companies, which were measured at fair value through profit or loss.
(3) Notes receivable
31 December 2023 31 December 2022
Bank acceptance notes 5,477,291 4,705,290
Trade acceptance notes 110,271 114,595
Less: Provision for bad debts (a) (65,602) (61,756)
5,521,960 4,758,129
- 51 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(3) Notes receivable (Cont’d)
(a) Provision for bad debts
The Group's notes receivable are generated from the sale of goods, provision of services
and other daily business activities, regardless of whether there is a significant financing
component, are measured on the basis of expected credit losses throughout the duration of
the provision for bad debts allowance for doubtful accounts
Allowance for doubtful accounts categories as follows:
31 December 2023
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad
debts on an
individual basis (i) 64,839 1.16% (64,839) 100.00%
Provision for bad
debts on a grouping
basis (ii) 5,522,723 98.84% (763) 0.01%
5,587,562 100.00% (65,602)
31 December 2022
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad
debts on an
individual basis (i) 61,467 1.28% (59,813) 97.31%
Provision for bad
debts on a grouping
basis (ii) 4,758,418 98.72% (1,943) 0.04%
4,819,885 100.00% (61,756)
(i) Notes receivable for which the related provision for bad debts was provided on an individual
basis are analysed as follows:
As at 31 December 2022 and 2023, as the companies encountered financial distress, the
Group has evaluated relative cash flow that might be collected under different scenarios,
and recognised the present value of the difference between the present value of the cash
flows that might be collected and the cash flows receivable according to the contract as
provision for bad debts as provision for bad debts,.
(ii) Notes receivable for which the related provision for bad debts was provided on a grouping
basis are analysed as follows:
As at 31 December 2023, the Group considered that there was no significant credit risk
associated with its bank acceptance notes and did not expect that there would be any
significant losses from non-performance by these banks..
- 52 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(3) Notes receivable (Cont’d)
(b) As at 31 December 2023, notes receivable endorsed or discounted but unmatured are as
follows:
Derecognised Not derecognised
Trade acceptance notes —— 25,747
Bank acceptance notes (i) 181,956 3,061,225
181,956 3,086,972
(i) For the year ended 31 December 2023 and 31 December 2022, certain bank acceptance
notes were discounted and endorsed and derecognised by some subsidiaries of the Group
for the purpose of daily treasury management, and the business model for managing the
notes receivable was aimed to both collect the contractual cash flows and sell such financial
assets, which thereby categorised the balance of these bank acceptance notes that satisfied
the above conditions as financial assets at fair value through other comprehensive income
and presented them as receivables financing (Note 4(6)). The remained bank acceptance
notes that did not meet the above conditions and business model were presented as notes
receivable.
(4) Accounts receivable
31 December 2023 31 December 2022
Accounts receivable 34,367,460 29,570,582
Less: Provision for bad debts (b) (1,482,721) (1,332,609)
32,884,739 28,237,973
(a) The ageing of accounts receivable is analysed as follows:
31 December 2023 31 December 2022
Within 1 year 32,609,034 28,142,167
1 to 2 years 1,114,153 1,099,842
2 to 3 years 326,815 140,153
3 to 5 years 188,085 101,202
Over 5 years 129,373 87,218
34,367,460 29,570,582
As at 31 December 2023 and 31 December 2022, the Group had no significant overdue
accounts receivable.
- 53 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(4) Accounts receivable (Cont’d)
(b) Provision for bad debts
For accounts receivable, the Group recognises the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
As at 31 December 2023, accounts receivable for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
Domestic customers 656,920 89.86% (590,325) The debtor
encountered
financial distress,
Foreign customers 624,425 30.73% (191,906) etc.
1,281,345 (782,231)
As at 31 December 2022, accounts receivable for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
Domestic customers 1,061,199 52.13% (553,196) The debtor
encountered
financial distress,
Foreign customers 22,437 97.37% (21,847) etc.
1,083,636 (575,043)
As at 31 December 2023, accounts receivable for which the related provision for bad debts
was provided on a grouping basis are analysed as follows:
31 December 2023
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 14,234,866 3.00% (427,472)
Overseas business grouping 18,851,249 1.45% (273,018)
33,086,115 (700,490)
- 54 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(4) Accounts receivable (Cont’d)
(b) Provision for bad debts (Cont’d)
As at 31 December 2022, accounts receivable for which the related provision for bad debts
was provided on a grouping basis are analysed as follows:
31 December 2022
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 12,494,592 2.72% (340,084)
Overseas business grouping 15,992,354 2.61% (417,482)
28,486,946 (757,566)
(c) The provision for bad debts in the current year amounted to RMB 571,890,000 (2022: RMB
680,932,000). The provision for bad debts reversed in the current year amounted to RMB
384,196,000 (2022: RMB 205,575,000). The provision for bad debts written off in the current
year amounted to RMB 75,948,000 (2022: RMB 55,411,000).
(d) As at 31 December 2023, the five largest accounts receivable and contract assets
aggregated by debtor are summarised and analysed as follows:
Provision for bad % of total
Amount debts balance
Total amount of the five
largest accounts receivable
and contract assets 3,568,439 (141,689) 9.26%
(e) Certain accounts receivables were pledged for bank loan facilitie as at 31 December 2023.
(5) Other receivables
31 December 2023 31 December 2022
Other receivables 2,233,595 2,249,186
Less: Provision for bad debts (51,717) (38,009)
2,181,878 2,211,177
The Group does not have amounts that are aggregated to other parties and reported in other
receivables as a result of centralised fund management.
- 55 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(a) Other receivables mainly include security deposit and guarantee, current accounts, petty
cash to staff and receivables related to stock options.
The ageing of other receivables is analysed as follows:
31 December 2023 31 December 2022
Within 1 year 1,688,987 1,932,646
1 to 2 years 208,857 137,213
2 to 3 years 162,943 97,205
3 to 5 years 98,851 48,616
Over 5 years 73,957 33,506
2,233,595 2,249,186
(b) Provision for losses and changes in book balance statement
Provisions for bad debts of other receivables are analysed by category as follows:
31 December 2023
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad debts on an individual basis (i) 159,088 7.12% (6,332) 3.98%
Provision for bad debts on a grouping basis (ii) 2,074,507 92.88% (45,385) 2.19%
2,233,595 100.00% (51,717)
31 December 2022
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad debts on an individual basis (i) 72,221 3.21% (4,262) 5.90%
Provision for bad debts on a grouping basis (ii) 2,176,965 96.79% (33,747) 1.55%
2,249,186 100.00% (38,009)
Stage 1 Stage 3
12-month ECL 12-month ECL Lifetime ECL (Credit
(Grouping) (Individual) impaired) Sub-total
Provision Provision Provision Provision
Book for bad Book for bad Book for bad for bad
balance debts balance debts balance debts debts
31 December 2022 2,176,965 33,747 67,959 - 4,262 4,262 38,009
Transfer to Stage 3 (6,166) (268) - - 6,166 268 -
Net /(decrease)
/increase in the
current year (96,292) 17,182 84,797 - (4,096) 1,752 18,934
Including: Write-off in
the current
year - - - - (4,096) (4,096) (4,096)
Derecognition - - - - - - -
Differences on
translation of foreign
currency financial
statements - (5,276) - - - 50 (5,226)
31 December 2023 2,074,507 45,385 152,756 - 6,332 6,332 51,717
As at 31 December 2023 and 31 December 2022, the Group had no other receivables at
Stage 2.
- 56 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(b) Provision for losses and changes in book balance statement (Cont’d)
(i) As at 31 December 2023, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low bad
Stage 1 152,756 0.00% - debt risks
lifetime ECL Provision for
Book balance rates bad debts Reason
The debtor
encountered
financial distress,
Stage 3 6,332 100.00% (6,332) etc.
As at 31 December 2022, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low bad
Stage 1 67,959 0.00% - debt risks
lifetime ECL Provision for
Book balance rates bad debts Reason
The debtor
encountered
financial
Stage 3 4,262 100.00% (4,262) distress, etc.
(ii) As at 31 December 2023 and 31 December 2022, other receivables for which the related
provision for bad debts was provided on a grouping basis were all at Stage 1, which are
analysed as follows:
31 December 2023 31 December 2022
Book Provision for bad Book Provision for bad
balance debts balance debts
Provision Provision
Amount Amount ratio Amount Amount ratio
Security
deposit/guarantee
and other
receivables
grouping 2,074,507 (45,385) 2.19% 2,176,965 (33,747) 1.55%
- 57 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(c) The provision for bad debts in the current year amounted to RMB 35,940,000 (2022: RMB
36,072,000). The provision for bad debts reversed in the current year amounted to RMB
12,910,000 (2022: RMB 38,848,000) The provision for bad debts written off in the current
year amounted to RMB 4,096,000 (2022: RMB 1,565,000).
(d) As at 31 December 2023, the five largest other receivables aggregated by debtor are
summarised and analysed as follows:
Provision for bad % of total
Amount debts balance
Total amount of the five
largest other receivables 283,102 (3,093) 12.67%
(e) As at 31 December 2023 and 31 December 2022, the Group had no significant government
grants recognised at amounts receivable.
(f) As at 31 December 2023 and 31 December 2022, the Group had no overdue dividends
receivable.
(6) Receivables financing
31 December 2023 31 December 2022
Receivables financing 13,330,008 13,526,540
The Group’s receivables financing were mainly accounts receivable and bank acceptance
notes transferred, discounted and endorsed for the purpose of daily treasury management
and were qualified for derecognition. In 2023, the Group endorses and discounts the bank
acceptance notes and the Group transfers substantially all the risks and rewards of
ownership to the transferee. The carrying amount of bank acceptance notes derecognised
were RMB 37,374,909,000(2022: RMB 39,064,235,000) and the relevant discount losses
were RMB 19,609,000(2022: RMB 55,701,000)
As at 31 December 2023 and 31 December 2022, the Group measured provision for bad
debts based on the lifetime ECL. As the credit risk characteristics of these bank acceptance
notes were similar, no provision for impairment was made individually. In addition, the Group
considered that there was no significant credit risk associated with its bank acceptance
notes and did not expect that there would be any significant losses from non-performance
by these banks.
As at 31 December 2023, in addition to Note 4(3)(b), the Group’s bank acceptance notes
endorsed or discounted but not matured amounted to RMB 10,285,438,000 (31 December
2022: RMB 12,368,841,000), all of which were derecognised.
In 2023, there was no material write-off of receivables financing in the Group (2022: Nil).
- 58 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(7) Advances to suppliers
31 December 2023 31 December 2022
Prepayments for raw materials and
others 3,316,194 4,367,211
(a) The ageing of advances to suppliers is analysed below:
31 December 2023 31 December 2022
% of total % of total
Amount balance Amount balance
Within 1 year 3,175,857 95.76% 4,238,120 97.04%
1 to 2 years 94,533 2.85% 83,905 1.92%
2 to 3 years 21,058 0.64% 17,820 0.41%
Over 3 years 24,746 0.75% 27,366 0.63%
3,316,194 100.00% 4,367,211 100.00%
As at 31 December 2023, advances to suppliers with ageing over 1 year with a carrying
amount of RMB 140,337,000 (31 December 2022: RMB 129,091,000) were mainly unsettled
prepayments for raw materials.
As at 31 December 2023, the five largest advances to suppliers aggregated by debtor are
summarised and analysed as follows:
Amount % of total balance
Total amount of the five largest
advances to suppliers 488,504 14.73%
(8) Contract assets
31 December 2023 31 December 2022
Contract assets 4,163,267 4,572,177
Less: Provision for impairment of
contract assets (117,342) (73,221)
Total 4,045,925 4,498,956
For contract assets, the Group measures the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
In 2023, there was no material write-off of contract assets in the Group (2022: Nil).
- 59 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(8) Contract assets (Cont’d)
As at 31 December 2023, contract assets for which the related provision for bad debts was
provided on an individual basis are analysed as follows:
Provision for
Book balance Lifetime ECL rate impairment Reason
The debtor
encountered
financial
Domestic business 71,441 72.47% (51,772) distress, etc.
As at 31 December 2022, there were no contract assets for which the related provision for
bad debts was provided on an individual basis.
As at 31 December 2023, contract assets for which the related provision for bad debts was
provided on a grouping basis are analysed as follows:
31 December 2023
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 1,359,776 2.31% (31,467)
Overseas business grouping 2,732,050 1.25% (34,103)
4,091,826 (65,570)
As at 31 December 2022, contract assets for which the related provision for bad debts was
provided on a grouping basis are analysed as follows:
31 December 2022
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 1,469,430 2.80% (41,155)
Overseas business grouping 3,102,747 1.03% (32,066)
4,572,177 (73,221)
- 60 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(9) Loan receivables
(a) By individual and corporation:
31 December 2023 31 December 2022
loan receivables measured at
amortised cost
Loan receivables to individuals 1,555,477 1,820,952
Loan receivables to corporations 14,073,508 13,475,027
Including: Loans 10,939,505 11,138,739
Note discounting 3,134,003 2,336,288
15,628,985 15,295,979
Less: Provision for loan losses (356,755) (463,929)
15,272,230 14,832,050
As at 31 December 2023, loan receivables over 1 year amounted to RMB 975,272,000 (31
December 2022: RMB 693,294,000).
(b) By type of collateral held:
31 December 2023 31 December 2022
Unsecured loans 1,553,285 1,818,768
Guaranteed loans 481,542 598,437
Pledged loans 13,594,158 12,878,774
Total loan receivables 15,628,985 15,295,979
(c) The provision for bad debts in the current year amounted to RMB 44,273,000 (2022: RMB
25,814,000), the provision for bad debts was written off amounted to RMB 9,466,000 (2022:
Nil) and the provision for bad debts reversed in the current year amounted to RMB
170,274,000 (2022: RMB 14,612,000) (Note 4(25)).
(d) As at 31 December 2023, the cost of the Group’s loan receivables for which the provision
for bad debts was provided on an individual basis amounted to RMB 3,083,537,000
(December 31, 2022: RMB 2,202,392,000), and the provision for bad debts amounted to
RMB 62,293,000(December 31, 2022:RMB 97,565,000).
(e) As at 31 December 2023 and 31 December 2022, the Group included the most of loan
receivables in Stage 1 and measured provision for impairment based on the 12-month ECL.
- 61 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(10) Inventories
(a) Inventories are summarised by category as follows:
31 December 2023 31 December 2022
Provision for Provision for
decline in decline in
Book the value of Carrying Book the value of Carrying
balance inventories amount balance inventories amount
Finished goods 35,291,863 (353,307) 34,938,556 34,753,459 (458,121) 34,295,338
Raw materials 8,572,689 (344,224) 8,228,465 8,675,143 (241,247) 8,433,896
Work in progress 3,170,699 - 3,170,699 2,519,241 - 2,519,241
Consigned processing
materials 444,995 - 444,995 427,838 - 427,838
Contract fulfilment
costs (i) 556,540 - 556,540 368,584 - 368,584
48,036,786 (697,531) 47,339,255 46,744,265 (699,368) 46,044,897
(i) The book balance of contract fulfilment costs mainly refers to transportation costs incurred
to fulfil sales contracts prior to the transferring of control over goods to customers.
(b) Analysis of provision for decline in the value of inventories is as follows:
Increase in Decrease in Differences
the current the current on translation
year year of foreign
currency
31 December Reversal or financial 31 December
2022 Provision write-off statements 2023
Finished goods 458,121 208,360 (316,901) 3,727 353,307
Raw materials 241,247 127,041 (34,095) 10,031 344,224
699,368 335,401 (350,996) 13,758 697,531
(c) Provision for decline in the value of inventories is as follows:
Specific basis for determining net Reason for reversal or write-off of
realisable value provision for decline in the value of
inventories
Stated at the lower of cost and net
Finished goods realisable value Sales
Stated at the lower of cost and net
Raw materials realisable value Requisition for production
(11) Current portion of non-current assets
31 December 2023 31 December 2022
Other debt investments due within 1 year
(Note 4(13)) 4,664,429 5,875,076
Long-term receivables due within 1 year
(Note 4(14)) 678,587 553,591
Current portion of other non-current assets
(Note 4(24)) 5,417,561 31,124,411
10,760,577 37,553,078
- 62 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(12) Other current assets
31 December 2023 31 December 2022
Fixed-income products (a) 53,858,011 38,748,850
Input VAT to be deducted 5,852,464 3,875,519
Prepaid expenses 1,047,492 856,455
Others (b) 2,142,924 3,061,554
62,900,891 46,542,378
(a) Fixed-income products were monetary investment products and certificate of deposit
deposited in financial institutions with maturities of no more than 1 year at the time of
acquisition, which were subsequently measured at amortised cost. As at 31 December 2023
and 31 December 2022, the Group considered that there was no significant increase in
credit risk of fixed-income products since initial recognition, and made provision for loss
based on 12-month ECL. The Group considered that there was no significant credit risk
associated with them, and did not expect that there would be any significant losses from
non-performance by these financial institutions. The restrictions on fixed-income products
are detailed in Note(24)(b)
(b) As at 31 December 2023, the Group acquired transferable certificates of deposit with a
maturity of less than one year of RMB 30,000,000 (31 December 2022: RMB 656,967,000),
measured at fair value through other comprehensive income.
(13) Other debt investments
31 December 31 December
2023 2022
Fair value through other comprehensive income
- Transferable certificate of deposit 10,983,476 16,969,335
Less: Other debt investments due within 1 year (Note
4(11)) (4,664,429) (5,875,076)
6,319,047 11,094,259
At 31 December 2023 and 31 December 2022, the cost of the Group's transferable
certificates of deposit was not materially different from its fair value.
As at 31 December 2023 and December 31 2022, the Group considered that there was no
significant increase in credit risk of transferable certificate of deposit since initial recognition,
and made provision for loss based on 12-month ECL. The Group considered that there was
no significant credit risk associated with transferable certificate of deposit and did not expect
that there would be any significant losses from non-performance by these financial
institutions.
In current year, there was no material write-off of other debt investments in the Group (2022:
Nil).
- 63 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(14) Long-term receivables
31 December 2023 31 December 2022
Long-term receivables 1,050,627 1,176,968
Less: Provision for bad debts (121,521) (8,779)
929,106 1,168,189
Less: Long-term receivables due
within 1 year (Note 4(11)) (678,587) (553,591)
250,519 614,598
The Group’s long-term receivables are presented in net amount of finance lease receivables
after offsetting the unrealised financing income.
(15) Long-term equity investments
Long-term equity investments are classified as follows:
31 December 2023 31 December 2022
Investments in associates and joint
ventures (a) 4,976,109 5,188,817
Less: Provision for impairment of long-
term equity investments - -
4,976,109 5,188,817
(a) Investments in associates and joint ventures mainly refer to the investments in Guangdong
Shunde Rural Commercial Bank Co., Ltd. (Shunde Rural Commercial Bank), Carrier Midea
North America LLC., Hefei Royalstar Motor Co., Ltd., Foshan Micro Midea Filter Mfg. Co.,
Ltd., Concepcion Midea Inc., TWENTYTHREEC LLC, Shenzhen CEGN Co., Ltd. , T. G.
BATTERY CO. (HONG KONG) LIMITED, and other enterprises by the Group.
The changes in equity of the Group’s investment in associates and joint ventures are as
follows:
Movements in the current year
Increase in Decrease in Share of net Share of
investments investments profit/(loss) Share of other other Cash dividends
31 December and Business and transfer- under equity comprehensive changes in or profits 31 December
2022 transfer-in combinations out method income equity declared Others 2023
5,188,817 15,348 366,938 (936,303) 680,759 8,031 3,412 (360,750) 9,857 4,976,109
(b) In 2023, the Group's sales revenue to associates and joint ventures was RMB 2,587,058,000,
with the closing balance of receivables from associates and joint ventures at RMB
275,963,000. The purchase amount to associates and joint ventures was RMB 859,288,000,
with the ending balance of payables to associates and joint ventures at RMB 269,155,000.
These transactions were conducted in accordance with normal commercial terms at agreed
price by reference to the market price. These transactions are negotiated on normal
commercial terms with reference to market prices.
(c) As at 31 December 2023, the Group's cash deposited in Shunde Rural Commercial Bank
amounted to RMB 4,604,976,000, and other non-current assets amounted to RMB
5,900,564,000. The interest income obtained by the Group from Shunde Rural Commercial
Bank was RMB 293,347,000
- 64 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(16) Other non-current financial assets
31 December 2023 31 December 2022
Measured at fair value
- Equity of unlisted companies, etc. 5,687,591 6,348,556
Others (a) 2,082,347 4,276,688
7,769,938 10,625,244
(a) As at 31 December 2023 and December 31 2022, the main information of the Group’s
unmatured cross-currency interest rate swaps were set out in Note 4(37).
- 65 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(17) Property, plant and equipment
Machinery Electronic
Overseas and Motor equipment
Buildings land equipment vehicles and others Total
Cost
31 December 2022 22,049,136 1,335,277 24,331,913 773,893 6,376,643 54,866,862
Increase in the current year
Purchase 270,762 61,793 2,987,375 65,439 1,298,264 4,683,633
Transfer from construction in
progress 3,266,288 - 126,355 - 73,969 3,466,612
Increase by business
combinations 1,024,144 - 413,976 102,997 108,537 1,649,654
Others 231,695 2,901 89,497 - 3,332 327,425
Decrease in the current year
Disposal, retirement and others (419,589) (19,673) (1,783,744) (49,786) (554,948) (2,827,740)
Differences on translation of
foreign currency financial
statements 8,819 7,330 (55,246) (1,694) 46,591 5,800
31 December 2023 26,431,255 1,387,628 26,110,126 890,849 7,352,388 62,172,246
Accumulated depreciation
31 December 2022 9,928,550 - 13,686,225 552,718 4,560,855 28,728,348
Increase in the current year
Provision 1,100,853 - 1,565,697 99,145 937,590 3,703,285
Others 145,263 - 61,441 - 41 206,745
Decrease in the current year
Disposal, retirement and others (144,871) - (876,895) (29,828) (413,141) (1,464,735)
Differences on translation of
foreign currency financial
statements (8,107) - (43,891) (811) 28,527 (24,282)
31 December 2023 11,021,688 - 14,392,577 621,224 5,113,872 31,149,361
Provision for impairment
31 December 2022 9,425 5,365 12,238 20,891 7,603 55,522
Increase in the current year
Provision 9,978 - 20,555 - 3,417 33,950
Decrease in the current year
Disposal, retirement and others - - (2,449) - (1,991) (4,440)
Differences on translation of
foreign currency financial
statements (94) (147) (7) (3) 141 (110)
31 December 2023 19,309 5,218 30,337 20,888 9,170 84,922
Carrying amount
31 December 2023 15,390,258 1,382,410 11,687,212 248,737 2,229,346 30,937,963
31 December 2022 12,111,161 1,329,912 10,633,450 200,284 1,808,185 26,082,992
(a) In 2023, the depreciation of property, plant and equipment amounted to RMB 3,703,285,000
(2022: RMB 3,365,445,000).
(b) As at 31 December 2023, the Company was still in the course of obtaining the ownership
certificate for the property, plant and equipment with a carrying amount of RMB 854,217,000
(31 December 2022: RMB 1,359,215,000).
(c) Certain property, plant and equipment were pledged as securities for bank loan facilities, as
at 31 December 2023.
- 66 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress
31 December 2023 31 December 2022
Provision for Carrying Provision for Carrying
Book balance impairment amount Book balance impairment amount
Shanghai Global Innovation Centre
Project 2,009,875 - 2,009,875 1,427,405 - 1,427,405
Midea Headquarters A08 Land Parcel
Project 749,805 - 749,805 357,612 - 357,612
Midea Digital Factory Project 358,801 - 358,801 142,595 - 142,595
Midea Xingtan Industrial Park Project 352,830 - 352,830 153,893 - 153,893
Gui'an Midea Cloud Project 150,126 - 150,126 419 - 419
Innovation and Technology Park Project 147,670 - 147,670 2,789 - 2,789
Midea Headquarters A04 Land Parcel
Project - - - 147,143 - 147,143
Thailand Factories - - - 347,207 - 347,207
Welling Auto Parts Project - - - 152,457 - 152,457
Other projects 966,692 (54,579) 912,113 1,146,399 (34,142) 1,112,257
4,735,799 (54,579) 4,681,220 3,877,919 (34,142) 3,843,777
- 67 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress (Cont'd)
(a) Movements of significant projects of construction in progress
Differences on
Transfer to translation of
property, plant foreign
31 December and equipment currency 31 December
2022 Increase in the in the current Other financial 2023 Source of
Book balance current year year decreases statements Book balance funds
Shanghai Global Innovation Centre
Project 1,427,405 582,470 - - - 2,009,875 Self-financing
Midea Headquarters A08 Land Parcel
Project 357,612 392,193 - - - 749,805 Self-financing
Borrowings
Midea Digital Factory Project 142,595 216,206 - - - 358,801 /Self-financing
Midea Xingtan Industrial Park Project 153,893 198,937 - - - 352,830 Self-financing
Gui'an Midea Cloud Project 419 149,707 - - - 150,126 Self-financing
Innovation and Technology Park
Project 2,789 144,881 - - - 147,670 Self-financing
Midea Headquarters A04 Land Parcel
Project 147,143 104,116 (251,259) - - - Self-financing
Thailand Factories 347,207 20,929 (372,264) - 4,128 - Self-financing
Welling Auto Parts Project 152,457 77,000 (229,457) - - - Self-financing
Smart Energy Industrial Park Project - 1,445,198 (1,445,198) - - - Self-financing
Other projects 1,146,399 1,055,211 (1,168,434) (63,637) (2,847) 966,692 Self-financing
3,877,919 4,386,848 (3,466,612) (63,637) 1,281 4,735,799
(i) As at 31 December 2023 and December 31 2022, the cost of construction in progress matched the budget amount, and the projects were carried
out on schedule.
(ii) In current year, the Group’s self-constructed plants were transferred to property, plant and equipment upon completion and acceptance and when
ready for their intended use; and the purchased machinery and equipment were transferred to property, plant and equipment when they met the
design requirements and were ready for their intended use after installation, commissioning and acceptance.
- 68 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(19) Right-of-use assets
Machinery Land use rights
and and
Buildings equipment others Total
Cost
31 December 2022 3,542,397 292,273 121,807 3,956,477
Increase in the current year
New lease contracts 1,994,030 129,722 48,773 2,172,525
Lease modifications and
others 62,089 32,619 17,397 112,105
Decrease in the current year
Expiration of lease contract (728,458) (84,936) (26,261) (839,655)
Lease modifications and
others (291,619) (24,230) (15,634) (331,483)
Differences on translation of
foreign currency financial
statements 45,102 12,302 431 57,835
31 December 2023 4,623,541 357,750 146,513 5,127,804
Accumulated depreciation
31 December 2022 1,391,933 189,696 34,970 1,616,599
Increase in the current year
Provision 1,184,933 100,928 54,913 1,340,774
Decrease in the current year
Expiration of lease contract (728,458) (84,936) (26,261) (839,655)
Lease modifications and
others (51,303) (13,091) (1,006) (65,400)
Differences on translation of
foreign currency financial
statements 19,960 6,466 275 26,701
31 December 2023 1,817,065 199,063 62,891 2,079,019
Carrying amount
31 December 2023 2,806,476 158,687 83,622 3,048,785
31 December 2022 2,150,464 102,577 86,837 2,339,878
- 69 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(20) Intangible assets
Patents and
Land use non-patent Trademark Trademark
rights technologies rights use rights Others Total
Cost
31 December 2022 7,623,704 3,232,374 4,894,654 2,188,283 5,841,999 23,781,014
Increase in the current year
Purchase 200,757 4,971 - 214 108,227 314,169
Increase by business
combinations 539,226 1,131,085 - - 388,810 2,059,121
Others 19,900 - - - 272,154 292,054
Decrease in the current
year
Disposal and others (181,999) (13,616) - - (511,011) (706,626)
Differences on translation
of foreign currency
financial statements (6,357) 60,689 221,783 (63,091) 308,364 521,388
31 December 2023 8,195,231 4,415,503 5,116,437 2,125,406 6,408,543 26,261,120
Accumulated amortisation
31 December 2022 1,278,249 1,172,588 219,885 383,604 3,589,984 6,644,310
Increase in the current year
Provision 164,023 295,578 66,969 52,334 589,146 1,168,050
Others 6,865 - - - - 6,865
Decrease in the current
year
Disposal and others (13,949) (12,840) - - (479,789) (506,578)
Differences on translation
of foreign currency
financial statements (255) 38,160 1,683 (5,510) 197,770 231,848
31 December 2023 1,434,933 1,493,486 288,537 430,428 3,897,111 7,544,495
Provision for impairment
31 December 2022 - 107,427 - - 120,362 227,789
Increase in the current year
Provision - - - - 25,642 25,642
Decrease in the current
year
Disposal and others - - - - - -
Differences on translation of
foreign currency
financial statements - (405) - - 5,863 5,458
31 December 2023 - 107,022 - - 151,867 258,889
Carrying amount
31 December 2023 6,760,298 2,814,995 4,827,900 1,694,978 2,359,565 18,457,736
31 December 2022 6,345,455 1,952,359 4,674,769 1,804,679 2,131,653 16,908,915
(a) In 2023, the amortisation of intangible assets amounted to RMB1,168,050,000 (2022:
RMB1,016,824,000).
(b) As at 31 December 2023, There was no intangible assets without the certificate of title(31
December 2022: RMB 33,814,900).
(c) Certain intangible assets were pledged as securities for bank loan facilities as at 31
December 2023.
- 70 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(21) Goodwill
The Group’s goodwill had been allocated to the relevant cash generating unit and cash
generating units at the acquisition date, without any change of goodwill allocation in 2023,
and the allocation is as follows:
31 December 2023 31 December 2022
Goodwill -
KUKA Group 22,364,486 21,122,932
TLSC Group 2,338,037 2,437,914
Little Swan 1,361,306 1,361,306
Others 5,327,237 4,149,906
31,391,066 29,072,058
Less: Provision for impairment (532,829) (523,405)
30,858,237 28,548,653
When making an impairment testing of goodwill, the Group compares the carrying amounts
of the relevant cash generating unit or cash generating units with their recoverable amounts.
If the recoverable amount is lower than the carrying amount, the difference shall be included
in profit or loss for the current period.
As at 31 December 2023, the recoverable amount of cash generating unit or cash
generating units with goodwill was calculated using discounted future cash flows determined
according to the budget approved by management (the forecast period is 5 to 6 years). The
future cash flows beyond the forecast period are calculated based on the estimated
perpetual annual growth rates. The perpetual annual growth rates (mainly 1%-2%) applied
by management are consistent with the estimates of the industry, and do not exceed the
long-term average growth rates of each product. Management determines forecast period
revenue annual growth rates (mainly 2.89%-15.43%) and gross margins (mainly 22.79%-
34.17%) based on past experience and forecast on future market development. The pre-tax
discount rates (mainly 10.73%-14.92%) used by management are the pre-tax rates that are
able to reflect the risks specific to the related cash generating unit or cash generating units.
Management analyses the recoverable amount of each cash generating unit or cash
generating units based on these assumptions and considers that no further provision for
impairment is necessary for the goodwill.
- 71 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(22) Long-term prepaid expenses
Long-term prepaid expenses mainly include expenses prepaid for software and project
reconstruction.
(23) Deferred tax assets and deferred tax liabilities
(a) Deferred tax assets before offsetting
31 December 2023 31 December 2022
Deductible Deductible
temporary temporary
differences and differences and
deductible Deferred tax deductible Deferred tax
losses assets losses assets
Deductible losses 10,350,251 2,126,566 6,424,498 1,500,622
Provision for asset
impairment 4,706,740 1,038,938 3,562,556 753,511
Employee benefits
payable 1,065,764 213,045 931,503 190,398
Other current liabilities 41,533,600 7,386,896 35,502,379 6,534,476
Others 16,388,482 3,915,192 14,889,531 3,233,559
74,044,837 14,680,637 61,310,467 12,212,566
Including:
Expected to be
recovered within 1
year (inclusive) 10,595,710 8,754,919
Expected to be
recovered after 1 year 4,084,927 3,457,647
14,680,637 12,212,566
(b) Deferred tax liabilities before offsetting
31 December 2023 31 December 2022
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Changes in fair value 982,749 202,257 1,043,209 236,440
Business combinations
involving enterprises not
under common control 12,819,515 3,124,747 10,898,558 2,921,290
Others 21,591,963 3,680,763 16,872,927 3,458,213
35,394,227 7,007,767 28,814,694 6,615,943
Including:
Expected to be recovered
within 1 year (inclusive) 1,159,024 1,221,941
Expected to be recovered
after 1 year 5,848,743 5,394,002
7,007,767 6,615,943
- 72 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(23) Deferred tax assets and deferred tax liabilities (Cont’d)
(c) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as
follows:
31 December 2023 31 December 2022
Balance after offsetting Balance after offsetting
Deferred tax assets 12,771,150 10,244,296
Deferred tax liabilities 5,098,280 4,647,673
(d) As at 31 December 2023, the amount of deductible temporary differences and tax losses
not unrecognised deferred tax assets of the Group were approximately RMB
15,190,667,000.
(e) Tax losses not recognised deferred tax assets can be carried forward to future years, with
an amount of approximately RMB 264,348,000 expected to expire within one year,
approximately RMB 495,325,000 to expire within one to two years, approximately RMB
702,361,000 to expire within two to three years, approximately RMB 991,896,000 to expire
within three to four years, and approximately RMB 11,044,420,000 to expire after four years.
(24) Other non-current assets
31 December 2023 31 December 2022
Fixed-income products (a) 84,538,948 73,157,118
Others 1,482,139 807,372
Less: Fixed-income products due
within 1 year (Note 4(11)) (5,417,561) (31,124,411)
80,603,526 42,840,079
(a) As at 31 December 2023 and 31 December 2022, fixed-income products were fixed
deposits, monetary investment products and certificate of deposit deposited in financial
institutions with maturities of more than 1 year at the time of acquisition, which were
subsequently measured at amortised cost.
(b) Certain fixed-income products were pledged for bank loan facilities as at 31 December 2023.
- 73 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(25) Asset impairment and provision for loss
Decrease in the current year
Differences on
translation of
foreign currency
financial
31 December Increase in the statements and 31 December
2022 current year Reversal Write-off others 2023
Provision for bad debts 1,905,082 785,606 (586,982) (89,510) 64,120 2,078,316
Less: Provision for bad debts of
accounts receivable 1,332,609 571,890 (384,196) (75,948) 38,366 1,482,721
Provision for losses of loan
receivables 463,929 44,273 (170,274) (9,466) 28,293 356,755
Provision for bad debts of notes
receivable 61,756 22,472 (18,626) - - 65,602
Provision for bad debts of other
receivables 38,009 35,940 (12,910) (4,096) (5,226) 51,717
Provision for bad debts of long-
term receivables 8,779 111,031 (976) - 2,687 121,521
Provision for decline in the value of
inventories 699,368 335,401 (10,025) (340,971) 13,758 697,531
Provision for impairment of property,
plant and equipment 55,522 33,950 - (4,440) (110) 84,922
Provision for impairment of intangible
assets 227,789 25,642 - - 5,458 258,889
Provision for impairment of contract
assets 73,221 47,814 (11,436) - 7,743 117,342
Provision for impairment of investment
properties 12,576 - - - - 12,576
Provision for impairment of construction
in progress 34,142 18,431 - - 2,006 54,579
Provision for impairment of goodwill 523,405 - - - 9,424 532,829
3,531,105 1,246,844 (608,443) (434,921) 102,399 3,836,984
- 74 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(26) Assets with use rights restricted
As at 31 December 2023 and 31 December 2022, assets with use rights restricted were
mainly as follows:
31 December 2023 31 December 2022
Cash at bank and on hand
Including: Cash at bank (Note 4(1)) 16,848,494 1,911,210
Other cash balances
(Note 4(1)) 4,072,963 1,688,278
Statutory reserve with the
Central Bank (Note 4(1)) 415,070 328,409
21,336,527 3,927,897
(27) Short-term borrowings
31 December 2023 31 December 2022
Unsecured borrowings 4,681,574 3,192,163
Guaranteed borrowings 1,083,216 1,399,219
Pledged and mortgage borrowings 3,054,386 578,098
8,819,176 5,169,480
As at 31 December 2023, the Group had no overdue short-term borrowings with annual
interest rates ranging from 2.20% to 7.04% (31 December 2022: 1.40% to 15.45%).
(28) Financial liabilities held for trading
As at 31 December 2023, financial liabilities held for trading referred to the equities
attributable to third parties in the structured entities included in the consolidation scope, and
were measured at fair value through profit or loss.
(29) Notes payable
31 December 2023 31 December 2022
Banker's Acceptance 21,626,514 25,572,421
Trade Acceptance 81,094
21,707,608 25,572,421
As at 31 December 2023, the Group had no matured but unpaid notes receivable (31
December 2022: Nil).
- 75 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(30) Accounts payable
31 December 2023 31 December 2022
Payables for purchase of goods and services 67,091,595 59,880,772
Others 5,438,870 4,352,453
72,530,465 64,233,225
As at 31 December 2023, accounts payable with ageing over 1 year with a carrying amount
of RMB 1,672,797,000 (31 December 2022: RMB 1,168,348,000) were mainly unsettled
accounts payable for materials.
(31) Contract liabilities
31 December 2023 31 December 2022
Advances on sales and services 38,549,278 25,143,337
Advances for construction projects 3,216,197 2,816,701
41,765,475 27,960,038
More than 90% of contract liabilities included in the carrying amount as at 31 December
2022 were transferred to operating revenue in 2023.
As disclosed in Note 5(1), due to business combinations involving entities not under
common control in the current year, the amount of contract liabilities increased by RMB
1,078,665,000. More than 90% of the contract liabilities had been transferred to
operating income in 2023.
(32) Employee benefits payable
31 December 2023 31 December 2022
Short-term employee benefits payable (a) 8,972,512 7,041,973
Others 103,515 110,244
9,076,027 7,152,217
- 76 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(32) Employee benefits payable (Cont’d)
(a) Short-term employee benefits
31 December Increase in the Decrease in the 31 December
2022 current year current year 2023
Wages and salaries, bonus,
allowances and subsidies 6,539,923 33,546,497 (31,751,302) 8,335,118
Staff welfare 326,811 2,152,907 (2,063,183) 416,535
Social security contributions 79,340 2,229,097 (2,220,761) 87,676
Including: Medical insurance 78,163 2,141,044 (2,132,446) 86,761
Work injury
insurance 778 61,140 (61,536) 382
Maternity insurance 399 26,913 (26,779) 533
Housing funds 25,687 798,695 (805,364) 19,018
Labour union funds and
employee education funds 22,002 178,277 (175,341) 24,938
Other short-term employee
benefits 48,210 980,540 (939,523) 89,227
7,041,973 39,886,013 (37,955,474) 8,972,512
(33) Taxes payable
31 December 2023 31 December 2022
Enterprise income tax payable 3,477,253 2,813,522
Unpaid VAT 1,082,424 975,035
Others 895,425 1,166,778
5,455,102 4,955,335
(34) Other payables
31 December 2023 31 December 2022
Other payables 4,442,928 4,322,025
(a) Other payables are mainly restricted share repurchase obligation, deposit and security
deposit payable and reimbursed logistics expense.
(b) As at 31 December 2023, other payables with ageing over 1 year with a carrying amount of
RMB 1,305,955,000 (31 December 2022: RMB 1,538,928,000) were mainly those
recognised for performing equity incentive plan and deposit and security deposit payable,
which were unsettled since related projects were uncompleted.
- 77 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(35) Current portion of non-current liabilities
31 December 2023 31 December 2022
Current portion of long-term
borrowings (Note 4(37)) 13,290,809 6,248,484
Current portion of lease liabilities
(Note 4(39)) 1,166,901 992,142
14,457,710 7,240,626
(36) Other current liabilities
31 December 2023 31 December 2022
Accrued sale rebates 48,311,934 40,041,953
Others 22,985,994 17,801,575
71,297,928 57,843,528
(37) Long-term borrowings
31 December 2023 31 December 2022
Guaranteed borrowings (a) 36,013,250 35,063,239
Unsecured borrowings 23,223,556 21,860,438
Pledged and mortgage borrowings 192,739 10,755
59,429,545 56,934,432
Less: Current portion of
guaranteed borrowings (6,631,136) -
Current portion of unsecured
borrowings (6,619,900) (6,237,729)
Current portion of pledged and
mortgage borrowings (39,773) (10,755)
46,138,736 50,685,948
- 78 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(37) Long-term borrowings (Cont'd)
(a) As at 31 December 2023, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings equivalent to RMB 2,129,843,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in April 2024; (ii)
guaranteed borrowings equivalent to RMB 4,490,432,000 guaranteed by the Company,
interest is calculated at a floating rate with interest paid every month, which will be due in
May 2024; (iii) guaranteed borrowings equivalent to RMB 1,185,644,000 guaranteed by the
Company, interest is calculated at a floating rate with interest paid every month, which will
be due in June 2025; and (iv) After deducting the bank fee, guaranteed borrowings
equivalent to RMB 24,157,339,000 guaranteed by the Company, interest is calculated at a
floating rate with interest paid every quarter, which will be due in August 2025. (v)
3,929,600,000 guaranteed by the Company, interest is calculated at a fixed rate with interest
paid every quarter, which will be due in May 2025
As at 31 December 2022, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings equivalent to RMB 2,011,606,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in April 2024; (ii)
guaranteed borrowings equivalent to RMB 4,415,556,000 guaranteed by the Company,
interest is calculated at a floating rate with interest paid every month, which will be due in
May 2024; (iii) guaranteed borrowings equivalent to RMB 1,165,874,000 guaranteed by the
Company, interest is calculated at a floating rate with interest paid every month, which will
be due in June 2025; (iv) After deducting the bank fee, guaranteed borrowings equivalent to
RMB 23,718,315,000 guaranteed by the Company, interest is calculated at a floating rate
with interest paid every quarter, which will be due in August 2025; and (v) guaranteed
borrowings equivalent to RMB 3,711,450,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in May 2025.
(b) As at 31 December 2023, the Group had no overdue long-term borrowings with annual
interest rates mainly ranging from 0.30% to 4.50% (31 December 2022: 0.30% to 5.99%).
(c) In 2022, the Group purchased cross-currency interest rate swap to mitigate the cash flow
risk associated with the above-mentioned guaranteed borrowings ((a)(iv)) equivalent to USD
3,419,058,000 of principal. Under the swap, a nominal amount of USD 3,419,058,000 was
converted into EUR at an agreed exchange rate, and the USD floating rate (SOFR+0.55%
p.a.) was converted into the agreed EUR fixed rate. The agreed swap period was scheduled
to start in August 2022 and end in August 2025. The Group designated such borrowings as
the hedged item, and the change in the value of cross-currency interest rate swap (after
excluding the foreign currency basis spread) as the hedging instrument for cash flow hedge.
There was an economic relationship between the hedging instrument and the hedged item.
The cross-currency interest rate swap matched the currency, amount and other major terms
of financial liabilities denominated in USD.
In 2023, the Group included the effective part of the changes in fair value of the cross-
currency interest rate swap (after excluding the foreign exchange basis spread) in “Other
comprehensive income - cash flow hedges”, and transferred them from other
comprehensive income to financial expenses in the period in which the hedging relationship
affected profit or loss, in a bid to offset the effect of hedged item on profit or loss for the
current period. The changes in fair value of foreign currency basis spread were recorded in
“Other comprehensive income - others”, and the foreign currency basis spread was
transferred from other comprehensive income to financial expenses in the period in which
the hedging relationship affected profit or loss (Note 4(45)).
- 79 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(38) Debentures payable
Differences on
translation of foreign
Business Interest accrued on Amortisation of Repayment in the currency financial
31 December 2022 combination par value premium/discount current year statements 31 December 2023
Debentures denominated in
USD (a) 3,163,616 91,309 704 (89,177) 51,517 3,217,969
Corporate bonds in 2022 (b) - 522,497 5,500 2,003 (530,000) - -
3,163,616 522,497 96,809 2,707 (619,177) 51,517 3,217,969
(a) The information of debentures is as follows:
Par value Nominal interest rate Issuance date Maturity Issuance amount Default or not
Debentures denominated in USD 2,848,500 2.88% 16 February 2022 5 years 2,848,500 No
Interest of the debentures is paid on a semi-annual basis and calculated by the simple interest method, and the interest rate is 2.88% annually. The debenture is guaranteed by the Company.
(b) The information of debentures is as follows:
Par value Nominal interest rate Issuance date Maturity Issuance amount Default or not
Corporate bonds in 2022 500,000 6.00% 5 August 2022 2 years 500,000 No
This bond is a corporate bond issued by Clou Electronics Co., Ltd., subsidiary of the Company. The interest of such bond was calculated by adopting the simple interest method on an annual
basis at an annual coupon rate of 6.00%, payable annually. The bond was redeemed in advance on 7 August 2023.
- 80 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(39) Lease liabilities
31 December 2023 31 December 2022
Lease liabilities 3,214,220 2,499,622
Less: Current portion of non-current
liabilities (Note 4(35)) (1,166,901) (992,142)
2,047,319 1,507,480
(i) As at 31 December 2023, the future minimum lease payments of short-term leases and low
value asset leases adopting the practical expedient totalled RMB 123,890,000 (31
December 2022: RMB 151,531,000) which should be paid within one year.
(40) Deferred income
Increase in Decrease in
31 December the current the current 31 December
2022 year year 2023
Government grants 1,721,092 220,391 (206,551) 1,734,932
Increase in Decrease in
31 December the current the current 31 December
2022 year year 2023
Government grants
related to industrial
upgrading 1,394,882 164,746 (160,335) 1,399,293
Other government
grants 326,210 55,645 (46,216) 335,639
1,721,092 220,391 (206,551) 1,734,932
(41) Long-term employee benefits payable
31 December 2023 31 December 2022
Supplementary retirement benefits (a) 1,302,495 1,368,513
Others 131,379 119,943
1,433,874 1,488,456
- 81 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(41) Long-term employee benefits payable (Cont’d)
(a) Supplementary retirement benefits
Supplementary retirement benefits obligation of the Group recognised on the balance sheet
date is calculated using the projected unit credit method, and reviewed by external
independent actuary institution.
(i) The Group’s supplementary retirement benefits liabilities:
31 December 2023 31 December 2022
Defined benefit obligation 3,208,084 3,209,466
Less: Fair value of planned assets (1,905,589) (1,840,953)
Liabilities of defined benefit obligation 1,302,495 1,368,513
(ii) The actuarial assumptions used to determine the present value of defined benefit obligation
31 December 2023
Discount rate 0.22%~10.00%
Inflation rate 1.23%
Salary growth rate 0.00%~6.20%
Pension replacement rate 1.10%~2.50%
Early retirement rate 0.00%~11.60%
Rate of changes in cost of medical
services 8.25%
(42) Share capital
Movements in the current year
Share-based
payment
31 December incentive plan Additional Repurchases 31 December
2022 (a) Desterilisation issuance and write-offs Sub-total 2023
RMB-denominated
ordinary shares
subject to trading
restriction 143,615 18,325 (18,383) - (9,994) (10,052) 133,563
RMB-denominated
ordinary shares not
subject to trading
restriction 6,853,658 20,165 18,383 - - 38,548 6,892,206
6,997,273 38,490 - - (9,994) 28,496 7,025,769
- 82 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(42) Share capital (Cont’d)
Movements in the current year
Share-based
payment
31 December incentive plan Additional Repurchases 31 December
2021 (a) Desterilisation issuance and write-offs Sub-total 2022
RMB-denominated
ordinary shares
subject to trading
restriction 156,539 12,153 (17,184) - (7,893) (12,924) 143,615
RMB-denominated
ordinary shares not
subject to trading
restriction 6,830,025 6,449 17,184 - - 23,633 6,853,658
6,986,564 18,602 - - (7,893) 10,709 6,997,273
(a) In 2023, the share-based payment incentive plan increased the share capital by 38,490,000
shares (2022: 18,602,000 shares).
(43) Treasury stock
Increase in Decrease in
31 December the current the current 31 December
2022 year year 2023
Treasury stock used
for share-based
payment incentive
plan 14,933,944 - (2,062,206) 12,871,738
Increase in Decrease in
31 December the current the current 31 December
2021 year year 2022
Treasury stock used
for share-based
payment incentive
plan 14,044,550 2,637,021 (1,747,627) 14,933,944
In 2023, the Group did not repurchase treasury stock, and the restricted shares and stock
ownership schemes granted in 2023 were approximately RMB 2,089,493,000. As at 31
December 2023, treasury stock mainly comprised treasury stock of approximately RMB
8,748,331,000 used for share-based payment incentive plan, as well as restricted shares
and stock ownership schemes amounting to approximately RMB 4,123,407,000 that have
not met unlock condition, amounting to approximately RMB 12,871,738,000 in total (31
December 2022: RMB 14,933,944,000).
- 83 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(44) Capital surplus
Increase in Decrease in
31 December the current the current 31 December
2022 year year 2023
Share premium (a) 15,507,577 3,348,091 (1,473,445) 17,382,223
Share-based payment
incentive plan (b) 2,279,108 1,208,095 (1,466,598) 2,020,605
Others (c) 1,906,454 43,684 (109,810) 1,840,328
19,693,139 4,599,870 (3,049,853) 21,243,156
Increase in Decrease in
31 December the current the current 31 December
2021 year year 2022
Share premium 14,944,914 1,771,809 (1,209,146) 15,507,577
Share-based payment
incentive plan 2,161,354 983,367 (865,613) 2,279,108
Others 3,410,662 41,636 (1,545,844) 1,906,454
20,516,930 2,796,812 (3,620,603) 19,693,139
(a) The increase in share premium arose from the exercise of stock options with the amount of
approximately RMB 2,317,783,000, the unlocking or invalid sales of restricted shares and
stock ownership schemes with the amount of approximately RMB 1,030,308,000; The
reduction in the equity premium is from the repurchase cancellation of restricted shares, the
release of restricted shares and the release or lapsed sale of stock ownership schemes.
(b) The increase of share-based payment incentive plan arose from expenses attributable to
shareholders’ equity of the parent company in the share-based payment incentive plan with
the amount of approximately RMB 1,208,095,000, while the decrease arose from the
transfer of approximately RMB 1,466,598,000 to share premium due to exercise of share-
based payment incentive plan.
(c) The decrease of others mainly included the Group’s capital contribution to the non-wholly-
owned subsidiaries of Guangdong Meicloud Technology Co., Ltd.
- 84 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(45) Other comprehensive income
Other comprehensive income in the balance sheet Other comprehensive income in the income statement for the year ended 31 December 2023
Less:
Other Reclassification
Attributable to comprehensive of other Attributable to Attributable to
the parent income Amount arising comprehensive the parent minority
31 December company after transferred to 31 December before income income to profit Less: Income tax company after shareholders
2022 tax retained earnings 2023 tax or loss expenses tax after tax
Other comprehensive income items which will not be
reclassified to profit or loss
Changes arising from remeasurement of defined
benefit plan 220,387 (87,280) - 133,107 (84,660) - (3,357) (87,280) (737)
Changes in fair value of investments in other equity
instruments (1,490) 1,516 - 26 (1,025) - - 1,516 (2,541)
Other comprehensive income items which will be
reclassified to profit or loss
Other comprehensive income that will be transferred
subsequently to profit or loss under the equity
method (71,822) 7,751 - (64,071) 8,031 (280) - 7,751 -
Cash flow hedging reserve (Note 4(37)) 699,961 (135,204) - 564,757 (414,173) 286,257 (11,794) (135,204) (4,506)
Differences on translation of foreign currency
financial statements (808,629) (84,307) - (892,936) (53,489) - - (84,307) 30,818
Others (Note 4(37)) 69,882 25,033 - 94,915 135,911 (110,878) - 25,033 -
108,289 (272,491) - (164,202) (409,405) 175,099 (15,151) (272,491) 23,034
Other comprehensive income in the balance sheet Other comprehensive income in the income statement for the year ended 31 December 2022
Less:
Other Reclassification
Attributable to comprehensive of other Attributable to Attributable to
the parent income Amount arising comprehensive the parent minority
31 December company after transferred to 31 December before income income to profit Less: Income tax company after shareholders
2021 tax retained earnings 2022 tax or loss expenses tax after tax
Other comprehensive income items which will not be
reclassified to profit or loss
Changes arising from remeasurement of defined
benefit plan 12,038 208,349 - 220,387 282,388 - (62,980) 208,349 11,059
Changes in fair value of investments in other equity
instruments (1,949) (892) 1,351 (1,490) (2,482) - 24 (892) (1,566)
Other comprehensive income items which will be
reclassified to profit or loss
Other comprehensive income that will be transferred
subsequently to profit or loss under the equity
method (89,213) 17,391 - (71,822) 17,391 - - 17,391 -
Cash flow hedging reserve (Note 4(37)) 304,344 395,617 - 699,961 (627,935) 954,423 39,490 395,617 (29,639)
Differences on translation of foreign currency
financial statements (1,984,168) 1,175,539 - (808,629) 1,222,721 - - 1,175,539 47,182
Others (Note 4(37)) - 69,882 - 69,882 106,716 (36,834) - 69,882 -
(1,758,948) 1,865,886 1,351 108,289 998,799 917,589 (23,466) 1,865,886 27,036
- 85 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(46) Surplus reserve
31 December Increase in the 31 December
2022 current year 2023
Statutory surplus reserve 10,702,928 - 10,702,928
31 December Increase in the 31 December
2021 current year 2022
Statutory surplus reserve 9,449,901 1,253,027 10,702,928
In accordance with the Company Law of the People’s Republic of China and the Company’s
Articles of Association, the Company should appropriate 10% of net profit for the year to the
statutory surplus reserve, and the Company can cease appropriation when the statutory
surplus reserve accumulated to more than 50% of the registered capital. The statutory
surplus reserve can be used to make up for the losses or increase the share capital after
approval from the appropriate authorities. According to the resolution of the Board of
Directors, the Company appropriated 10% of net profit in 2022, amounting to approximately
RMB 1,253,027,000. As at 31 December 2023, the Company’s statutory surplus reserve
had reached 50% of the registered capital.
(47) Undistributed profits
2023 2022
Undistributed profits at the beginning of the year 119,679,202 102,982,763
Add: Net profit attributable to shareholders of the
parent company for the current year 33,719,935 29,553,507
Other comprehensive income transferred to
retained earnings - (1,351)
Others - 1,412
Less: Ordinary share dividends payable (a) (17,144,264) (11,652,025)
Appropriation to general risk reserve (b) (19,678) -
Reversal of general risk reserve (b) 49,152 47,923
Appropriation to statutory surplus reserve
(Note 4(46)) - (1,253,027)
Undistributed profits at the end of the year 136,284,347 119,679,202
(a) Ordinary share dividends distributed in the current year
In accordance with the resolution at the Board of Shareholders’ meeting, dated 19 May 2023,
the Company distributed a cash dividend to the shareholders at RMB 2.50 per share,
amounting to approximately RMB 17,188,858,000 calculated by 6,875,543,263 issued
shares less those repurchased; 9,994,000 repurchased incentive shares in the restricted
share incentive schemes plan were written off (Note 4(42)), and cash dividend amounting
to approximately RMB 44,594,000 was cancelled. The actual cash dividend distributed in
the current year amounted to approximately RMB 17,144,264,000.
- 86 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(47) Undistributed profits (Cont’d)
(b) General risk reserve
In 2023, according to the Notice on Strengthening the Supervision and Administration of
Commercial Factoring Enterprises issued by China Banking and Insurance Regulatory
Commission and the Administrative Measures for the Provision of Reserves of Financial
Enterprises issued by the Ministry of Finance, certain subsidiaries of the Group provided
general risk reserve approximately RMB 19,678,000, reversed general risk reserve
amounting to approximately RMB 49,152,000 (2022: reserved general risk reserve
amounting to approximately RMB 47,923,000).
(48) Operating revenue and cost of sales
2023 2022
Revenue from main operations 344,132,712 316,464,774
Revenue from other operations 27,904,568 27,452,757
372,037,280 343,917,531
2023 2022
Cost of sales from main operations 248,945,077 237,007,098
Cost of sales from other operations 24,536,296 23,531,603
273,481,373 260,538,701
(a) Revenue and cost of sales from main operations
2023 2022
Revenue from Cost of sales Revenue from Cost of sales
main from main main from main
operations operations operations operations
HVAC 161,110,843 119,912,866 150,634,586 116,234,025
Consumer appliances 134,691,669 90,239,157 125,284,737 87,449,080
Robotics and
automation system 33,016,554 25,226,852 29,927,674 23,664,772
Others 15,313,646 13,566,202 10,617,777 9,659,221
344,132,712 248,945,077 316,464,774 237,007,098
In 2023, cost of sales from main operations was mainly material costs and labour costs,
which accounted for over 80% of total cost of sales from main operations (2022: over 80%).
- 87 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(48) Operating revenue and cost of sales (Cont’d)
(b) Revenue and cost of sales from other operations
2023 2022
Revenue from Cost of sales Revenue from Cost of sales
other from other other from other
operations operations operations operations
Revenue from sales of
materials 24,410,046 23,089,716 24,114,807 22,329,521
Others 3,494,522 1,446,580 3,337,950 1,202,082
27,904,568 24,536,296 27,452,757 23,531,603
In 2023, cost of sales from other operations was mainly material costs, which accounted for
over 80% of total cost of sales from other operations (2022: over 80%).
(c) In 2023, among the Group’s revenue from main operations, the amount recognised at a
point in time accounted for above 90% (2022: above 90%) of the total amount and the
amount recognised within a certain period of time mainly included revenue from main
operations of robotics and automation system segment. The Group’s main revenue from
other operations was recognised at a point in time.
(d) The Group had no significant contract changes or adjustments to transaction prices.
(49) Interest income and interest costs
The Group’s interest income and expenses arising from financial business are presented as
follows:
2023 2022
Interest income from loan receivables 1,435,539 1,614,497
Including: Interest income from loan
receivables to corporations and
individuals 1,340,766 1,565,168
Interest income from note
discounting 94,773 49,329
Interest income from deposits with banks, other
financial institutions and the Central Bank 236,369 175,957
Interest income 1,671,908 1,790,454
Interest costs (31,660) (49,461)
1,640,248 1,740,993
- 88 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(50) Taxes and surcharges
2023 2022
City maintenance and construction tax 756,551 543,225
Educational surcharge 565,534 406,480
Others 494,417 616,179
1,816,502 1,565,884
(51) Selling and distribution expenses
2023 2022
Selling and distribution expenses 34,880,875 28,716,121
In 2023, selling and distribution expenses were mainly advertisement and promotion fee,
after-sale services expenses, employee benefits, E-commerce service fee, storage service
fee and property management expenses, which accounted for over 80% of total selling and
distribution expenses (2022: over 80%).
(52) General and administrative expenses
2023 2022
General and administrative expenses 13,476,908 11,582,664
In 2023, general and administrative expenses were mainly employee benefits, depreciation
and amortisation expenses, technical maintenance expenses, administrative office
expenses, which accounted for over 80% of total general and administrative expenses (2022:
over 80%).
(53) R&D expenses
2023 2022
R&D expenses 14,583,311 12,618,506
In 2023, R&D expenses were mainly employee benefits, depreciation and amortisation
expenses, technical development fee, trial products and material inputs expenses, which
accounted for over 90% of total R&D expenses (2022: over 90%).
In 2023, the cost of sales, selling and distribution expenses, general and administrative
expenses and R&D expenses in the income statement were mainly material costs and
employee benefits, advertisement and promotion fee, which accounted for over 80% of total
cost of sales, selling and distribution expenses, general and administrative expenses and
R&D expenses (2022: over 80%)
- 89 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(54) Financial income
The Group’s financial income, other than those arising from financial business (Note 4(49)),
are presented as follows:
2023 2022
Interest expenses (a) (2,808,104) (1,830,915)
Less: Interest income 6,951,446 5,837,713
Exchange gains or losses (904,738) (507,081)
Others 23,052 (112,226)
3,261,656 3,387,491
(a) In 2023, interest costs on lease liabilities of the Group amounted to approximately RMB
151,334,000 (2022: RMB 111,773,000).
(55) Asset impairment losses
2023 2022
Losses on decline in the value of inventories
(Note 4(10)) 325,376 448,591
Impairment losses on intangible assets
(Note 4(20)) 25,642 48,593
Impairment losses on contract assets 36,378 24,422
Impairment losses on property, plant and
equipment (Note 4(17)) 33,950 5,578
Impairment losses on construction in progress
(Note 4(18)) 18,431 -
Impairment losses of long-term equity
investments - 6,179
439,777 533,363
(56) Reversal of credit impairment
2023 2022
Losses on bad debts of accounts receivable
(Note 4(4)) 187,694 475,357
Losses on/(Reversal of) bad debts of other
receivables (Note 4(5)) 23,030 (2,776)
Losses on bad debts of notes receivable
(Note 4(3)) 3,846 30,132
(Reversal of)/Losses on Impairment of loan
receivables (Note 4(9)) (126,001) 11,202
Losses on/(Reversal of)/ impairment of long-
term receivables (Note 4(14)) 110,055 (229)
198,624 513,686
- 90 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(57) Losses on changes in fair value
2023 2022
Derivative financial instruments 161,457 (815,922)
Structural deposits 6,300 44,562
Investments in equity instruments 58,735 1,022,531
226,492 251,171
(58) Investment income
2023 2022
Share of profit of associates and joint
ventures 680,759 608,278
Investment income from holding of
financial assets held for trading 213,095 167,002
Investment losses from disposal of
derivative financial assets and
liabilities (356,081) (519,923)
Others (b) (74,212) (47,303)
463,561 208,054
(a) There is no significant restriction on recovery of investment income of the Group.
(b) Others mainly included gains/losses from disposal the long-term equity investments, losses
on discounted notes receivable that have been derecognised(Note 4(3)(b),) and deem
disposal gains arising from the remeasurement of a associate at fair value when the
associate become a subsidiary.
(59) Losses on disposal of assets
2023 2022
Gains on disposal of non-current
assets 100,775 72,397
Losses on disposal of non-current
assets (161,643) (132,251)
(60,868) (59,854)
- 91 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(60) Other income
2023 2022
Special subsidy 1,831,461 1,896,113
Additional deduction of input VAT 250,921 -
2,082,382 1,896,113
(61) Income tax expenses
2023 2022
Current income tax calculated based on tax law
and related regulations 8,474,651 7,500,259
Deferred income tax (1,942,840) (2,354,559)
6,531,811 5,145,700
The reconciliation from income tax calculated based on the applicable tax rates and total
profit presented in the consolidated income statement to the income tax expenses is listed
below:
2023 2022
Total profit 40,277,163 34,955,931
Income tax calculated at tax rate of 25% 10,069,291 8,738,983
Effect of different tax rates applicable to
subsidiaries (2,932,107) (2,302,968)
Effect of income tax annual filing for prior
periods 36,833 (45,762)
Income not subject to tax (387,848) (544,607)
Costs, expenses and losses not deductible for
tax purposes 642,991 486,777
Utilisation of previous temporary differences or
deductible losses for which no deferred tax
assets were recognised in prior periods (304,850) (106,106)
Others (592,499) (1,080,617)
Income tax expenses 6,531,811 5,145,700
- 92 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the weighted average number of
outstanding ordinary shares:
Unit 2023 2022
Consolidated net profit attributable to ordinary
shareholders of the parent company RMB’000 33,719,935 29,553,507
Less: Dividends payable to restricted shares RMB’000 (66,155) (63,556)
33,653,780 29,489,951
Weighted average number of outstanding Thousand
ordinary shares shares 6,824,100 6,790,926
RMB
Basic earnings per share Yuan/share 4.93 4.34
Including:
- Basic earnings per share from continuing
operations: 4.93 4.34
- Basic earnings per share for discontinued
operations: - -
(b) Diluted earnings per share
Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the diluted weighted average number of
outstanding ordinary shares:
Unit 2023 2022
Adjusted consolidated net profit attributable to
ordinary shareholders of the parent
company RMB’000 33,712,852 29,553,248
Weighted average number of outstanding Thousand
ordinary shares shares 6,824,100 6,790,926
Weighted average number of ordinary shares Thousand
increased from share-based payment shares 25,141 28,297
Weighted average number of diluted Thousand
outstanding ordinary shares shares 6,849,241 6,819,223
RMB
Diluted earnings per share Yuan/share 4.92 4.33
(63) Notes to the cash flow statement
The significant cash flow items are presented as follows:
(a) Cash received relating to other operating activities
2023 2022
Revenue from other operations 3,303,721 3,190,182
Other income 2,705,256 2,566,471
Financial income - interest income 997,711 765,716
Non-operating income 369,337 378,645
Others 345,727 394,943
7,721,752 7,295,957
- 93 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Notes to the cash flow statement (Cont’d)
(b) Cash paid relating to other operating activities
2023 2022
Selling and distribution expenses (excluding
employee benefits and taxes and surcharges) 25,907,963 22,884,362
General and administrative expenses and R&D
expenses (excluding employee benefits and
taxes and surcharges) 10,464,563 10,504,557
Others 4,561,853 1,076,588
40,934,379 34,465,507
(c) Cash received from disposal of investments
2023 2022
Cash received from disposal of wealth
management products and fixed deposits 97,988,091 87,932,257
Cash received from disposal of financial assets
held for trading 17,664,542 10,481,901
Others 422,060 150,558
116,074,693 98,564,716
(d) Cash paid to acquire investments
2023 2022
Cash paid for wealth management products and
fixed deposits 131,537,892 99,924,986
Cash paid for financial assets held for trading 15,439,694 7,930,989
Others 20,588 293,220
146,998,174 108,149,195
- 94 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Notes to the cash flow statement (Cont’d)
(e) Cash paid relating to other financing activities
2023 2022
Payment of lease liabilities 1,553,852 1,198,421
Restricted share repurchase obligation 257,576 194,524
Acquisition of minority interests 36,357 2,773,676
Repurchase of outstanding shares - 2,637,021
Others 416,091 129,877
2,263,876 6,933,519
(f) Movements in liabilities arising from financing activities
Bank
borrowings Debentures Lease
and others payable liabilities
(including the (including the (including the
current current current
portion) portion) portion) Total
31 December 2022 62,350,510 3,163,616 2,499,622 68,013,748
Net cash flows from
financing activities 1,274,059 (500,000) (1,430,001) (655,942)
Interest on borrowings
paid in the current
year (2,002,477) (119,177) - (2,121,654)
The impact of
combinations 3,425,076 522,497 56,876 4,004,449
Interest accrued in the
current year 2,559,961 96,809 151,334 2,808,104
Other non-cash
changes (i) 880,697 54,224 1,936,389 2,871,310
31 December 2023 68,487,826 3,217,969 3,214,220 74,920,015
(i) Other non-cash changes mainly include differences on translation of foreign currency
financial statements of borrowings in 2023, as well as lease liabilities arising from new lease
contracts.
(g) Non-cash receipts and payments
2023 2022
Purchase of inventories and long-
term assets in bank acceptance
notes 65,413,361 55,682,577
Increase in right-of-use assets 2,284,630 1,273,326
67,697,991 56,955,903
- 95 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Notes to the cash flow statement (Cont’d)
(h) Supplementary information to the cash flow statement
Reconciliation of net profit to cash flows from operating activities is as follows:
2023 2022
Net profit 33,745,352 29,810,231
Add: Asset impairment losses 439,777 533,363
Credit impairment losses 198,624 513,686
Depreciation and amortisation 7,348,921 6,507,920
Losses on disposal of assets 60,868 59,854
Losses on changes in fair value 226,492 251,171
Financial income (3,134,637) (3,226,913)
Investment income (463,561) (208,054)
Increase in deferred tax assets (1,865,724) (1,896,424)
Decrease in deferred tax liabilities (65,601) (424,557)
Decrease/(Increase) in inventories 206,064 (423,933)
Increase in operating receivables (9,747,941) (19,423,895)
Increase in operating payables 29,692,141 21,556,429
Share-based payments and others 1,261,836 1,028,950
Net cash flows from operating activities 57,902,611 34,657,828
Net increase/(decrease) in cash and cash equivalents:
Cash and cash equivalents at the end of the year 59,887,260 51,131,968
Less: Cash and cash equivalents at the beginning of
the year (51,131,968) (40,550,039)
Net increase in cash and cash equivalents 8,755,292 10,581,929
(i) Composition of cash and cash equivalents
31 December 2023 31 December 2022
Cash on hand 1,603 1,645
Cash at bank that can be readily drawn on
demand 27,673,419 26,670,319
Deposits with the Central Bank that can be
readily drawn on demand 147,971 172,394
Deposits with banks and other financial
institutions that can be readily drawn on
demand 32,064,267 24,287,610
Cash and cash equivalents at the end of the
year 59,887,260 51,131,968
- 96 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Monetary items denominated in foreign currencies
31 December 2023
Foreign currency
balance Exchange rate RMB balance
Cash at bank and on hand
USD 1,807,580 7.0827 12,802,549
JPY 67,585,697 0.0502 3,392,802
HKD 4,708,629 0.9062 4,266,960
EUR 125,066 7.8592 982,921
BRL 123,194 1.4630 180,233
VND 525,993,333 0.0003 157,798
Other currencies Not applicable Not applicable 4,167,818
Sub-total 25,951,081
Accounts receivable
USD 1,438,670 7.0827 10,189,665
JPY 13,985,060 0.0502 702,050
HKD 58,968 0.9062 53,437
EUR 552,957 7.8592 4,345,803
BRL 1,201,854 1.4630 1,758,313
VND 1,553,600,000 0.0003 466,080
Other currencies Not applicable Not applicable 2,811,931
Sub-total 20,327,279
Other receivables
USD 20,097 7.0827 142,344
JPY 1,357,410 0.0502 68,142
HKD 2,224 0.9062 2,015
EUR 19,016 7.8592 149,454
BRL 75,956 1.4630 111,123
Other currencies Not applicable Not applicable 272,520
Sub-total 745,598
Short-term borrowings
USD 149,915 7.0827 1,061,802
EUR 264,869 7.8592 2,081,659
HKD 738,351 0.9062 669,094
Other currencies Not applicable Not applicable 74,093
Sub-total 3,886,648
- 97 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Monetary items denominated in foreign currencies (Cont’d)
31 December 2023
Foreign currency
balance Exchange rate RMB balance
Accounts payable
USD 263,926 7.0827 1,869,310
JPY 5,454,183 0.0502 273,800
HKD 21,812 0.9062 19,766
EUR 221,088 7.8592 1,737,572
BRL 191,699 1.4630 280,456
Other currencies Not applicable Not applicable 2,031,534
Sub-total 6,212,438
Other payables
USD 5,773 7.0827 40,892
JPY 5,429,602 0.0502 272,566
HKD 2,249 0.9062 2,038
EUR 7,696 7.8592 60,485
Other currencies Not applicable Not applicable 247,037
Sub-total 623,018
Current portion of non-
current liabilities
EUR 314,039 7.8592 2,468,095
Other currencies Not applicable Not applicable 4,626,072
Sub-total 7,094,167
Long-term borrowings
USD 3,410,753 7.0827 24,157,339
Other currencies Not applicable Not applicable 5,118,109
Sub-total 29,275,448
Debentures payable
USD 454,342 7.0827 3,217,969
Lease liabilities
EUR 102,338 7.8592 804,298
JPY 974,661 0.0502 48,928
Other currencies Not applicable Not applicable 281,608
Sub-total 1,134,834
- 98 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Monetary items denominated in foreign currencies (Cont’d)
31 December 2022
Foreign currency
balance Exchange rate RMB balance
Cash at bank and on hand
USD 609,434 6.9646 4,244,463
JPY 16,255,134 0.0524 851,769
HKD 1,425,846 0.8933 1,273,708
EUR 193,599 7.4229 1,437,066
BRL 42,876 1.3348 57,231
VND 368,026,667 0.0003 110,408
Other currencies Not applicable Not applicable 1,871,026
Sub-total 9,845,671
Accounts receivable
USD 1,100,260 6.9646 7,662,872
JPY 11,525,763 0.0524 603,950
HKD 36,138 0.8933 32,282
EUR 474,305 7.4229 3,520,717
BRL 1,304,874 1.3348 1,741,746
VND 1,219,460,000 0.0003 365,838
Other currencies Not applicable Not applicable 2,718,768
Sub-total 16,646,173
Other receivables
USD 50,652 6.9646 352,771
JPY 1,510,344 0.0524 79,142
HKD 3,427 0.8933 3,061
EUR 28,835 7.4229 214,039
BRL 76,722 1.3348 102,409
Other currencies Not applicable Not applicable 270,417
Sub-total 1,021,839
Short-term borrowings
USD 84,705 6.9646 589,938
EUR 430,826 7.4229 3,197,982
BRL 176,101 1.3348 235,059
Other currencies Not applicable Not applicable 198,248
Sub-total 4,221,227
- 99 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Monetary items denominated in foreign currencies (Cont’d)
31 December 2022
Foreign currency
balance Exchange rate RMB balance
Accounts payable
USD 296,297 6.9646 2,063,593
JPY 6,228,492 0.0524 326,373
HKD 15,264 0.8933 13,635
EUR 268,679 7.4229 1,994,377
BRL 341,988 1.3348 456,486
Other currencies Not applicable Not applicable 1,714,350
Sub-total 6,568,814
Other payables
USD 13,402 6.9646 93,341
JPY 8,671,927 0.0524 454,409
HKD 1,863 0.8933 1,664
EUR 1,049 7.4229 7,784
Other currencies Not applicable Not applicable 100,053
Sub-total 657,251
Current portion of non-
current liabilities
EUR 33,566 7.4229 249,157
USD 50,031 6.9646 348,445
Other currencies Not applicable Not applicable 116,437
Sub-total 714,039
Long-term borrowings
USD 3,405,553 6.9646 23,718,315
Other currencies Not applicable Not applicable 11,307,295
Sub-total 35,025,610
Debentures payable
USD 454,242 6.9646 3,163,616
Lease liabilities
EUR 91,819 7.4229 681,561
JPY 1,649,676 0.0524 86,443
Other currencies Not applicable Not applicable 74,986
Sub-total 842,990
Foreign currencies in which the above monetary items are denominated refer to all
currencies other than RMB.
- 100 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope
(1) Business combinations involving enterprises not under common control
(a) Business combinations involving enterprises not under common control in the current year
(i) Acquisition of Shenzhen Clou
Listed on the Shenzhen Stock Exchange, Shenzhen Clou is a leading integrated service
provider in the energy sector in China, mainly covering smart grid and new electrochemical
energy storage. The group previously held 8.95% equity interest in Shenzhen Clou and was
able to exert significant influence over it and account for it as an associate.
In May 2023, the Company purchased an additional 13.84% equity interest in Shenzhen
Clou for a cash consideration of RMB828,094,000. Upon completion of the transaction, the
Company's equity interest in Shenzhen Clou increased to 22.79% and Shenzhen Clou
became a subsidiary of the Company.
The cost of the merger is the sum of the above cash consideration and the fair value of the
equity held prior to the purchase date amounting to approximately RMB1,810,002,000.
The fair value of the identifiable net assets acquired at the purchase date is approximately
RMB3,298,913,000, minority shareholders' equity is approximately RMB 2,563,373,000 and
goodwill formed is approximately RMB1,074,462,000.
From the date of purchase to the end of the year, Shenzhen Clou's operating income was
approximately RMB 3,090,363,000; Net loss of approximately RMB 433,904,000.
The net cash outflow resulting from the acquisition of Shenzhen was approximately RMB
463,137,000.
Except for the above acquisition, other acquisitions have no significant impact on the
Group's consolidated financial statement.
(2) Changes of consolidation scope due to other reasons
(a) Increase of consolidation scope
Midea Electric Trading (Singapore) Co. Pte. Ltd. and Midea Electrics Netherlands B.V.,
wholly-owned subsidiaries of the Company, established Midea Electrical Manufacturing
México S. de R.L. de C.V. in June 2023, holding 99% and 1% of the shares respectively.
Hiconics Eco-energy Technology Co., Ltd., a wholly-owned subsidiary of the Company,
established Hefei Midea Hiconics Energy Technology Co., Ltd. in July 2023, holding 100%
of the shares.
Hefei Midea Hiconics Energy Technology Co., Ltd., a wholly-owned subsidiary of the
Company and Wang Shizhen, established Hefei Midea Hiconics Photovoltaic Technology
Co., Ltd. in July 2023, holding 80% and 20% of the shares respectively
- 101 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes of consolidation scope due to other reasons (Cont’d)
(a) Increase of consolidation scope (Cont’d)
In August 2023, Shenzhen Clou, a subsidiary of the Company, established Foshan CLOU
Ess, Ltd., holding 100% of the shares.
Midea Electric Trading (Singapore) Co. Pte. Ltd. and Midea Electrics Netherlands B.V.,
wholly-owned subsidiaries of the Company, established MG LAND MEXICO, S. de R.L. de
C.V in August 2023, holding 99% and 1% of the shares respectively.
Clivet S.p.A., a wholly-owned subsidiary of the Company, established CLIVET SOUTH
EAST D.O.O. in September 2023, holding 100% of the shares.
In September 2023, Beijing Wandong Medical Technology Co., LTD., a subsidiary of the
Company, established Shanghai Wandong Yingrui Medical Technology Co., LTD., holding
100% of the shares.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Zhejiang Midea Refrigeration Technology
Co., Ltd. in October 2023, holding 95% and 5% of the shares respectively.
Swisslog Holding AG, a wholly-owned subsidiary of the Company, established Swisslog A/S
and Swisslog Oy in October 2023, holding 100% of the shares.
Midea Home Appliances Investments (Hong Kong) Co., Limited and Midea Electric Trading
(Singapore) Co. Pte. Ltd., wholly-owned subsidiaries of the Company, established PT Jaya
Refrigeration Equipment in November 2023, holding 95% and 5% of the shares respectively.
Kuka Deutschland GmbH, a wholly-owned subsidiary of the Company, established KUKA
Robotics Czech s.r.o., KUKA Robotics Hungary Kft. and KUKA Robotics d.o.o. Beograd in
November 2023, holding 100% of the shares.
KUKA Deutschland GmbH and KUKA Aktiengesellschaft, wholly-owned subsidiaries of the
Company, established KUKA Robotics Slovakia s.r.o. in November 2023, holding 97.5% and
2.5% of the shares respectively.
In November 2023, the Company's subsidiary Beijing Wandong Medical Technology Co.,
Ltd. established Suzhou Wanying Medical Technology Co.,Ltd., holding 100% of the shares.
KUKA Deutschland GmbH, a wholly-owned subsidiary of the Company, established Kuka
Robotics Romania s.r.l. in December 2023, holding 100% of the shares.
KUKA Deutschland GmbH and KUKA CEE GmbH, wholly-owned subsidiaries of the
Company, established KUKA Polska sp. z.o.o. in December 2023, holding 99.9% and 0.1%
of the shares respectively.
Swisslog Holding AG, a wholly-owned subsidiary of the Company, established Swisslog
France SAS in December 2023, holding 100% of the shares.
Midea Electric Trading (Singapore) Co. Pte. Ltd. and Midea International Corporation
Company Limited, wholly-owned subsidiaries of the Company, established Midea Intelligent
Manufacturing (Thailand) Co., LTD in December 2023, holding 99% and 1% of the shares
respectively.
- 102 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(b) Decrease of consolidation scope(Cont’d)
Decrease of consolidation scope in the current year mainly includes deregistration and
disposal of subsidiaries. Details are as follows:
Disposal method Disposal time-point of
Name of entity of the equity the equity
Swisslog Technology Center Netherlands B.V. Deregistration January 2023
Taiyuan Andesuihua Logistics Co., Ltd. Deregistration January 2023
Foshan Shunde Bainian Tongchuang Plastictic Industrial
Co., Ltd. Deregistration January 2023
Guangzhou Hualing Air-Conditioning & Equipment Co.,
Ltd. Deregistration February 2023
Shenzhen Hiconics Motor System Co., Ltd. Change of equity March 2023
Wuhu Aixili Technology Co., Ltd. Change of equity May 2023
KUKA Aerospace Holdings LLC Deregistration May 2023
Reis Holding GmbH Change of equity June 2023
KUKA lndustries GmbH & Co. KG Change of equity June 2023
Guangdong Midea Electromechanical Technology Co.,
Ltd. Deregistration June 2023
KUKA S-Base s.r.o. i.L. Deregistration August 2023
Shanxi Clou New Energy Co., Ltd. Deregistration August 2023
Western-style Electric Products Company Change of equity September 2023
Hangzhou Long-termism Tech Co., Ltd. Change of equity September 2023
Swisslog Healthcare Netherlands B.V. Deregistration September 2023
Nanjing Wandong Medical Equipment Co., Ltd. Deregistration September 2023
Midea Middle East Deregistration September 2023
Shenzhen Helu Energy Co., Ltd Deregistration September 2023
Shenzhen Luxin Energy service Co., LTD Deregistration September 2023
Fujian Lurun Energy Co., Ltd Deregistration September 2023
Main Power Inno Tech (Shenzhen) Manufacturing Co.,
Ltd. Deregistration October 2023
Kangbao Ruikai new energy development Co., LTD Deregistration October 2023
Guangdong Shunyi Electrical Insulation Equipment Co.,
Ltd Deregistration October 2023
Ningxia Tongxin Sunrise Photovoltaic Power Generation
Co., Ltd Deregistration November 2023
Beijing Clou New Energy Investment Co., LTD Deregistration November 2023
Zhejiang Clou Electricity Sales Co., Ltd Deregistration November 2023
Wuxi Lujin New Energy Technology Co., LTD Deregistration December 2023
Yixing Tongde energy Technology Co., LTD Deregistration December 2023
Hebei Zide new energy development Co., LTD Deregistration December 2023
Reis Robotics USA Inc. Deregistration December 2023
KUKA Robotics OOO Change of equity December 2023
- 103 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities
(1) Interests in subsidiaries
(a) Composition of principal subsidiaries
Major business Place of
Subsidiaries location registration Nature of business Shareholding (%) Acquisition method
Direct Indirect
Business combinations
Manufacture and sales of household involving enterprises not under
GD Midea Air-Conditioning Equipment Co., Ltd. Foshan, PRC Foshan, PRC air conditioner 73% 7% common control
Business combinations
GD Midea Group Wuhu Air-Conditioning Equipment Co., Manufacture and sales of household involving enterprises not under
Ltd. Wuhu, PRC Wuhu, PRC air conditioner 93% 7% common control
Wuhu Maty Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioner 87% 13% Establishment
Manufacture and sales of household
Chongqing Midea Air-Conditioning Equipment Co., Ltd. Chongqing, PRC Chongqing, PRC air conditioner 95% 5% Establishment
GD Midea Heating & Ventilating Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of air conditioner 90% 10% Establishment
Manufacture and sales of air
Zhejiang Meizhi Compressor Co., Ltd. Ningbo, PRC Ningbo, PRC conditioner parts 100% - Establishment
Business combinations
involving enterprises not under
Hefei Midea Refrigerator Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerator 75% 25% common control
Guangdong Midea Kitchen Appliances Manufacturing Manufacture of small household
Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Foshan Shunde Midea Washing Appliances Manufacture of small household
Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances 75% 25% Establishment
Foshan Shunde Midea Electrical Heating Appliances Manufacture of small household
Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Business combinations
Manufacture of small household involving enterprises under
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 90% 10% common control
Wuxi Little Swan Electric Co., Ltd. Wuxi, PRC Wuxi, PRC Manufacture of laundry appliance 100% - Establishment
Manufacture and sales of air
Hefei Midea Heating & Ventilating Equipment Co., Ltd. Hefei, PRC Hefei, PRC conditioner 99% 1% Establishment
Manufacture and sales of household
Guangzhou Hualing Refrigerating Equipment Co., Ltd. Guangzhou, PRC Guangzhou, PRC air conditioner 75% 25% Establishment
Manufacture of small household
Wuhu Midea Life Appliances Mfg Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 100% - Establishment
Midea Electric Trading (Singapore) Co., Pte. Ltd. Singapore Singapore Export trade - 100% Establishment
Midea Group Finance Co., Ltd. Foshan, PRC Foshan, PRC Financial industry 95% 5% Establishment
Foshan Shunde Midea Household Appliances Industry
Co., Ltd. Foshan, PRC Foshan, PRC Investment holding 100% - Establishment
Midea International Corporation Company Limited Hong Kong Hong Kong Investment holding 100% - Establishment
Midea Electric Netherlands (I) B.V. Netherlands Netherlands Investment holding - 100% Establishment
Business combinations
involving enterprises not under
Toshiba Consumer Marketing Corporation Japan Japan Manufacture of household appliances - 100% common control
- 104 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont’d)
(1) Interests in subsidiaries (Cont’d)
(a) Composition of principal subsidiaries (Cont’d)
Major business Place of
Subsidiaries location registration Nature of business Shareholding (%) Acquisition method
Direct Indirect
Business combinations
Manufacture of involving enterprises not
TLSC Japan Japan household appliances - 100% under common control
Business combinations
Manufacture and sales of involving enterprises not
KUKA Germany Germany robots - 100% under common control
Ningbo Midea United Materials
Supply Co., Ltd. Ningbo, PRC Ningbo, PRC Wholesale and retail 100% - Establishment
Annto Logistics Supply Chain
Technology Co., Ltd. Wuhu, PRC Wuhu, PRC Logistics - 74% Establishment
Wuhu Midea Annto Logistics Co.,
Ltd. Wuhu, PRC Wuhu, PRC Logistics - 74% Establishment
Business combinations
involving enterprises not
Midea Capital Corporation Limited. Foshan, PRC Foshan, PRC Investment 95% 5% under common control
Midea Innovation Investment Co., Shenzhen, Shenzhen,
Ltd. PRC PRC Investment 85% 15% Establishment
Manufacture and sales of
Shanghai, Shanghai, intelligent household
Midea Group (Shanghai) Co. Ltd. PRC PRC appliances 90% 10% Establishment
Midea Investment Development British Virgin British Virgin
Company Limited Islands Islands Investment - 100% Establishment
Anhui Meizhi Precision Manufacture and sales of
Manufacturing Co., Ltd. Wuhu, PRC Wuhu, PRC air conditioner parts 95% 5% Establishment
Manufacture of
Hubei Midea Refrigerator Co., Ltd. Jingzhou, PRC Jingzhou, PRC refrigerator 97% 3% Establishment
- 105 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont’d)
(2) Interests in associates and joint ventures
The Group’s associates and joint ventures have no significant influence on the Group and
are summarised as follows:
2023 2022
Aggregated carrying amount of investments 4,976,109 5,188,817
Aggregate of the following items in proportion
Net profit (i) 680,759 608,278
Other comprehensive income (i) 8,031 17,391
Total comprehensive income 688,790 625,669
(i) The net profit and other comprehensive income have taken into account the impacts of
both the fair value of the identifiable assets and liabilities upon the acquisition of investment
in associates and joint ventures and the unification of accounting policies adopted by the
associates and joint ventures to those adopted by the Company.
7 Segment information
The reportable segments of the Group are the business units that provide different products
or services, or operate in different areas. Different businesses or areas require different
technologies and marketing strategies, the Group, therefore, separately manages the
production and operation of each reportable segment and evaluates their operating results
respectively, in order to make decisions about resources to be allocated to these segments
and to assess their performance.
The Group identified 4 reportable segments as follows:
- Heating & ventilation, as well as air-conditioner
- Consumer appliances
- Robotics and automation system
- Others
Inter-segment transfer prices are determined based on negotiation by both parties with
reference to selling prices for third parties.
The assets are allocated based on the operations of the segments and the physical
locations of the assets. The liabilities are allocated based on the operations of the
segments. Expenses indirectly attributable to the segments are allocated based on the
proportion of each segment’s revenue.
Operating expenses include cost of sales, interest costs, fee and commission expenses,
taxes and surcharges, selling and distribution expenses, general and administrative
expenses, R&D expenses and financial income.
- 106 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting
(a) Information on the profit or loss, assets and liabilities of reported segment
Segment information as at and for the year ended 31 December 2023 is as follows:
Heating &
ventilation, as Robotics and Other
well as air- Consumer automation segments and
conditioner appliances system unallocated Elimination Total
Revenue from external customers 177,572,832 145,857,207 33,408,425 16,871,340 - 373,709,804
Inter-segment revenue 4,509,170 1,042,635 416,740 7,224,604 (13,193,149) -
Operating costs and expenses (161,702,897) (130,269,783) (33,235,551) (22,669,546) 12,865,232 (335,012,545)
Segment profit 20,379,105 16,630,059 589,614 1,426,398 (327,917) 38,697,259
Other profit or loss 1,579,904
Total profit 40,277,163
Total assets 201,061,725 192,503,082 42,735,142 244,913,804 (195,175,569) 486,038,184
Total liabilities 144,034,536 147,021,198 35,887,893 221,726,906 (236,931,998) 311,738,535
Long-term equity investments in associates
and joint ventures 648,200 130,710 13,371 4,183,828 - 4,976,109
Share of profit of associates and joint ventures 460,163 11,392 349 208,855 - 680,759
Increase in non-current assets (excluding
long-term equity investments, financial
assets, goodwill and deferred tax assets) 4,710,263 2,381,335 1,588,442 8,286,200 - 16,966,240
(Reversal of)/Losses on asset impairment (45,838) 226,500 219,068 40,047 - 439,777
Losses/(Reversal of) on credit impairment 58,756 82,463 114,763 (159,449) 102,091 198,624
Depreciation and amortisation expenses 2,395,076 1,814,210 1,396,549 1,745,599 (2,513) 7,348,921
- 107 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont’d)
(a) Information on the profit or loss, assets and liabilities of reported segment (Cont’d)
Segment information as at and for the year ended 31 December 2022 is as follows:
Heating &
ventilation, as Robotics and Other
well as air- Consumer automation segments and
conditioner appliances system unallocated Elimination Total
Revenue from external customers 167,072,126 135,631,425 30,203,793 12,801,362 - 345,708,706
Inter-segment revenue 3,674,995 902,151 373,373 7,288,925 (12,239,444) -
Operating costs and expenses (155,057,892) (121,217,521) (30,107,864) (17,488,764) 12,180,514 (311,691,527)
Segment profit 15,689,229 15,316,055 469,302 2,601,523 (58,930) 34,017,179
Other profit or loss 938,752
Total profit 34,955,931
Total assets 173,419,099 160,854,058 41,186,669 203,093,817 (155,998,376) 422,555,267
Total liabilities 122,574,760 126,523,988 33,478,351 186,475,612 (198,421,246) 270,631,465
Long-term equity investments in associates
and joint ventures 396,327 113,029 39,183 4,640,278 - 5,188,817
Investment income/(losses) from associates
and joint ventures 254,487 (134) 1,220 352,705 - 608,278
Increase in non-current assets (excluding
long-term equity investments, financial
assets, goodwill and deferred tax assets) 4,663,285 3,318,915 1,303,041 2,021,440 - 11,306,681
Asset impairment losses 107,496 191,771 221,592 12,504 - 533,363
(Reversal of)/Losses on credit impairment (26,109) 468,842 10,611 29,377 30,965 513,686
Depreciation and amortisation expenses 2,208,139 1,825,681 1,275,870 1,205,750 (7,520) 6,507,920
- 108 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont’d)
(b) Geographical area information
The Group’s revenue from external customers domestically and in foreign countries or
geographical areas, and the total non-current assets other than long-term equity
investments, financial assets, goodwill and deferred tax assets located domestically and in
foreign countries or geographical areas (including Germany, Hong Kong of China,
Singapore, Japan, the USA, Italy and South America) are as follows:
Revenue from external customers 2023 2022
Domestic 222,804,120 203,063,764
In other countries/geographical areas 150,905,684 142,644,942
373,709,804 345,708,706
Total non-current assets 31 December 2023 31 December 2022
Domestic 43,020,433 34,458,577
In other countries/geographical areas 18,617,238 17,914,192
61,637,671 52,372,769
In 2023 and 2022, revenue from each individual customer is lower than 10% of the Group’s
total revenue.
9 Related parties and significant related party transactions
(1) Information of the parent company
(a) General information of the parent company
Place of
Name of the parent company Relationship registration Nature of business
Controlling Shunde District,
Midea Holding Co., Ltd. shareholder Foshan Commercial
The Company’s ultimate controlling person is Mr. He Xiangjian.
(b) Registered capital and changes in registered capital of the parent company
31 December 2023 and 31
December 2022
Midea Holding Co., Ltd. 330,000
- 109 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
9 Related parties and significant related party transactions (Cont’d)
(1) Information of the parent company (Cont’d)
(c) The percentages of shareholding and voting rights in the Company held by the parent
company
31 December 2023 31 December 2022
Voting rights Voting rights
Shareholding (%) (%) Shareholding (%) (%)
Direct Indirect Direct Indirect
Midea Holding Co., Ltd. 30.87% - 30.87% 31.00% - 31.00%
(2) Information of the Company’s subsidiaries
Please refer to Note 6(1) for the information of the Company’s material subsidiaries.
(3) Information of other related parties
Name of other related parties Relationship
Controlled by direct relatives of the
Orinko Advanced Plastics Co., Ltd. Company’s ultimate controlling shareholder
Guangdong Hekang Medical Management Controlled by the Company’s ultimate
Co., Ltd. controlling shareholder
Guangdong Ruizhu Intelligent Technology Controlled by the Company’s ultimate
Co., Ltd. controlling shareholder
(4) Information of related party transactions
Other significant related party transactions of the Company other than those already
mentioned in this report are as follows
(a) Pricing strategy
The following primary related party transactions are conducted in accordance with normal
commercial terms at agreed price by reference to the market price.:
(b) Purchase of goods
Content of related
Related parties party transactions 2023 2022
Orinko Advanced Plastics Co., Ltd. Purchase of goods 1,419,679 1,399,675
- 110 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
9 Related parties and significant related party transactions (Cont’d)
(4) Information of related party transactions (Cont’d)
(c) Sales of goods
Content of related party
Related parties transactions 2023 2022
Guangdong Ruizhu Intelligent
Technology Co., Ltd. Sales of goods 242,513 197,787
Guangdong Hekang Medical
Management Co., Ltd. Sales of goods 165,188 14,952
407,701 212,739
(d) Remuneration of key management (including share payment)
2023 2022
Remuneration of key management 247,191 211,681
Remuneration of key management includes stock option incentive plan, restricted stock
schemes and stock ownership schemes.
(5) Balances with related parties
Other significant related party transactions of the Company other than those already
mentioned in this report are as follows:
31 December 2023 31 December 2022
Accounts payable Orinko Advanced Plastics Co., Ltd. 181,281 93,665
- 111 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment
(1) Stock option incentive plan
(a) Pursuant to the ninth stock option incentive plan (the “Ninth stock option incentive plan”)
approved at the 2021 annual shareholders’ meeting in 2022, the Company actually granted
107,693,000 stock options with exercise price of RMB 54.61 to 2,813 employees. Under the
circumstance that the Company meets expected performance, 30%, 30% and 40% of the
total stock options granted will become effective after 2 years, 3 years and 4 years
respectively since 8 June 2022.
Determination method for fair value of stock options at the grant date
Ninth stock option
Exercise price of options: RMB 54.61
Effective period of options: 5 years
Current price of underlying shares: RMB 52.99
Estimated fluctuation rate of share price: 35.70%
Estimated dividend rate: 2.17%
Risk-free interest rate within effective period of options: 2.00%
The fair value of the Ninth Stock Option Incentive Plan calculated pursuant to the above
parameters is: RMB 1,334,978,000.
(b) Movements in stock options during the year ended 31 December 2023
2023 2022
(Share in thousands) (Share in thousands)
stock options issued at the beginning of the year 275,548 198,770
stock options granted during the year - 107,693
stock options exercised during the year (38,490) (18,602)
stock options lapsed during the year (48,900) (12,313)
stock options issued at the end of the year 188,158 275,548
As at 31 December 2023, the residual contractual maturity date of the Fifth Stock Option
Incentive Plan is on 6 May 2024. The residual contractual maturity date of the Fifth Reserved
Stock Option Incentive Plan is on 10 March 2025. The residual contractual maturity date of
the Sixth Stock Option Incentive Plan is on 29 May 2025. The residual contractual maturity
date of the Seventh Stock Option Incentive Plan is on 4 June 2024. The residual contractual
maturity date of the Eighth Stock Option Incentive Plan is on 3 June 2026. The residual
contractual maturity date of the Ninth Stock Option Incentive Plan is on 7 June 2027.
- 112 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont’d)
(2) Restricted Share Incentive Schemes
(a) Pursuant to the restricted share incentive schemes for 2023 (the “Restricted Share Incentive
Schemes for 2023”) approved at the 2022 annual shareholders’ meeting in 2023, the
Company granted 18,325,000 restricted shares with exercise price of RMB 25.89 to 415
incentive recipients. Under the circumstance that the Company meets expected
performance, 40%, 30% and 30% of the total restricted shares granted will be unlocked after
1 year, 2 years and 3 years respectively since 20 June 2023. The listing date for the granted
restricted shares of this scheme is 14 July 2023.
Pursuant to the restricted share incentive schemes for 2022 (the “Restricted Share Incentive
Schemes for 2022”) approved at the 2021 annual shareholders’ meeting in 2022, the
Company granted 12,152,500 restricted shares with exercise price of RMB 26.47 to 191
incentive recipients. Under the circumstance that the Company meets expected
performance, 30%, 30% and 40% of the total restricted shares granted will be unlocked after
2 years, 3 years and 4 years respectively since 8 June 2022. The listing date for the granted
restricted shares of this scheme is 13 July 2022.
(b) Movements in restricted shares during the year ended 31 December 2023
2023 2022
(Share in thousands) (Share in thousands)
Restricted shares issued at the beginning of the year 50,211 62,267
Restricted shares granted during the year 18,325 12,153
Restricted shares unlocked during the year (18,639) (16,316)
Restricted shares lapsed during the year (9,994) (7,893)
Restricted shares issued at the end of the year 39,903 50,211
- 113 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont’d)
(3) Stock ownership schemes
Pursuant to the Midea Group stock ownership schemes for 2023 (the “stock ownership
schemes for 2023”) approved at the 2022 annual shareholders’ meeting in 2023, the
Company granted 9,946,276 shares to employees, and the exercise periods of the granted
shares are one year, two years and three years from the date of grant. Based on the
Company’s performance appraisal and individual performance appraisal, 40%, 30% and
30% of the stock ownership schemes will be granted, respectively.
Pursuant to the eighth stock ownership schemes of the Midea Global Partner Plan (the
“Eighth Global Partner Plan”) approved at the 2021 annual shareholders’ meeting in 2022 ,
the Company granted 3,770,433 shares to employees, and the exercise periods of the
granted shares are 1 year, 2 years and 3 years from the date of grant. Based on the
Company’s performance appraisal and individual performance appraisal, 40%, 30% and
30% of the stock ownership schemes will be granted, respectively.
Pursuant to the fifth stock ownership schemes of the Midea Business Partner Plan (the “Fifth
Business Partner Plan”) approved at the 2021 annual shareholders’ meeting in 2022, the
Company granted 2,826,759 shares to employees, and the exercise periods of the granted
shares are 1 year, 2 years and 3 years from the date of grant. Based on the Company’s
performance appraisal and individual performance appraisal, 40%, 30% and 30% of the
stock ownership schemes will be granted, respectively.
Shares granted under the stock ownership schemes are repurchased from the secondary
market through the company’s dedicated securities account. The fair value of the stock
granted under the ESOP is determined by the market closing price of the outstanding shares
on the date the equity instrument is granted less the exercise price.
In 2023, the fair value of shares granted under the stock ownership scheme was RMB
564,849,000.
(4) The total expenses due to the above share-based payment incentive plan, which were
granted, recognised for the year ended 31 December 2023 were approximately RMB
1,245,456,000 (2022: RMB 1,028,950,000). As at 31 December 2023, the balance relating
to the share-based payment incentive plan and accrued from capital surplus was
approximately RMB 2,020,605,000 (31 December 2022: RMB 2,279,108,000).
- 114 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
11 Contingencies
As at 31 December 2023, the maximum potential loss amount in tax disputes involving
Brazilian subsidiary with 51% interests held by the Company was about BRL 735 million
(equivalent to RMB 1080 million) (Some cases have lasted for more than 10 years. The
above amount included the principal, penalties and interest). Original shareholders of the
Brazilian subsidiary have agreed to compensate the Company according to verdict results
of the above tax disputes. The maximum compensation amount is about BRL 157 million
(equivalent to RMB 230 million).As at the date on which the financial statements were
authorised for issue, relevant cases are still at court. With reference to judgements of third-
party attorneys, management believes that the probability of losing lawsuits and making
compensation is small, and has correspondingly accrued provisions based on the probability
of making compensation.
12 Commitments
(1) Capital commitments
Capital expenditures contracted for by the Group but are not yet necessary to be recognised
on the balance sheet as at the balance sheet date are as follows:
31 December 2023 31 December 2022
Buildings, machinery and equipment 4,005,911 5,145,982
13 Events after the balance sheet date
(1) Overview of profit distribution
On 26 March 2024, on the basis of the total shares 6,920,391,836 to be distributed (total
6,968,950,724 shares net of repurchased 48,558,888 shares) of the Company at the date
on which the financial statements were authorised for issue, the Board of Directors proposed
a distribution of cash dividends of RMB 20,761,175,508 at RMB 30 every 10 shares
(including tax). Such proposal is pending for approval at the shareholders’ meeting. The
distribution of cash dividends proposed after the balance sheet date is not recognised as
liabilities at the balance sheet date.
- 115 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Operating lease proceeds after the balance sheet date
As the lessor, the Group’s undiscounted lease proceeds receivable after the balance sheet
date are as follows:
31 December 2023 31 December 2022
Within 1 year 79,835 62,028
1 to 2 years 73,144 62,643
2 to 3 years 70,872 56,275
3 to 4 years 68,363 58,624
4 to 5 years 63,130 57,669
Over 5 years 429,492 471,342
784,836 768,581
15 Financial instruments and risks
The Group is exposed to various financial risks in the ordinary course of business, mainly
including:
Market risk (mainly including foreign exchange risk, interest rate risk and other price
risk)
Credit risk
Liquidity risk
The following mainly relates to the above risk exposures and relevant causes, objectives,
policies and process of risk management, method of risk measurement, etc.
The objective of the Group's risk management is to seek balance between risk and income,
minimising the adverse impact of financial risks on the Group's financial performance.
Pursuant to the risk management objective, the Group has made risk management policies
to identify and analyse the risks it is exposed to and set appropriate risk resistant level and
design relevant internal control procedures to monitor the Group’s risk level. The Group
reviews regularly these risk management policies and relevant internal control systems to
adapt to changes in market condition or its operating activities.
(1) Market risk
(a) Foreign exchange risk
The Group mainly operates in China, Europe, the USA, Asia, South America and Africa for
the manufacturing, sales, investments and financing activities. Any foreign currency
denominated monetary assets and liabilities other than in RMB would subject the Group to
the risk arising from fluctuation of exchange rate.
- 116 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(1) Market risk (Cont’d)
(a) Foreign exchange risk (Cont’d)
The Group’s finance department has a professional team to manage the risk arising of
fluctuation of exchange rate, with approach of the natural hedge for settling currencies,
signing forward foreign exchange hedging contracts and controlling the scale of foreign
currency assets and liabilities, to minimise foreign exchange risk, and to reduce the impact
of exchange rate fluctuations on business performance.
As at 31 December 2023, for the financial assets and financial liabilities held by subsidiaries
whose functional currency is not denominated in USD, if the functional currency had
appreciated or depreciated by 5% against the USD and other factors remain unchanged,
the Group will increase or reduce its pre-tax profit by approximately RMB 1,051,858,000 (31
December 2022: approximately RMB 607,437,000).
As at 31 December 2023, for the financial assets and financial liabilities held by subsidiaries
whose functional currency is not denominated in EUR, if the functional currency had
appreciated or depreciated by 5% against the EUR and other factors remain unchanged,
the Group will increase or reduce its pre-tax profit by approximately RMB 27,850,000 (31
December 2022: approximately RMB 39,468,000).
As at 31 December 2023, for the financial assets and financial liabilities held by subsidiaries
whose functional currency is not denominated in RMB, if the functional currency had
appreciated or depreciated by 5% against the RMB and other factors remain unchanged,
the Group will increase or reduce its pre-tax profit by approximately RMB 317,553,000 (31
December 2022: approximately RMB 266,658,000).
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term
borrowings and debentures payable. Financial liabilities issued at floating rates expose the
Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the
Group to fair value interest rate risk. The Group determines the relative proportions of its
fixed rate and floating rate contracts depending on the prevailing market conditions.
The Group’s finance department at its headquarters continuously monitors the interest rate
position of the Group. Increases in interest rates will increase the cost of new borrowing and
the interest costs with respect to the Group’s outstanding floating rate borrowings, and
therefore could have a material adverse effect on the Group’s financial performance.
Management makes adjustments timely with reference to the latest market conditions and
may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.
As at 31 December 2023, after taking into account the interest rate swap arrangements, the
Group had no floating rate borrowings (31 December 2022: interest rates had risen/fallen
by 50 basis points while holding all other variables constant, the Group’s profit before tax
would have decreased/increased by approximately RMB 1,739,000).
- 117 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(1) Market risk (Cont’d)
(c) Other price risk
The Group's other price risk arises mainly from financial assets held for trading (Note 4(2)),
other non-current financial assets (excluding the hedging instruments mentioned in Note
4(16)) and investments in other equity instruments measured at fair value. As at 31
December 2023, if expected price of the investments held by the Group fluctuated, the
Group's gains or losses on changes in fair value and other comprehensive income would
be affected accordingly.
As at 31 December 2023, if the Group’s expected price of above mentioned investments in
equity instruments had risen or fallen by 10% while other factors had been remained
constant, the Group would have an increase or decrease in profit before tax amounting to
approximately RMB 606,750,000, and an increase or decrease in other comprehensive
income amounting to approximately RMB 3,787,000.
(2) Credit risk
Credit risk is managed on a grouping basis. Credit risk mainly arises from cash at bank and
on hand, deposits with the Central Bank, deposits with banks and other financial institutions,
notes receivable, accounts receivable, receivables financing, loan receivables, other
receivables, contract assets, lease receivables, other debt investments, other current
assets, other non-current assets and derivative financial assets at fair value through profit
or loss that are not included in the impairment assessment scope.
The Group expects that there is no significant credit risk associated with cash at bank,
deposits with the Central Bank and deposits with banks and other financial institutions since
they are deposited at state-owned banks and other medium or large size listed banks with
good reputation and high credit rating. Management does not expect that there will be any
significant losses from non-performance by these banks.
Other debt investments held by the Group mainly consist of transferable certificates of
deposit. The Group controls its credit risk exposure by setting overall investment limits,
which are reviewed and approved annually. The Group regularly monitors the credit risk
exposure of debt investments, changes in credit ratings of debt investments and other
relevant information to ensure the overall credit risk is limited to a controllable extent.
The Group has policies to limit the credit exposure on notes receivable, accounts receivable,
contract assets, loan receivables, other receivables, lease receivables, fixed-income
products in other current assets, other debt investments and fixed-income products in other
non-current assets. The Group assesses the credit quality of and sets credit limits on its
customers by taking into account their financial position, the availability of guarantee from
third parties, their credit history and other factors such as current market conditions. The
credit history of the customers is regularly monitored by the Group. In respect of customers
with a poor credit history, the Group will use written payment reminders, or shorten or cancel
credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
- 118 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(2) Credit risk (Cont’d)
In addition, the amount and type of collateral required for loan receivables depend on an
assessment of the credit risk of the counterparty. The collaterals pledged for pledged loans
are mainly receivables and inventories. The Group monitors the market value of the
collaterals, requests additional collaterals according to relevant agreements and monitors
the market value of collaterals when reviewing the adequacy of provision for impairment.
In addition, financial guarantee obligations and loan commitments may give rise to risks as
a result of defaults by counterparties. The Group has set stringent application and approval
requirements for financial guarantee obligations and loan commitments, takes into account
internal and external credit ratings and other information, and continuously monitors credit
risk exposure, changes in the credit ratings of counterparties and other relevant information
to ensure that the overall credit risk is limited to a controllable extent.
As at 31 December 2023, the Group had no significant collateral or other credit
enhancements held as a result of the debtor's mortgage (31 December 2022: Nil).
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the
Group’s finance department in its headquarters. The Group’s finance department at its
headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity
requirements to ensure it has sufficient cash and securities that are readily convertible to
cash to meet operational needs, while maintaining sufficient headroom on its undrawn
committed borrowing facilities from major financial institutions so that the Group does not
breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term
and long-term liquidity requirements.
At the balance sheet date, the Group's undiscounted contractual cash flows are consistent
with its carrying amount and financial liabilities within one year include notes payable,
accounts payable, other payables, financial liabilities held for trading, derivative financial
liabilities and other current liabilities; The remaining financial liabilities are presented as
undiscounted contract cash flows by maturity date as follows:
31 December 2023
On demand or
within a year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 8,870,346 - - - 8,870,346
Customer deposits and
deposits from banks
and other financial
institutions (including
interest) 89,022 - - - 89,022
Current portion of non-
current liabilities
(including interest) 13,549,559 - - - 13,549,559
Long-term borrowings
(including interest) 611,563 38,259,251 7,812,923 154,216 46,837,953
Debentures payable
(including interest) 91,792 91,792 3,324,903 - 3,508,487
Lease liabilities (including
interest) - 815,583 1,069,277 446,468 2,331,328
Other non-current liabilities - 2,218 36,947 - 39,165
23,212,282 39,168,844 12,244,050 600,684 75,225,860
- 119 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(3) Liquidity risk (Cont’d)
31 December 2022
On demand
or within a
year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 5,239,105 - - - 5,239,105
Customer deposits and
deposits from banks
and other financial
institutions (including
interest) 77,523 - - - 77,523
Current portion of non-
current liabilities
(including interest) 7,508,788 - - - 7,508,788
Long-term borrowings
(including interest) 593,936 12,730,569 36,356,095 - 49,680,600
Debentures payable
(including interest) 90,261 90,261 3,359,723 - 3,540,245
Lease liabilities (including
interest) - 659,201 778,483 312,797 1,750,481
Other non-current liabilities - - 680,482 - 680,482
13,509,613 13,480,031 41,174,783 312,797 68,477,224
(i) As at the balance sheet date, the Group did not provide financial guarantees to external
parties or loan commitments to related parties.
16 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the
fair value hierarchy of the lowest level input that is significant to the entire fair value
measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
- 120 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis
As at 31 December 2023, the financial assets and liabilities measured at fair value on a
recurring basis by the above three levels are analysed below:
Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,726,584 64,004 - 1,790,588
Derivative financial assets - 1,278,161 - 1,278,161
Receivables financing - 13,330,008 - 13,330,008
Other current assets - hedging
instruments and transferable
certificate of deposit - 422,593 - 422,593
Other debt investments (including
the current portion) - 10,983,476 - 10,983,476
Investments in other equity
instruments - - 37,874 37,874
Other non-current financial assets - 2,082,347 5,687,591 7,769,938
Total assets 1,726,584 28,160,589 5,725,465 35,612,638
Financial liabilities measured at fair
value -
Financial liabilities held for trading - - 1,346,674 1,346,674
Derivative financial liabilities - 257,668 - 257,668
Other current liabilities - hedging
instruments - 155,554 - 155,554
Other current liabilities - 2,282 - 2,282
Total liabilities - 415,504 1,346,674 1,762,178
As at 31 December 2022, the financial assets and liabilities measured at fair value on a
recurring basis by the above three levels are analysed below:
Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,264,595 2,019,998 - 3,284,593
Derivative financial assets - 665,484 - 665,484
Receivables financing - 13,526,540 - 13,526,540
Other current assets - hedging
instruments and transferable
certificate of deposit - 743,934 - 743,934
Other debt investments (including
the current portion) - 16,969,335 - 16,969,335
Investments in other equity
instruments - - 41,359 41,359
Other non-current financial assets - 4,276,688 6,348,556 10,625,244
Total assets 1,264,595 38,201,979 6,389,915 45,856,489
Financial liabilities measured at fair
value -
Financial liabilities held for trading - - 1,580,771 1,580,771
Derivative financial liabilities - 234,606 - 234,606
Other current liabilities - hedging
instruments - 79,933 - 79,933
Total liabilities - 314,539 1,580,771 1,895,310
- 121 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
The Group takes the date on which events causing the transfers between the levels take
place as the timing specific for recognising the transfers. There was no significant transfer
of fair value measurement level of the above financial instruments.
The fair value of financial instruments traded in an active market is determined at the quoted
market price; and the fair value of those not traded in an active market is determined by the
Group using valuation technique. The valuation models used mainly comprise discounted
cash flow model and market comparable corporate model. Inputs of valuation technique
mainly comprise risk-free interest rate, floating rate, foreign exchange rate, volatility,
financial data of target companies, market multiple of comparable companies and discount
for lack of marketabilities, etc.
There were no changes in the valuation technique for the fair value of the Group’s financial
instruments in the current year.
The changes in Level 3 assets and liabilities are analysed below:
Investments in other
equity instruments and
other non-current Financial liabilities held
financial assets for trading
1 January 2023 6,389,915 (1,580,771)
Increase 172,008 -
Decrease (282,046) 364,272
Transfer out of Level 3 (375,466) -
Total gains for the current
period
Investment losses
recognised in the
income statement (199,037) (130,175)
Gains recognised in other
comprehensive income 20,091 -
31 December 2023 5,725,465 (1,346,674)
- 122 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
The changes in Level 3 assets and liabilities are analysed below (Cont’d):
Investments in other
equity instruments and
other non-current Financial liabilities held
financial assets for trading
1 January 2022 5,958,620 -
Increase 1,746,172 (1,766,953)
Decrease (190,586) 99,876
Transfer out of Level 3 (838,345) -
Total gains for the current period
Investment losses
recognised in the income
statement (409,005) 86,306
Gains recognised in other
comprehensive income 123,059 -
31 December 2022 6,389,915 (1,580,771)
(a) Financial assets and liabilities subject to Level 3 fair value hierarchy are included unlisted
equity investments at fair value of other non-current financial assets, investments in other
equity instruments and trading financial liabilities. The valuation techniques using market
approach, net asset value and other pricing models. These assumptions are based on
unobservable inputs, including risk-free interest rate, floating rate, financial data of target
company, market multiple of comparable companies, discount for lack of marketabilities and
recent market data (such as subsequent adjustments for observable price changes resulting
from recent financing transactions executed by the investment company).
Financial assets and liabilities subject to Level 2 fair value hierarchy are included
receivables financing, structured deposits, transferable certificate of deposits and
derivatives (including cross currency interest rate swap contracts), which are valued using
discounted cash flow method, market approach and income method.
(2) Assets and liabilities not measured at fair value but for which the fair value is disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly
include: cash at bank and on hand, notes receivable, accounts receivable, contract assets,
loan receivables, other receivables, long-term receivables, current portion of non-current
assets (excluding other debt investments due within one year mentioned in Note 4(11)),
other current assets (excluding those mentioned in Note 16(1)), notes payable, accounts
payable, contract liabilities, short-term borrowings, lease liabilities, long-term borrowings,
debentures payable, current portion of non-current liabilities, customer deposits and
deposits from banks and other financial institutions, other payables and other current
liabilities.
Carrying amounts of the Group’s financial assets and financial liabilities measured at
amortised cost as at 31 December 2023 and 31 December 2022 approximated to their fair
value.
- 123 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, refund capital to shareholders, issue new shares or sell
assets to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital
structure on the basis of gearing ratio (total liabilities divide total assets).
As at 31 December 2023 and 31 December 2022, the Group's debt-to-asset ratio is as
follows:
31 December 2023 31 December 2022
Total liabilities 311,738,535 270,631,465
Total assets 486,038,184 422,555,267
Debt-to-asset ratio 64.14% 64.05%
- 124 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements
(1) Other receivables
31 December 2023 31 December 2022
Other receivables 19,621,009 26,182,925
Less: Provision for bad debts (6,650) (7,824)
19,614,359 26,175,101
The Company has no amounts that are aggregated with other parties and included in other
receivables as a result of centralised fund management.
(a) Other receivables are analysed by ageing as follows:
31 December 2023 31 December 2022
Within 1 year 19,277,501 26,069,074
1 to 2 years 340,449 110,631
Over 2 years 3,059 3,220
19,621,009 26,182,925
(b) Provision for losses and changes in book balance statement
31 December 2023
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad debts on an individual
basis (i) 152,756 0.78% - 0.00%
Provision for bad debts on a grouping
basis (ii) 19,468,253 99.22% (6,650) 0.03%
19,621,009 100.00% (6,650)
31 December 2022
Book balance Provision for bad debts
% of total Provision
Amount balance Amount ratio
Provision for bad debts on an individual
basis (i) 67,959 0.26% - 0.00%
Provision for bad debts on a grouping
basis (ii) 26,114,966 99.74% (7,824) 0.03%
26,182,925 100.00% (7,824)
- 125 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements (Cont’d)
(1) Other receivables (Cont’d)
(b) Provision for losses and changes in book balance statement (Cont’d)
Stage 1
12-month ECL (Grouping) 12-month ECL (Individual) Sub-total
Provision Provision Provision
Book for bad for bad for bad
balance debts Book balance (i) debts debts
31 December 2022 26,114,966 7,824 67,959 - 7,824
Transfer to Stage 3 in the
current year - - - - -
Net (decrease)/increase in
the current year (6,646,713) (1,174) 84,797 - (1,174)
Including: Write-off in the
current year - - - - -
Derecognition - - - - -
31 December 2023 19,468,253 6,650 152,756 - 6,650
(i) As at 31 December 2023 and 31 December 2022, the Company had no other receivables
at Stage 2 or Stage 3:
(c) Provision for bad debts
As at 31 December 2023 and 31 December 2022, other receivables of the Company at
Stage 1 are analysed as follows:
(i) As at 31 December 2023, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Provision for bad
Book balance 12-month ECL rate debts Reason
Relatively low bad
Stage 1 152,756 0.00% - debt risks
As at 31 December 2022, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Provision for
Book balance 12-month ECL rate bad debts Reason
Relatively low bad
Stage 1 67,959 0.00% - debt risks
- 126 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements (Cont’d)
(1) Other receivables (Cont’d)
(c) Provision for losses and changes in book balance statement (Cont’d)
(ii) As at 31 December 2023 and 31 December 2022, other receivables for which the related
provision for bad debts was provided on a grouping basis were all at Stage 1, which are
analysed as follows:
31 December 2023 31 December 2022
Book
balance Provision for bad debts Book balance Provision for bad debts
Provision Provision
Amount Amount ratio Amount Amount ratio
Related parties and security
deposit/guarantee
payables grouping 19,468,253 (6,650) 0.03% 26,114,966 (7,824) 0.03%
(d) As at 31 December 2023, the five largest other receivables aggregated by debtor are
analysed as follows:
% of total balance Provision for
Nature Balance Ageing bad debts
Company A Current accounts 17,071,391 Within 1 year 87.00% (5,660)
Company B Current accounts 1,088,000 Within 1 year 5.54% (361)
Company C Current accounts 339,172 Within 1 year 1.73% (112)
Company D Current accounts 254,700 Within 1 year 1.30% (84)
Company E Current accounts 155,998 Within 1 year 0.80% (52)
18,909,261 96.37% (6,269)
(2) Long-term equity investments
Long-term equity investments are classified as follows:
31 December 2023 31 December 2022
Subsidiaries (a) 72,398,113 69,705,046
Associates (b) 3,559,731 3,398,523
75,957,844 73,103,569
Less: Provision for impairment - -
75,957,844 73,103,569
- 127 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(a) Subsidiaries
Movements in the current year
Provision for Cash dividends
impairment attributable to the
parent company
Increase in Decrease in Provision for declared in the
31 December 2022 investment investment impairment Others 31 December 2023 Ending balance current year
Wuxi Little Swan Electric Co., Ltd. 20,313,623 - - - 62,108 20,375,731 - 1,815,850
Foshan Shunde Midea Household Appliances Industry Co., Ltd. 5,950,999 - - - 1,053 5,952,052 - -
Guangdong Midea Electric Co., Ltd. 5,001,072 - - - 2,070 5,003,142 - -
Beijing Wandong Medical Technology Co., Ltd. 4,349,003 - - - 4,199 4,353,202 - 38,350
Midea Group Finance Co., Ltd. 3,363,479 - - - 1,844 3,365,323 - -
Midea Innovation Investment Co., Ltd. 2,135,000 - - - - 2,135,000 - -
GD Midea Air-Conditioning Equipment Co., Ltd. 1,987,281 - - - 98,294 2,085,575 - 174,382
Guangdong Midea Microwave Oven Manufacturing Co., Ltd. 1,880,041 - - - - 1,880,041 - 554,117
Guangdong Midea Intelligent Technologies Co., Ltd. 1,860,540 - - - 1,671 1,862,211 - -
Guangdong Meizhi Compressor Limited 1,418,863 - - - 534,882 1,953,745 - 576,730
Shenzhen CLOU Electronics Co., Ltd. - 828,094 - - 833,580 1,661,674 - -
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 1,201,861 - - - 19,880 1,221,741 - -
Hefei Midea Heating & Ventilating Equipment Co., Ltd. 1,083,420 - - - 4,196 1,087,616 - 1,706,052
Hainan Midea Building Technology Co., Ltd. 921,500 - - - - 921,500 - -
Midea Group (Shanghai) Co. Ltd. 920,427 - - - 26,178 946,605 - -
GD Midea Heating & Ventilating Equipment Co., Ltd. 899,435 - - - 54,982 954,417 - 1,016,476
Hubei Midea Refrigerator Co., Ltd. 885,138 - - - 28,042 913,180 - 1,475,941
Anhui Meizhi Precision Manufacturing Co., Ltd. 834,812 - - - 3,906 838,718 - -
Wuhu Maty Air-Conditioning Equipment Co., Ltd. 776,756 - - - 4,025 780,781 - 1,404,750
Guangdong Midea Building Technology Co., Ltd. 769,430 - - - - 769,430 - -
Wuhu Xinhe Technology Co., Ltd. 742,684 - - - - 742,684 - -
Guangdong Meizhi Precision- Manufacturing Co., Ltd. 625,877 - - - 14,853 640,730 - -
Foshan Shunde Midea Washing Appliances Manufacturing Co., Ltd. 595,045 - - - 31,636 626,681 - -
Hefei Midea Refrigerator Co., Ltd. 556,199 - - - 6,479 562,678 - -
Guangzhou Hualing Refrigerating Equipment Co., Ltd. 533,343 - - - 9,509 542,852 - -
Ningbo Midea United Materials Supply Co., Ltd. 503,420 - - - 2,565 505,985 - 689,901
Guangdong Midea Electromechanical Technology Co., Ltd. 500,000 - - - (500,000) - - -
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. 481,769 - - - - 481,769 - -
Guangzhou Midea Hualing Refrigerator Co., Ltd. 444,415 - - - 20,473 464,888 - -
GD Midea Environment Appliances Mfg. Co., Ltd. 417,382 - - - 10,679 428,061 - -
Others 7,752,232 60,949 (30,246) - 557,166 8,340,101 - 6,294,849
69,705,046 889,043 (30,246) - 1,834,270 72,398,113 - 15,747,398
- 128 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(b) Associates
Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., and Hefei Royalstar Motor Co., Ltd. and other companies by
the Company.
The equity movements of the Group’s investment in associates are as follows:
Increase in Decrease in Share of net Share of Cash
investment investment profit/(loss) Share of other other dividends or
31 December and and transfers under equity comprehensive changes in profits 31 December
2022 transfers in out method income equity declared Others 2023
3,398,523 942,444 (832,614) 157,844 (960) (1,455) (104,051) - 3,559,731
(3) Operating revenue
Operating revenue mainly comprises other operating revenue including the trademark
royalty income, rental income and management fee income, obtained by the Company from
the subsidiaries.
(4) Investment income
2023 2022
Income from long-term equity investments
under equity method 15,747,398 10,279,124
Investment income from associates 157,844 260,651
Investment income from holding of
financial assets held for trading 77,581 95,277
Others (13,933) 282,904
15,968,890 10,917,956
There is no significant restriction on repatriation of the Company's investment income.
- 129 -
MIDEA GROUP CO., LTD.
SUPPPLEMENTARY INFORMATION
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
1 Details of non-recurring profit or loss for the year ended 31 December 2023
2023
Gains or losses on disposal of non-current assets (233,657)
Except for the effective hedging activities related to the Group’s
ordinary activities, gains or losses on changes in fair value arising
from financial assets held for trading, derivative financial assets,
financial liabilities held for trading, derivative financial liabilities,
other non-current financial assets, and investment income from
disposal of financial assets held for trading, derivative financial
assets, financial liabilities held for trading, derivative financial
liabilities, other non-current financial assets. (345,146)
Others (mainly including government grants, reversal of provision for
impairment of receivables tested for impairment on an individual
basis, compensation income, penalty income and other non-
operating income and expenses) 1,345,521
766,718
Less: Effect of income tax (143,692)
Effect of minority interests (after tax) 122,001
745,027
(1) Basis of preparation of details of non-recurring profit or loss for the year ended 31 December
2023
The China Security Regulatory Commission (“CSRC”) issued the Explanatory
Announcement No. 1 on Information Disclosure by Companies Offering Securities to the
Public - Non-recurring Profit or Loss (Revised in 2023) (“No. 1 Explanatory Announcement
of the 2023 Version”) in 2023, which has come into effect since the date of issuance. The
Group prepares the details of non-recurring profit or loss for the year ended 31 December
2023 in accordance with the requirements of No. 1 Explanatory Announcement of the 2023
Version.
Under the requirements of the No. 1 Explanatory Announcement of the 2023 Version, non-
recurring profit or loss refers to that arises from transactions and events that are not directly
relevant to ordinary activities, or that is relevant to ordinary activities, but is extraordinary
and not expected to recur frequently that would have an influence on users of financial
statements making economic decisions on the financial performance and profitability of an
enterprise.
(2) Impact of the implementation of No. 1 Explanatory Announcement of the 2023 Version on
non-recurring profit or loss for the year ended 31 December 2022
Under the relevant requirements of the Explanatory Announcement No. 1 on Information
Disclosure by Companies Offering Securities to the Public - Non-recurring Profit or Loss
(2008), (“No. 1 Explanatory Announcement of the 2008 Version”), government grants
included as non-recurring profit or loss for the year ended 31 December 2022 by the Group
include government grants related to assets of RMB105,573,000. As the subsidy is relevant
to normal operating business and conforms to national industrial policies, the Group is
entitled to the subsidy in accordance with established standards and the subsidy has a
continuing impact on the Group’s profit or loss over the useful life of the asset. Therefore,
according to the relevant requirements of the No. 1 Explanatory Announcement of the 2023
Version, the above subsidy of RMB105,573,000 shall be included as recurring profit or loss.
-1-
MIDEA GROUP CO., LTD.
SUPPPLEMENTARY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Details of non-recurring profit or loss for the year ended 31 December 2022
2022
Gains or losses on disposal of non-current assets (59,854)
Except for the effective hedging activities related to the
Group’s ordinary activities, gains or losses on changes in
fair value arising from financial assets held for trading,
derivative financial assets, financial liabilities held for
trading, derivative financial liabilities, other non-current
financial assets, and investment income from disposal of
financial assets held for trading, derivative financial assets,
financial liabilities held for trading, derivative financial
liabilities, other non-current financial assets. (604,446)
Others (mainly including government grants, reversal of
provision for impairment of receivables tested for
impairment on an individual basis, compensation income,
penalty income and other non-operating income and
expenses) 1,777,103
1,112,803
Less: Effect of income tax (103,624)
Effect of minority interests (after tax) (63,645)
945,534
The Group prepares the details of non-recurring profit or loss for the year ended 31
December 2022 in accordance with relevant requirements of No. 1 Explanatory
Announcement of the 2008 Version.
3 Return on net assets and earnings per share
The Group’s return on net asset and earnings per share calculated pursuant to the
Compilation Rules for Information Disclosure of Companies Offering Securities to the Public
No. 9 - Calculation and Disclosure of Return on Net Asset and Earnings per Share (revised
in 2010) issued by CSRC and relevant requirements of accounting standards are as follows:
Weighted average Earnings per share (in RMB Yuan)
return on net assets Basic earnings per Diluted earnings
(%) share per share
2023 2022 2023 2022 2023 2022
Net profit attributable to
ordinary shareholders
of the Company 22.23% 22.21% 4.93 4.34 4.92 4.33
Net profit attributable to
ordinary shareholders
of the Company, net of
non-recurring profit or
loss 21.74% 21.50% 4.82 4.20 4.81 4.20
-2-
3. Differences in Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences in the net profit and net assets disclosed in the financial reports prepared under China
Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□ Applicable √ N/A
(2) Differences in the net profit and net assets disclosed in the financial reports prepared under CAS
and foreign accounting standards
□ Applicable √ N/A
(3) Reasons for the differences. Where any reconciliation is made to any data that have been audited
by an overseas auditor, the name of the overseas auditor shall be provided.
Midea Group Co., Ltd.
Legal Representative: Fang Hongbo
28 March 2024
- 236 -
