2021
Annual Report
April 2022
Midea Group Co., Ltd.
Stock code: 000333
1
Letter to Shareholders
This is a century of change. A falling leaf reveals the coming of the fall, and each leaf, each
person, can feel the changes of this great era. We would like to pay tribute to the
perseverance and dedication of every Midea employee, helping us chase our dreams
regardless of what the future holds. Their strong will and yearning for the future have
become the strength to continue the success and warmth of Midea. We would also like to
pay tribute to our shareholders who have been loyal to Midea for so long. In a turbulent
year of huge changes and market fluctuations, their long-standing trust and insistence on
long-term value are invaluable. With a decade of transformation, Midea's revenue
exceeded RMB300 billion for the first time. For the sixth consecutive year, Midea was
included in the Fortune Global 500 list. Meanwhile, Midea was recognized as one of
"Forbes China 2021 Top 10 Chinese Companies in Industrial Digital Transformation". Also,
four factories of Midea have been included in the “Global Lighthouse Network” initiated by
the World Economic Forum. Even more exceptionally, despite the substantial increase in
various costs related to commodities, shipping logistics, and energy supplies, Midea was
still able to maintain profitability, demonstrating its resilience.
There is neither a better era nor a worse era, only a new era. The changes of the times
have led to disruptive changes in many industries. Every major change and crisis are like
big waves in the sea, and after the wave ebbs away, high-quality companies stand out. In
this great era, no path is entirely smooth, nor is any path set in stone, and a great company
will inevitably undergo different cycles. In this era, uncertainty has become the norm and
part of the mainstream, while the pandemic crisis has served as an accelerator for some
companies to enhance their competitiveness and for the commercial competition. However,
technology-driven transformation remains the main theme of the current era. The
emergence and in-depth application of artificial intelligence and digital technologies, rapid
changes in user needs and the strengthening of the awareness of consumer sovereignty,
as well as the continuous ups and downs of the market have all significantly promoted the
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progress of technology-driven transformation. Midea needs to truly listen to the voice of this
era, face up to reality, seek continuous evolution, grasp certainties amid uncertainties to
build strengths, and innovate and change for greater growth in order to adapt to the times
and shape a brighter future.
A company either prospers in making changes or perishes in mediocrity. All seeds of
destruction are planted at the height of business prosperity. All goodness, excellence and
greatness are meant to be broken, just like all athlete records. A decade of course resetting
lies ahead. With a great story woven by all Mideans, Midea must be the first to apply
industry-leading technologies, create a second growth curve at the optimum time, and open
up a new avenue for growth. It must also upgrade and transform itself from a world-leading
home appliance manufacturer to a technology- and innovation-driven group by continually
reforming and challenging itself. In the current time and the new decade ahead, Midea's
key business principle is to implement new strategies to boost new growth areas, including
new business models, new processes, new techniques, new alternative materials, new
products, new technology breakthroughs, new brands, new channels, new marketing
methods, new national market breakthroughs, among others. Innovation is to do things we
have not done before, and it requires our courage and our new mindset.
Our mission and vision are the cornerstones of our everlasting business success. Midea
has repositioned its five business segments and established the new strategic focuses of
"Technology Leadership, Digitization & Intelligence Driven, Direct to Users, and Global
Impact". In the process of implementing new strategies to boost the new growth areas,
operating efficiency is the key to Midea's survival and competitiveness, technology and
innovation are the foundations of Midea, and the customer-oriented approach is the starting
point for all business logic.
In this cold winter, we should further invest in the future, accelerate the upgrading of
existing operations and the creation of further growth, retain the "Number One Engine" of
the core home appliance business, adhere to long-term technology investment, thoroughly
promote IoT and digital transformation, and accelerate product intelligent upgrades and
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overall smart home business improvement. We must consolidate our existing strengths.
Meanwhile, given the grand backdrop of intelligent manufacturing, energy conservation and
emission reduction, and domestic substitution, we must be decisive in our deployment and
accelerate the takeoff of our four core engines of robotics & automation, building
technologies, energy management, and intelligent travel. Midea will continue to improve
operating efficiency, maintain the stability of profitability, advocate long-termism and
altruism, make the right choices, and invest in the future, in technologies, and in talent.
Today, Midea already has all the strengths necessary for growth over the long run.
"Faith in a Seed" is our review of the past and our expectations for the future to mark the
occasion of Midea’s 50th anniversary. This magnificent tree that is Midea today must be
firmly built to grow into an evergreen tree, one that has a thick trunk and roots reaching
deeply into the soil so that the branches and leaves have the nourishment they need. The
trunk represents our core business, while the dense branches represent the further
innovation and growth that we need to create. Midea's advanced governance mechanism,
adaptive values and ideas, and managerial mindset growth are the essential root of the tree
of Midea. Only if it is truly built to grow, will Midea be able to continue prospering far into the
future.
This turning point will pass eventually. In the face of a century of great change and a
turbulent world, there is no way of knowing what will happen, but dedication is the best
farewell. Youth has no age, stay young inside. Midea stays young because it dares to
reform, innovate and challenge itself.
If you don’t know where to go, every road will take you ahead. As we make our way forward,
we look forward to continuing to witness the sustained growth of the Midea tree together
with all our shareholders.
Board of Directors, Midea Group
April 2022
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The 2021 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, CFO and Director of Finance of the Company, and Ms. Chen Lihong, head of
the accounting department 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 6,869,123,038 shares at the disclosure date of this report (the total share
capital of 6,997,053,441 shares minus the repurchased 127,930,403 shares in the
repo securities account at that date), it is proposed that the Company should
distribute a cash dividend of RMB17 (tax inclusive) per 10 shares to all the
shareholders and should not carry out any bonus issue or convert capital surplus
into share capital.
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 2021 Annual Report of Midea Group Co., Ltd.
Contents
LETTER TO SHAREHOLDERS..............................................................................................................2
SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS................................. 5
SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS............................................. 9
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS........................................................15
SECTION IV CORPORATE GOVERNANCE...................................................................................110
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY............................................. 151
SECTION VI SIGNIFICANT EVENTS............................................................................................... 182
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS...... 207
SECTION VIII PREFERENCE SHARES.......................................................................................... 218
SECTION IX BONDS........................................................................................................................... 219
SECTION X FINANCIAL REPORT.................................................................................................... 223
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The 2021 Annual Report of Midea Group Co., Ltd.
Documents Available for Reference
1. The original of The 2021 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 2021 Annual Report that is released on
http://www.cninfo.com.cn.
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The 2021 Annual Report of Midea Group Co., Ltd.
Definitions
Term Definition
The “Company”, “Midea”, “Midea Group” or the
Midea Group Co., Ltd.
“Group”
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.
Swisslog Swisslog Holding AG
Servotronix Servotronix Motion Control Ltd.
WINONE WINONE Elevator Company Limited
Reporting Period 1 January 2021 to 31 December 2021
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The 2021 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 Midea Headquarters Building, No. 6 Midea
Address Avenue, Beijiao Town, Shunde District, Avenue, Beijiao Town, Shunde District,
Foshan City, Guangdong Province, China Foshan City, Guangdong Province, China
Tel. 0757-22607708 0757-23274957
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The 2021 Annual Report of Midea Group Co., Ltd.
Fax 0757-26605456
E-mail 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
Place where this Report is kept Company Investor Relations Department
4. Company Registration and Alteration
Organization 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
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The 2021 Annual Report of Midea Group Co., Ltd.
2021-over-20
2020 20 change 2019
2021
(%)
Before Restated Restated Before Restated
Operating revenue
341,233,208 284,221,249 284,221,249 20.06% 278,216,017 278,216,017
(RMB'000)
Net profit attributable to
shareholders of the 28,573,650 27,222,969 27,222,969 4.96% 24,211,222 24,211,222
Company (RMB'000)
Net profit attributable to
shareholders of the
Company before 25,929,086 24,614,653 24,614,653 5.34% 22,724,392 22,724,392
non-recurring gains and
losses (RMB'000)
Net cash flows from
operating activities 35,091,704 29,557,117 29,557,117 18.73% 38,590,404 38,590,404
(RMB'000)
Basic earnings per share
4.17 3.93 3.93 6.11% 3.60 3.60
(RMB/share)
Diluted earnings per share
4.14 3.90 3.90 6.15% 3.58 3.58
(RMB/share)
Weighted average ROE (%) 24.09% 24.95% 24.95% -0.86% 26.43% 26.43%
Change of 31
December
31 December 31 December 2020 2021 over 31 31 December 2019
2021 December
2020
Before Restated Restated Before Restated
Total assets (RMB'000) 387,946,104 360,382,603 360,382,603 7.65% 301,955,419 301,955,419
Net assets attributable to
shareholders of the 124,868,124 117,516,260 117,516,260 6.26% 101,669,163 101,669,163
Company (RMB'000)
Reasons for the changes to the accounting policies:
The Ministry of Finance has issued in 2021 the Circular on Adjustments to the Application Scope of the
Regulations of Accounting Treatments for Rental Waivers as a Result of COVID-19 (CK [2021] No. 9),
the Circular on Issuing Interpretation No. 14 of the Accounting Standards for Business Enterprises (CK
[2021] No. 1), the Q&A for the Implementation of the Accounting Standards for Business Enterprises,
and the Circular on Issuing Interpretation No. 15 of the Accounting Standards for Business Enterprises.
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The 2021 Annual Report of Midea Group Co., Ltd.
The Group has prepared the financial statements for the year ended 31 December 2021 according to the
aforesaid regulatory documents. For further information about the changes to the accounting policies,
please refer to Note 2(31) to the financial statements.
Total share capital of the Company on the last trading session before disclosure:
Total share capital of the Company on the last trading
6,997,053,441
session before disclosure (share)
Fully diluted earnings per share based on the latest share capital above:
Dividend paid to preference shareholders 0
Interest paid for perpetual bonds (RMB) 0
Fully diluted earnings per share based on the latest
4.0837
share capital above (RMB/share)
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.
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The 2021 Annual Report of Midea Group Co., Ltd.
7.3 Reasons for the differences
□Applicable √N/A
8. Key Financial Results by Quarter
RMB'000
Q1 2021 Q2 2021 Q3 2021 Q4 2021
Operating revenue 82,504,017 91,305,548 87,532,404 79,891,239
Net profit attributable to
6,468,588 8,540,458 8,446,204 5,118,400
shareholders of the Company
Net profit attributable to
shareholders of the Company
6,649,368 7,987,143 7,928,026 3,364,549
before non-recurring gains and
losses
Net cash flows from operating
8,553,861 11,622,549 7,720,334 7,194,960
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 2021 2020 2019 Note
Gain or loss from disposal of non-current
77,527 -52,424 -131,131
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 995,824 2,204,165 676,430
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
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The 2021 Annual Report of Midea Group Co., Ltd.
Other non-operating income and expenses
2,352,849 1,378,105 1,347,788
except above-mentioned items
Less: Corporate income tax 668,578 765,871 394,095
Minority interests (after tax) 113,058 155,659 12,162
Total 2,644,564 2,608,316 1,486,830 --
Particulars about other items that meet the definition of non-recurring gain/loss:
□Applicable √N/A
No such cases for the Reporting Period.
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
No such cases for the Reporting Period.
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The 2021 Annual Report of Midea Group Co., Ltd.
Section III Management Discussion and Analysis
1. Industry Overview for the Reporting Period
1.1 Summary of business scope
Midea is a global technology group comprising five major business divisions: the Smart Home Business
Group, the Industrial Technology Business Group, the Building Technologies Division, the Robotics &
Automation Division, and the Digital Innovation Business. Midea offers diversified products and services.
Specifically, the Smart Home Business Group, as the main operating entity of 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 the
best experience of whole-house smart home appliances and service. The Industrial Technology
Business Group is capable of carrying out professional R&D, production, and sales of high-precision
core components such as compressors, motors, chips, variable frequency drive, servo systems, and
cooling modules. It operates many brands including GMCC, Welling, MR, TOSHIBA, HICONICS,
SUNYE, SERVOTRONIX, DORNA, etc., with its products widely used in home appliances, 3C products,
new energy vehicles and industrial automation, among others. The Building Technologies Division is
responsible for providing products and services in relation to buildings, as well as the relevant operations.
With the digital building service platform as the core, it facilitates logistics, information, feeling and
energy flows of buildings to provide complete building solutions that are intelligent, digital and
low-carbon. The Robotics & Automation Division primarily focuses on providing solutions of industrial
robotics, automatic logistics systems, and transmission systems for future factory-related fields, as well
as solutions for health care, entertainment, new consumption, etc. The Digital Innovation Business
primarily includes new business arising from the business model transformation of Midea Group such as
intelligent supply chains and Industrial Internet, which can provide software services, unmanned retail
solutions, and production services, among others, for the digital transformation of enterprises. The
Digital Innovation Business also comprises Beijing Wandong Medical Technology Co., Ltd. (WDM) that is
engaged in medical imaging devices and related services.
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The 2021 Annual Report of Midea Group Co., Ltd.
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 has upgraded its strategic focus
to “Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and Global Impact”, so as
to rebuild Midea in the new era.
Midea, a global operating company, has now established a global platform with around 200 subsidiaries,
35 R&D centers, 35 major manufacturing bases, and more than 160,000 employees. Its business covers
more than 200 countries and regions. Overseas, Midea has 20 R&D centers and 18 major
manufacturing bases in more than ten countries, with around 30,000 employees. 22 currencies are used
by Midea in settlement. In addition, Midea is the majority shareholder of KUKA, a Germany-based world-
leading company in robotics and automation, with a stake of approximately 95%.
1.2 Position in home appliance industry
Midea ranks No. 183 on the 19th Forbes Global 2000 list released in May 2021, moving up 46 places
compared to last year. Meanwhile, it is listed in “Forbes China 2021 Top 10 Chinese Companies in
Industrial Digital Transformation” and “Forbes China 2021 Top 10 Chinese Companies in Industrial
Internet”. In addition, it ranks No. 288 on the Fortune Global 500 list unveiled in August 2021, moving up
19 places from the year before and marking its sixth year on the list. In September 2021, Midea won the
China Quality Award at the fourth such event with its “5 All 5 Digitalization" intelligent quality
management model. Up to early 2022, four factories of Midea have been included in the “Global
Lighthouse Network” initiated by the World Economic Forum, covering air conditioners, microwave
ovens, refrigerators and laundry appliances, which represents Midea’s leading intelligent manufacturing
and digital capabilities across the global manufacturing sector. Meanwhile, Midea takes the lead among
domestic home appliance makers by ranking No. 36 on the 2022 Brand Finance Tech 100 list released
by Brand Finance, a British brand assessment institution. Also, Midea ranks No. 33 on the 2021
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The 2021 Annual Report of Midea Group Co., Ltd.
BrandZ Top 100 Most Valuable Chinese Brands list, with its brand value up 58%. 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. Meanwhile, Standard & Poor’s has
raised the credit rating on Midea from “A-” to “A” in 2021, making Midea the highest-rated private
manufacturer in China.
According to data provider AVC, Midea ranks first with respect to both the online and offline domestic
market share for seven out of the 25 major home appliance categories, namely, residential air
conditioners, clothes dryers, rice cookers, electric fans, electric pressure cookers, induction cookers and
electric radiators. This is because Midea has successfully retained the "Number One Engine" of ToC
business in 2021 on the domestic market.
The table below shows the offline market shares and rankings of the Company’s primary home
appliance products (by retail sales) in 2021:
Product category Market share Ranking
Residential air conditioners 36.0% 1
Laundry appliances 27.4% 2
Clothes dryers 25.0% 1
Refrigerators 14.5% 2
Rice cookers 42.1% 1
Electric pressure cookers 43.8% 1
Electric radiators 49.4% 1
Induction cookers 47.9% 1
Electric fans 38.7% 1
Electric kettles 38.0% 1
Water dispensers 43.0% 1
Blenders 30.7% 2
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The 2021 Annual Report of Midea Group Co., Ltd.
Product category Market share Ranking
Water purifiers 20.1% 2
Microwave ovens 46.6% 2
Countertop ovens 31.9% 2
Electric water heaters 17.0% 3
The table below shows the online market shares and rankings of the Company’s primary home
appliance products (by retail sales) in 2021:
Product category Market share Ranking
Residential air conditioners 34.6% 1
Laundry appliances 33.7% 2
Clothes dryers 31.7% 1
Refrigerators 18.2% 2
Microwave ovens 49.7% 1
Countertop ovens 27.0% 1
Electric pressure cookers 40.4% 1
Rice cookers 30.1% 1
Induction cookers 50.5% 1
Dishwashers 29.5% 1
Electric kettles 27.0% 1
Electric fans 22.7% 1
Garment steamers 25.1% 1
Electric radiators 21.4% 1
Water purifiers 17.6% 1
Electric water heaters 29.9% 2
Gas water heaters 17.1% 2
Range hoods 15.9% 2
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The 2021 Annual Report of Midea Group Co., Ltd.
Product category Market share Ranking
Sterilizing cabinets 17.9% 2
Gas stoves 13.8% 2
Water dispensers 15.7% 3
Blenders 14.3% 3
1.3 Industry Overview
A. Home Appliance Industry
2021 saw a strong rebound of China’s economy, which became increasingly stable with an upturn. The
home appliance industry overcame adverse factors such as the price upsurge of raw materials and the
chip shortage in the manufacturing industry. The overall development of the industry maintained a
positive and healthy trend, with continued strong growth in exports and further recovery in the domestic
market. According to the 2021 Annual Report of China’s Household Electrical Appliance Industry jointly
published by the China Household Electric Appliance Research Institute (CHEARI) and the National
Household Electrical Appliance Industry Information Center, in 2021, the domestic retail sales of home
appliances was RMB754.28 billion, up 3.4% year-on-year; and the exports of home appliances reached
RMB638.2 billion, up 14.1% year-on-year, as shown by data released by the Central Administration of
Customs. Currently, the world is still in a grave and complex situation due to the pandemic, with
unprecedented challenges for economic development. Nevertheless, in the medium and long run,
upgrading of the industrial structure, stable increase of household income, diversified consumption, the
national policy support for the green and smart industries, as well as upgrading of the standards for
home appliances will create new opportunities and growth points. From the perspective of industry trend,
first, the home appliance industry presents horizontal cross-border development with the integration of
home decoration, home furnishing and home appliances. Home appliance manufacturers expand their
business horizontally in cooperation with distribution channels, advancing towards a strategic direction
of home appliances + home furnishing. Whole-house customization and whole-house renovation have
been incorporated into their line of business. Second, home appliance manufacturers display vertical
development within themselves by diversifying product categories and specifications. The elements
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The 2021 Annual Report of Midea Group Co., Ltd.
such as capturing lifestyle trends, tapping into user needs, addressing pain points, promoting product
innovation and providing quality living will shape the development of new products. Third, the product is
always the cornerstone. User experience can be enhanced from the dimensions of safety, ease of use
and wellness, which contribute to product competitiveness. Although China's white goods market has
entered a matured stage, consumption upgrading remains evident and high-end home appliances with
high energy efficiency aimed at improved quality of life still have great potential for development.
According to the data from the National Household Appliances Industry Information Center, the domestic
retail sales of air conditioners was RMB154.5 billion in 2021, up 4.8% year on year. In terms of sales
channel, online channel sales accounted for nearly 45%, amounting to RMB69 billion, up 14.1% year on
year. In terms of competition pattern, the concentration of offline air conditioner market share was further
improved, and the market share by unit sales of the top three enterprises in the industry exceeds 83%
totally. In terms of product performance, the market share of products with high energy efficiency kept
rising, and the price structure was further optimized, among which, in the offline air conditioner market,
the unit sales of inverter products increased to over 98%, the unit sales of Energy Efficiency Class 1
products increased to over 70%, and the unit sales of products with a unit price of over RMB2,000
increased to 87%. In terms of product function, the functions of air conditioners have been expanded
from cooling and heating to self-cleaning, humidity, air cleanness and freshness, etc. As the comfort of
product experience has been focused on, the fresh air function products have developed rapidly, and the
market segments have further developed, such as the rapid development of air conditioners that are
applicable for kitchen scenes and the elderly and portable air conditioners.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of laundry appliances was RMB71.4 billion in 2021, up 8.7% year-on-year, with the
online sales accounting for over 52% of total sales. In the upgrade of the laundry appliance market, in
terms of the product types, the market share of front-loading products keeps growing stably, with the
offline market share (by unit sales) climbing to 52.5% (32.5% for front-loading washer-dryers).
Meanwhile, as consumers are paying more attention to health, the offline market shares (by unit sales)
of laundry appliances with sterilization and mite elimination functions rose to 54.5% and 22.8%
respectively in 2021. Washing capacity continued to be upgraded, with large-capacity products
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The 2021 Annual Report of Midea Group Co., Ltd.
increasingly replacing small-capacity ones. The offline unit sales of 10kg-12kg washers occupied a 60%
market share, with a year-on-year increase of over 11%. Meanwhile, mid- and high-end products saw a
much bigger share in the offline market by unit sales. To give an example, products with a unit price of
over RMB5,500 took up a market share of 20%. The drying function brings the advantages of saving
time, being convenient, non-ironing, and saving space. As China’s clothes dryer technologies become
more mature, the heat-pump clothes dryer experienced fast growth during 2021 and has dominated the
domestic offline market.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of refrigerators were RMB99.9 billion in 2021, up 7.4% year-on-year. The market
share concentration of the leading brands in the domestic refrigerator market has been further enhanced.
Due to the impacts of rising raw material prices and structural upgrading, structural upgrading was
evident with refrigerators of different prices, with the offline market share (by unit sales) of products
priced over RMB7,000 exceeding 20%. As seen from the change of multi-door refrigerator market share,
those with more than four doors have become the absolute mainstream in the offline market, with a
market share of 45.3% by unit sales. In 2021, the offline market share (by unit sales) of refrigerators with
an over-400L capacity was close to 60%. Consumer's intensified willingness to pursue quality life has
prompted the refrigerator market to pivot towards high-end multi-dimensional design, which is mainly
manifested as "good looking", "capacious", "fresh", and "intelligent". In other words, better appearance
design and material, larger capacity and structure, improved storage and preservation technology, and
more smart applications.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of kitchen appliances was RMB174.8 billion in 2021, up 4.3% year-on-year. As
dishwashers became more popular on the domestic market, the retail sales were close to RMB10 billion,
with the online and offline sales recording year-on-year increases of 11.9% and 12.4%, respectively. And
product upgrading continued. Integration of more functions such as washing, sterilization, drying and
storage emerged. Built-in large-capacity products saw a substantially bigger market share, with the
offline market share of dishwashers with 13 place settings capacity reaching 25.6% by retail sales. And
the average price of dishwashers went up 8.5% year-on-year on the offline market. In terms of the
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competition landscape, the top three manufacturers saw expanding market shares domestically, with
their combined offline market share exceeding 50% by unit sales. Integrated stove sales reached
RMB24.5 billion in the domestic market, an increase of 38.8% year-on-year. Due to the surge in demand
for high-end kitchen appliances, in particular steamers and ovens as a result of the pandemic, integrated
stove products have evolved rapidly. The all-in-one models with kitchen hood, stove, steamer and oven
have developed dramatically and become the category with the largest offline market share, with the
offline market share of products priced over RMB13,000 reaching as high as 57.4% by unit sales. Smart
products with multiple functions are the trend. For instance, intelligent voice control function will be built
in to deliver a more convenient handling experience, and integration of different cooking methods such
as sautéing, stir-frying, stewing, baking and steaming enables the multi-cooking scenario possible.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic sales of small domestic appliances was RMB117.4 billion in 2021, down 8.6% year-on-year, of
which the online sales took up a percentage of 70.9%. With respect to the market performance of all
categories, due to weak demand for traditional products, the high base in 2020 caused by the
“stay-at-home” policy as a result of the COVID-19 pandemic, as well as natural factors such as the
temperature and air quality, small kitchen appliances and environment appliances underperformed,
while the market of emerging health-friendly small domestic appliances for personal care told a different
story. The diversified and individualized consumer needs have resulted in rapid growth for these
products, driving the emergence of more niche products. The sales of health-friendly vacuum cleaners
were outstanding due to the pandemic. In 2021, the domestic sales of vacuum cleaners were RMB26.6
billion, up 14.5% year-on-year. By categories, robot cleaners embraced new functions such as
self-cleaning, cleaning base, dust collecting base and automatic water filling. Their average market price
increased considerably, with the online price up nearly 44% year-on-year. As the needs for house
cleaning continue to grow, multiple new cleaning appliances such as scrubbers and steam mops have
emerged. Thanks to the advancement of technology and more human-friendly design, such as roller
brush that can self-clean in real time, lighter body weight, and less noise, the online and offline market
shares (by retail sales) of floor scrubbers surged 244.7% and 779.6% respectively year-on-year.
According to the data from the National Household Electrical Appliance Industry Information Center, the
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online retail sales of home appliances in China amounted to RMB368.01 billion in 2021, up 9.3%
year-on-year, accounting for a market share of 48.8%; while the offline retail sales amounted to
RMB386.27 billion, down 1.7% year-on-year, accounting for 51.2%. Online sales channel of home
appliances in the past decade or so has made its way from scratch to expansion. The 2020 pandemic
has once again pushed it to a new height, but now with the general resumption of offline shopping, the
online channel has ushered in a period of relative stability. In terms of sales, the sales structure of each
channel in the domestic market remains well optimized, with high-end, healthy and intelligent home
appliances gaining a prominent presence. According to the data from the National Household Electrical
Appliance Industry Information Center, in 2021, both online and offline market sales of medium- and
high-end products, such as self-cleaning air conditioners, cross four-door refrigerators, front-loading
washer-dryers, gas water heaters with zero cold water and robot cleaners, have further improved.
B. Robotics and Industrial Automation Industry
World Robotics 2021 Industrial Robotics released by the International Federation of Robotics
(hereinafter referred to as "IFR") showed that there will be five trends in robot industry in 2022, which
refer to that robots will be applied to more new industries, it will be more easy to operate robots, the skills
of robots and workers will get promoted, robots will guarantee manufacturing, and robots will support
digital automation technology. Global robot installations rebounded strongly in 2021, with IFR projecting
a 13% increase of global robot installations, amounting to 435,000 units. In particular, Americas
achieved an increase of 18% year on year, Europe achieved an increase of 7.4% year on year, and Asia
achieved an increase of 15% year on year. IFR also predicted that the growth rate of the global industrial
robotics industry will slow down relatively from 2022 to 2024, and the annual new installations will
exceed 510,000 units in 2024.
IFR data showed that the CAGR of the sales of industrial robotics in China from 2015 to 2020 exceeded
20%, and the installation of industrial robots continued to rank first in the world. In 2021, in spite of facing
multiple challenges such as the epidemic, chip shortage crisis, raw material shortage, supply chain
pressure, power supply tension and rising transportation prices, with unstable overseas epidemic, China
continued to take overseas manufacturing orders. Besides, COVID-19 promoted enterprises to use the
strategy of "robot assembling line", and market demand was successively released with the stable
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epidemic in China. According to the data released by the National Bureau of Statistics, the domestic
production volume of industrial robotics achieved to 366,044 units in 2021, up 44.9% year on year, which
hit a new record. Simultaneously, in 2021, relevant financing in the industrial robotics field retained
heated, while Industrial Internet of Things, collaborative robotics, logistics and medical robots, and 3D
vision and sensors were the most remarkable fields. In terms of industries, as the new energy
automobile drove the automobile industry to return to prosperity and the demand for 3C products,
lithium-ion and photovoltaic was strong, the application of robot in general industrial fields was further
expanded, and new opportunities appeared for the application of robot in non-industrial fields. In terms of
models, MIR data shows that SCARA robots, collaborative robotics and six-axis robotics all presented
high growth momentum, among which the shipment of six-axis robotics below 20kg in 2021 rose by 48%
year on year, while six-axis robotics above 20kg hit a new record, whose year-on-year growth reached
64% after three consecutive years of negative growth, and even the year-on-year growth of collaborative
robotics was more than 100%.
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 932 robotics, while the
robotic density of China has increased from 49 robotics in 2015 to 246, nearly twice the global average
of 126. China ranks No. 9 in this respect, with great potential and prospects. 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.
C. Smart Building Industry
In the smart building 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
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market concentration. According to the data from HVAC, Industry Online and Changjiang Securities
Research Institute, the proportion of foreign brands of commercial air conditioner in 2020 was about 48%,
and the long tail effect was obvious as only four manufacturers have a share of more than 10%. For
elevator, the data from the Business Yearbook of Elevator Industry in China and Changjiang Securities
Research Institute indicates 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
2021, 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 Industry Online, HVAC and Changjiang Securities Research
Institute, the sales revenue (excluding tax) of domestic commercial air conditioner in 2021 was
RMB123.2 billion, up 25% year on year, of which domestic sales accounted for about 90%; the
compound annual growth rate of the industry in the past five years was 9%. 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 scale was
nearly RMB100 billion. 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 of National Bureau of Statistics and Changjiang
Securities Research Institute, in 2021 the production of domestic elevators, escalators and lifts was 1.55
million sets, up 17% year on year, which was mainly for domestic sales; the compound annual growth
rate was 10% in the past five years, maintaining a steady expansion. Judging from the operating data of
major manufacturers in 2020, 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 and Changjiang Securities Research
Institute 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
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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 nearly RMB400 billion, and the compound annual growth rate of the industry is between
5% and 10% (revenue caliber).
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. As the Building Energy Conservation Research Center of Tsinghua University
and the Changjiang Securities Research Institute showed in relevant data, the energy consumption and
carbon emissions of buildings account for a high proportion in the whole society. The carbon emissions
of building operation accounted for about 22% of the total domestic carbon emissions in 2019, 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 2021,
a series of "double carbon" policies involving building construction 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, all of which aim at 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
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 "double carbon" and energy saving renovation.
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Taken as a whole, under the background of "double 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: unit machine, multi-split
machine, and large-scale water units. In 2021, the share growth of chillers of domestic brands began to
accelerate and made breakthroughs, leading the commercial air conditioner industry to the stage of
domestic replacement in all aspects, and thus there is a large space for future increase. Compared with
air conditioner, the domestic replacement process of elevator is relatively slow, but the relevant market
pattern will be 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 competition
opportunities 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, and the optimization of competition
pattern is underway.
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2. Business Scope in the Reporting Period
In 2021, the COVID-19 pandemic remained a serious problem for the world, the political and economic
environment became more complicated both at home and abroad, and the prices of bulk raw materials
such as copper and steel surged to a high level. Meanwhile, new changes such as energy reform, IoT,
digital transformation and Metaverse were underway with innovation springing up. Uncertainties and
challenges became the new normal. As such, Midea encountered a more complex external environment
compared to last year. However, it delivered expected operating results in spite of the profit pressure
caused by sharp fluctuations in raw material costs and the appreciation of the RMB, manifesting its
resilience. Against a more uncertain backdrop, technology-driven transformation remains the main
theme of the current era. Midea adhered to the strategic focus with “Technology Leadership” as the core,
promoted development both in the ToB and ToC business, as well as carried out transformation in both
the domestic and overseas operations. With innovation, breakthroughs and planning as the keynote, it
took the five business divisions into a new stage, promoted the implementation of the strategic focus, as
well as delivered innovation and breakthroughs regarding management systems, the organizational
structure and mechanisms. For 2021, Midea achieved, on a consolidated basis, total revenue of
RMB343.4 billion, up 20% YoY; and a net profit attributable to shareholders of the Company of RMB28.6
billion, up 5% 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 deeply integrates technological innovation and household
appliances to achieve the vision of "Bring Great Innovations to Life" through technological innovation. In
addition, based on user needs and consumption trends with respect to living rooms, balconies, kitchens,
bathrooms, among others, Midea offers its own products and ecosystem products. Household service is
comprehensively deepened by using IoT technology, so as to provide intelligent comprehensive
solutions for the whole house, making home life more efficient, convenient, healthy and comfortable, and
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building an industry-leading and smart home service platform. Midea independently builds a big data
platform integrating market, user and public opinion data, constructs a big data-based innovative
planning platform, and implements product innovation driven by both big and small data. Centering on
the planning process, it achieves the integration of SKU planning and smart scene planning process. It is
the first to create the planning connect system in the industry, covering the whole planning process. By
achieving cross-department data circulation and integrating internal and external data of the entire value
chain, Midea enhances the efficiency of data circulation and shortens the cycle of new product
development. Meanwhile, through intelligent analysis, intelligent early warning, intelligent prediction,
intelligent decision-making and intelligent control, a unique smart decision-making support model for
planning is created to empower planning decision-making. Compared to traditional market research, the
intelligent market scanning efficiency of the big data-based innovative planning center has increased by
over 50%, which can closely follow up thousands of categories and explore market opportunities and
trends of users' demand. It has covered multiple countries and regions around the world, further
strengthening Midea's global planning capability. With the big data platform's empowerment, digital
marketing extends to the C2M model, while through user insight and user research, brands and products
are empowered, where real-time market feedback on new products is utilized to accurately target
marketing. Real-time interaction with consumers is achieved and supply and demand information is
closely connected by perceiving users and activating users' information through hundreds of millions of
global user touch points, and then product development changes from the chain mode to a closed-loop
mode. In terms of industrial design, Midea leads the way in user experience and interaction upgrading
with ongoing innovations. In 2021, Midea won a total of 141 industrial design awards, including 41 Red
Dot Design Awards, 49 iF Design Awards, 40 IDEA Awards and 11 G-mark Awards.
For smart living room scenes:
In terms of residential air conditioners, Midea, as a prominent innovator who always stays at the forefront
of the industry, has never stopped exploring product innovation based on user needs, scenarios and
ecosystems. COLMO AirNEXT Air Evolution Main Frame adopts a pluggable air module to meet the air
needs of users of different ages, while with an open ecological interface to upgrade the disrotatory
breezeless technology, the wind speed and temperature are more natural and stable. It is equipped with
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the OTA online upgrading technology to improve the health and comfort of air and the intelligence and
convenience for operation in multiple scenes, and proactively identify environmental information to
provide users with intelligent air solutions based on big data such as location, weather and user habits.
Midea All-Season Second Generation Residential Central Air Conditioner, which integrates household
system solutions such as central conditioner, floor heating, fresh air and humidification of the whole
house, is the industry's first product that has been certified by high temperature sterilization of multi-split
coil, whose sterilization rate reaches more than 99%. Relying on the Bauhaus aesthetics, COLMO
Residential Central Air Conditioner integrates the five-dimensional adjustment of temperature, humidity,
wind, cleanness and freshness and an intelligent expert system for the whole house, achieving "one
room, one climate" and active adjustment of the whole house, and flexibly meeting requirements of all
scenes such as three-bedroom units, penthouses and villas. Midea iColor Exclusive Custom Air
Conditioner features "Color Panel" with innovative multi-color woven fabric. Based on the big data
analysis of users' needs, it provides a variety of appearance and function modules. Users are able to
order different module combinations at their options. The products are produced and distributed from the
back end, tailor-made to meet the needs of differentiation and personalization. China Zun Artistic
Floor-Standing Air Conditioner and Freshness Artistic Floor-Standing Air Conditioner are the
masterpieces of Midea's air conditioners with combination of aesthetics, comfort, health, etc. China Zun
Air Conditioner is powered by innovative technologies including S+ breezeless, new generation of dual
hybrid fresh air and intelligent central voice system. Freshness Air Conditioner integrates three
dimensions of technology with full domain features for breezeless, fresh air and voice system. Infused
with Huawei's HarmonyOS system, the industry's first seven air conditioner models were launched by
Midea in 2021, offering various experiences such as one-touch connectivity, minimal interaction and
direct services. In an effort to enhance overseas market penetration of residential air conditioners, Midea
has been not only committed to expanding the market of window air conditioners, dehumidifiers and
portable air conditioners, but also actively leading the industry to contribute to environmental protection.
Following the Outstanding Contribution Award from the United Nations Industrial Development
Organization in 2020, Midea has upgraded its R290 split unit product in 2021 and won the "Der Blaue
Engel" certification from Germany twice in a row. At present, the Der Blaue Engel-certified R290 split unit
model has been officially launched in the EU and beyond.
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The brand new Dual Flow Disrotatory Fan launched by Midea has won the 2021 "Good Design" award in
South Korea, for which the aerodynamic dual-rotor turbine engine technology is brought in and the
double-blade disrotatory technique is adopted for the first time in the industry, which generates
disrotatory airflow through speed ratio adjustment to achieve a variety of winds and meet the needs of
users in different scenes. The product not only carries the innovative technology born in the cooperation
with Chongqing University to dynamically adjust the wind speed according to the ambient temperature,
but also has functions of net ionic sterilization and 3D movement. Midea Washable Tower Fan adopts
the patented design that allows washing the whole body, which is original in the industry, to solve the
pain point that it is difficult to disassemble and wash the air duct of Tower Fan, and to achieve the air
duct system washing with one key separation, providing clean air experience. Midea Microelectrolysis
Washing Air Cooling Tower Fan innovatively uses microelectrolysis for sterilization, in which tap water
through electrolysis is used for sterilization, whose sterilization rate is as high as 99.9%. It is equipped
with the irrigation wind wheel at the air conditioner level and the wet pad waterfall washing technique to
thoroughly clean air, and provide healthy and moist clean air.
Launching the Cold Boiled Water Smart Instant Water Bottle, Midea achieves rapid cooling of boiling
water to quickly prepare 55°C water and effective energy saving of 60% through the self-designed plate
water-cooled heat exchanger. By studying the double pump control system and optimizing the
multi-sensing temperature probe and PID algorithm, six water temperature modes are available so that
warm boiled water can always be ready. The sterilization rate is over 99% through the test by the
third-party authority, at the leading level in the industry. COLMO Residential TURING Countertop
Sparkling Water Direct Drinking Machine carries multiple industry-pioneering technologies, redefining
the high-end water drinking standard, integrating water filtration, super cooling, multi-stage temperature
control and adjustable sparkling water taste technology to achieve a multi-purpose machine. Equipped
with the HiDrink drinking water management system, it can achieve functions such as scientific
customization of water drinking, user-defined water getting through identity recognition, intelligent
reminding of water drinking and water drinking report generation, creating a scientific and healthy way of
water drinking for users. It breaks the industry's traditional cooling model, whose temperature decreases
by 5°C and cold water volume increases by 50% compared with the general cooling technology.
Meanwhile, the use of innovative four-dimensional sterilization ensures natural and pure water.
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Continuously integrating the concept of "deep cleaning for the whole house" into product design, Midea
has launched Eureka Smart Sterilizing Floor Scrubber that integrates vacuuming, mopping and
sterilization. The advanced “deep cleaning” technology it carries can help scrub away large particles of
dry and wet mixed garbage, stubborn stains and dirt at corners. This product has won multiple industry
awards and carries 50 patent applications in total. Its core technologies include the industry's first
integrated real-time electrolytic water sterilization, integrated rolling scrubbing and drying, integrated
self-cleaning control, integrated automatic moving and the mute air duct structure. Midea Z7 Smart
Wireless Vacuum Cleaner has successfully broken through the high-end market and won the AWE
Award. It boasts an original smart maintenance and cleaning solution and leads the industry in suction
power, battery life, etc. Carrying more than one hundred patents, its core technologies include the
high-efficient BLDC motor, the high-efficient flow channel and the new-generation shock and noise
reduction technology. Moreover, digital smart control technology, soft-package and high-energy storage
battery technology, fast charging technology and AIoT software technology are also applied. The brand
new Midea All-in-one Household Robot Vacuum Cleaner W11 integrating "sweeping, mopping, washing
and drying" functions uses the automatic rolling brush lifting technology to create a one-stop automatic
cleaning system. It adopts an industry-pioneering cleaning mode of mopping after sweeping, sweeping
being separated from mopping, and the dry being separated from the wet, in addition to the functions
such as automatic water refill, automatic back washing and automatic drying. Over 30 groups of sensors
are carried and the self-developed NaviPolar3.0 algorithm is embedded in this product, to provide more
efficient and intelligent use experience. It has won the 2021 CMF Design Award.
For smart balcony scenes:
Under the trend of diversified user consumption behaviors, new scenes become the necessary elements
for defining new products. Gradually the balcony becomes the window of revealing the home aesthetic
personality, as washing and drying packages become a new demand for balcony's shift from drying area
to leisure area. Meanwhile, as more people like to “stay at home and be lazy”, demand is rising for smart
and One Touch services. Against this backdrop, scenes such as home dry cleaning and mixed clothes
washing emerge at the right moment. Targeting the pain point that high-end clothing or special clothing
cannot be washed at home, COLMO AI Light Dry Cleaning Technology disrupts the traditional washing
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mode by innovatively applying the high-energy steam technology to laundry appliances. It has been
granted the "Technology Innovation Award" at the 2021 (17th) China Household Appliances Innovation
Award event. It uses dry, saturated and high-energy steam with excellent heat and mass transfer
performance to penetrate through fibers, achieving results such as thorough wrinkle and dust removal
without damaging the clothes. It also boasts 5-minute and Grade-A rapid odor removal, whose
sterilization rate is 99.9%. "Key Technology and Industrialization of Double-Driven, Dewatering and
Double-Drum Washing Machine with Large Capacity", "Key Technology and Industrial Application of
Long-Acting Plasma for Deodorization and Sterilization" and "Application and Industrialization of New
Special Effect Technology of Electrode Catalytic Coating for Use in Washing Machines" included in
COLMO Light Dry Cleaning Technology 2.0 have also been certified as "Internationally Advanced" by the
China National Light Industry Council. The Blue Oxygen Technology based on electrocatalytic coating
and special electrode preparation technology is industry-pioneering, while the technologies of anti-cross
color, whitening white clothing, long-term bacteriostasis of the whole machine and harmful substance
degradation are made available. What's more, the cleaning effect of special stains is improved from the
traditional five categories of stains to 32, and all the cleaning ratios reach Grade-A. The Light Dry
Cleaning Technology and the Blue Oxygen Technology further promote the technological innovation and
progress of the laundry appliance industry.
Equipped with Light Dry Cleaning Technology 2.0, COLMO Star Atlas Washer-dryer accurately controls
the steam saturation, temperature and tempo speed. With the One Touch smart control, it removes dust
without damaging the clothes. With the steam generator of compact design and the brand new second
heating flow channel design, users’ pain points are effectively resolved. Nano-level high-energy soft
steam and the super smart camera system, clothing humidity, weight, water quality, weather and other
big data are calculated on the cloud through Internet of Things, so as to achieve the best washing and
drying effect. It has won the Red Dot Award and the IDEA Award. Little Swan True Color Series
Washer-dryer, carrying the Blue Oxygen Technology, boasts the industry's thinnest platform and the
largest free fetch caliber, which effectively solves a series of pain points such as cross color, special
stains, occupying a large space and bending down to fetch the clothes. In addition to being certified as
"Internationally Advanced" by China National Light Industry Council, this product has also won the 2021
"Red-Top Award" and the Golden Choice Award for "Blue Oxygen Sterilization Innovative Product".
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Meanwhile, True Color Clothes Dryer, with the new Soft Drying Platform for Wool, is the first of its kind to
receive the “Wool Hand Wash Safe” label in China, solving problems of wool being not easy to dry,
shrinking and wrinkling. It also innovatively uses an integrated multi-layer filter for easy cleaning, which
is able to remove as much as 98.6% dust. Toshiba XP1 Series Washer-dryer innovatively adopts both
the ultra fine bubble (UFB) technology and the fine bubble technology, creating the dual-bubble washing
technology to deliver more cleanness. In addition, it greatly optimizes the original heat pump system and
expands the air duct, which shortens the time needed to wash 7kg of clothes to 97 minutes, increasing
the efficiency by 10% and leading the industry in Japan. It has won the 2021 Good Design Award and
the MonoMax Award. Toshiba T11 Series Washing Machine adopts a mortise and tenon structure and a
minimalist tempered glass door. This new model is available with a variety of specifications and
capacities. Also, it is equipped with the WIFI function for the first time for remote control. The unique
Ultra Fine Bubble mode, with the front cavity pressuring on the special microporous outlet structure at
the back end, can produce hundreds of millions of ultra fine bubbles to instantly dissolve sebum and
grease for thorough cleanness. The unique Greatwaves program provides the same washing effect as
heating by adjusting the washing pace to create strong water flows. Additionally, the Steam Care
function produces high temperature steam of 80°C for sterilization and wrinkle removal.
For smart kitchen scenes:
Being customer-oriented, Midea constantly makes product innovation, technological breakthrough and
smart scene expansion around the core demands of users with respect to cooking, such as
deliciousness, freshness, nutrition, health, high efficiency and convenience. COLMO Turing Series
Refrigerators have pioneered the industry's automatic door opening and closing technology to deliver
more convenience and intelligence. It supports offline voice door opening and closing, refrigerator
control and other functions. With more interactive intelligence functions and services online, it can
realize the intelligent connectivity of entire home appliances through the authorization of the MSmartLife
App as the voice access. Microcrystal function is upgraded again to provide the optimal preservation
solution for all types of fresh food, meanwhile, effectively inhibit the purine content in fresh seafood.
Space ecosystem compartment can smartly recognize and adjust the moisture level of ingredients. The
blue light function will be automatically turned on upon high humidity to enhance the anthocyanins of
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ingredients. TURING Nutrition Refrigerator brings users intelligently balanced nutrition management
through AI-powered multi-dimensional nutrition technologies based on a deep "nutrition" perspective
supported by "machine rationality" to meet the health and nutrition needs of families. Toshiba Mist
Refrigerator conveys freshness with "Mist Freshness" technology. Toshiba patented technology UNIT
moisture permeable film, is a moisture permeable airtight porous polymer fiber material, which allows
moisture to penetrate and keeps airtight at the same time. It prevents the cold wind from blowing directly
on fruits and vegetables, delivering the delicate water vapor that reaches directly to the cells of fruits and
vegetables. By creating a constant moisturizing environment suitable for fruit and vegetable storage, it
realizes seven days freshness of fruits and vegetables, with three quick-freezing modes - direct
placement of hot items, vegetable freezing and vegetable drying. The three modes of low-temperature
chilling, fast micro-freezing and original defrosting accurately match the storage environment required by
the food, and maintain the best taste and nutrients. It makes ice quickly in 60 minutes, with independent
space that is clean and odorless. In addition, the iTouch function allows just a tap to open the door.
Midea's first American-style refrigerator is equipped with the original metal texture soft close handle.
Combined with the traditional Chinese mortise and tenon technology, it achieves the perfect integration
of classical aesthetics and contemporary design. PST + technology helps achieve rapid odor purification
within 19 minutes with a bacteria removal rate of up to 99.9%. The panel adopts carbon ion crystal
diamond process and high-temperature sintered brushed texture, reflecting rich layers with skin-friendly
touch. It also offers stain and fingerprint resistance, and the internal pasta space can also effectively
avoid pasta from drying out and cracking when stored via the unique microporous spoiler technology.
Midea’s first HarmonyOS refrigerator was fully launched in tandem with Huawei in Huawei Mall in June
2021. This refrigerator can realize non App second network access by "tapping" the cell phone on the
refrigerator, and recognize the freshness of the ingredients in the compartment, which quickly generates
a large number of recipes depending on the ingredients in the refrigerator. One-click appointment of
post-sales service is also available.
COLMO Star Atlas SV8 Range Hood is the first of its kind with four zones for vacuuming smoke and
ultra-thin design of 360mm, whose suction can be up to 26m/min and maximum wind pressure 1,100Pa.
With unique AI support, it can automatically enter the smart smoke suction status at the moment of
ignition and automatically adjust the suction power according to the smoke status. The self-developed AI
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Active Noise Reduction Module used in this product can reduce the noise to as low as 42dB, allowing
users to concentrate on their cooking. Its innovative flat lighting system can be adjusted according to the
environment, making the cooking space brighter. The innovative design of dual oil mesh and oil cup can
be cleaned in a dishwasher. Silent Series Thin Range Hood improves the user experience of "easy
suction, easy washing and easy control", providing healthy, clean and smart cooking experience. It
continues to adopt the double suction design, in addition to innovative thin design of "A3 waist" with a
360mm frame, two perfectly designed air ducts and a 290mm body. It caters to both stewing and
flash-frying scenes. The new design of double section oil cup and quick disassembly help achieve
efficient cleaning, and innovative square lights help reveal the true colors of the food. Ultra-thin Gas
Stove Q81U Series uses the industry-leading air-intake-from-the-top ignition technology to save space.
The innovative seamless stovetop design makes it easy to clean, and the ultra-thin body of 25mm
provides great space for the dishwashing and sterilization package. The ultra-thin air-intake-from-the-top
design carries a number of patented technologies, which meets the expansion application to the greatest
extent. Oxygen Stove Q63-M Series carries the industry-pioneering saucer mixed oxygen cabin mixed
oxygen technology, with blue fire to quickly turn raw ingredients to delicious and nutritious food, greatly
improving the cooking quality.
Midea F70 Dishwasher carries the patented technology of ADS smart input, providing smart solutions for
the whole process of tableware wash and care. With accurate input of detergent, oil stains are scoured
with 360° high-pressure washing, making it an easy job to clean oily tableware for Chinese consumers.
Meanwhile, the low noise effect of 44dB is made available by using the variable frequency technology to
provide quality life experience. Besides, for a small number of tableware, the stratified washing function
is provided. In order to ensure safe and clean tableware, the four-star sterilization standard is reached
with the help of 100°C hot air sterilization. COLMO TURING Series Dishwashers, with zircon blue as the
main color and rational geometry as the overall design, embodies the essence of minimalist, high-end
and grand design. It adopts an AI-powered detergent input system. The internal structure breaks through
the traditional limitation, where dishes can be placed on the upper and lower layers. It also boasts the
capacity of 15 sets and Water Efficiency Grade I. It has passed the four-star sterilization certification by
China Household Electric Appliances Research Institute. The Week-Long Ion Freshness technology it
carries is VDE-certified, with a sterilization rate of more than 99%, providing natural and high-end wash
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and care. Midea 200Q11 Sterilizing Cabinet, with a height of 775mm that perfectly fits with the Chinese
cabinet structure and a large capacity of 180L that redefines kitchen storage space, achieves the
storage of tableware, knives and cutting board in one machine. It carries the modular bowl basket that
enables separate sterilization. The ultraviolet-wave medium-temperature two-star sterilization makes it
suitable for tableware of different materials. And negative ion is used to ensure odorless storage, with an
AI-powered warm disk to improve user experience.
Midea has launched a series of innovative rice cooker products in 2021. Double-Valve Low-Sugar Rice
Cooker, on the basis of adhering to making good rice and low sugar, through the innovation of double
valve design and control technology optimization, achieves functions of 18-minute fast rice and
30-minute fast porridge. It has won the iF Award. Centering on the whole process of users' cooking rice
and porridge, Fully Automatic Rice Cooker, through innovation and reconstruction, achieves new
technical breakthroughs such as fully automatic water and rice input, fully automatic rice washing, fully
automatic precise control of rice water ratio and fully automatic cooking with One Touch. It has been
granted the Good Design Award and the IDEA Award. MiniMore Multi-functional Rice Cooker is a
multi-functional product of modular combination designed for the young consumers, as it has functions
such as IH rice cooker, IH constant temperature stove and IH frying pan/boiling pot, which is applicable
to different cooking scenes such as home and open air. It has won multiple international design awards.
Midea has launched the "Adjustable Lifting Electric Grill", carrying the industry's first stepless rod lifting
technology to meet the needs of cooking different food. It also boasts an adjustable dish diameter of
0-35mm. Centering on the "holistic health" trend, Midea has launched the "Antibacterial Series Electric
Grill". By adding antibacterial agents and fungicides in the coating, bacteria and the breeding
environment of bacteria can be effectively destroyed, with an antibacterial rate of over 99%. Midea
Smokeless Electric Grill, which is equipped with the internal circulation water-cooled smoke absorption
system, can achieve cooking smoke purification without consuming any materials, which allows
consumers to enjoy barbecue even in the living room. With detachable and washable structure design, it
is easy to clean.
Midea MINI20 Calorie-burning Cooking Platform benefits from the leading miniaturized magnetron
technology, uses the Q12 magnetron that is the smallest in volume and the highest in power in the
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industry, and achieves that the plot ratio of microwave oven increases by 24%. It is suitable for small
kitchens. The MIX fat burning algorithm is originally created, and three technologies including steaming,
microwaving and baking are combined, so as to achieve delicious and healthy food. Equipped with
Huawei’s HarmonyOS system, health data is shared to create personal fat-burning solutions. Midea
Roasting Series uses graphene heating tube technology to achieve instant heating in 0.2 second and
high temperature radiation of 1300°C to solve the pain point of "long preheating, slow baking" of the
electric oven. Midea R5 Built-in Microwave, Steamer and Oven Combo integrates four cooking methods
including microwaving, steaming, baking and frying. And its high-end TFT and humanized interactive
interface enables users to enjoy cooking.
COLMO I2000 High-flux Under-sink Water Purifier applies a number of innovative technologies. The
industry leading two-dimensional self-purifying system, specifically slow flow stripping and deep spin
purification, extends the life of the RO filter to ten years. Featuring full time zero staleness technology, it
flushes the filter fully automatically to ensure that every cup of water is fresh and good; upgraded PR
front filter adopts organ type structure design, with eight times higher dirt-holding capacity; the
third-generation pull-out filter replacement method realizes simpler replacement in two-steps. The
product won the industry and market recognition, and was granted the "Water Purifier Value Product
Award" and the "Red Star Design Award".
For smart bathroom scenes:
With continuing breakthroughs in core performance based on the core scene-based requirements of
users, Midea Electric Water Heater has made breakthroughs in phase change energy storage and
ultra-short double tank products, achieving the smallest volume in the industry with the same volume,
and putting forward the concept of no-wash electronic anode to lead the industry in terms of internal tank
anticorrosion. The industry standard of level-one constant temperature and level-one mute are initiated
by Midea Gas Water Heater. Midea led the formulation of the industry's grading standard on constant
temperature Technical Specification for Intelligent Constant Temperature Grading Evaluation of
Household Gas Rapid Water Heater Throughout the Whole Process, and jointly issued Healthy Bath
White Paper with China Household Electric Appliance Research Institute, dedicating to solving the
fluctuation of the bath water temperature in the household environment. At the same time, skin-friendly
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technologies are developed, fine bubble and bath constant temperature curves are introduced, and
millimeter wave individual recognition is introduced to expand the application scenes and provide more
comfortable hot bath solutions.
Midea F6032-HW8 (HE) Electric Water Heater is the first customized bath electric water heater with
intelligent temperature adjustment. Equipped with the third generation electronic constant temperature
valve, it breaks through the bottleneck of the constant temperature of electric heating. The customized
electric heating is plus or minus 0.5°C which can be customized according to the skin feeling. The hot
water model of customized bath is provided for different users, as energy and electricity saving is
achieved by automatic heating upon the learning and memorizing of the users' bath habits and patterns
through the Smart Cloud Housekeeper. The long-term pain point of the industry is resolved by avoiding
the impact on water quality through the wash-free electronic magnesium rod. It is fitted with magnetic net
scale inhibition valve, with a scale inhibition rate of up to 90% for better water quality. Midea HL6
Constant-Temperature Gas Water Heater, the first product that has procured the level-one
constant-temperature certification in the industry, applies the international leading new
constant-temperature technology for the first time. It carries ADRC2.0 self-adapting constant
temperature algorithm and intelligent start-stop constant temperature valve, and achieves double
upgrade which includes hardware's precision control and software's actuarial, among which the
start-stop constant temperature speed increases by 70%, and the outlet constant temperature increases
by 37%, effectively enhancing the bath constant temperature experience by improving the start-stop,
multi-point water use and water pressure fluctuation during the process. Midea has also launched a
number of smart bathroom products that are original in the industry. In particular, Midea Smart Bathroom
Mirror is the first smart mirror cabinet equipped with electronic chip and drying storage. It is divided into
four zones including general storage zone, healthy sterilization zone, open zone and makeup dry zone.
The surface possesses intelligent demisting technology with which mirror's anti-misting function is
started with One Touch. The makeup dry zone uses a new generation of semiconductor dehumidification
technology and 360° air duct design to keep dry. Additionally, it adopts high-intensity UV lamp and
mobile storage rack with non-contact sterilization, and the sterilization rate is as high as over 99%. It is
also equipped with an intelligent voice control system, enabling easy control of the household appliances.
The integrated touch screen makes it easy to operate with time, weather and temperature information
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available any time. Skin-caring Shower is the industry's first smart shower that can control the water
heater remotely, and features a dechlorination filter for skin care. Skin-caring Faucet also adopts the
skin-caring filter and can display real-time water temperature. Bubble Facial Cleanser is the industry's
first intelligent temperature adjustment water heater dedicated to facial cleansing. Through the high
concentration of 180 million fine bubbles per liter, oil removal rate reaches 99% to achieve deep
cleansing.
B. Adhered to the strategy of “Technology Leadership”, increased R&D investments, built a
global R&D platform for better R&D efficiency, established a digital R&D system for agile
innovation, and implemented the strategy of “Innovation Patentability, Patent Standardization,
Standard Internationalization and Midea Standard Goes Out”
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. 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 and building of a global product platform, Midea is
building “Technology Leadership”. As of the end of 2021, Midea boasts ten corporate technology
centers/industrial design centers/post-doctoral research centers at the state level, 19 academicians with
long-term cooperation and eight academician workstations/workshops, in addition to more than 60
corporate technology centers/engineering centers/industrial design centers/key labs at the ministerial or
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provincial levels.
Midea Group is committed to investing in the research of core technologies. In 2021, more than a
hundred of technologies launched by Midea were certified as "Internationally Advanced" by authorities,
including "Research and Industrialization of Key Technology for New Generation R290 Room Air
Conditioners", "Research and Application of Multi-sound Source Vibration and Noise Control Technology
for Air-cooled Refrigerators", "Key Technology for Long-acting Plasma Deodorization and Sterilization in
High Humidity Environment and Industrial Application", "Research and Application of Technology for
Horizontally Opposed Magnetic Variable Frequency Centrifugal Compressors", "Research and
Application of Key Technology for Roasting", "Key Technology for Power Control of High-quality IH
Electric Cookwares and Industrial Application", "Research and Industrialization of Key Technology for
New High-efficiency Inverter Compressors", "Research and Application of Key Kitchen Air Management
Technology for Range Hood" and "Research and Application of Key Technology for Low-carbon and
High-energy Efficiency Heat Exchanger for Household Appliances". On 3 November 2021, the 2020
State Science and Technology Awarding Meeting of the People's Republic of China was held at the
Great Hall of the People in Beijing and Midea Air-conditioner won the National Award for Progress in
Science and Technology (Second Prize) for its project of "Theory of Building Thermal Environment and
Key Technology of Green Creation". Besides, Midea also won the Heilongjiang Provincial Technological
Invention Award (First Prize), the China National Light Industry Council Technology Progress Award
(First Prize), the China Energy Conservation Association Award for Technology Progress in Energy
Conservation and Emission Reduction (First Prize), the China General Chamber of Commerce
Technology Progress Award (First Prize) and other awards.
Midea has strengthened the transformation of R&D achievements while carrying out the core technology
research. By the end of 2021, Midea (inclusive of TLSC) held more than 70,000 valid patents. In the year,
Midea filed applications for over 10,000 patents around the globe, and was granted more than 3,000
invention patents, of which over 1,000 were granted overseas. Midea continues to improve patent quality.
It won multiple awards at the 2021 22nd China Patent Awards, including a Silver Invention Award for its
“Air Conditioner with a Coverable Air Outlet”, Silver Design Awards for “Electric Kettle” and “Wireless
Rechargeable Handheld Dust Mite Vacuum Cleaner”, in addition to more than 20 Excellence Awards for
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technologies such as the “Air-conditioning System with Enhanced Vapor Injection”.
In 2021, adhering to the strategic focus of “Technology Leadership”, Midea implemented the policy of
“One Midea, One System, One Standard” to further promote standardization. A two-tier standardization
management system has been put in place for the Group and its business divisions, in addition to a
standardization management committee at the Group level. With the double drivers of “standard
innovation + production innovation”, Midea shifts innovation achievements to advanced technological
standards. Additionally, it plays an active part in the formulation and revision of various standards,
contributing to the standardization of industrial technologies and creating more value for users, partners
and industries. As of the end of 2021, Midea took part in the formulation/revision of 1,347 technological
standards, including 41 international standards, 514 national standards, 277 industry standards, and 515
local and group standards. Midea also became the leading work unit of the working group on
TC212/WG7 smart control technology for wireless household appliances and the working group on
TC212/WG10 sensors. The Group has been recognized as an “Enterprise Standard Leader” for four
consecutive years for 38 standards covering 32 products. Midea Residential Air Conditioner and Midea
Kitchen Appliances both have projects that have been approved as National Standardization Pilot
Projects for Consumer Goods. Smart Cloud Multi-split Air Conditioner was selected as one of the 100
group standard application demonstration projects in 2021. The two group standards of China
Household Electrical Appliances Association (CHEA), namely General Requirements and Evaluation
Specifications for Inner Pot of Rice Cooker, and Electric Stir-Fryers for Household and Similar Purposes,
which Midea participated in formulating, were certified as "Internationally Advanced". Midea Refrigerator
won the first Anhui Standard Innovation Contribution Award.
In 2021, regarding smart home, Midea has participated in the formulation of International Standard
entitled Requirements for Evaluating Intelligent Household Appliances, and National Standard entitled
Technical Specification of Intelligent Power Module for Household Appliances. In respect of building
technologies, Midea advocates the industry should improve the quality of multi-split models and takes
the lead in formulating the first reliability improvement standard for the multi-split industry. In terms of key
product performance, Midea took part in the formulation of the national standards entitled Ergonomics of
Thermal Environment - Assessment of Thermal Environment in Transportation - Part 3: Human
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Evaluation of Thermal Environment Comfort, Ergonomics of Thermal Environment - Assessment and
Management of Human Cold and Heat Stress, Test Methods for Noise of Household and Similar
Appliances: Special Requirements for Fans, Measurement Methods for Electromagnetic Fields of
Household Appliances and Similar Apparatus with Respect to Human Exposure, Standard Tableware for
Testing the Energy and Water Efficiency of Dishwashers, Energy Efficiency Limiting Values and Grades
for Electric Ovens for Household and Similar Purposes, Safety of Household and Similar Appliances
Special Requirements for Commercial Microwave Ovens, Standard Samples of Bricks for Energy
Efficiency Testing of Built-in Electric Ovens for Household and Similar Purposes, Test Methods for Noise
from Household and Similar Appliances: Special Requirements for Vacuum Cleaners, Surface Cleaning
Apparatus Part 1: General Requirements for Test Materials and Equipment, Surface Cleaning Apparatus
Part 3: Performance Test Method for Wet Carpet Cleaning Apparatus; In terms of core components,
Midea participated in the formulation of the national standard entitled Special Requirements for Electric
Door Locks of Electric Automatic Controllers for Household and Similar Purposes, Totally Enclosed Type
Motor for Room Air Conditioner-Compressor, industry standard entitled Electric Automatic Controller
Humidity Sensor, Aluminum Lining Panel Assembly for Household Refrigeration Appliances, Standard
for Domestic Heat Pumps Dryers. In terms of green and healthy technologies, Midea participated in the
formulation of industry or group standards including Evaluation and Technical Specifications for Green
Design Products: Room Air Conditioner, Technical Specifications for Green-Design Product Assessment:
Refrigerator, Technical Specifications for Green-Design Product Assessment: Electric Rice Cooker,
Technical Specifications for Green-Design Product Assessment: Fan, Technical Specifications for
Green-Design Product Assessment: Blender, Technical Specifications for Green-Design Product
Assessment: Vacuum Cleaner, Technical Specifications for Green-Design Product Assessment: Home
Microwave Oven, Technical Specifications for Green-Design Product Assessment: Multi-split Air
Conditioning (Heat Pump) and Similar Units, Technical Specifications for Green-Design Product
Assessment: Air-Source Heat Pump Cold and Hot Water Unit, Technical Specifications for Green-Design
Product Assessment: High Temperature Heat Pump Unit, Technical Specifications for Green-Design
Product Assessment: Air Conditioning for Computer and Data Processing Room, Technical
Specifications for Green-Design Product Assessment: Compressor for Room Air Conditioner, Technical
Specifications for Green-Design Product Assessment: Robot Vacuum, and Requirements of the
Greenhouse Gas Emissions Accounting and Reporting—Household Appliance Manufacturer. With
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regard to “Leader” standards, Midea played a part in the formulation of Green Product
Assessment—Household Electric Appliances—Part 1: Refrigerators, Air-conditioners and Washing
Machines, Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Electric
Fans, Minimum Allowable Values of the IPLV and Energy Efficiency Grades for Multi-connected
Air-condition (Heat Pump) Unit, Split Type Room Air-conditioner with the Function of Breezeless Mode,
Technical Code for the Certification of the Breezeless Cooling Feature of Multi-split Air Conditioner, and
“Leader” Assessment Requirements for Unitary Air Conditioners. In terms of international standards,
Midea participated in the revision of IEC 60436 “Electric Dishwashers for Household Use-Methods For
Measuring the Performance and IEC 60456 organized by IEC/TC59/SC59D, and the performance
standard proposal of IEC/59L NP 63XXX electric rice cooker has been formally filed, while the standard
proposal of IEC 60335-2-15 on electric pressure cooker has entered the formal standard manuscript
inquiry (CDV) stage. The five microwave oven performance standards for IEC 60705 have also entered
the Working Draft (WD) stage; the two national standards proposed by Midea, named Over-the-Air (OTA)
Technical Requirements for Electric Automatic Controller for Household and Similar Purposes, and
General Safety Technical Requirements for Intelligent Voice Controllers, have also been approved.
C. Deepened the channel transformation, further improved the channel efficiency and rebuilt the
retail and ToB service abilities so as to achieve direct connection with customers
Midea is resolute in enhancing vertical efficiency and horizontal synergy efficiency, accelerating retail
growth and retail transformation by focusing on user needs. Through the reform of direct retailing, Midea
has been continuously promoting the "vertical efficiency improvement" of offline channels. More than
90% of the retailers of offline franchise system can place orders directly to Midea for procurement,
achieving the shift from distributors to operators. Midea kept optimizing the inventory efficiency of all
channels and reduced the inventory-to-sales ratio by 20%. The change of organizational structure has
effectively supported the "horizontal synergy efficiency enhancement". Midea has strengthened its
operation center to make it become the “main battlefield”, driven deep coordination among all product
categories, and promoted corporate operations of the operation center, so as to realize the "One Midea"
for all markets and ensure the consistency of user service and experience.
In 2021, online sales as a percentage of Midea’s total sales remained over 45%, and online and offline
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The 2021 Annual Report of Midea Group Co., Ltd.
markets integrated at a faster speed. Based on different levels and characteristics of different channels,
as well as changes to customers’ needs and ways of spending, 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. This mainly involves the following aspects. Firstly, being
customer experience-oriented, it provides just the shopping experience wanted by customers by putting
in place an exclusive store network covering all channels. To be specific, it possesses more than 900
smart home stores for domestic users with house decoration demands. Meanwhile, it has deepened the
cooperation with top home decoration service providers. It has over 2,500 Midea flagship stores in
districts and counties, as well as over 11,000 Midea multi-category stores in towns and villages. Second,
in the retail link, Midea builds an immersive 3D model room for entire home appliances focused on home
decoration users, providing a roaming shopping experience to achieve accurate recommendations and
exclusive intelligent shopping guide. At the same time, focused on the improvement of the product suite
purchase, it builds the service chain and exclusive rights and interests system for home decoration
product suite purchase, driving transformation to integrated services for home decoration + home
appliances, and providing home decoration users with time-saving, cost-effective and worry-free
comprehensive solutions. Third, Midea actively seeks new business opportunities. On emerging
channels such as Pinduoduo, Douyin, Kuaishou, and Xiaohongshu, Midea has refined its product
offering and optimized the marketing and rating system. It also continued to build the operation platform
for e-commerce and promote self-operated core stores on the channels as part of its efforts to drive
consistency and efficiency in operations and polish the DTC capability. Fourth, special campaigns have
been carried out to make product mix breakthroughs. User needs are accurately identified through data
analysis, new measures are taken to drive growth in new product categories, and efforts are made to
improve the smart scenario operation capability. Fifth, post-sales service and logistics experience are
well optimized, including integrated delivery and installation, two deliveries in one day, home delivery
and home pickup service for returned goods. Digitalization of the supply chain and optimization of supply
and demand efficiency are being pursued.
Midea leverages the “Digitization & Intelligence Driven” strategy to be “Direct to Users”, and initiates a
series of business moves in user experience, user operation and user service from user needs and
service scenarios. Based on the underlying data capabilities for user demand insights, Midea can better
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The 2021 Annual Report of Midea Group Co., Ltd.
serve users through user life cycle management, membership and private domain operations to
enhance user loyalty. Firstly, Midea focuses on "user experience" and improves the user experience of
the whole value chain under the guidance of the Net Promoter Score (NPS), with the NPS increasing by
over 25% compared to 2020. In addition, Midea strengthens user operation in daily operation, promotes
the establishment of membership system and private domain traffic, and deeply promotes the
intelligence and IoT of products. By the end of 2021, the cumulative number of registered members
exceeded 110 million. Furthermore, Midea reinforces the building of data platform and commercial data
analysis. Analysis of user consumption behavior data serves as a strong support for business
decision-making.
Midea deepens and promotes the business model change and the digital and intelligent transformation
of the user service system to provide one-stop whole-home smart home appliance service solutions for
users. First, Midea reconstructs the service process from the user's perspective, and redesigns the
service blueprint by covering 18 core scenarios and solving 214 service pain points. Second, Midea
forges ahead with the construction of intelligent interaction, that is, it launched online voice robots for
responding customers' requests, H5 text robots, and IoT-based active guidance function for activation
and troubleshooting, which helped to handle 4 million orders throughout the year with the first-level
failure notice rate of 87%; it also launched the "text + video + voice" customer interactive service prior to
peers with satisfaction rate of 98%, in order to serve customers in complex scenes. Third, Midea rolls out
a cloud platform for digital operations and services to connect service outlets and cover the engineers
and outlets consultation services, and drove efficiency improvement throughout the entire chains by
digital transformation, solving problems over 500,000 with the average response time of 120 seconds.
Fourth, we deepen the change of engineer operation mode by assigning orders online based on big data
intelligence to realize the direct connection of engineers. In 2021, direct allocation of over 42 million work
orders across all categories was fulfilled. Fifth, we continue to introduce new technologies and tools to
empower engineers’ services by comprehensively building an independent learning platform for
engineers. A total of 113 online new courses have been developed and more than 20,000 engineers
have gained multi-category service competence. The introduction of AI intelligent image recognition
technology fully safeguards the quality of installation. Fourth generation of air conditioning intelligent
variable frequency detector was also developed to help engineers to improve service efficiency. Finally,
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The 2021 Annual Report of Midea Group Co., Ltd.
Midea improves the service model to provide better user experience. It has fully realized the
replacement of smart small home appliances with after-sales services, replacing nearly 410,000
products throughout the year with shortened replacement cycle of 3 days.
Transformation of the ToB business model has been further deepened. Based on the Group's five
business segments, the business model has been upgraded from traditional hardware product packages
to scene-based solutions targeting customers in the whole industry, so as to enhance sales and brand
presence on the ToB market. Meanwhile, refinements have been carried out for the existing customer,
product and business structures, thus increasing the profitability of the business value chain. Midea has
enhanced cross-division horizontal synergy, forming a regular special collaboration mechanism for
information exchange, business opportunity sharing, market strategy making, resource allocation and
other aspects. In addition to the traditional home appliance industry, Midea has unfolded coordinated
marketing in the ToB business of the Building Technologies Division, the Robotics & Automation Division,
and the Digital Innovation Business through industry-wide solution development and promotion. In the
vertical sector, by taking the traditional real estate, industry, agriculture, commerce and construction
business as the access point, it continues to expand the cooperative product categories and seize the
incremental opportunities in the existing market, to achieve growth breakthroughs. In terms of
organizational efficiency improvement, Midea is market oriented. By optimizing the organizational
structure and reforming the salary and incentive mechanism, it delivers constant improvements with
respect to organization, personnel, appraisal and incentive, etc., in order to activate organization and
improve efficiency. In terms of business model reform, through comprehensive sorting of existing
markets, industries and customers, it takes the initiative to adapt to the development and changing
trends of each industry, allocates organizational resources based on market demand, improves
professional marketability for different industries, strengthens the building of service provider system,
deeply optimizes supply chain, and builds a LTC-based whole-process value chain. In terms of sales
expansion, the expansion of new industries, new customers and new categories serves as a
breakthrough to achieve business growth and Midea keeps enhancing the professional sales capabilities
in regard with customers from different industries. The ToB business achieved nearly 50% year-on-year
shipment growth in 2021. In addition, Midea continues to beef up operational risk control internally and
externally to ensure the sustained, healthy development of the business.
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Annto, a subsidiary of Midea Group, is a technological innovation-based logistics service provider. It is
committed to providing customers with end-to-end digital and intelligent supply chain solutions. In terms
of internal support and services, under the background of Midea Group promoting the T+3 business
model deep reform, Annto further promoted the logistics reform and improved B2C logistics capacity.
Through big data analysis and data modeling and based on user needs, Annto refines and integrates its
warehouse network across the country and expands the unified warehousing and distribution model to
retail stores. Overall planning of channel inventories and unified operation of warehousing and
distribution boost channel efficiency and provide support for comprehensive standardization and
digitalization of user services. In 2021, Annto established an integrated and smart supply chain platform
for the whole process of production logistics, warehousing, urban distribution, delivery and installation. It
also cooperated with Sino-US Global Logistics Institute of Shanghai Jiao Tong University to establish the
Joint Research Center for Smart Logistics and Supply Chain, generating achievements in route planning
for delivery vehicles, scheduling and controlling of digital manufacturing logistics and other fields. In the
field of production logistics, with the help of four major services and products, namely intensive
transportation, smart VMI, internal logistics and integration of delivery and packaging, and the
development of digitalization and intelligence, Annto promotes the reform of supply chain business of
Midea and the inventory is optimized and becomes visible. Preliminarily, there are fewer needs for
human labors, a higher level of digitalization and more flexibility. VMI centers have been established in
many production bases, providing services to thousands of suppliers at the same time. In the field of
warehousing, equipped with AGV, stackers, circular shuttles and other intelligent devices, the first
high-standard automatic warehouse for heavy cargo was established and went into service in 2021.
Leveraging automatic code scanning, cargo-type testing, Goods-to-Person (G2P), automatic outbound
and other advanced technologies, the warehouse achieves intelligent unmanned warehouse
management. Meanwhile, large logistics distribution centers and thousands of pre-warehouses were
established in more than 140 cities nationwide, with a total storage area of more than 6 million square
meters. In the field of urban distribution, goods can be delivered from one city to another directly via the
less-than-truck-load (LTL) distribution networks. Route planning helps realize optimal efficiency.
Meanwhile, Annto strengthens the cultivation and expansion of end outlets, improving user experience.
In the field of delivery and installation, in 2021, Annto established an integrated delivery, installation and
post-sales platform and integrated online and offline businesses, and integrated sales, logistics,
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after-sales and other processes as well as all links within the after-sales system. It also established a
model that allowed engineers of the platform to manage and pay directly, and standardized and
visualized the delivery and installation process. Currently, the delivery and installation network has more
than 3,000 delivery and installation outlets and over 32,000 professional engineers, covering more than
2,700 districts and counties in China. In 2021, the number of fulfilled orders exceeded 13 million. Tens of
millions of users got delivery and installation services. Annto was also the leader in the field of domestic
heavy cargo delivery service.
In terms of external business expansion, adhering to the business philosophy of building and sharing
with customers, Annto provides strong support for corporate customers in promoting channel efficiency
and sales growth. It focuses on industrial customers and industry in depth, while continuing to strengthen
the construction of core capabilities such as LTL, urban distribution and integrated delivery and
installation to steadily improve customer service experience, thus increasing its market share year by
year. By providing customers with systemic solutions ranging from 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, Annto assist enterprises to transform channels and boost supply chain efficiency as well as
help customers develop continuously. Based on Midea's industry-leading experience of channel
transformation and sound smart supply chain systems and networks, Annto has provided services to
thousands of enterprises, with clients spanning many industries across home appliances, consumer
electronics, food and beverage, maternal and infant, and household necessities and chemicals. In 2021,
a “shared inventory system" supply chain innovation in Midea Group launched by Annto was included in
the list of "Typical Cases of Deep Integration and Innovative Development of Logistics Industry and
Manufacturing Industry" complied by the Economic and Trade Department of the National Development
and Reform Commission. Via “a shared inventory system” covering the whole channel, Annto further
supports corporate customers in establishing a system to monitor the whole value chain operation
indicators to continuously optimize costs and expenses, strengthen risk control capabilities, and provide
data support for business decisions.
D. Promoted “Global Impact”, enhanced localized operations overseas and accelerated the
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cooperative integration of TLSC
Midea further promoted its global business layout to solidify its global competency. It formulated a global
supply cooperative mechanism, strengthened the global manufacturing network and localized
operations overseas, optimized the global logistics and service system, and promoted product
globalization and regionalization. Its overseas business spans more than 200 countries and regions in
North America, South America, Europe, Asia, Africa and Oceania. Meanwhile, guided by the market and
focusing on users, Midea builds a global user research network with foresight. Midea has established an
organization for local consumer and market observation, built a digital marketing ecosystem,
implemented product lifecycle management based on the changing trends of user needs and
consumption habits around the world, built user touch points throughout the entire chain, and
continuously optimized and matched the retail operation system for the user-growth market. It has
reconstructed the overseas sales operation system, continuously deepened the user-oriented digital
transformation, and established end-to-end procurement as well as execution processes, tools,
operation mechanisms and information connection for sales orders to achieve online and visual
overseas planning and order execution. Midea exerted great efforts to build the intelligent overseas
commercial system, constantly deepened its data-based business decision-making capability, and
created a digital platform to facilitate mobile operations overseas. 23 overseas branches were covered.
A total of 45 key indicators were included, such as sales, finance, supply chain, products, and
e-commerce. Furthermore, real-time online business, data transparency and sharing, and early risk
warning have become available for better operating efficiency in the key part of the overseas business.
In 2021, Midea made headway towards the Global Impact strategy that has focused on the United
States, Brazil, Germany, Japan and ASEAN, and initiated a special campaign for overseas branding. It
not only clarified specific plans for user segmentation, product maps, brand matrices and localization
infrastructure construction in strategic markets, but also invested more resources in user insight,
branding, product innovation and organizational consolidation to ensure the implementation of the
relevant strategies. It kept improving the distribution of overseas channels, being customer-oriented and
promoting the transformation of overseas channels into retail terminals. Midea added more than 43,000
overseas own brand sales outlets, with a cumulative total of over 150,000, and constantly promoted
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channel flattening to improve channel data transparency. By building an overseas data platform and
introducing digital decision models and algorithms, it has improved cargo turnover efficiency. Midea
achieved online scene-based, video-based, and livestreaming operation, as well as improved channel
operation efficiency and capability, by experimenting with full direct operation, a shared inventory system,
and shared warehouses, in addition to piloting the DTC model. Multiple product suites and key single
products were released for the overseas online markets, which effectively enhanced customer royalty in
the post-pandemic era. Midea has steadily increased its investment in the overseas e-commerce
business. It established overseas e-commerce companies and formed special teams for the overseas
e-commerce IT system, improved the e-commerce organizational structure by introducing professional
talents, and developed a digital system in line with business needs. In 2021, it achieved 65%
year-on-year growth in overseas e-commerce sales, with an ever-increasing proportion of e-commerce
sales. More than 40 Best Seller products were available on the e-commerce platforms in the United
States, the United Kingdom, Germany, Italy and Brazil, with eight sub-categories ranking as the top three
sales on Amazon in the United States. Furthermore, it has also gradually improved the Asia-Pacific
regional e-commerce organization and achieved year-on-year growth of 145% during the annual
e-commerce promotion in Southeast Asia. With accelerated expansions of e-commerce channels, Midea
has plugged into local e-commerce platforms in more than ten European and American countries in 2021.
Own branding was strengthened overseas. It expedited the pace of global breakthrough of its own brand
by launching a special project for branding in North America. It strengthened its own brand penetration in
key markets in multiple dimensions, including offline terminal retail experience, guide team development,
social media campaign and whole-house product suite marketing. Midea reaches millions of overseas
target users through sponsorship of well-known football clubs and sporting events in Europe, North
America, South America and Southeast Asia; it continuously improves brand exposure and invests in
digital marketing to escalate promotion in local market and further enhance Midea's global presence
through marketing campaigns on live broadcasting platforms, social media, independent websites and
search engines. Overseas platform building was improved to promote overseas user growth projects. A
digital ecosystem of user growth was constructed with six major touch points: user co-creation, user
services, brand official website, social media, overseas e-commerce and the MSmartLife App. With the
best modes of overseas user data storage, content iteration and operation explored, an overseas
customer data platform was created to promote overseas private domain traffic; the overseas
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manufacturing layout was further improved. To accelerate the model of “China-Based Supply for the
World + Local Supply”, Midea's new production base for refrigerators, washing machines and water
heaters in Egypt has put into operation and will cover markets in the Middle East and Africa; the new
production base for air conditioners in Thailand has completed test run and will further improve the
manufacturing layout in Southeast Asia. A new manufacturing base was launched in Brazil to cover
several key categories. In addition, the domestic refined manufacturing system was introduced and
promoted in the overseas manufacturing bases, and overseas talent development was enhanced with
respect to lean management, with an over-20% increase in manufacturing efficiency and an
improvement in global production and delivery capacity. The constantly refined EHS management
system provides firm assurance for the safe and stable operation of the overseas manufacturing bases.
Global logistics and service system was enhanced. On the one hand, it deepened cooperation with
global strategic partners, and created a new mode of international logistics cooperation to effectively
ensure the supply of logistics resources during drastic market changes. On the other hand, it improved
the global service capability. Midea optimizes service networks of overseas iSERVICE system and cloud
call center platform, and master data management of global outlets and service projects, and continues
to construct fast-response and proactive global service system. Midea has successfully expanded the
global service system to Indonesia, Malaysia, Thailand, Singapore and other key markets. The cloud call
center platform was rolled out in many countries successively, and Midea Spare Parts Center has been
put in place to build a global spart parts supply chain management network and drive digital and
intelligent transformation, with an aim to ensure the timeliness and coverage of spart parts supply for the
overseas business. The unified barcode of the whole value chain of production, logistics, sales and
post-sales service has greatly improved service efficiency and user experience. Digital intelligence
supported the development of overseas business, by pushing forward the online and automation of the
whole business process, covering the front-end optimization of business and financial processes, and
the new product launch process, as well as the back-end consolidation of the online management of
inventory and post-sales, in order to better visualize the whole process. Based on the diversified channel
structure and business characteristics of overseas markets, it developed an overseas channel
collaborative platform to realize online business processing for customers of different channels and
improve overseas channel manageability.
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In 2021, the COVID-19 pandemic has remained a serious impediment to the Japanese market. The
operation was further affected by rising raw material costs and exchange rate fluctuations. TLSC
continued to deepen the synergy with the Group's product divisions in the value chain to ensure the
supply of products despite the pandemic and tight sea freight resources, while safeguarding the safety of
employees. Measures such as price adjustments through the launch of new products and enhanced
sales activities, improved product mix, increased retail market share and tightly controlled non-operating
expenses, so as to address the impact of rising product costs and other factors and ensure the
accomplishment of the operating objectives and profit growth. The retail sales of the Japanese home
appliance market declined 3% compared to 2020, while that of TLSC bucked the trend and grew by 9%.
Its market share of six major product categories combined has increased to 12.5%, with the respective
market share of air conditioners, refrigerators, laundry appliances, microwave ovens and rice cookers
continuously growing. Organizational structure and business model are transformed to adapt to market
changes. Online sales team is further strengthened with the proportion of online sales consistently
increasing. Domestic sales, post-sale organization system and network distribution are integrated and
optimized to enhance organizational efficiency and vitality. 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. By the end of
2021, the business of TLSC has covered more than 70 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
Focusing on “Digitization & Intelligence Driven”, Midea achieves changes in the format of products,
drives hardware sales through software sales and intensifies contents and services; and achieves
changes in business methodology, promotes reforms in research, production and sales, and fosters
disruptive changes in existing business models through an Internet mindset and Internet tools. Midea
has promoted business digitization and established a data business system. After years of digital
practice, focusing on the development trend of industrial digitalization and the characteristics of industrial
digitalization, Midea has established its SMART data business system. With process changes
throughout the whole chain of data business, data governance to ensure data specification and
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availability, high-value data assets constructed relying on the public layer, data products and data
applications have been created with data technology.
In the process of R&D, Midea has constantly focused on the strategy of “Technology Leadership”. In the
digital and intelligent planning, aimed at data such as short-term market hotspots, mid- and long-term
market trends and user research and feedback, a digital planning platform was established to achieve
the integrated analysis of big data and small data in order to tap into user needs. Through digitalization,
Midea quickly transformed its technology capability into popular products of high user perception.
Dozens of new products have been created on the platform up to now. In the digital intelligent
development, the first year of digital simulation of Midea was launched. The unified digital simulation
platform and the simulation talent system of Midea were established, and intelligent laboratories were
built to realize the automation of testing. The digital R&D platform was built, and industrial software
platforms in R&D such as GPM and MPLM were released and gone live in all R&D units to drive the
transformation of efficient collaborative R&D mode. In the process of manufacturing, Midea has stepped
up the development of 5G+ Industrial Internet of Things and launched the construction of several
factories with 5G fully connected. It has completed the full coverage of the 5G network in eight parks of
five product divisions, boosted the large-scale application of digital technologies such as 5G + AI and 5G
+ AR in quality management and won the fourth China Quality Award, with an evident improvement in
product quality. In green manufacturing, based on the Industrial Internet of Things Platform, Midea has
promoted the networked and intelligent upgrade of the energy management system. In the production
plan, it achieved multi-constraint, multi-objective and multi-version scheduling schemes by a
self-developed intelligent mixed-flow scheduling algorithm, which steadily improved production efficiency,
with the planning and scheduling efficiency improved by 75% and the factory resource allocation
efficiency improved by 8%. In the process of warehousing and distribution, the solution scene for the
overall supply chain has been supported by T+3 plan connection, direct delivery, unified warehousing
and distribution as well as shared inventory, to materialize the core competitiveness of supply chain and
logistics services such as national integration services of warehouse distribution logistics, online and
offline BC integration, delivery and installation integration. In addition, iterative upgrading was achieved
via IoT, ultra-wide bandwidth (UWB), 5G, blockchain, big data, intelligent hardware, and other technical
applications to shorten delivery time, improve efficiency and provide a robust guarantee for the
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implementation of Midea’s strategy of “Direct to Users”. In the process of marketing, Midea has driven
the “Direct to Users” strategy with the “Digitization & Intelligence Driven” strategy, adhered to the
customer-oriented principle and focused on building a digital, intelligent, personalized and open Midea
Cloud Sales platform, which has supported the retail reform, C2M model, unified warehousing and
distribution, direct-management and direct-payment services for engineers, and intelligent analysis of
big data to further enhance the digital intelligent operation capability and platform operational level of all
channels and the whole value chain. Meanwhile, the membership system jointly established with retail
stores has attracted more users, encouraged them to take part in member activities, improved buying
experience, and boosted user royalty. Specifically, offline members have covered more than 1,300
stores and the sales volume of members translated from Enterprise WeChat reached around RMB10
million. In the process of after-sales service, the after-sales service reform has been steadily
implemented to intensify users’ service experience. Midea has taken the lead in the industry in user
reputation on third-party e-commerce platforms, with service satisfaction close to 99% and service
professionalism hitting 99.2%. Besides, it has also focused on digital intelligent services, with more than
2.7 million annual work orders handled by voice robots and over 20,000 customers served by video
customer services in 2021. The convenient service, package purchasing and installing, was
comprehensively pushed forwarded to forge engineers providing multi-category service. For set work
orders, the completion rate of the same engineer reached 99.3%, and sales by engineers contributed
more than RMB2.3 billion, with a year-on-year increase of 130%. Midea has strengthened the
transformation of direct-management and direct-payment of after-sales outlets and engineers to
constantly enhance the service efficiency, with the work order direct allocation rate of more than 70%,
the percentage of direct payment amount accounting for approximately 90%. During the operation and
management process, in-depth exploration is made in the best digital practice of talent development,
and the establishment of talent analysis models, talent label systems and the talent portrait system is
accelerated to lay a solid foundation for the intelligent application of human resources. Besides, aimed at
standardizing the management procedure and improving operating efficiency and service quality, we
have made continuous efforts to improve the employee management system. Midea has realized digital
decision support, providing efficient and rich digital services and digital self-service analysis tools by data
bank to improve data support for the whole value chain. By upgrading the mobile infrastructure, mobile
applications are promoted in marketing, supply chain, etc. More digital scenes are created, and
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decision-making efficiency and the capability of comprehensive digitalization is enhanced. With respect
to overseas operations, with the “International 632 Project” as the core, Midea continues with the digital
transformation of its overseas business. The global order processing mechanism was launched to
connect overseas marketing and manufacturing in an effective and automatic manner. To support the
implementation of the strategy of “Global Impact”, multiple key programs have been launched, including
overseas e-commerce platforms, empowerment of overseas channels and retail stores, the T+3 system
for overseas operations, the global capital platform, integrated global services, etc. Further, automation
was promoted in overseas marketing to as a way to increase efficiency in the whole overseas value
chain, and boost global competitiveness under the new circumstances.
Additionally, in response to China’s goals with respect to “carbon emission peak” and “carbon neutrality”,
Midea has beefed up energy saving and emission reduction by relying on its strategy of “Digitization &
Intelligence Driven”. On one hand, M.IoT has connected each key node of energy use in manufacturing
and production planning systems to enable transparent, visual and controllable energy efficiency
management. Also, digital technologies have been adopted to upgrade energy management in the
manufacturing process. So far, the digital transformation of energy efficiency management has been
applied to nearly 20 factories, reducing energy consumption for the production of a single product by
15% as well as supporting upstream and downstream companies and external customers in carbon
emission reduction. On the other hand, scene-based innovation and application extension in smart home
featuring low energy consumption can help save energy and reduce emissions in the process of product
use.
Midea has built a new data platform with manufacturing characteristics. By integrating large-scale offline
computing, streaming computing, graph computing, data mining, machine learning, neural networks and
other advanced big data technologies, it has connected the Group's research, production and sales data
and integrated the Group's smart home, intelligent manufacturing, smart buildings, robots and other
multi-industry, multi-terminal and multi-category data. With the integration of online and offline data in
addition to product and service data, it has built core data assets with the core as B-end and C-end
customers, to improve the "User One_ID" system and achieve asset-based, real-time and service-based
data. In terms of asset-based data, Midea has improved the methodology of data construction and
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comprehensively built core data assets such as user domain, marketing domain, IoT domain and supply
chain domain, and significantly improved data access and data construction. In the aspect of real-time
data, through large-scale stream computing, data delay has been reduced to a millisecond level,
covering more than ten business areas. Data timeliness has been improved to materialize cost reduction
and efficiency improvement, with above 20% and above 50% respectively in some areas. As for
service-based data, more stable, efficient and flexible data service has been built, and the stability of
data service has been increased to above 99%.
Midea has comprehensively pushed forward the implementation of IoT technology platform, integrated
the advantageous IT and R&D resources, and continuously deepened the PaaS technology platform to
support departments and entities such as IT, IoT, Building Technologies, Midea Cloud, and Annto,
completing the deployment of domestic and overseas public and private clouds, and materialize the
landscape of global multi-data centers operation and maintenance. As at the beginning of 2022, PaaS
Technology Center has empowered 180 systems, with the number of service accesses increased 3
times. The total amount of API requests of PaaS components has increased tens of times, up to 6.75
billion times. The efficiency of internal system technology platform construction has increased by 10%
and the server cost has reduced by 20%. Moreover, Midea has built a self-developed platform of
container cloud and developed an industry-leading containerized business form, and the total number of
IT systems connected to containers reached 138, with over 85% of the Group's microservice systems
containerized. In the future, it will build elastic and stable container cloud architecture in order to
empower the Midea Cloud Sales platform, reduce the cost and time spent on the self-developed platform,
and improve system stability and reliability.
Midea has steadily enhanced its artificial intelligence (AI) technologies and further promoted the
application of intelligent technologies. In 2021, Midea AI Innovation Center, with an R&D team of over
200 people, established AI technology R&D networks covering China and the United States to achieve
continuous innovation in AI core technologies and implemented the applications in four major fields
respectively, including home service robots, smart home AI empowerment, AI home brain, and edge
intelligence, driving the application of products of AI technology in smart home. Among them, the voice
full-chain technology has gradually been materialized in the voice front-end, speech recognition, natural
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language comprehension, speech synthesis and other fields. Besides, industry-leading innovative
technology combinations such as the mix of dialects, intelligent wake-up, people discrimination by the
voice, and proactive recommendations were also built. The independently-developed technologies
related to voice/language have been applied to five formats of products, 11 product categories and 34
SKUs, and accumulatively serviced 1.1 billion user requests. Midea has achieved technological
breakthroughs in computer vision. In virtual human technology, the full online real-time synthesis from
two-dimensional images to three-dimensional images of the person has been materialized and the
industry-leading 2D camera-based technology which is driven by live action and automatically generates
emoticons has been developed. In the scene of smart home, a centimeter-level semantic map has been
achieved and the low-cost standardized visual recognition hardware module has been successfully
developed. Furthermore, the Midea team won second place in Track 2 at ICCV 2021 DeeperAction
Challenge in the world.
F. Promoted the strategy of “Digitization & Intelligence Driven” and accelerated the
implementation of “Comprehensive Intellectualization” to “Customize a Smarter Midea Life for
You”
In 2021, Midea upgraded the users’ smart life, established a C2M digital platform for whole-house
intelligent solutions, completed the platforms of Midea Cloud Sales, Midea Home Delivery and Midea
Cloud Shelves as well as developed personalized whole-house solutions, which were available for users
to place orders with one click and select SKU or product mix for different scenes at will. The whole-house
intelligent terminal of Midea covered nearly 700 stores in China, and meanwhile, 100 stores rolled out
the project of experience pavilion for whole-house smart home remodel to provide one-stop whole-house
intelligent solutions for users. The sales of the solution for the whole-house space scene reached
180,000 orders in 2021, achieving a trading volume of more than RMB14 billion. As at the end of 2021,
the MSmartLife App has cumulatively launched over 300 smart scenes, of which the execution exceeded
280 million times during the year. The number of connected Midea smart devices has increased by over
96% year on year, with 20% of families connected to multiple devices. In addition, the international
version of the MSmartLife App now supports Thai and Vietnamese languages to back up the
intelligence-based development of key overseas countries.
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M.IoT has built a business value chain of Midea Smart Home, which is based on the life cycle of user
experience and is customer-oriented, to provide users with whole-scene experience services and more
quality ecosystem value-added services to create a pan-MSmartLife App ecosystem that focuses on
“Customize a Smarter Midea Life for You”. It continues to turn a new page to meet the needs of
customers. Midea has furthered in-depth cooperation with Huawei. With more than 230 types or 25
categories of HarmonyOS-based household appliances, it has made a leap from SKU cooperation to
whole-house intelligence. In addition, it has reached strategic cooperation with Tencent Xiaowei in Smart
Home. It can make the AI voice control to mainstream intelligent household appliances of Midea a reality
through Tencent Xiaowei assistant. Moreover, Midea also has carried out strategic cooperation with
China Electric Power Research Institute (“CEPRI”) and rolled out household appliances equipped with
the energy-saving program of CEPRI to achieve the online regulation of load resources and two-way
interaction with the power grid, which promoted the efficiency improvement in addition to the safe and
stable operation of the power grid, and proactively fuel the national strategy of “carbon emission peak”
and “carbon neutrality”. Additionally, it has further deepened cooperation with overseas companies such
as Google, Amazon and Apple, and continued to optimize the voice reciprocal experience of products to
achieve multi-equipment, cross-brand, cross-platform and diversified service linkage. M.IoT open
platform launched “Scene Configuration Platform” to further improve the development and access
efficiency of scene linkage capabilities of scenes of all categories, with 78% of smart devices supporting
scene linkage capabilities as at the end of 2021. Based on the health research results and big data
analysis capability accumulated by Midea for many years, Midea has been able to provide users with
personalized and comprehensive solutions for healthy sleep, diet and other scenes with Midea products
as the core.
Based on users, environment and equipment data, Midea has created the “Air Cloud Housekeeper”
intelligent algorithm function covering multiple products, which can achieve “cloud management” of
devices for users through intelligent algorithms, meeting the needs of users in different scenes. Also,
Smart Refrigerator AI Fresh-keeping Cloud Housekeeper has been launched to further iterate the
algorithm of keeping food storage fresh, and to make adjustments in view of the users' preferences and
ambient temperature, thus realizing precise temperature and humidity control. Smart Cloud
Housekeeper points to the four frequent theme scenes of "air", "water", "diet" and "cleaning", steadily
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optimizes user experience and achieves the energy-saving goal. It adds the reminder function for
appliance failure and service status updates, as well as generates reports with appliance operation
based on data analysis to facilitate energy-saving control. In 2021, the monthly active users of Midea
Smart Cloud Housekeeper grew more than 450% year on year. The APP has provided more than 6
million Midea users with more energy-saving, more comfortable, more convenient, safer and healthier
digital family lives. Dozens of patent applications for innovative technologies have been submitted.
Meanwhile, the “Electric Heating Cloud Housekeeper” has also been accredited with the first VDE
energy-saving certification in the industry, saving up to 40% of electricity for users.
With the protection of user privacy and data security at the core, Midea has continuously built and
improved the Midea smart home security system that is in line with the standards of the domestic and
overseas industry, which has been CNAS and ISO 17025 certified. In early 2021, M.IoT cloud platform
and the MSmartLife App passed the assessment for classified protection of information system security.
In October 2021, China Cybersecurity Review Technology and Certification Center issued the industry's
first “IT Product Information Security Certification (EAL4+)” certificate for the Smart Home
Communication Module of Midea. In the same period, Midea successfully passed the system
certification of the Cross Border Privacy Rules (“CBPR”) of Asia-Pacific Economic Cooperation (“APEC”)
and was accredited with the certificate issued by the Infocomm Media Development Authority (“IMDA”)
of Singapore. Besides, Midea was also accredited with the security certificate of Cloud Security Alliance
(“CSA”) issued by the British Standards Institute (“BSI”) and the international standard certificate for
Compliance Management in Relation to Antitrust and Data Protection ISO37301:2021. As such,
M-Smart is considered industry-leading in terms of data security.
Midea redefines the intelligent standard of the industry and boosts the improvement of user connection
experience through technological innovation. In May 2021, M.IoT issued the White Paper on Distribution
Network Technology of "One Touch Smart Link" Appliance which redefines the standard of "link". Midea's
household appliances are equipped with the "Automatic Discovery" and "One Touch Smart Link"
functions, which realizes user insensitive distribution network and improves user experience. At the
same time, Midea's products can be interconnected with OPPO cell phones to achieve the underlying
communication protocols, increasing the success rate of network connection by 35%. The MSmartLife
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App has launched the network connection function “household appliances find friends”, which refers that
household appliances connected with a network can materialize a one-key network connection for
household appliances yet to be connected, to avoid repeated operations and improve the experience of
network connection. Furthermore, the international version of the MSmartLife App also supports one-key
authorization in Alexa and users can control smart devices through the Alexa account with one key
connection. Midea has released the industry’s first whole-scene home IoT operating system developed
based on OpenHarmony 2.0, which can provide new solutions for cross-brand and cross-category
products in terms of interconnection, autonomous collaborations between devices, cloud-terminal
integration, AI interaction empowerment and other issues, reduce the connection cost of ecosystem
products, optimize collaborative innovation between industry chains, and provide developers and
partners with a more convenient development environment and a more powerful application ecosystem.
Midea has participated in the formulation of the international standard—Standard for General
Requirements of Evaluating Intelligent Performance of Household and Similar Electrical Appliances—by
the Institute of Electrical and Electronics Engineers (“IEEE”), and proposed a more instructive grading
standard for intelligent household appliances L0-L4, which provides a grading of the level of household
appliance intelligence with user-side and product-side and fuels the standardized development of the
household appliance intelligence industry. In October 2021, Midea also innovatively proposed the
concept of “meta-home” which combined physical space, Internet space and virtual space. Based on
basic technologies such as perception, communication, AI, big data and virtual reality, it could achieve
the digital home twins, provide a new IoT application as well as interaction experience and allow users to
enjoy more in-depth intelligent services.
G. 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
COLMO serves high-end users with high-end smart products. Its overall sales reached over RMB4
billion in 2021, up 300% year on year. In terms of products, after three years of development, COLMO's
high-end smart products have covered air conditioners, refrigerators, laundry appliances, kitchen
appliances, water heaters, microwave-steamer-oven combos and other categories, and formed the four
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product suites of BLANC, TURING, EVOLUTION and AVANT, preliminarily establishing a leading
high-end smart life solution in the global home appliance market. In 2021, COLMO launched the
TURING Whole-house suite, the EVO Interstellar suite, the AVANT My Treasure suite and the Star Atlas
suite to satisfy the pursuit of high-end smart scenes and pioneering designs by high-end users, further
enriching and improving scene solutions. With a vision of "providing global high-end users with an
all-inclusive high-end smart life solution", COLMO started the evolution and upgrade from high-end
smart products to high-end whole-house smart systems in 2021, took the lead in proposing high-end
intelligent control services centered on "Villa Intelligence Expert", and initially sketched a higher-end
"intelligent control of the whole house" era. The COLMO products have won 14 international awards
including the iF Award, the Red Dot Award, the IDEA Award and the PIN UP Award, covering air
conditioners, refrigerators, washing machines, kitchen appliances and other products. In terms of the
brand, as the promoter and leader of the COLMO Lifestyle, COLMO continues to cooperate with IPs in
the fields of culture, film and art to inspire high-end lifestyles with brand culture, and to present insights
and thought on minimalist aesthetics and the COLMO Lifestyle in a multidimensional manner. The brand
has cooperated with Ma Qingyun and his father Ma Boqian to film the micro documentary Less is More,
launched the second season of Life Evolution, and worked together with director Jia Zhangke to create
Behind China: Meeting the 1%, constantly leading the high-end lifestyle with "rational aesthetics". In
terms of the market, COLMO has served more than 330,000 high-net-worth customers around the world,
of which more than 16,000 have purchased 5 or more items. According to the data from AVC, the
proportion of COLMO products in the high-end market has increased significantly in 2021, with
floor-standing air-conditioners constituting about 36% of the market, wall-mounted air conditioners and
water purification products above 20%, and front-loading washing machines close to 15%. In terms of
sales channels, COLMO has been providing better whole-house smart experiences for high-end users.
In 2021, COLMO further expanded the whole-house channel by setting up more than 300 experience
halls and 40 experience pavilions. At present, nearly 7,000 stores and outlets have been arranged in the
domestic market.
In 2021, 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 continued focusing on exploring the potential of young users. Centered on product
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innovation, WAHIN deepened the brand marketing towards the young generation and spread the brand
in different cultural circles with the virtual character "WAHIN Girl" being the spokesperson and a slogan
of "It's your turn, young man!" Through innovative designs with a more youthful vibe, combined with a
more intelligent user experience, the brand has made full efforts to promote various categories such as
air conditioners, washing machines, refrigerators, kitchen appliances and small household appliances.
WAHIN reported revenue of more than RMB5.5 billion, an increase of over 200% year on year. During
the "618" promotion, WAHIN ranked among the top ten in the Tmall home appliance industry, and ranked
fifth in sales on JD.com. WAHIN upgraded the digital remote controller and turned a new page of digital
remote control in the air conditioning industry. During the "618" promotion, "WAHIN Girl" same series of
air conditioners was launched, the brand exposure exceeded 120 million UV, and nearly 200,000 sets of
this series were sold. Sales of WAHIN HA Series Wall-Mounted Air Conditioner exceeded 50,000 units in
both the "618" promotion and the “Double 11” sale. Sales of the WAHIN 35HE1 product exceeded
RMB100 million in the "618" promotion. During the "Double11" sale, sales of the WAHIN air conditioning
products ranked among the top five on Taobao and its related platforms. WAHIN launched an ultra-thin
washing machine during the "618" promotion, which became a hot-selling item. Thanks to marketing
models such as exposure through livestreaming among youngsters, the product sold 3,000 units in the
whole network on the same day and RMB10 million for the whole month. During the "Double 11" sale,
the sales of WAHIN washing machines reached over RMB50 million. The brand also launched the
Dazzling Blue refrigerator collection, which enabled it to unify the visual design language, achieve rapid
growth and improve the overall sales structure. During the "Double 11" sale, the sales of the products
reached over 4,700 units, thanks to new marketing methods such as cross-field interactive livestreaming
and scene-based content recommendation. During the "618" promotion, the short video of WAHIN
refrigerator flagship store entered the Top-5 list of T-mall brand short videos. WAHIN Kitchen Appliance
launched the WAHIN-dimension smart appliance suite, covering kitchen and bathroom appliances such
as electric water heater, gas water heater, range hood stove, dishwasher and water purifier. With the
fashionable color matching of orange and blue as well as the new experience of smart interaction,
WAHIN kitchen appliance led the trend of household appliances by catering to customer needs for
diversified scene experience. Sales of various categories were outstanding during the "618" promotion.
In addition, WAHIN Vie6 8-set Dishwasher ranked first in the network sales of SKU. WAHIN's built-in
products have also given a striking performance in 2021, with sales increasing by 100% year on year. In
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2021, WAHIN continued exploring sales channels for its small domestic appliances on platforms such as
JD.com, Tmall and Douyin, and promoted the development of products such as the foldable Little Sun
which enables artistic space usage, and the circulation fans for both table and floor use.
H. Seized market opportunities amid domestic and international circulations, responded to
China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological
breakthroughs and innovations, and kept improving the ToB business landscape
In 2021, the Electromechanical Business Group has been transformed into the Industrial Technology
Business Group. With the vision of "Technology Drives the Whole World" and the power of technological
innovation to support the global industrial development in the new era, the Industrial Technology
Business Group is dedicated to becoming the world's leading solution provider in intelligent
transportation, industrial automation, green energy and consumer appliances. The Industrial Technology
Business Group will sprint for the revenue target of RMB100 billion within five years. It has established
the Industrial Technology Research Institute and a strategic development organization in 2021. It
focuses on both independent development and acquisitions, and improves the technology, product and
market structures in four major areas. A complete industrial chain has taken shape, covering information,
control, drive, and execution. Meanwhile, it continues to increase investments in the development of key
and cutting-edge technologies. During 2021, it invested over RMB1 billion in R&D and introduced 400
more R&D personnel, in addition to greater effort made in the introduction of senior experts in the
industry. The Industrial Technology Business Group made constant efforts for consumer appliances and
consolidated its leading position in the industry. According to data provider ChinaIOL, in 2021, the unit
sales of residential air conditioner compressors surpassed 100 million units, up 20% year-on-year and
accounted for 42% of the global sales, representing the largest market share across the world. The unit
sales of refrigerator compressor increased by 13% and represented 13% of the global sales, thus
ranking at the forefront of the industry. The unit sales of motor for residential air conditioner and washing
machine accounted for 40% and 20% of the global figures respectively. The domestic market share of
in-car air conditioner compressor has doubled to 25%. Midea continues with digital and intelligent
transformation to deal with workforce challenges in the future and keeps expanding and improving its
capacities. The Foshan Xingtan Base was newly established to make a forward-looking layout in
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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 and a world-class
“Lighthouse Network” factory. Hitachi Compressor (Thailand) Ltd. (HCTL) was acquired and the
integration work was steadily improved. It has significantly increased the production capacity of
refrigerator compressor and improved the global supply of core components. In terms of product
technology innovation, the three R&D projects of "Research and Industrialization of Key Technology for
New High-efficiency Inverter Compressors", "Research and Application of Pressure Difference Start
Technology for Rotary Compressors" and "Research and Industrialization of Key Technology for New
Generation Variable Frequency Motor System for Household Appliances" of the Industrial Technology
Business Group passed science and technology appraisal held by China National Light Industry Council
and was recognized as “Internationally Advanced”. The Industrial Technology Business Group puts more
resources to core components of new energy vehicles, and develops core components of two-wheeled
electric vehicles. In May 2021, the three major product lines of drive system, thermal management
system and auxiliary/automatic driving system were put into operation, and the five auto parts, i.e. drive
motor, electric water pump, electric oil pump, electric compressor and EPS motor, were officially
released. It has also developed the groundbreaking rotor electric compressor innovatively adopting
natural refrigerant CO2 which has the features of high efficiency, low noise, and light weight, and
achieved the high-efficiency refrigeration and low-temperature heating, increasing the service life of heat
pumps by 20% compared with traditional ones. These products have raised extensive attention and are
recognized by the market. The Business Group has defined the development path of "industry marketing
& technology sales & regions" in the field of industrial automation, proactively promoted the
transformation of its marketing model, and released a series of new products and applications. Among
them, the linear drive CDLB compact linear module has achieved a localization rate of more than 50% of
the parts, and led the race between peers in performance with the positioning accuracy from 10μm to
2μm and the steady acceleration from 0.3g to 1g. The BDHDE rotating servo system has realized the
pre-entry function of electronic nameplate parameter and EC function which simplify the operation and
management of the product for customers. The R-series servo motor has advantages of 8000rpm rotate
speed and short motor length, which has a wide range of technical applications. The Business Group
has also introduced the Codesys Controller Programming Platform, which is the world's leading IDE
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platform applying open programming language in PLCopen standard and can seamlessly switch
between controllers of notable brands. In addition, SERVOTRONIX has been awarded the title of
"CDDIA Annual Influential Linear Driver Brand" by China Direct Drive Industrial Alliance (CDDIA) for
three consecutive years. In the field of new energy, the Industrial Technology Business Group provides
customers with low-carbon, digital, customized one-stop energy solutions based on its industry-leading
high-voltage variable frequency drive products in intelligent micro-grid, energy storage, and SVG, which
can be applied to centralized scenarios such as power plants, as well as distributed scenarios such as
factories, schools and hospitals. Meanwhile, inspired by the concept of green and sustainable
development, it actively implements the national dual-carbon strategy, and lays out products and
businesses related to new energy storage in the field of power generation, grid, load and storage by
virtue of nearly 20 years of power and electronics technology as well as the continuous talent
introduction. Additionally, in the field of consumer appliances, the Business Group puts more resources
in product lines of MCU, IoT, power supply and power chip. In 2021, it produced more than 10 million
chips, and gradually expanded its chips business into the industrial control and automobile industry.
As a leading manufacturer of core components, the Industrial Technology Business Group has won
many industry awards. For example, the relevant patented product technologies won six Excellence
Awards at the 22nd China Patent Awards. The project of "New Sliding Vane High Efficiency Compressor
Technology Research, Performance Evaluation and Application" won the “2020 China National Light
Industry Council Technology Progress Award (First Prize)”. "Ultra-efficient Variable Frequency Rotary
Compressors" and "New Generation of BLDC Motor and its Smart Controller for Front-loading Washing
Machines" were both awarded the 2021 AWE Core Chip Award. "New Generation of BLDC Motor for
Ultra-efficient Air Conditioners" and "Rotary Compressors with Pressure Difference Start Technology"
won the Gold Spike Award of China Household Electrical Appliance Industry Chain Conference. "Rotary
Compressors with Pressure Difference Start Technology", "40 High-efficient and Wide-range Variable
Frequency Scroll Compressor" and "BLDC Motor for Ultra-efficient Commercial Air Conditioners"
respectively won the Innovative Product Awards of 2021 China Refrigeration Expo. And “R410A Jet
Inverter Heat Pump Compressors” was awarded the Innovative Product Award of 2021 China Heat
Pump Exhibition. In addition, "8HP Variable Frequency Enhanced Vapor Injection (EVI) Rotary
Compressors" won HAPE 2021 Innovation Award. Besides, the project "Research and Industrialization
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of Key Technologies of New-structure Compressor for Low-temperature Super-heating" won the first
prize of Science and Technology Progress Award of Guangdong Light Industry Council; the five products
in series of air conditioner compressors, refrigerator compressors and air conditioner motors obtained
the "Low-carbon Energy" certificate at the 2021 Development Conference of Eco-friendly Low Carbon
Technology; the home appliance parts brand GMCC was granted the title of "Leader Brand of 2021-2022
Air Conditioner Compressor Industry" at the China Air Conditioner Industry Symposium; GMCC and
Welling also won the "Golden Wisdom Award" and the "Top Ten Supply Chain Product" at the 2021
Development Summit of China HVAC Industry for the first time.
In 2021, Midea HVAC & Building Technologies has been reformed into Midea Building Technologies.
After the upgrade, Midea Building Technologies has been dedicated to the construction of a digital
platform, and supporting plentiful, changeable scene groups as well as flexible, personalized digital
experience by "building facilities + digital technology + industrial ecosystem", by which it will facilitate the
logistics, information, feeling and energy flows to provide an overall building solution of SMART IN ONE.
In terms of market performance, Midea Commercial Air Conditioner has continued to rank first with
respect to domestic market share according to the data monitored by Industry Online and the
Electromechanical Information of Commercial Air Conditioner Market in 2021. In terms of marketing,
Midea Building Technologies provides industry-specific integrated solutions to customers in various
fields. For example, at the first China Architectural Science Conference and Green Smart Building Expo,
it presented comprehensive solutions for buildings in typical scenes such as smart rail transit, smart
hospital, business complex, data center and smart plant; at the 22nd National Hospital Construction
Congress and China International Hospital Construction, Equipment and Management Exhibition, it
presented the "Solution of Midea Smart Hospital LIFE Flow". At the 61st National Pharmaceutical
Machinery Expo (Fall 2021) and China International Pharmaceutical Machinery Expo (Fall 2021), it
released the comprehensive solutions for the pharmaceutical industry. In terms of product breakthroughs,
MeiKong, which is under Midea Building Technologies, has released the new brand "KONG", Building a
Brand-new LIFE: China Building Automation White Paper, the strategy of KONG C3 SI, and other core
products in Shanghai during 2021, which injected burgeoning power into China's building automation
industry. In the same year, Midea Building Technologies produced thousands of centrifuges with a total
cooling capacity of more than 1.2 million tons, marking the core technological capabilities of Midea and
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that domestic centrifuges have broken through the foreign technical barriers. "Air C+ Duct Type Air
Conditioner Indoor Units", "Sinan Series Magnetic Variable Frequency Centrifugal Chillers" and "Three
Pipe Heat Recovery Multi-split System" won the Innovative Product Award at 2021 China Refrigeration
Expo. In the year, Midea Building Technologies also released the digital elevator strategy- starting the
digital and intelligent era of elevators in all aspects by digital operation, independent electronic control
platform, electronic security and intelligent technology. Meanwhile, it has launched the new elevator
brand LINVOL with the positioning of the "expert in full life cycle management of elevators". In reliance
upon the advanced industrial system of Midea Group, Winone independently designed and built the
32-meter heavy-duty escalators test tower for public transport. The project now has been put into use.
The escalator in this project has a maximum height of 25m and an inclination angle of 30 degrees. It has
a proven, safe and reliable technology and fully complies with Chinese rail transportation standards, with
numerous technical parameters higher than European standard. As a heavy-duty escalator, it can
perfectly handle extremely dense passenger traffic. In terms of technological innovation, Midea Building
Technologies set up Midea Building Technologies Research Institute in 2021 to achieve the fully
combination of human and architecture with digital technology and to build thoughtful smart buildings.
Also, it has jointly established the Research Center of Building Carbon Neutrality Technology with
Shanghai Jiao Tong University. Many awards were won for the relevant technological achievements. For
example, Midea's project of "Research and Industrialized Application of High-efficient and Energy-saving
Key Technology for Wide-temperature-range Heat Recovery Multi-split Systems" (jointly applied with
SJTU) won the second prize of Science and Technology Award of the 10th China Refrigeration Society,
the first prize of Science and Technology Award of Guangdong Mechanical Engineering Society, and the
first prize of Science and Technology Award Guangdong Machinery Industry Association. The project
"Technology and Industrialization of Ultra-low-temperature High-efficient Energy-saving Air Source Heat
Pump" (jointly developed with SJTU) won the Industry-University-Research Cooperation Innovation
Achievement Award of China Industry-University-Research Collaboration Association. The
independently developed project "Heat Recovery Multiple-unit and Intelligent Control System" won the
Silver Award at the 72nd Nuremberg International Invention Exhibition in Germany. At the 2021 China
HVAC Industry Development Summit, Midea Building Technologies won the "Golden Wisdom Award for
Cooling & Heating Intelligent Manufacturing" in the fifth consecutive year, and the self-developed
"Sinan-series Maglev Centrifuge" won the "Top Ten Product Award". Additionally, the relevant patented
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product technologies won six Excellence Awards at the 22nd China Patent Awards. GD Midea Heating &
Ventilating Equipment Co., Ltd. and WINONE Elevator Company Limited were recognized as
Guangdong Industrial Design Center. These honors and awards attest to Midea's technological R&D
strength in building technologies. In terms of product services, Midea Building Technologies has also
been committed to improving the standards toward the offerings of products and services. The first VRF,
MDVS, multi-split reliability improvement standard proposed by Midea was fully affirmed by experts.
Midea is committed to providing customers with overall solutions. For instance, in the "miracle of human
engineering" Sichuan-Tibet Railway project, Midea built an overall solution covering HVAC, elevator and
automatic control system for Lalin section which provides efficient, reliable and intelligent technology and
equipment guarantee for the construction of important national transportation hubs. Midea Building
Technologies provided an overall solution of "old machine replacement & load partition & multi-type
equipment matching" for the national stadium "Bird's Nest" as the main venue of the opening and closing
ceremony in Beijing Winter Olympics and Winter Paralympics to create an intelligent and low-carbon
stadium. At the Dubai World Expo, it provided indoor air integrated solutions for high-quality temperature
and air experience to Italy, Poland, Germany, Pakistan and Czech pavilions. In the 14th National Games,
it made overall solutions to create an eco-friendly and intelligent environment for 11 venues and
supporting buildings, covering advanced equipment such as centrifuges, screw machines, and multi-split
air-conditioners, which fully presented the technological capacity as an industry leader. In the project of
Suzhou Metro Line 6, it provided a perfect solution of "efficient computer room & intelligent terminal &
intelligent control system" for 31 stations of the line, helping Suzhou Metro achieve energy conservation
and efficiency improvement.
With its leading product technology and perfect solutions, Midea Building Technologies is highly
recognized by partners in various fields. For example, 16 of its projects have won the 2020-2021 China
Construction Engineering Luban Prize （ National Prime-quality Project ） . It has also won the "2021
Innovative Solution Award of China IDC Industry" at the China IDC Industry Annual Ceremony, and the
title of "Top Ten Construction Equipment Suppliers of China Hospital Construction" at the 9th China
Hospital Construction Award Ceremony. In addition, MeiKong has won the "2021 Top Ten Building
Automation Brand Award" at the 2021 Intelligent Building Brand Awards Ceremony. In addition, Midea
Building Technologies won the Long-term Cooperation Award for 10 Years of Vanke Group, the
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Innovative Product Award and the Industry Influential Brand Award at 2021 China Heat Pump
Cogeneration Summit.
I. Promoted innovation in robotic product development, accelerated integration and expansion of
the robotics business for the China market
KUKA, a subsidiary of Midea, is the first robotic manufacturer in the world to introduce sensitive
lightweight robots into the production plant, as well as the first manufacturer with a product range
covering collaborative robots, mobile robots and industrial heavy-duty robots. In 2021, KUKA launched a
series of new products. In terms of digitalization, KUKA presented its new operating system iiQKA.OS at
Hannover Fair. With this system, robot use will be greatly simplified and be as easy as cellphone use.
The iiQKA.OS system is intended to serve as the basis for an entire ecosystem which provides access to
robot accessories, programs and apps, etc. At the end of 2021, taking advantages of Industrial Internet
of Things (IIoT), the new KUKA iiQoT platform can collect and provide the data of working condition of
different robots in real time, covering aspects such as hardware, software and controller. Since it was
regarded as Cloud Solutions, the remote monitoring of robot system has become more effective, and the
condition data can be visited by users anytime anywhere. For the food and medical industry, KUKA
released the "KR DELTA robot" -- the first delta robotics-- with a parallel kinematics. The new robot
obtains excellent performance at a much lower cost. Its arms can reach up to 1,200mm and the robot
has a payload capacity of 6kg. As the latest product in KUKA lightweight robot portfolio, this robot is
made entirely of stainless steel and can perform pick-and-place applications towards food and medicine.
In respect of digital simulation, KUKA made public a new version of smart simulation software KUKA.Sim
4.0. The software is featured by a new level of simplicity, planning reliability and cost efficiency. It not
only streamlines the workflow and saves time for customers, but also demonstrates its functions in
multiple scenes. With regard to medical care, a Munich therapy center uses a medical product with an
integrated KUKA robot, that is, The CyberKnife system of Accuray, as a high-precision instrument in
tumor treatment. This product is an alternative to conventional radiotherapy and a breakthrough of KUKA
robot in the medical field. In general industry area, the speed of KUKA KMP 600-S diffDrive can reach
two meters per second. It not only possesses capacities of laser scanning and 3D object recognition but
possesses a load capacity of up to 600kg, which also opens up new ways and increases flexibility for
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internal production's goods flow while providing support for production. In spite of welding large
workpieces, the brand new KUKA Friction Stir Welding Cell known as cell4_FSW can procure higher
weld strength. As it does not cause welding deformation easily, it is very flexible at the same time,
historically solving the pain point of the industry. Quality Test Equipment developed by Germany Berghof,
consisting of a KUKA KR CYBERTECH robot and a 3D scanner, won the "2021 Germany Innovation
Award", which is used for checking the components and parts at the end of the assembly lines.
Compared to the congeneric quality and safety test equipment for the components and parts of
automobiles, the equipment has edges in cost and flexibility. In construction area, KUKA KR QUANTEC
Machine will assist Belgium BESIX Group in reforming the traditional construction methods, printing
concrete columns, sculptures and facade elements by 3D with the help of KUKA robot to have a quick
and environmental effect. "KUKA NOX" Construction Robot, winning 2021 Red Dot Design Concept
Award, is similar to a mobile 2D printer, which can enhance the efficiency of construction by printing
identification information based on the digital modeling of architectural design, and achieve that
customers and architects can check the construction site anytime anywhere in a virtual scene by
applying the digital twinning technology in construction site. As for new businesses, KUKA's Swisslog
creates automation systems that bring scalability, flexibility and lower costs to vertical farming, allowing
them to be installed and maintained in a wide range of pre-existing and purpose-built spaces. These
systems help broaden the applicability of growing crops and bring food production closer to urban
consumers.
During 2021, in the automotive field, KUKA entered into a new cooperation framework agreement with
the Daimler Group to extend the long-term partnership. The orders cover robots, production lines, KUKA
robot controllers and other products, such as KR FORTEC heavy-duty robots and the new KR
QUANTEC generation. KUKA also received orders from another global automobile manufacturer, with a
total of tens of millions of euros. In the future, KUKA will join the body components of a premium SUV
using a patented process of pierce riveting technology. By early 2022, KUKA has supplied BMW's
Dingolfin factory with KR C5 Intelligent Robot Controllers of approximately 250 units for applying to
manufacturing car doors and valves, and the power consumption can be reduced by up to 15%
compared with the previous generation controller. In September 2021, KUKA received an order from
MAGNA who is the supplier of G-class Mercedes cars and will build a fully automatic ladder production
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line for electric car models in Austria, where the heavy-load six-axis robot KR 1000 Titan will be used on
the production line system, and will integrate KUKA's innovative welding technology that can meet the
needs of electric vehicle production. KUKA also procured assembly lines of body base for Audi's midsize
and luxury cars, and the order amounts to several million euros, where approximately 200 KUKA robots
will be used on the line, covering manufacturing stages such as spot welding and bonding. At the
beginning of 2022, KUKA even procured a project order from Ford Otosan who is the biggest
commercial vehicle suppliers of Ford Motor in Europe, for which over 700 robots will be provided to
produce Ford next-generation electric automobiles. In the general industrial field, the new order KUKA
received from BACA System involved 100 KR 210 QUANTEC robots. For seven consecutive years,
KUKA has been supporting BACA System with innovative robot solutions in the stone cutting industry
and a total number of over 450 KUKA robots. In terms of logistics automation, in May 2021, Swisslog
announced that the ZKW Group, the specialist for innovative, premium lighting systems and electronics,
will use Swisslog automation to help increase manufacturing. With centerpiece of the installation being
Tornado miniload cranes, Swisslog is expected to provide automation systems which cover QuickMove
conveyor systems and SynQ management software. Throughout the pandemic, Swisslog has continued
to support businesses with project realization for critical supply chains. It won 21 AutoStore orders with a
total value of over EUR60 million in the first half of the year. These orders came from customers in
different industries including Norwegian logistics provider Bring, Italian importer Andreas STIHL SpA,
and German toy retailer ROFU. In December 2021, Swisslog procured a project order of millions of
euros from European seafood e-commerce Rohlik who develops rapidly, and will provide automatic
logistics solutions in Prague and Vienna in Europe that will involve multiple solutions and software
systems such as CycloneCarrier Shuttle solution, QuickMove conveyor system, and SynQ Software.
Modern high-rack storage technology and warehouse management software system will be provided to
Swiss Federal Railway (SFR) by Swisslog. In catering area, Ratio, a catering company located in
Singapore orders 20 robots from KUKA again for mixing wines and making coffee, in order to expand the
business. Besides, in June 2021, KUKA won the 2020 Stellantis First Supplier Awards for its timely,
efficient and high-quality products and services provided. Stellantis was formed in January by the merger
of Fiat Chrysler Automobiles (FCA) and Peugeot Citroen Group (PSA).
KUKA further accelerated integration and expansion of the robotics business in China, promoted
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transformation of the domestic marketing, and centered on applications and key customers. In 2021,
KUKA China has launched 24 new products and applications, further enriching the domestic product
offering. It provides customers with value-added services through digital applications, including six
products such as KMP 600-S diffDrive Mobile Robot, KR 6 R600 Z200 CS Robot, Rail Logistics
Transport System of ETV TransGuard System and Arc welding six-axis robot of KR6 R1440-2 Arc HW E,
and 12 digital applications such as Smart Gateway External Beta of KUKA.Smart Gateway MV, KUKA
Connect EasyPro 1.0, KUKA Center Spare Parts Service System and KUKA Digital Dashboard. KUKA
China regarded Mobile Robot as an independent business to operate, established professional technical
teams on noumenon, navigation and motion control of Mobile Robot, and issued the new product -- KMP
600I Automatic Mobile Robot that successfully participated in the 2021 Asia International Logistics
Technology and Transportation System Exhibition (CeMAT ASIA). In order to improve customer service
efficiency, expand service content and enhance customer stickiness, KUKA Center system was
upgraded and developed by KUKA China, who comprehensively utilized all innovative technologies of
mobile internet and information to establish a one-stop service platform for customers that crosses
different terminals such as mobile phone, PC and phone and pulls through all business flows within
industrial services. In order to ensure and accelerate the implementation of research and development
projects, KUKA China established the first digital laboratory of Midea Group, which is also the largest
laboratory in China's robot industry, covering an area of more than 10,000 square meters, while it can
achieve experiments such as drive system validation, motor validation, reducer validation, controller
development, development and validation of the operating system platform, MADA, robot system,
development and validation of the logistics vehicle, application software development and development
and validation of the digital cloud platform, fully covering all validation demands including core
components and parts, noumenon of robot and system application layer. What's more, KUKA China was
recognized as "Guangdong ToB Technology Research Center" and "Guangdong Intellectual Property
Demonstration Enterprise".
The customer structure of KUKA China kept improving in 2021, and sales in other industries accounted
for a higher proportion of its total sales than sales in the traditional auto industry. In particular, the sales
in industries such as electric vehicles, engineering machinery, new energy and consumer electronics
increased significantly as a percentage of the total sales, and the sales to new customers accounted for
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more than 10%. In automobile area, domestic automobile customers increased by more than 100% year
on year. KUKA China procured the first business in the truck industry, with an order of more than
RMB100 million in total, involving KUKA's many products including automatic transportation system and
modular manufacturing unit. In electric vehicle area, due to the rapid increase in sales of new energy
automobiles, which drove the expansion of the components and parts of the upstream automobiles,
KUKA strove to expand customers of this area such as Gestamp, Magna, Changchun Engley, Kunshan
Xinjie and Wuxi Wanhua, and succeeded; it also won the order of Arc Welding Robot from the
manufacturer of new energy transportation vehicles -- Jiangsu Jinpeng Group, successfully breaking
through the competition pattern of the area. In new energy area, the lithium-ion business surged by over
350% year on year, and the lithium-ion and photovoltaic industries achieved the sales performance with
over 1,000 units in a single industry, becoming the leader of these two industries. In consumer electronic
area, a growth of 300% year on year was achieved and an important breakthrough was made in Apple's
major contract manufacturers, which was highly recognized by customers. In general industrial area, the
sales of Palletizing Robot broke through a thousand units, which was nearly a three-time increase year
on year, and broke through among the head customers of the industries including the dairy industry,
furniture and chemical industry; additionally, it procured orders from customers in glass industry and will
supply hundreds of robots. In ToB machinery area, thanks to the "One Belt, One Road" development
strategy, KUKA has successively obtained multiple orders of centralized procurement projects from
Zoomlion, Shandong Shantui and Sany. In logistics area, Swisslog successfully won FILA's all-channel
central warehouse project, with orders of tens of millions euros in total. As a benchmark of automatic
three-dimensional warehouses in China's shoe and clothing industry, the project has a total floor area of
171,000 square meters, where the automatic logistics equipment such as light-load stackers,
multi-storey shuttles and robots will be applied, and the leading technology - radio frequency
identification (RFID) will be integrated to achieve the integration of multiple operating methods such as
B2B and B2C. It can not only meet customers' various online and offline business processes and cover
all direct stores in China, but also increase the efficiency by 200% upon completion. In addition, KUKA
has been playing an active part in raising Midea Group’s intelligent manufacturing level. By early 2022,
the robot density of Midea is over 370 units per 10,000 persons. And this number is expected to reach
700 by in the next two years with greater investments in this respect.
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J. Deepened the long-term incentive and protected the interests of shareholders
In 2021, 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 eight stock option incentive schemes, five restricted share incentive schemes, seven global
partner stock ownership schemes and four business partner stock ownership schemes, 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 by putting forward cash dividend plans (including that of 2021) with a total
amount of more than RMB69 billion since Group listing in 2013. In addition to the consistent dividend
payouts, the Company has carried out a string of share repurchase plans. Subsequent to a share
repurchase of RMB4 billion in 2018, 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. For the year ended 31 December 2021, Midea has used approximately
RMB13.6 billion for share repurchases.
3. Core Competitiveness Analysis
A. As one of the leaders among the global household appliance makers and a dominator in the
major appliance sectors, Midea Group provides high-quality, one-stop home solutions through
its wide product range.
As a white goods and HVAC enterprise with a whole industrial chain and full product line, Midea Group
has developed a complete industrial chain combining R&D, manufacturing and sales of core
components and finished products, supported by an industry-leading R&D center and manufacturing
technologies of core components (such as compressors, electrical controls, magnetrons and controllers),
and ultimately based on its powerful capabilities in logistics and services. Midea owns top brands of
household appliance and HVAC in China. Its dominance in the major appliance and HVAC markets
means that it can provide a wide range of competitive product sets. It also means internal synergies in
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brand awareness, price negotiation as a whole, customer needs research and R&D investments.
Compatibility, coordination and interaction among household appliances have become increasingly
important since smart home is gaining popularity. With a full product line, Midea has had a head start in
providing a combined and compatible smart home platform with integrated home solutions for
customers.
B. Global R&D resource integration capabilities, adherence to the strategy of
“Technology Leadership”, a global innovation ecosystem and a scientist system, as well as
continuing lead in R&D and technical innovation
The Group is focused on building a competitive, multi-layered global R&D system. It has established a
three-tier technical committee system and a four-tier R&D system responsible for the formulation and
implementation of technology strategies, with an aim to build world-leading R&D capabilities. The
interconnected technology strategies and mid- and long-term product planning serve as two drivers of
growth. Midea currently focuses on 11 technologies in a bid to make breakthroughs with key
technologies and achieve technology leadership. It has invested over RMB45 billion in R&D over the
past five years, with the investment of RMB12 billion in 2021. In order to deepen its global technology
ecosystem, the Group has set up a total of 35 research centers in 12 countries to gradually build up a
“2+4+N” global R&D network and gain the advantage of scale in this respect. 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 these
facilities into complementary regional R&D centers. Following the strategy of “Technology Leadership”, it
attracts more professional talent and builds an organic global R&D network. It has over 18,000 R&D
personnel and over 500 foreign senior experts. While establishing its own research centers around the
world, Midea also works on constructing an open platform of innovative ecosystems through integration
of superior resources. On one hand, a global innovation ecosystem has been put in place to integrate
resources of large companies, SMEs, universities, research institutes and consulting agencies. This
R&D ecosystem has access to enormous resources. On the other hand, a scientist system has been
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established with eight academician workstations/workshops and 19 academicians with strategic
cooperation on more than 100 R&D projects. The Group cooperates with domestic and foreign scientific
research institutions, such as Massachusetts Institute of Technology, University of California, Berkeley,
University of Illinois at Urbana-Champaign, Stanford University, Purdue University, University of
Maryland, The University of Sheffield, Polytechnic University of Milan, 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 carries out strategic cooperation with tech giants such as BASF and Honeywell to build a
global innovation ecosystem. The Group’s long-term focus on building technology, marketing, design,
product and open innovation systems, building a cutting-edge research system and building reserves in
technology for mid/long term, has provided a solid foundation for the Group to maintain long-term
technical superiority across the globe.
C. Stronger Global Impact fueled by Midea’s continual global resource allocation and
investments, globally-advanced manufacturing capabilities and advantage of scale
The success of a series of global acquisitions and new business expansion moves has further solidified
Midea’s global operations and leading advantages in robotics and automation. With the world’s leading
production capacity and experience, and a wide variety of products as well as its production bases all
over the world, the Group has been able to expand rapidly into the emerging overseas markets and is
becoming a stronger competitor in those mature overseas markets. The Group is one of the biggest
manufacturers in the world for many product categories, which gives it competitive edges in efficiency
improving and cost reducing that its overseas competitors are unable to replicate. Overseas sales of the
Group accounts for more than 40% of the total sales revenue. Its products have been exported to over
200 countries and regions, and it owns 18 overseas manufacturing bases and 24 overseas operating
agencies. Midea’s global operations system has been further improved through the reform of
international business organizations towards diverse business models. It also increases investments in
overseas business operations, focuses on the needs of local customers and enhances product
competitiveness in a bid to promote significant growth in its Own Branding & Manufacturing (OBM)
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business. In addition, with a deep knowledge and understanding on product characteristics and product
demands in overseas market, Midea is promoting worldwide branding and expansion through global
collaboration and cooperation. In this way, the global competitiveness of Midea is increasing steadily.
D. A complete and broad channel network and a well-established smart supply chain system
ensuring the steady growth of Midea’s domestic sales
With its continuous efforts, 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. Offline retail outlets have reached more than 100,000. Midea has
created a network layout of comprehensive household appliance stores, co-branded stores of home
decoration business, specialty stores of self-owned products, traditional retailers and e-commerce
franchise stores. It provides easy access to Midea's products and services, covering the entire market
from first-tier cities to townships. Particularly, Midea boasts a unique exclusive shop system in the
industry with more than 15,000 outlets, where various needs of users from new decoration to updates
can be met in home decoration stores, flagship stores, multi-category stores and community stores. In
2021, Midea set up business entities for pre-decoration operations, which have been faithfully driving the
implementation of the intelligent transformation strategy and retail reform. It also focuses on "smart
home" and "whole-house decoration solutions", as well as promotes deep cooperation with decoration,
furnishing, building materials, design and other channels. Midea has built more than 880 smart home
experience centers. Centering on three major capabilities of "whole-house home appliances &
whole-house intelligence/ecology & hardware/software", Midea has realized one-stop service for users
and created a diversified smart lifestyle by the construction of smart home experience centers for
decoration. In the same year, Midea completed the construction of Midea Cloud Sales and related
operating platform, providing offline stores with professional digital platform supports such as capacity
enhancement, purchasing guarantee, and user operation; it introduced ecological products of house
decoration and household service to extend business categories for offline stores, and improved
actuarial rate, order review timeliness and logistics efficiency to ensure store supply experience;
additionally, it also forged online channels for offline stores by the Midea Home Delivery app, stimulated
offline retail by trade-in service, group purchase and other new models, and optimized customer
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operation with member rights and Member's Day promotion. In 2021, Midea remained the best-selling
household appliance manufacturer on major e-commerce channels such as JD and T-mall for nine
consecutive years. Besides, in Pinduoduo, Douyin, Kuaishou and other emerging channels, Midea
grows at a faster pace, driving sales and user growth through membership operation, as well as the
offering of product suites and smart products.
Making full use of the digital technology, Annto Logistics Technology Co., Ltd. (Annto), a subsidiary of
Midea, refines its nationwide logistics network through the big data technology to build a smart and
digital distribution platform. Annto concentrates its resources on urban distribution and is able to provide
fully visualized direct distribution services covering every town and village of the country. Relying on
more than 140 urban distribution centers nationwide, it covers more than 99% of towns and villages
across the country. It can finish the delivery to 30,739 (or 77% of) towns and villages within 24 hours and
to 36,955 (or 93% of) towns and villages within 48 hours in the country. Additionally, Annto focuses on a
shared inventory system for online and offline channels and the competitive edge of integrated delivery
for the ToB/C business, refines its network of integrated delivery and installation services, drives
connectivity through the whole process from manufacturing to sale, provides quality service solutions for
various orders from customers, as well as comprehensively better the end user experience.
E. A user experience-oriented reform of “Comprehensive Digitalization and Comprehensive
Intellectualization” that focuses on “Digitization & Intelligence Driven” to make Midea a leader in
the IoT era
Midea has put in place and will prioritize the development of the Midea Cloud Sales commercial platform
supported by unified data and technology platforms, the IoT ecosystem platform, and the Industrial
Internet platform of “M.IoT”, with an aim to become a world-leading technology group driven by
digitization & intelligence. On one hand, it promotes deep integration of the digital technology and
business in the whole value chain, with the view to becoming an icon in digitalization. On the other hand,
with foresight, it plans for whole new products, services and business models centering on smart
technologies, products and scenes, so as to outcompete Internet companies. With continual investment
and research in artificial intelligence (AI), silicon chip, sensor, big data, cloud computing and other new
technologies, Midea has built the biggest AI team in the household appliance industry, which is
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committed to enabling products, machines, production processes and systems to sense, perceive,
understand and judge, driven by the combination of big data and AI, in order to reduce obstacles for
man-machine interaction to the minimum and create smart appliances without any assistance in
interaction. Focusing on “people and their family”, Midea builds a whole value chain of IoT.
Breakthroughs have been made in user data protection, content operation for smart scenes, smart
connection technology, the smart home ecosystem, cloud platforms, the smart voice function, the big
data-based cloud housekeeper services, etc. By doing so, Midea is able to offer complete smart home
solutions for users, as well as to empower its business partners.
Upon years of digital transformation characterized by “One Midea, One System, One Standard”, Midea
has successfully materialized operations driven by software and data through its value chain, connecting
end to end and covering planning and R&D, Product Ordering, intelligent scheduling, flexible
manufacturing, coordinative supply, product quality tracking, logistics, installation & post-sale services,
etc. The Group’s digital platform has made come true C2M flexible manufacturing, platform-based and
modularized R&D, digitalized production techniques and simulation, intelligent logistics, digital marketing,
digital customer service, etc. By way of integrating the IoT capabilities of its AI Innovation Center,
Software Engineering Institute, IT Department, IoT Division, Smart Home Business Group, Robotics &
Automation Division, Building Technologies Division, Digital Innovation Business and other organs,
Midea has established a unified IoT technology platform. Its Industrial Internet platform has been
upgraded to “M.IoT 2.0”, and four of its factories have been included in the “Global Lighthouse Network”
initiated by the World Economic Forum, representing Midea’s powerful technology attribute and strong
intelligent manufacturing capability. These practices are swiftly applied to other Midea manufacturing
bases across the world. Based on these “Lighthouse” factories and the “Lighthouse Network”, Midea
brings the relevant experience and services outside the Group to empower ecosystem partners and
facilitate the transformation of China’s manufacturing sector. It has provided the relevant products and
services for around 300 customers in more than 40 market segments. Therefore, it is safe to say that
Midea has built a solid foundation regarding Industrial Internet systems. While driving online systems
and digitalization, Midea also adopts a systematic data-based approach to governance. A whole new
data platform has been put in place to accumulate data assets and achieve integration of online and
offline business data, as well as product and service data. Further, the “User One_ID” system has been
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refined to provide adequate data support for all business lines.
F. Sound corporate governance mechanism and effective incentive scheme to provide a solid
foundation for Midea’s sustained and steady development
Paying close attention to the construction of a governance framework, regarding its corporate control,
centralization and decentralization systems, the Group formed a mature management system for
professional managers. The divisional system has been in operation for many years, and its
performance- oriented evaluation and incentive mechanism featuring full decentralization has become a
training and growth platform for the Group's professional managers. The Group's primary senior
management team consists of professional managers who have been trained and forged in the
operational practices of Midea Group. They have been working for Midea on average for more than 15
years, all with rich professional and industrial experience, deep understanding and insights of the
relevant industries with respect to ToC and ToB, and accurate understanding of the industry environment
and corporate operations management. The Company's advantages in such systems and mechanisms
have laid a solid foundation for the efficient and effective business operations, as well as the promising,
stable and sustainable future development of the Company. At present, the Company has launched
eight Stock Option Incentive Schemes, five Restricted Share Incentive Schemes, seven Global Partner
Stock Ownership Schemes and five Business Partner Stock Ownership Schemes for key managerial
and technical personnel, in addition to the exploration and practices with respect to diversified stock
ownership schemes of key innovative subordinates. As such, a governance structure has been put in
place that aligns the interests of senior management and core business backbones with that of all
shareholders, as well as comprises long and short-term incentives and restrains.
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
2021 2020
As a percentage of As a percentage of
YoY Change (%)
Amount total operating Amount total operating
revenue (%) revenue (%)
Total 341,233,208 100% 284,221,249 100% 20.06%
By business segment
Manufacturing 301,026,573 88.22% 256,694,589 90.32% 17.27%
By product category
HVAC 141,879,146 41.58% 121,215,043 42.65% 17.05%
Consumer
131,866,099 38.64% 113,890,764 40.07% 15.78%
appliances
Robotics &
automation 27,281,328 7.99% 21,588,782 7.60% 26.37%
systems
By geographical segment
PRC 203,579,380 59.66% 163,139,841 57.40% 24.79%
Outside PRC 137,653,828 40.34% 121,081,408 42.60% 13.69%
By sales model
Online 62,103,887 18.20% 58,244,327 20.49% 6.63%
Offline 279,129,321 81.80% 225,976,922 79.51% 23.52%
Note: Consumer appliances in the table above primarily include refrigerators, laundry appliances, kitchen appliances and
small domestic appliances.
The Company’s five business segments, namely the Smart Home Business Group, the Industrial
Technology Business Group, the Building Technologies Division, the Robotics & Automation Division,
and the Digital Innovation Business recorded revenue of RMB234.9 billion (up 13% year-on-year),
RMB20.1 billion (up 44% year-on-year), RMB19.7 billion (up 55% year-on-year), RMB25.3 billion (up
23% year-on-year), and RMB8.3 billion (up 51% year-on-year) respectively during the Reporting Period.
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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 (%)
By business segment
Manufacturing 301,026,573 228,641,881 24.05% 17.27% 18.90% -1.04%
By product category
HVAC 141,879,146 112,012,603 21.05% 17.05% 19.85% -1.85%
Consumer
131,866,099 95,279,340 27.75% 15.78% 16.85% -0.66%
appliances
Robotics &
automation 27,281,328 21,349,939 21.74% 26.37% 23.43% 1.87%
systems
By geographical segment
PRC 203,579,380 156,825,853 22.97% 24.79% 24.73% 0.04%
Outside PRC 137,653,828 107,700,146 21.76% 13.69% 18.27% -3.03%
By sales model
Online 62,103,887 44,995,271 27.55% 6.63% 5.65% 0.67%
Offline 279,129,321 219,530,728 21.35% 23.52% 26.01% -1.56%
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 segment Item Unit 2021 2020 YoY Change (%)
In thousand
Sales 562,677.2 507,591.4 10.85%
units/sets
Home appliances
Output Ditto 585,074.7 510,986.9 14.50%
Inventory Ditto 87,636.3 62,511.8 40.19%
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Reason for any over 30% YoY movements in the data above
√Applicable □N/A
The inventory of home appliances went up 40.19%, primarily driven by the increased sales and the
pre-stocking.
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
2021 2020
Business As a percentage As a percentage YoY Change
Item
segment Amount of total cost of Amount of total cost of (%)
sales (%) sales (%)
Raw materials 175,102,256 84.47% 144,479,295 82.56% 21.20%
Home Labor costs 12,186,025 5.88% 11,066,122 6.32% 10.12%
appliances Depreciation 3,203,362 1.55% 3,009,985 1.72% 6.42%
Energy 2,846,166 1.37% 2,567,340 1.47% 10.86%
4.2.6 Changes in the scope of the consolidated financial statements for the Reporting Period
√Yes □No
The detailed information of major subsidiaries included in the consolidation scope in the current period is
set out in Notes 5 and 6. Entities newly included in the consolidation scope in the current period through
acquisition mainly include Beijing Wandong Medical Technology Co., Ltd. and its subsidiaries and
Hitachi Compressor (Thailand) Ltd. (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) 36,258,505
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Total sales to top five customers as a percentage of the
10.63%
total sales for the year (%)
Total sales to related parties among top five customers as
0
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 22,103,723 6.48%
2 Customer B 5,424,006 1.59%
3 Customer C 3,802,787 1.11%
4 Customer D 2,607,532 0.76%
5 Customer E 2,320,457 0.68%
Total -- 36,258,505 10.63%
Other information about top five customers
□Applicable √N/A
Major suppliers of the Company
Total purchases from top five suppliers (RMB'000) 16,286,134
Total purchases from top five suppliers as a percentage of
6.26%
the total purchases for the year (%)
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 5,515,903 2.12%
2 Supplier B 3,588,607 1.38%
3 Supplier C 2,495,177 0.96%
4 Supplier D 2,356,026 0.91%
5 Supplier E 2,330,421 0.90%
Total -- 16,286,134 6.26%
Other information about top five suppliers
□Applicable √N/A
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4.3 Expense
Unit: RMB'000
2021 2020 YoY Change (%) Reason for any significant change
Selling and distribution
28,647,344 23,563,455 21.58%
expenses
General and
10,266,283 9,264,148 10.82%
administrative expenses
Increased interest income and exchange
Finance costs 4,386,111 2,638,032 66.26%
gains
Research and
12,014,907 10,118,667 18.74%
development expenses
4.4 R&D investment
√Applicable □N/A
Information about R&D personnel
2021 2020 YoY Change (%)
Number of R&D personnel 18,105 15,265 18.60%
R&D personnel as a
percentage of total 10.92% 10.23% 0.69%
employees
Educational background of
—— —— ——
R&D personnel
Bachelor’s degree 10,881 9,259 17.51%
Master’s degree 3,934 3,182 23.66%
Doctoral degree 427 309 38.07%
Other 2,863 2,515 13.84%
Age structure of R&D
—— —— ——
personnel
Below 30 5,956 5,317 12.02%
30~40 9,532 7,831 21.72%
Over 40 2,617 2,117 23.60%
Information about R&D investment
2021 2020 YoY Change (%)
R&D investment (RMB’000) 12,014,907 10,118,667 18.74%
R&D investment as a
3.52% 3.56% -0.04%
percentage of operating
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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 2021 2020 YoY Change (%)
Subtotal of cash inflows from
330,415,497 252,985,046 30.61%
operating activities
Subtotal of cash outflows due to
295,323,793 223,427,929 32.18%
operating activities
Net cash flows from operating
35,091,704 29,557,117 18.73%
activities
Subtotal of cash inflows from
127,801,101 147,012,656 -13.07%
investing activities
Subtotal of cash outflows due to
114,201,515 182,323,319 -37.36%
investing activities
Net cash flows from investing
13,599,586 -35,310,663 138.51%
activities
Subtotal of cash inflows from
21,145,221 54,749,413 -61.38%
financing activities
Subtotal of cash outflows due to
52,349,760 55,505,708 -5.69%
financing activities
Net cash flows from financing
-31,204,539 -756,295 -4025.97%
activities
Net increase in cash and cash
17,001,531 -6,893,252 346.64%
equivalents
Explanation of why the data above varied significantly
√Applicable □N/A
a. Primarily driven by a decrease in cash paid to acquire investments, net cash flows from investing
activities increased 138.51% from last year.
b. Primarily driven by an increase in cash payments relating to other financing activities, net cash flows
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from financing activities decreased 4025.97% from last year.
c. Primarily driven by an increase in net cash flows from investing activities, net increase in cash and
cash equivalents increased 346.64% 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
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 2021 1 January 2021
As a Change in
As a Explanation about any
percentage of percentage
Amount percentage of Amount material change
total assets (%)
total assets (%)
(%)
Cash at bank
71,875,556 18.53% 81,210,482 22.40% -3.87%
and on hand
Accounts
24,636,440 6.35% 22,978,363 6.34% 0.01%
receivable
Contract assets 3,823,476 0.99% 3,236,848 0.89% 0.10%
Inventories 45,924,439 11.84% 31,076,529 8.57% 3.27%
Investment
859,195 0.22% 405,559 0.11% 0.11%
properties
Long-term
equity 3,796,705 0.98% 2,901,337 0.80% 0.18%
investments
Fixed assets 22,852,848 5.89% 22,239,214 6.13% -0.24%
Construction in
2,690,930 0.69% 1,477,302 0.41% 0.28%
progress
Right-of-use
2,297,354 0.59% 2,155,516 0.59% 0.00%
assets
Short-term 5,381,623 1.39% 9,943,929 2.74% -1.35%
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The 2021 Annual Report of Midea Group Co., Ltd.
borrowings
Long-term
19,734,020 5.09% 42,827,287 11.81% -6.72%
borrowings
Contract
23,916,595 6.16% 18,400,922 5.08% 1.08%
liabilities
Lease liabilities 1,533,552 0.40% 1,513,426 0.42% -0.02%
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
Amou
Profit or loss Cumulati nt
from ve fair provid
Purchased Other
Opening change in value ed for Sold in the Closing
Item in the change
balance fair value change impair period balance
period s
during the charged ment
period to equity in the
period
Financial assets
1. Financial assets held for
trading (excluding derivative 28,239,601 -1,228,358 - 9,328,293 30,422,512 -37,822 5,879,202
financial assets)
2. Derivative financial assets 1,188,428 127,345 22,579 6,072 44,681 -928 1,298,815
3. Receivables financing 13,901,856 3,628,304 10,273,552
4. Other debt investments and
21,456,155 5,832,000 14,156 210,323 27,484,322
other
5. Investments in other equity
46,651 2,238 2,907 -235 45,747
instruments
6. Other non-current financial
3,360,849 932,704 2,008,271 342,329 -46,622 5,912,873
assets
Sub-total of financial assets 68,193,540 -168,309 24,817 17,174,636 34,454,889 124,716 50,894,511
Investment properties
Productive living assets
Others
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Sub-total of the above 68,193,540 -168,309 24,817 17,174,636 34,454,889 124,716 50,894,511
Financial liabilities 180,736 -22,350 11,025 -2,762 166,649
Contents of other changes
Whether there were any material changes on the measurement attributes of major assets of the
Company during the Reporting Period
□ Yes √ No
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)
114,201,515 182,323,319 -37.36%
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
Type Abbrevi Mea Profit or Cumula Purcha Profit or Fund
Code of Initial Opening Sold in Closing
of ation of sure loss from tive fair sed in loss in Accountin ing
securitie investment carrying the carrying
secur securiti men change value the the g title sour
s cost amount period amount
ities es t in fair change period period ce
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met value charged
hod during to
the equity
period
Fair
Over Financial
valu Own
seas XIAOM 1,676,54 assets
1810 769,972 e -711,567 -37,822 - -711,567 927,158 fund
listed I-W 7 held for
met s
stock trading
hod
Fair
Over Financial
valu Own
seas assets
DNK Danke 172,190 e 35,126 -34,709 -417 - -34,709 - fund
listed held for
met s
stock trading
hod
Dom Fair
Espres Financial
estica valu Own
sif -163,34 assets
lly 688018 13,998 e 128,032 -114,034 - 35,316 - fund
System 8 held for
listed met s
s trading
stock hod
Dom Fair
Financial
estica valu Own
assets
lly 688165 EFORT 178,534 e 475,260 -82,948 - - -82,948 392,312 fund
held for
listed met s
trading
stock hod
-- 2,314,96 -163,34 1,319,47
Total 1,134,694 -943,258 -38,239 - -793,908 - --
5 8 0
7.4.2 Derivatives investments
√Applicable □N/A
Unit: RMB'000
Closing
Rel investme
Amou
atio Purch nt
nt
nshi Rel ased amount Actual
Type Initial Sold in provid Closing
Opera p ated Opening in as a gain/loss
of investme Starting Ending Reporti ed for investm
ting with tran investment Repo percenta in
deriva nt date date ng impair ent
party the sact amount rting ge of the Reporting
tive amount Period ment amount
Co ion Perio Compan Period
(if
mpa d y’s
any)
ny closing
net
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assets
Futur Futur
es es 01/01/20 31/12/2
No No 105 105 71,790 0.0575% 241,206
comp contra 21 021
any cts
FX
1,007,58 01/01/20 31/12/2
Bank No No deriva 1,007,587 6,072 44,681 902,875 0.7231% 2,138,811
7 21 021
tives
1,007,69 1,007,692 2,380,017
Total -- -- 6,072 44,681 974,665 0.7806%
2
Source of derivatives
All from the Company’s own funds
investment funds
Litigation involved (if
N/A
applicable)
Disclosure date of the
announcement about
the board’s consent for 30/04/2021
the derivative
investment (if any)
Disclosure date of the
announcement about
the general meeting’s
22/05/2021
consent for the
derivative investment (if
any)
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 materials, but also made use of bank financial instruments and
Risk analysis of promoted forex funds business, with the purpose of avoiding the risks of exchange and interest
positions held in rate fluctuation, realizing the preservation and appreciation of forex assets, reducing forex
derivatives during the liabilities, as well as achieving locked-in costs. The Company has performed sufficient
Reporting Period and evaluation and control against derivatives investment and position risks, details of which are
explanation of control described as follows:
measures (Including but
not limited to market 1. Legal risk: The Company's futures business and forex funds businesses shall be conducted
risk, liquidity risk, credit in compliance with laws and regulations, with clearly covenanted responsibility and obligation
risk, operational risk, relationship between the Company and the agencies.
legal risk, etc.) Control measures: The Company has designated relevant responsible departments to enhance
learning of laws and regulations and market rules, conducted strict examination and verification
of contracts, defined responsibility and obligation well, and strengthened compliance check, so
as to ensure that the Company's derivatives investment and position operations meet the
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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 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.
Changes in market
prices or fair value of
derivative products
during the Reporting
1. Gain from futures contracts during the Reporting Period was RMB241.206 million.
Period, specific
2. Gain from FX derivatives during the Reporting Period was RMB2,138.811 million.
methods used and
3. Public quotations in futures market or forward forex quotations announced by the Bank of
relevant assumption
China are used in the analysis of derivatives fair value.
and parameter settings
shall be disclosed for
analysis of fair value of
derivatives
Explanation of
No change
significant changes in
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accounting policies and
specific financial
accounting principles in
respect of the
Company's derivatives
for the Reporting Period
as compared to the
previous Reporting
Period
The Company's independent directors are of the view that the futures hedging business is an
Special opinions
effective instrument for the Company to eliminate price volatility and implement risk prevention
expressed by
measures through enhanced internal control, thereby improving the operation and management
independent directors
of the Company; the Company's foreign exchange risk management capability can be further
concerning the
improved through the forex funds business, so as to maintain and increase the value of foreign
Company's derivatives
exchange assets and the abovementioned investment in derivatives can help the Company to
investment and risk
fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry
control
out derivatives investment business, and the risks are controllable.
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
Company Business Registered Net profit
Company name assets (in assets (in revenue (in profit (in
type scope capital (in RMB
RMB RMB RMB RMB
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The 2021 Annual Report of Midea Group Co., Ltd.
million) million) million) million) million)
Guangdong Midea Manufactur
USD158.58
Kitchen Appliances Subsidiary ing of home 20,073.58 8,079.99 16,603.86 2,175.90 1,937.06
million
Manufacturing Co., Ltd. appliances
Foshan Shunde Midea
Manufactur
Electrical Heating USD42
Subsidiary ing of home 17,599.61 8,783.49 10,310.02 1,362.43 1,170.70
Appliances million
appliances
Manufacturing Co., Ltd.
Wuhu Midea Kitchen & Manufactur
RMB60
Bath Appliances Mfg. Subsidiary ing of water 16,905.10 1,762.28 13,640.60 1,723.49 1,490.93
million
Co., Ltd. heaters
Manufactur
Wuxi Little Swan ing of RMB732,4
Subsidiary 18,524.64 5,883.50 23,104.22 2,169.17 2,013.01
Electric Co., Ltd. laundry 87,764
appliances
Acquisition and disposal of subsidiaries during the Reporting Period
√Applicable □N/A
The detailed information of major subsidiaries included in the consolidation scope in the current period is
set out in Notes 5 and 6. Entities newly included in the consolidation scope in the current period through
acquisition mainly include Beijing Wandong Medical Technology Co., Ltd. and its subsidiaries
(hereinafter, “WDM”) and Hitachi Compressor (Thailand) Ltd. (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
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”, and drives sustained growth in the five business segments under the guidance of the
strategic focus. Midea are built to grow on the back of advanced governance mechanism, future-proof
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The 2021 Annual Report of Midea Group Co., Ltd.
values, and managerial mindset growth. Midea will continuously improve the governance mechanism by
empowering responsibilities, rights and obligations, encouraging entrepreneurship and boosting
organizational vitality, and establish a flat 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 EHS governance and ESG rating. Additionally, the Management needs to
reflect on and challenge themselves, endeavoring to achieve all-round growth both spiritually and
intellectually. Meanwhile, Midea will continue to improve the talent structure and build diverse teams that
are inclusive and collaborative. Midea integrates global resources, follows the customer-oriented
principle, and builds key technology barriers by way of technological innovation and quality improvement,
so as to achieve global leadership with respect to principal product categories and new business
breakthroughs, as well as to maintain technology leadership. It aims to establish direct connection with
customers in terms of mindsets, products, buying, services, etc. through digitalization and
intellectualization in its operations. Supported by data- and platform-based operations in the whole value
chain, Midea strives to boost its business competitiveness and become more competitive in the digital
era by implementing the strategy of “Digitization & Intelligence Driven”. It will also promote global
operations and try to lay a solid foundation in this regard and enhance global impact through promoting
its own branded products. It will promote efficiency driven growth by improving management,
manufacturing and asset efficiency to create more cost efficiency. Additionally, it will strengthen its ToB
business to build new business platform and growth points. It aims 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.
Key operation points in 2022:
In 2022, based on the core strategic focus with “Technology Leadership” as the core, Midea will promote
development both in the ToB and ToC business, as well as carry out transformation in both the domestic
and overseas operations. Midea will upgrade its existing operations and drive high-quality development
through increasing added value of products, optimizing product structure, improving market layout, and
adjusting the proportion of channels. It must be fully prepared to respond, decide and act swiftly to deal
with possible problems and challenges in the future. Midea innovates and changes for greater growth. It
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The 2021 Annual Report of Midea Group Co., Ltd.
will adhere to the core strategy of “Technology Leadership” and the business philosophy of "Implement
New Strategies to Boost New Growth Areas". It will continually upgrade existing operations and achieve
further growth by enhancing perspective and breaking down established mindsets, and promote
business growth by making full use of new technologies, new products, new structures, new markets,
new channels, new pathways, new methods and new business models. With the dual-circulation and
dual-carbon strategies at home and abroad, while upgrading the "Number One Engine" of the existing
ToC business, Midea will seize the opportunities of domestic replacement and industrial upgrading to
embrace ToB transformation to create new businesses and ignite the "Number Two Engine". Midea
should focus on developing not only the core ToB businesses such as robotics and automation, building
technologies, energy management, and smart travel, but also the transformation and upgrading of digital
innovation businesses such as Annto, Midea Cloud, WDM and Midea Intelligent Lighting & Controls.
Specific priority tasks are set out below:
a. Based on the core strategy of “Technology Leadership”, Midea will establish a comprehensive
research organization, increase investment in digitalization and R&D, improve talent structure, and carry
out the task of scientific innovation, product innovation, technological innovation, business model
innovation, and process innovation. Midea will resolutely increase R&D investment, build up R&D scale
advantage, and continuously lay out key technologies, cutting-edge technologies, basic technologies,
digitalization and intellectualization. By virtue of the two drivers of technology strategy and product
strategy, as well as the three-tier technical committee and the four-tier R&D system, Midea will lead
technological innovation according to product demand, and create the brand advantage for Midea in
energy saving, health and intelligence; it will actively support the dual-carbon strategy and the "Green
Strategy" of the Group, apply eco-friendly and low-carbon technology to products by technology
innovation, help to save energy and reduce emissions in the life cycle of products, and lead the
formulation of environment conservation standards to obtain the national green product certification of all
categories of products; to promote the rapid application of scientific innovation by standard, it will
implement the "3+1" strategy for standardization, and strengthen the formulation and revision of
international standards. For the purpose of making breakthroughs and building key technology barriers
in all the product categories, and promoting innovation of global products, product structure
improvement and high-end strategy, it will continue to implement the "Three Generations" project,
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The 2021 Annual Report of Midea Group Co., Ltd.
accelerate the application of research results, and retain the "Number One Engine" of ToC business. In
ToB business, it will cooperate with strategic partners by digital technology to increase the research on
differentiated innovation technologies in new industries and foster the industrialization of innovation
technologies. Also, in order to build up an R&D-centric innovation-driven model and maintain technology
leadership in a comprehensive manner, it will continuously optimize the R&D network and scientist
system, improve the "2+4+N" R&D framework based on regional technology advantages, adapt the R&D
structure, introduce high-end talents, build R&D centers of new industries, expand the open-end
innovative ecology, and explore the incubation mechanism.
b. Midea will keep a high-quality development direction and stick to internal, sustained and effective
organic growth. In the process of implementing new strategies to boost new growth areas, the key for
Midea's survival in competition 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 pursuit of
better profitability. In order to win in competition, it is important to develop high-end products to refine the
product mix. Breakthroughs must be made in a faster manner regarding small and major appliances, in
addition to the promotion of products catering to new consumption trends. Newly established business
entities will explore corporation-based development, actively carry out innovation and embrace new
models and approaches, as well as strengthen breakthroughs with respect to new models, business,
product categories and application areas. 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
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The 2021 Annual Report of Midea Group Co., Ltd.
fresh impetus for continual growth through relentless innovation.
c. In the domestic market, based on the “Direct to Users” strategy, Midea will continue to deepen the
reform of its organizational structure, improve retail capacity, and develop user insights and back-end
capacity. Midea will also commit itself to intelligent experience terminals and user experience as part of
efforts to connect with users' preferences. For channel transformation, Midea will take the operation
center as the “main battlefield”, continuously empower and fully authorize the operation center. At the
same time, Midea will optimize the platform of Midea Cloud Sales to improve the use experience of
retailers in all aspects, and to ensure the enhancement of the operation center's capabilities. It will
improve the efficiency of transformation from "Midea Home Delivery" to Midea offline microstore through
the digital transformation of store responsibility system, data visualization, and online business moves.
Meanwhile, it will establish the cloud warehouse network, enable terminal stores to focus on retail trade,
and strengthen the scene display function for products in stores, to realize the whole-scene sales and
goods delivery by cloud warehouse. Also, it will improve sales capability of product suites and
scene-based display through the intelligent scene-based display in terminal stores, the 3D display in app
of Midea Cloud Sales and "Midea Home Delivery", and the introduction of C2M professional customized
tools for terminal shopping guidance to provide users with professional one-stop solutions. For the
product marketing, Midea will accelerate the layout of product structure and the breakthrough of product
suites, improve the product layout of new brands by enhancing the matching efficiency of potential
customers and driving sales growth with new marketing and playing methods, and build emerging
categories in advance by user insight; moreover, it will accelerate the online marketing transformation,
promote business consistency, build integrated marketing capabilities online, and press ahead with
mid-office capability building of users, content, live broadcasting, and data to continuously improve
business efficiency. With regard to user operation, Midea will continue to uphold the principle of "Create
Value for Users" and optimize product iteration, purchase experience and service experience based on
user experience. Moreover, it will attract more members and provide more member privilege services as
well as accelerate the operation of private domain traffic. In addition, Midea will invest more in intelligent
devices to optimize user experience and improve user loyalty, and strengthen the support of data
platforms and business intelligence. For the user service, in combination with the transformation of
front-end business model, Midea will proactively promote the whole-house scene-based services and
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The 2021 Annual Report of Midea Group Co., Ltd.
the construction of ecological chain in pre-installation scene, and create an integrated solution for
whole-house package purchasing and installing services. Meanwhile, it will deepen the building of
engineers' service capacity, upgrade the system of service engineer operation, tie the service quality,
engineer income to operation rules and promote the digital management on engineers, the intelligent
dispatching by big data, and digital transformation of service providers to realize the leapfrogging
breakthrough of service efficiency and quality.
d. On the overseas market, Midea will continuously optimize the product structure, build experience
centers for overseas users with intelligent-based scene, and comprehensively promote the whole-house
intelligent scene system and the upgrade of intelligent terminals to build a product competition system
with high added value. It will improve channel efficiency and flattening, enhance product turnover
efficiency, explore direct retail and the shared inventory system, and attempt to implement the DTC
business model. In response to building the capabilities of terminal retail operation and direct access to
users, it will continue to improve the breadth and depth of the network layout of offline channels, expand
the coverage of overseas sales outlets, and drive retail transformation and the “Direct to Users”
capability. Also, to enhance the competitiveness of online channels, it will accelerate the key capacity
building of overseas e-commerce, and improve cross-border logistics, user research and digital
marketing. It will propel the digital transformation and reform of overseas business, improve logistics and
storage capacity in the project of global digitization, optimize the network of after sales service and spare
parts, and promote the overseas iService3.0 digital after-sales service system. It will strengthen local
manufacturing coordination to greatly shorten the delivery cycle and increase product competitiveness.
Furthermore, it will propel the end-to-end process sorting and reconstruction in business scenes of
export, and improve accuracy, consistency and visualization of data flow to make progress in operation
efficiency of value chain.
In 2022, TLSC will continue to be customer-oriented, respond faster to market changes, and achieve
reasonable revenue growth under the premise of continuous improvement of operating quality. Due to
the impact of COVID-19, risks such as rising shipping costs, shortage of transportation capacity, rising
raw material costs, and exchange fluctuation will persist. TLSC will proactively make response in these
situation by strengthening communication with key customers and collaboration in all parts of value
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chain, and accelerate self-reform. It will proactively experiment with new methods and models to
improve management effectiveness, optimize organizational system and invigorate teams, enhance
retail capability to increase market share, and continuously make progress in product structure to
increase product added value and ensure profitability.
e. In 2022, in light of different needs from different consumer groups, Midea will carry out long-term
planning, improve its multi-brand matrix, and refine its high-end brand portfolio. The cultivation of
COLMO, the brand targeting high-end consumers, is an important strategy of the Group. It will continue
to explore new approaches in R&D and marketing, refine its product mix, and keep innovating. It is to
enhance whole-house smart products, expand its channel network, and upgrade the scene-based and
smart experience at the retail end to boost sales. WAHIN will cater to the new trends of young people,
and constantly innovate in product and marketing side to cultivate young users and deepen the brand
image. Therefore, WAHIN will launch flagship product suites in all categories to provide young users with
the experience in personalized whole-house intelligent scene. Furthermore, WAHIN will carry out
promotional activities around different circles of young people at major marketing nodes such as Spring
Festival, "618" and "Double 11", in which various trending cultures and innovative forms like college
music festival, entertainment and sports, and anime will be included.
f. Midea will boost its competitiveness in the digital era by implementing the strategy of “Digitization &
Intelligence Driven”. It will strengthen the building of Midea as a digitalized enterprise, improve the digital
operational methods and systems, support the integration of every link of Midea’s value chain by digital
means, and create value by optimizing key operating indicators such as cost, efficiency and revenue
through digitalization. Effort will also be made to refine the Midea Cloud Sales platform and promote
digital reform in marketing to support the “Technology Leadership” and “Direct to Users” strategies.
Midea will further build and optimize digitalized Industrial Internet factories and promote green, intelligent
manufacturing. And it will strengthen digital support for the “Global Impact” strategy. Measures to be
taken include enhancing the data platform and data governance to promote data-driven improvement in
operations.
Being customer-oriented, Midea will build the capability for making whole-house intelligent solution in
whole process and the capability for whole-house intelligent business in a closed loop, improve sales
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The 2021 Annual Report of Midea Group Co., Ltd.
ability in whole-house intelligent scene by convenient business links, continuously iterate and release
whole-house intelligent solutions to support different terminal business forms, establish Midea
whole-house intelligent open-end platform, and fully support the ecological cross-industry cooperation
with home decoration and household products to provide customers and partners with efficient digital
tools. Through promoting high-performance operations in the whole value chain with data, Midea will
provide plentiful intelligent life experience to customers with cooperative partners. Based on Midea's
years of research results on health mechanism, and functions of big data and AI, Midea will provide
users with more personalized and all-round solutions for healthy life. Combined with users' habits and
big data, the intelligent scenes will be recommended for users to promote the creation and enjoyment of
intelligent scenes. By introducing ecology-based entry, Midea will create cases for the MSmartLife App
under the self-built ecological benchmark and explore new experience and new mode of smart home
appliances. In addition, Midea will optimize the MSmartLife App to realize intelligent devices' closed-loop
capability of network connection and device control, and, in order to further enhance user experience,
Midea will provide users with functions to link online or offline. Centering on key technology
breakthroughs, Midea will promote the development of smart home appliances in the direction of active
service and robotization. It will develop a home-service robot with the functions of whole-house linkage,
safety protection and life assistant in 2022.
Midea will build a model platform in the IoT industry and a business platform of meta-home to realize the
concept of digital twin, and invent a multi-modal perception algorithm to support intelligent original
applications. In the next stage, it will upgrade the M.IoT operating system, support the M-Smart 4.0
protocol, provide execution capabilities for device localization, and realize the decoupling of device
system from applications to support the new software developing mode of "Home Appliance Plus
Computer". Also, Midea will deepen the cooperation between schools and enterprises to explore the
next generation of IoT architecture in smart home appliances, and lay out multiple data centers
worldwide to build an integrated global IoT cloud platform. Furthermore, Midea will realize the
productization of open interface on platform and data open capabilities to empower industry solutions
and improve the efficiency of intelligent scenes development. On data management, Midea will
consolidate data technology and promote business digitalization to establish a stable, efficient and
user-friendly group data common layer through advanced big data technologies including large-scale
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offline computing, streaming computing, graphics computing, machine learning, and hyper-scale
graphics neural network. It will also upgrade core data assets, construct the "User One_ID" 2.0, and
provide all-round data support service for each business system on the grounds of asset-based data,
real-time data, and service-based data. Additionally, it will promote digital and intelligent transformation
in each business, strive to create the benchmark of "manufacturing data platform", focus on digital
product planning and digital product operation, improve channel efficiency by digital automatic stocking
and replenishment, and upgrade internal data monitoring and decision support platform.
g. Midea will dedicate itself to driving new growth in the core ToB business, constantly expand the
business boundaries and accelerate business growth, and rapidly layout, enter into and occupy the
market of new business. In 2022, focusing on the field of new energy automobile parts, Midea will realize
the comprehensive improvement in customers, products and manufacturing capabilities, that is, it will
shift to mass production from project acquisition to cover more mainstream customers, improve
competitiveness in three major product lines (i.e. thermal management, main driver, auxiliary/intelligent
driving) and other technical fields to gradually implement the development plan of "Parts - Components -
Systems", and carry out mass production at the new base in Anqing, Anhui to help the product of central
motor in E-bike rapidly enter into the European and American markets. In the field of industrial
automation, Midea will further improve the motion control solutions in robot, semiconductor and
consumer electronics. In the field of green energy, Midea will drive a full offering of energy storage
products and solutions. With respect to consumer appliances, Midea will promote the mass production of
valve products and chips, and make breakthroughs in sales.
h. Midea will beef up KUKA’s localized operations in China, increase investment in the development and
application of robotics, as well as foster R&D innovation of core components and software systems. In
terms of marketing, Midea will maintain leadership in the auto sector and take active steps to explore
new areas including new energy, general industrial manufacturing, electronics, medical care and
logistics, services, etc. Concerning operation, it will concentrate on R&D, supply chain management,
high-performance operations and digitalization, among others, so as to build the core competitiveness of
the robotics and industrial automation business in a faster manner.
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Risks Faced by the Company and Countermeasures:
A. Risk associated with the COVID-19 pandemic
The fluctuations and repeated outbreaks of the COVID-19 pandemic may impact the demand,
production and sales of the Company’s products and services. Pandemic control measures, such as
lockdown, social distancing, and travel restrictions, reduce customer mobility. Other consequences
include limited production and operations in some regions, the shutdown of retail outlets, suspended
customer operations, and increased logistics costs. All these factors bring about uncertainties and
challenges to the normal functioning of the Company and the market environment.
B. 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.
C. 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.
D. Risk in global asset allocation and overseas market expansion
Internationalization and global operations is a long-term strategic goal of the Company. The Company
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The 2021 Annual Report of Midea Group Co., Ltd.
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.
E. 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
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.
F. 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 2022. 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
Way of Type of Index to main
Date Place Visitor Discussions
visit visitor inquiry information
BOCIM, New China 1. Midea’s new business structure and
Fund, Taiping Asset strategic focus? 2. Midea’s planning Log Sheet of
Management, Ping and strategy for overseas sales in the Investor Relations
Midea An Annuity near future? 3. KUKA’s latest Activities for 18
18 March By
Group Institution Insurance, SWS MU condition and future development? 4. March 2021
2021 phone
HQ Fund Management, What are the positions for WINONE disclosed on
Kaiyuan Securities, Elevator and WDM, which were www.cninfo.com.c
Fullgoal Fund, and acquired in the past year, in Midea’s n
CICC Securities business landscape in the future?
1. What major risks will the Company
be exposed to in its future
development? 2. Since intelligent
home appliance products are the
market trend, what are the Company's
plans for its development in this
section? 3. What are the Company's
current arrangements for its overseas
capacity? What products will Midea
make with its new overseas capacity
in the future? 4. Against the backdrop
of a hike in the price of raw materials, Log Sheet of Midea
how is the increase in the prices of Group Investor
Midea
17 May By The Company's overseas orders of Midea going? Will Relations Activities
Group Institution
2021 phone investors the price increase affect the profit 20210517
HQ
margin? 5. What about the current disclosed on
overall performance and progress of www.cninfo.com.cn
the internal channel reform of Midea?
6. What are the Company's priorities
when it continuously expands its
diversified ToB business? What are
the expectations for miscellaneous
ToB business? 7. Is the overall KUKA
business exposed to the risk of
goodwill impairment? 8. Given that the
development of small domestic
appliance products in the Company's
overseas OBM business is weak, will
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The 2021 Annual Report of Midea Group Co., Ltd.
the Company expand its global small
domestic appliance business via
cross-border e-commerce?
Shanghai Kuandu
Asset Management
1. What about the synergy of
Co., Ltd., China
WINONE Elevator in the aspect of
Securities Co., Ltd.,
intelligent buildings? 2. What about
China Life Asset
the current status and future outlooks Log Sheet of
Management Co.,
of the Electromechanical Business Investor Relations
Ltd., Boc
Midea Group? 3. What about the business Activities for 11
11 June By International (China)
Group Institution plans of KUKA China? 4. Though the June 2021
2021 phone Co., Ltd., Bank of
HQ pandemic in the last year has disclosed on
China Investment
contributed to a leap forward in the www.cninfo.com.c
Management Co.,
small domestic appliance sector in n
Ltd., Bank of
China, the development of Midea's
Communications
small domestic appliances is still
Schroder Fund
weak. Is there any solution?
Management Co.,
Ltd.
1. Given that the pandemic in the last
year has offered many small domestic
appliance companies development
AIA Life Insurance
opportunities, how will Midea develop
Co., Ltd., Huatai
its small domestic appliance
Securities Co., Ltd.,
business? 2. Given that more and
Maxwealth Fund Log Sheet of
more companies have announced
Management Co., Investor Relations
their plans in the sector of alternative
Midea Ltd., Boc Samsung Activities for 29
29 June By fuel vehicles recently, what are
Group Institution Life Insurance Co. June 2021
2021 phone Midea's plans for this sector? 3. Is
HQ Ltd., Ping An Annuity disclosed on
Midea affected by the current global
Insurance Company www.cninfo.com.c
microchip shortage? What are the
of China, Ltd., and n
solutions? 4. What do you think of the
Zhong Ou Asset
competitive landscape and market
Management Co.,
performance of residential air
Ltd.
conditioners? 5. What about the
Company's performance at the 6.18
Shopping Festival?
ABC-CA Fund 1. What were the Company's Log Sheet of
Management, New expectations for COLMO in 2021? 2. Investor Relations
Midea
20 July By China Asset Given multitudinous players in the Activities for 20
Group Institution
2021 phone Management, Gfund small domestic appliance market, how July 2021
HQ
Management, will Midea catch up in products with disclosed on
Dacheng Fund, weak competitiveness? 3. As the www.cninfo.com.c
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The 2021 Annual Report of Midea Group Co., Ltd.
Horizon Asset, global pandemic is gradually under n
NingquanInvestmen control, how will Midea overcome the
t, Xingyin Fund influence exerted by the operational
Management, resumption of rivals? 4. What about
Pengyang AMC, the current status and strategies for
CICC Asset the future development of KUKA? 5.
Management, How is the export of Industrial Internet
Invesco Great Wall of Things (IIOT) and digital solutions
Fund Management, going?
Anxin Asset
Management, and
Huatai
SecuritiesSelf-opera
ted
E Fund, GF
Securities, China 1. What about the market
Asset Management, performance of the Electromechanical
China Universal, Business Group? 2. Why does Midea
China Southern begin to incorporate medical services Midea Group: Log
Asset Management, into its diversified business? 3. What Sheet of Investor
Midea
30 July By Yinhua Fund, Bosera measures has Midea taken to Relations Activities
Group Institution
2021 phone Funds, Harvest increase the percentage of the OBM for 30 July 2021
HQ
Fund, ICBC Credit business? 4. What about the current disclosed on
Suisse Asset business picture and profitability of www.cninfo.com.cn
Management, TLSC? 5. What about the business
Invesco Great Wall development of the HVAC & Building
Fund Management, Technologies Division?
and CITIC Securities
CITIC Securities,
1. What about the channel reform of
CICC Securities,
Midea? 2. What about Midea's
BOCOM Schroders,
progress in the ToB sector? 3. What
Penghua Fund,
about the performance of TLSC in the
China Galaxy 000333 Midea
first half of the year? 4. Why does
Securities, CITIC Group Research
Midea change the HVAC & Building
26 Midea Asset Management, Communication
By Technologies Division into the
September Group Institution China Asset Information
phone Building Technologies Division? 5.
2021 HQ Management, UBS 20210926
Concerning the "carbon emission
SDIC, First State disclosed on
peak" and "carbon neutrality" goals
Cinda Fund, HuaAn www.cninfo.com.cn
released by the state in September
Fund, Caitong
last year, what are the arrangements
Securities, and
of Midea for the home appliances
Qianhai Alliance
sector?
Asset Management
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The 2021 Annual Report of Midea Group Co., Ltd.
3w Fund 1. What are the arrangements of
Management Llc, Midea for the medical sector? 2. Log Sheet of
ApaH Capital Could you please introduce the new Investor Relations
16 Midea Management criteria for intelligent home appliance Activities for 16
By
November Group Institution Limited, Apg grading released by Midea? 3. What November 2021
phone
2021 HQ Investments Asia about the progress that Midea has disclosed on
Limited, Baring Asset achieved in the Internet of Things www.cninfo.com.c
anagement (Asia) ("IoT")? 4. What is the "meta-Home" n
Limited, etc. concept put forward by Midea?
1. Could you please introduce Midea's
Hao Advisors Log Sheet of
understanding of the whole-house
Management Investor Relations
appliance scenario? 2. What about
29 Midea Limited, LMR Master Activities for 29
By the cooperation between M.IoT and its
November Group Institution Fund Limited, November 2021
phone ecological partners? 3. Could you
2021 HQ Millennium Capital disclosed on
please introduce the Green Strategy
Management (Hong www.cninfo.com.c
released by Midea in the technology
Kong) Limited, etc. n
month of this year?
1. What about the progress in the
Huashang Fund,
application of Midea's building
Mirae Asset Huachen
technologies to different application
Fund Management,
scenarios? 2. What about the
China Southern Log Sheet of
development of Annto at present? 3.
Asset Management, Investor Relations
As the global shipping status is still
16 Midea Guosen Securities, Activities for 16
By not positive due to the impacts of the
December Group Institution Guotai Junan December 2021
phone COVID-19, what measures has the
2021 HQ International, disclosed on
Company taken to ensure that the
Essence Securities, www.cninfo.com.c
export business is carried out as
Ping An Fund n
usual? 4. Concerning the new brand
Management,
of building control introduced by the
Fullgoal Fund, and
Building Technologies Division of the
Yinhua Fund
Company, what is its positioning?
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The 2021 Annual Report of Midea Group Co., Ltd.
Section IV Corporate Governance
1. Basic Situation of Corporate Governance
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 four special committees under the Board, namely the Strategy Committee, the Auditing
Committee, the Nomination Committee as well as the Remuneration and Appraisal 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.
In 2021, the Company won the following honors:
No. 288 of “Fortune Global 500”; No. 183 of “The World’s 2000 Largest Public Companies” released
by the Forbes; No. 33 of the “BrandZ 2021 Top 100 Most Valuable Chinese Brands” jointly
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The 2021 Annual Report of Midea Group Co., Ltd.
released by WPP and Kantar Millward Brown; No. 186 of the “2022 Brand Finance Global 500”; and
the Round Table Award at the Seventeenth “Gold Prize of Round Table” of Chinese Boards of
Listed Company organized by the Directors & Boards magazine.
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.
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.
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The 2021 Annual Report of Midea Group Co., Ltd.
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
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 Meeting of Shareholders and Special Meetings of Shareholders Convened
during the Reporting Period
4.1 Meetings of shareholders convened during the Reporting Period
Investor
Meeting Type participation Convened date Disclosure date Disclosure index
ratio
2021 First Special Special Announcement No.
Meeting of meeting of 55.5957% 25 January 2021 26 January 2021 2021-007, disclosed on
Shareholders shareholders www.cninfo.com.cn
2020 Annual Annual Announcement No.
Meeting of meeting of 53.4445% 21 May 2021 22 May 2021 2021-045, disclosed on
Shareholders shareholders www.cninfo.com.cn
2021 Second Special Announcement No.
Special Meeting of meeting of 57.7457% 25 June 2021 26 June 2021 2021-076, disclosed on
Shareholders shareholders www.cninfo.com.cn
2021 Third Special Announcement No.
18 September
Special Meeting of meeting of 60.3476% 17 September 2021 2021-104, disclosed on
2021
Shareholders shareholders www.cninfo.com.cn
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The 2021 Annual Report of Midea Group Co., Ltd.
4.2 Special meetings of shareholders convened at the request of preference shareholders with
resumed voting rights
□Applicable √N/A
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The 2021 Annual Report of Midea Group Co., Ltd.
5. Directors, Supervisors and Senior Management
5.1 General information
Shares Shares
Shares held increased decreased Shares held
Starting Ending Other
Incumbent/ at the at the at the at the
Name Office title Gender Age date of date of increase/decrease Reason for share changes
Former year-begin Reporting Reporting period-end
tenure tenure (share)
(share) Period Period (share)
(share) (share)
Chairman of
Fang
the Board and Incumbent Male 54 2012-8-25 2024-9-16 116,990,492 0 116,990,492
Hongbo
CEO
He
Director Incumbent Male 54 2012-8-25 2024-9-16 0 0 0
Jianfeng
Director and
Yin Bitong Incumbent Male 53 2016-12-16 2024-9-16 2,109,655 0 2,109,655
Vice President
Director and
Gu Yanmin Incumbent Male 58 2014-4-21 2024-9-16 0 0 0
Vice President
Wang Director and
Incumbent Male 45 2021-9-17 2024-9-16 0 0 0
Jianguo Vice President
Yu Gang Director Incumbent Male 62 2018-9-26 2024-9-16 0 0 0
Xue Independent
Incumbent Male 57 2018-9-26 2024-9-16 179,914 0 179,914
Yunkui Director
Guan Independent
Incumbent Male 44 2018-9-26 2024-9-16 0 0 0
Qingyou Director
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The 2021 Annual Report of Midea Group Co., Ltd.
Independent
Han Jian Incumbent Female 49 2018-9-26 2024-9-16 0 0 0
Director
Chairman of
Dong the
Incumbent Male 36 2020-10-16 2024-9-16 0 0 0
Wentao Supervisory
Committee
Zhao Jun Supervisor Incumbent Male 46 2014-4-21 2024-9-16 0 0 0
Liang Employee
Incumbent Female 38 2017-3-30 2024-9-16 0 0 0
Huiming Supervisor
Zhang
Vice President Incumbent Male 48 2018-4-23 2024-9-16 516,575 0 516,575
Xiaoyi
Hu Ziqiang Vice President Incumbent Male 64 2014-8-18 2024-9-16 400,000 0 400,000
Wang 100,000 restricted shares
Vice President Incumbent Male 54 2014-8-18 2024-9-16 240,000 100,000 340,000
Jinliang were granted
100,000 restricted shares
were granted and 35,700
Li Guolin Vice President Incumbent Male 45 2020-7-3 2024-9-16 265,000 35,700 100,000 400,700
shares were purchased by
way of centralized bidding
Fu
Vice President Incumbent Male 53 2021-9-17 2024-9-16 200,000 0 200,000
Yongjun
Guan
Vice President Incumbent Male 42 2021-9-17 2024-9-16 535,000 0 535,000
Jinwei
CFO and
Zhong 2022-2-22 65,000 shares of equity
Director of Incumbent Female 40 2024-9-16 211,152 65,000 276,152
Zheng 2019-3-22 incentives were exercised
Finance
Jiang Board 80,000 restricted shares were
Incumbent Male 48 2013-10-30 2024-9-16 358,600 80,000 438,600
Peng Secretary granted
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The 2021 Annual Report of Midea Group Co., Ltd.
Cai
CFO Former Male 40 2021-4-19 2022-1-29 0 0 0
Weiding
80,000 restricted shares were
Xiao
Vice President Former Male 51 2019-3-22 2021-4-30 460,000 185,000 645,000 granted and 105,000 share
Mingguang
options were exercised
Liu Min Vice President Former Female 44 2020-10-16 2021-6-1 0 0 0
Helmut
CFO Former Male 49 2019-10-22 2021-1-25 0 0 0
Zodl
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The 2021 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
Helmut Zodl CFO Former 2021-1-25 Personal reason
Cai Weiding CFO Appointed 2021-4-19 Personal reason
Xiao Mingguang Vice President Former 2021-4-30 Personal reason
Liu Min Vice President Former 2021-6-1 Personal reason
Wang Jianguo Director Elected 2021-9-17 -
Fu Yongjun Vice President Appointed 2021-9-17 -
Guan Jinwei Vice President Appointed 2021-9-17 -
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 and CEO of Midea Group. He
joined Midea in 1992 and previously served as the General Manager of Midea Air-Conditioning Business
Unit, CEO of Midea Refrigeration Electric Appliances Group, Chairman and CEO of GD Midea Holding
Co., Ltd.
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. Yin Bitong, male, a Master's graduate, joined Midea in 1999 and served as GM Assistant and
Marketing Director of the Residential Air Conditioning Division as well as GM and Director of Wuxi Little
Swan Co. Ltd. He is now a Director and Vice President of Midea Group, a Co-President of the Smart
Home Business Group, and the President of Midea China.
Mr. Gu Yanmin, male, holder of a Doctoral degree, joined Midea in 2000 and has functioned as the
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The 2021 Annual Report of Midea Group Co., Ltd.
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
Manager of Midea Group’s Refrigeration Division. Currently, he is a Director and Vice President of Midea
Group, a Co-President of the Smart Home Business Group, and the President of Midea International
Business, in addition to being in charge of the TLSC Division, the international logistics platform and
legal affairs.
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
the Executive Chairman of the Board of Directors and a co-founder of 111, Inc., as well as a Director of
Midea Group.
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
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The 2021 Annual Report of Midea Group Co., Ltd.
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,
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., Beijing Yingpu
Technology Co., Ltd., Hangzhou Hikvision DIGITAL Technology Co., Ltd., Shandong High-speed Road &
Bridge Group Co., Ltd., and Shaanxi International Trust 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. He used to work in CIMC
and ZTE. 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.
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 Employee Supervisor of Midea Group.
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The 2021 Annual Report of Midea Group Co., Ltd.
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 Chief Information Officer 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 and
the CTO of Midea Group, in addition to being the Chairman of the Board of Beijing Wandong Medical
Technology 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. 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 and the Director of Quality and Intelligent
Manufacturing of Midea Group.
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 Vice President,
and the President of the Industrial Technology Business Group, 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
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.
Ms. Zhong Zheng, female, a 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
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Midea Group, etc. She is now the CFO and Director of Finance 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
Chairman of the
He Jianfeng Infore Group Co., Ltd. Board and 1995-06 - Yes
President
Chairman of the
Gu Yanmin KUKA Supervisory 2017-01 2024-06 Yes
Committee
Executive
Yu Gang 111, Inc. Chairman of the 2011-04 - Yes
Board
Independent
Ouyeel Co., Ltd. 2019-08 2022-08 Yes
Director
Zhuhai Wanda Commercial Independent
2021-03 2024-03 Yes
Management Group Co., Ltd. Director
Xue Yunkui
Independent
Bank of Shanghai Co., Ltd. 2021-01 2024-01 Yes
Director
Independent
Hinova Pharmaceuticals Inc. 2020-09 2023-09 Yes
Director
Beijing Rushi Research Information Chairman of the
Guan Qingyou 2017-12 - Yes
Consulting Service Co., Ltd. Board
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Independent
Shaanxi International Trust Co., Ltd. 2019-07 2022-07 Yes
Director
Independent
Nanhua Futures Co., Ltd. 2019-02 2025-02 Yes
Director
Shandong Hi-Speed Road&Bridge Independent
2020-06 2023-06 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 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:
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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 54 Incumbent 11,060
and CEO
He Jianfeng Director Male 54 Incumbent Yes
Director and Vice
Yin Bitong Male 53 Incumbent 7,280
President
Director and Vice
Gu Yanmin Male 58 Incumbent 5,640
President
Director and Vice
Wang Jianguo Male 45 Incumbent 4,640
President
Yu Gang Director Male 62 Incumbent 450
Xue Yunkui Independent Director Male 57 Incumbent 450
Guan Qingyou Independent Director Male 44 Incumbent 450
Han Jian Independent Director Female 49 Incumbent 450
Chairman of the
Dong Wentao Male 36 Incumbent 800
Supervisory Committee
Zhao Jun Supervisor Male 46 Incumbent Yes
Liang Huiming Employee Supervisor Female 38 Incumbent 260
Zhang Xiaoyi Vice President Male 48 Incumbent 5,810
Hu Ziqiang Vice President Male 64 Incumbent 3,710
Wang Jinliang Vice President Male 54 Incumbent 3,810
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Li Guolin Vice President Male 45 Incumbent 3,940
Fu Yongjun Vice President Male 53 Incumbent 6,780
Guan Jinwei Vice President Male 42 Incumbent 6,260
CFO and Director of
Zhong Zheng Female 40 Incumbent 3,610
Finance
Jiang Peng Board Secretary Male 48 Incumbent 2,380
Cai Weiding CFO Male 40 Former 7,550
Xiao Mingguang Vice President Male 51 Former 3,900
Liu Min Vice President Female 44 Former 3,760
Helmut Zodl CFO Male 49 Former 540
Total -- -- -- -- 83,530 --
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 28th
Meeting of the Third Board of Directors
The 28th Meeting of
(Announcement No. 2021-001), which has been
the Third Board of 5 January 2021 6 January 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 6 January 2021
See the Announcement on Resolutions of the 29th
Meeting of the Third Board of Directors
The 29th Meeting of
(Announcement No. 2021-010), which has been
the Third Board of 23 February 2021 24 February 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 24 February 2021
See the Announcement on Resolutions of the 30th
Meeting of the Third Board of Directors
The 30th Meeting of
(Announcement No. 2021-017), which has been
the Third Board of 29 March 2021 30 March 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 30 March 2021
See the Announcement on Resolutions of the 31st
The 31st Meeting of Meeting of the Third Board of Directors
the Third Board of 19 April 2021 20 April 2021 (Announcement No. 2021-021), which has been
Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and Shanghai
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Securities News dated 20 April 2021
See the Announcement on Resolutions of the 32nd
Meeting of the Third Board of Directors
The 32nd Meeting of
(Announcement No. 2021-033), which has been
the Third Board of 23 April 2021 30 April 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 30 April 2021
See the Announcement on Resolutions of the 33rd
Meeting of the Third Board of Directors
The 33rd Meeting of
(Announcement No. 2021-039), which has been
the Third Board of 9 May 2021 10 May 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 10 May 2021
See the Announcement on Resolutions of the 34th
Meeting of the Third Board of Directors
The 34th Meeting of
(Announcement No. 2021-056), which has been
the Third Board of 4 June 2021 5 June 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 5 June 2021
See the Announcement on Resolutions of the 35th
Meeting of the Third Board of Directors
The 35th Meeting of
(Announcement No. 2021-096), which has been
the Third Board of 30 August 2021 31 August 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 31 August 2021
See the Announcement on Resolutions of the First
Meeting of the Fourth Board of Directors
The First Meeting of
(Announcement No. 2021-105), which has been
the Fourth Board of 17 September 2021 18 September 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 18 September 2021
The Second Meeting The Interim Report for the Third Quarter 2021 was
of the Fourth Board of 29 October 2021 - approved with eight affirmative votes, 0 negative
Directors notes and 0 abstentions.
See the Announcement on Resolutions of the Third
Meeting of the Fourth Board of Directors
The Third Meeting of
(Announcement No. 2021-113), which has been
the Fourth Board of 24 December 2021 27 December 2021
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and Shanghai
Securities News dated 27 December 2021
The Fourth Meeting of See the Announcement on Resolutions of the Fourth
29 December 2021 30 December 2021
the Fourth Board of Meeting of the Fourth Board of Directors
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The 2021 Annual Report of Midea Group Co., Ltd.
Directors (Announcement No. 2021-118), which has been
disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and Shanghai
Securities News dated 30 December 2021
6.2 Attendance of directors in Board meetings and meetings of shareholders
Attendance of directors in Board meetings and meetings of shareholders
Presence due Absence from
Presence at Presence at
at Board Presence at Absence from Board Presence at
Board Board
meetings in Board Board meetings for meetings of
Director meetings by meetings
the Reporting meetings on meetings two shareholders
telecommuni through a
Period site (times) (times) consecutive (times)
cation (times) proxy (times)
(times) times
Fang Hongbo 12 1 11 0 0 No 3
He Jianfeng 12 1 11 0 0 No 0
Yin Bitong 12 0 12 0 0 No 0
Gu Yanmin 12 1 11 0 0 No 1
Wang Jianguo 4 0 4 0 0 No 0
Yu Gang 12 1 11 0 0 No 0
Xue Yunkui 12 1 11 0 0 No 0
Guan Qingyou 12 1 11 0 0 No 0
Han Jian 12 1 11 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
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
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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 of
Convened opinion and Other
Committee Members meetings Topics
date recommen information
convened
dations
The following proposals were
approved: The 2020 Final Account
Report, The Summary Report of the
Audit Committee on the 2020 Annual
Audit, The 2020 Annual Report and
2021-4-27 Its Summary, The Interim Report for - -
Xue Yunkui,
the First Quarter 2021, The Proposal
Guan
Audit on Re-appointment of Independent
Qingyou, Han 3
Committee Auditor for Internal Control for 2020,
Jian, and Yu
and The Proposal on
Gang
Re-appointment of CPA Firm.
The Semi-Annual Report 2021 and
2021-8-30 - -
Its Summary was approved.
The Interim Report for the Third
2021-10-29 - -
Quarter 2021 was approved.
The Proposal on Appointment of
2021-4-18 - -
CFO was approved.
Guan
The following proposals were
Qingyou, Yu
Nomination approved: The Proposal on
Gang, Xue 3
Committee Re-election of the Board of Directors
Yunkui, and 2021-8-30 - -
and Nomination of Non-independent
Han Jian
Director Candidates, and The
Proposal on Re-election of the
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Board of Directors and Nomination
of Independent Director Candidates.
The following proposals were
approved: The Proposal on Election
of Chairman for the Fourth Board of
Directors, The Proposal on Election
of Members for Special Committees
under the Fourth Board of Directors,
The Proposal on Appointment of
2021-9-17 President, The Proposal on - -
Appointment of Vice President, The
Proposal on Appointment of CFO,
The Proposal on Appointment of
Director of Finance, The Proposal on
Appointment of Board Secretary,
and The Proposal on Appointment of
Representative for Securities Affairs.
The following proposals were
approved: The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2017 Restricted Share Incentive
Scheme, The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2018 Restricted Share Incentive
Scheme, The Proposal on the
Repurchase and Retirement of
Han Jian, Yu
2021-1-5 Certain Incentive Shares under the - -
Remuneration Gang, Xue
2019 Restricted Share Incentive
and Appraisal Yunkui, and 5
Scheme, The Proposal on the
Committee Guan
Repurchase and Retirement of
Qingyou
Certain Incentive Shares under the
2020 Restricted Share Incentive
Scheme, and The Proposal on the
Satisfaction of Unlocking Conditions
for the Third Unlocking Period for
Reserved Restricted Shares under
the 2017 Restricted Share Incentive
Scheme.
The following proposals were
2021-4-27 approved: The Remuneration - -
Payment Standards for Directors,
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Supervisors and Senior
Management for 2020, The Proposal
on the Eighth Stock Option Incentive
Scheme (Draft) and Its Summary,
The Proposal on the 2021 Restricted
Share Incentive Scheme (Draft) and
Its Summary, The Seventh Core
Management and Global Partner
Stock Ownership Scheme of Midea
Group Co., Ltd. (Draft) and Its
Summary, The Fourth Core
Management and Business Partner
Stock Ownership Scheme of Midea
Group Co., Ltd. (Draft) and Its
Summary, The Proposal on Matters
Related to the Stock Option Exercise
for the First Exercise Period for
Reserved Stock Options of the Fifth
Stock Option Incentive Scheme, and
The Proposal on the Satisfaction of
Unlocking Conditions for the First
Unlocking Period for Reserved
Restricted Shares under the 2018
Restricted Share Incentive Scheme.
The following proposals were
approved: The Proposal on Matters
Related to the Stock Option Exercise
for the Second Exercise Period for
the First Grant of the Fifth Stock
Option Incentive Scheme, The
Proposal on Matters Related to the
Stock Option Exercise for the First
Exercise Period of the Sixth Stock
Option Incentive Scheme, The
2021-6-4 - -
Proposal on Matters Related to the
Stock Option Exercise for the First
Exercise Period of the Seventh
Stock Option Incentive Scheme, The
Proposal on the Satisfaction of
Unlocking Conditions for the Second
Unlocking Period for the First Grant
under the 2018 Restricted Share
Incentive Scheme, The Proposal on
the Satisfaction of Unlocking
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Conditions for the First Unlocking
Period of the 2019 Restricted Share
Incentive Scheme, and The
Proposal on the Satisfaction of
Unlocking Conditions for the First
Unlocking Period of the 2020
Restricted Share Incentive Scheme.
The following proposals were
approved: The Proposal on the Plan
of Diversified Employee Stock
Ownership Schemes for Annto
Logistics Supply Chain Technology
Co., Ltd., The Proposal on the Plan
2021-8-30 - -
of Diversified Employee Stock
Ownership Schemes for Maytech
Technology Co., LTD., and The
Proposal on the Remuneration
Standards for Independent Directors
and External Directors.
The following proposals were
approved: The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2018 Restricted Share Incentive
Scheme, The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2019 Restricted Share Incentive
2021-12-24 - -
Scheme, The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2020 Restricted Share Incentive
Scheme, and The Proposal on the
Repurchase and Retirement of
Certain Incentive Shares under the
2021 Restricted Share Incentive
Scheme.
Fang Hongbo,
Gu Yanmin,
Strategy
Yu Gang, and 0 - - - -
Committee
Guan
Qingyou
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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 2,351
Number of in-service employees of main subsidiaries 163,448
Total number of in-service employees 165,799
Total number of paid employees in the period 165,799
Number of retirees to whom the Company or its main
1,301
subsidiaries need to pay retirement pension
Functions
Function Number of employees
Production 134,274
Sales 8,561
Technical 19,150
Financial 2,116
Administrative 1,698
Total 165,799
Educational backgrounds
Educational background Number of employees
Master’s and doctoral degrees 5,508
Bachelor’s degree 26,976
Junior college and technical secondary school 69,839
Others 63,476
Total 165,799
9.2 Remuneration policy
Remunerations for employees are paid on time according to the remuneration system of the Company.
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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
Midea Academy has six empowerment centers, namely the Leadership Empowerment Center, the
Digital and Intelligent Innovation Empowerment Center, the Intelligent Manufacturing Empowerment
Center, the Globalization Empowerment Center, the Newcomer Empowerment Center, and the General
Empowerment Center, in addition to a professional online learning platform—M-Learning, which
empowers all Midea employees and ecosystem partners through special learning courses and practical
learning functions.
In Midea, new employees will receive orientation and job-specific skill training or tutoring, while
in-service ones will be given irregular trainings inside or outside the Company to help improve their
professional and universal skills. In this way, Midea people enjoy better development opportunities.
Midea has also put in place a multi-tier talent development system, including a mature leadership
development program comprising the Sailor Project, the Voyager Project and the Pilot Project to
cultivate reserve talent for mid-level key personnel, heads for the primary structure of business
units/business entities, and presidents for business divisions, respectively.
The attendances at internal training sessions were 995,693 in 2021, of which 3,494 were management
personnel, 568,784 technical and marketing personnel and 423,415 operational personnel.
a. Building Leadership Development Programs such as the Sailor-Voyager-Pilot program and a
High-Potential Leaders Training system to facilitate talent management and training. 55 talent training
programs were carried out.
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b. Building a professionalism promotion system. 3,611 such programs were carried out, where 667,977
staff were trained for a total of 1,108,874 man-hours.
c. Providing channels for common skill improvement. 706 such programs such as the Lecture for Staff
were launched, where 145,147 staff were trained for a total of 341,666 man-hours.
d. Improving individual comprehensive ability. 173 external trainings for individuals at junior, middle and
senior levels were organized, where 62,592 staff were trained for a total of 137,924 man-hours.
e. In order to help new graduates develop themselves fast and foster a new power for the Company, 121
relevant programs such as the Re-Education of New Graduates, the Training Camp for New Graduates,
and the Orientation Training Camp for New Graduates were organized, where 8,288 new graduates
were trained for a total of 19,078 man-hours.
f. Facilitating organizational learning. 9,985 internal sharing sessions were held, where 710,398
employees were trained for 1,049,859 man-hours. With the addition of 1,235 new internal trainers,
annual teaching time reached 8,184 hours in total. And a total of 1,185 courses were designed in the
year.
g. 97,203 key technical staff and working team leaders were trained for a total of 349,169.43 hours.
h. 141,037 staff visited M-Learning, a mobile app developed by Midea for online training, for a total of
763,359 times in 2021.
9.4 Labor outsourcing
□Applicable √N/A
10. Profit Distribution and Converting Capital Surplus into Share Capital
The Company has strictly implemented the Shareholder Return Plan for the Next Three Years
(2019-2021), 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. In
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addition, the Company carried out share repurchases by way of centralized bidding in 2015, 2018 and
2021. As per the Company Law, the Stock Listing Rules of the Shenzhen Stock Exchange, and
Guideline No. 9 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—Share
Repurchases, the amount used to repurchase shares in a year shall be deemed as cash dividends and
included in the total cash dividends for the year when it comes to calculation.
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 played
Yes
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
17
included)
Additional shares converted from capital surplus
0
for every 10 shares (share)
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Total shares as the basis for the preliminary plan
6,869,123,038
for profit distribution (share)
Cash dividends (RMB) (tax inclusive) 11,677,509,164.60
Cash dividends in other forms (such as share
13,664,103,513.72
repurchase) (RMB)
Total cash dividends (inclusive of those in other
25,341,612,678.32
forms) (RMB) (tax inclusive)
Distributable profits (RMB) 28,094,420,000
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 (2022) No. 10017 issued by PricewaterhouseCoopers Zhong Tian
LLP, the parent company realized a net profit of RMB14,835,388,000 for 2021. Pursuant to the relevant provisions under
the Articles of Association, it provided 10% as statutory surplus reserve, namely RMB1,483,539,000. Plus undistributed
profits at the beginning of the year of RMB25,795,300,000 and minus the profit distributed in the year of
RMB11,052,729,000, the actual distributable profit would be RMB28,094,420,000.
Note: Up to the disclosure date of this Report, the total share capital of the Company stood at 6,997,053,441 shares and
there were 127,930,403 shares in the repurchased share account. Therefore, the total shares entitled to the dividend are
6,869,123,038 shares.
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
A. Overview of the Third Stock Option Incentive Scheme
a. The Company convened the 34th Meeting of the 3rd Board of Directors on 4 June 2021, at which the
Proposal for the Adjustment to the Exercise Price for the Third Stock Option Incentive Scheme was
approved. As the 2020 Annual Profit Distribution had been carried out, the exercise price for the Third
Stock Option Incentive Scheme was revised from RMB16.26 to RMB14.69 per share.
During the Reporting Period, 10,522,746 shares were exercised under the Third Stock Option Incentive
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The 2021 Annual Report of Midea Group Co., Ltd.
Scheme.
B. Overview of the Fourth Stock Option Incentive Scheme
During the Reporting Period, 7,516,624 shares were exercised under the Fourth Stock Option Incentive
Scheme.
C. Overview of the Fifth Stock Option Incentive Scheme
a. The Company convened the 32nd Meeting of the 3rd Board of Directors on 28 April 2021, at which the
Proposal for the Adjustments to the Incentive Recipients and Their Exercisable Stock Options for the
Fifth Stock Option Incentive Scheme was approved. It was agreed to adjust the incentive recipients and
their exercisable stock options with respect to the reserved stock options under the Fifth Stock Option
Incentive Scheme due to the resignation, low individual or business division performance appraisals or
other factors of some incentive recipients. Upon the adjustments, the number of locked-up reserved
stock options granted to them was reduced from 5,340,000 to 4,270,250.
The Proposal for Matters Related to the Stock Option Exercise for the First Exercise Period for the
Reserved Stock Options of the Fifth Stock Option Incentive Scheme was also approved. A total of 74
incentive recipients who are eligible for the Fifth Stock Option Incentive Scheme have been allowed to
exercise 1,000,250 stock options in the first exercise period (ended 10 March 2022).
b. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
Retirement of Unexercised Stock Options in the First Grant under the Fifth Stock Option Incentive
Scheme upon Expiry was approved. As the first exercise period for the first grant under the Fifth Stock
Option Incentive Scheme expired on 6 May 2021, the Board of Directors of the Company agreed to retire
the 5,000 stock options that had been previously granted to Votadoro Giusepp but were unexercised
upon expiry.
c. The Proposal for the Adjustment to the Exercise Price for the Fifth Stock Option Incentive Scheme
was also approved. As the 2020 Annual Profit Distribution had been carried out, the exercise price for the
first grant was revised from RMB53.45 to RMB51.88 per share, and the exercise price for the reserved
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stock options from RMB44.28 to RMB42.71 per share.
d. The Proposal for the Adjustments to the Incentive Recipients and Their Exercisable Stock Options for
the First Grant of the Fifth Stock Option Incentive Scheme was also approved. It was agreed to adjust
the incentive recipients and their exercisable stock options under the Fifth Stock Option Incentive
Scheme due to the resignation, being reassigned, low individual or business division performance
appraisals or other factors of some incentive recipients. Upon the adjustments, the number of locked-up
stock options granted to them in the first grant of the Fifth Stock Option Incentive Scheme was reduced
from 31,860,000 to 29,267,000.
e. The Proposal for Matters Related to the Stock Option Exercise for the Second Exercise Period of the
First Grant of the Fifth Stock Option Incentive Scheme was also approved. A total of 1,015 incentive
recipients who are eligible for the Fifth Stock Option Incentive Scheme have been allowed to exercise
8,931,000 stock options in the second exercise period (ended 6 May 2022).
During the Reporting Period, 5,775,512 shares were exercised with respect to the first grant under the
Fifth Stock Option Incentive Scheme.
During the Reporting Period, 335,450 shares were exercised with respect to the reserved stock options
under the Fifth Stock Option Incentive Scheme.
D. Overview of the Sixth Stock Option Incentive Scheme
a. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
Adjustment to the Exercise Price for the Sixth Stock Option Incentive Scheme was approved. As the
2020 Annual Profit Distribution had been carried out, the exercise price for the Sixth Stock Option
Incentive Scheme was revised from RMB51.28 to RMB49.71 per share.
b. The Proposal for the Adjustments to the Incentive Recipients and Their Exercisable Stock Options for
the Sixth Stock Option Incentive Scheme was also approved. It was agreed to adjust the incentive
recipients and their exercisable stock options under the Sixth Stock Option Incentive Scheme due to the
resignation, low business division performance appraisals, low individual performance appraisals, being
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The 2021 Annual Report of Midea Group Co., Ltd.
reassigned or other factors of some incentive recipients. Upon the adjustments, the number of locked-up
stock options granted to them was reduced from 46,540,000 to 38,963,250.
c. The Proposal for Matters Related to the Stock Option Exercise for the First Exercise Period of the
Sixth Stock Option Incentive Scheme was also approved. A total of 965 incentive recipients who are
eligible for the Sixth Stock Option Incentive Scheme have been allowed to exercise 8,708,250 stock
options in the first exercise period (ended 27 May 2022).
During the Reporting Period, 4,848,541 shares were exercised under the Sixth Stock Option Incentive
Scheme.
E. Overview of the Seventh Stock Option Incentive Scheme
a. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
Adjustment to the Exercise Price for the Seventh Stock Option Incentive Scheme was approved. As the
2020 Annual Profit Distribution had been carried out, the exercise price for the Seventh Stock Option
Incentive Scheme was revised from RMB50.43 to RMB48.86 per share.
b. The Proposal for the Adjustments to the Incentive Recipients and Their Exercisable Stock Options for
the Seventh Stock Option Incentive Scheme was also approved. It was agreed to adjust the incentive
recipients and their exercisable stock options under the Seventh Stock Option Incentive Scheme due to
the resignation, low business division performance appraisals, low individual performance appraisals,
being reassigned or other factors of some incentive recipients. Upon the adjustments, the number of
locked-up stock options granted to them was reduced from 65,020,000 to 59,663,000.
c. The Proposal for Matters Related to the Stock Option Exercise for the First Exercise Period of the
Seventh Stock Option Incentive Scheme was also approved. A total of 1,309 incentive recipients who are
eligible for the Seventh Stock Option Incentive Scheme have been allowed to exercise 10,223,000 stock
options in the first exercise period (ended 3 June 2022).
During the Reporting Period, 5,488,178 shares were exercised under the Seventh Stock Option
Incentive Scheme.
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The 2021 Annual Report of Midea Group Co., Ltd.
F. Overview of the Eighth Stock Option Incentive Scheme
a. The Proposal on the Eighth Stock Option Incentive Scheme (Draft) and its Abstract was approved at
the 32rd Meeting of the 3rd Board of Directors and the 2020 Annual General Meeting of Shareholders,
and the incentive recipient list for the Eighth Stock Option Incentive Scheme (Draft) was reviewed at the
21st Meeting of the 3rd Supervisory Committee.
b. On 14 July 2021, the Company granted 81,740,000 stock options to 1,885 incentive recipients with
the exercise price being RMB81.41 per share.
G. Overview of the 2017 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017
Restricted Share Incentive Scheme was approved at the 28th Meeting of the 3rd Board of Directors. As
such, it was agreed to repurchase and retire 32,917 restricted shares that had been granted to 2
personnel but were still in lockup, for the reasons of their resignation, being reassigned or other factors.
The said retirement of shares was completed on 24 May 2021.
b. The Proposal on the Satisfaction of the Conditions for the Third Unlocking Period for the Reserved
Restricted Shares of the 2017 Restricted Share Incentive Scheme was also approved. A total of 39
personnel were eligible for this unlocking, with 1,292,083 restricted shares (0.02% of the Company’s
total existing share capital) unlocked and allowed for public trading on 8 February 2021, of which senior
management Xiao Mingguang unlocked 50,000 shares.
H. 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 28th Meeting of the 3rd Board of Directors. As
such, it was agreed to repurchase and retire 1,009,501 restricted shares that had been granted to 22
personnel but were still in lockup, for the reasons of their resignation, being reassigned, violation of the
“Red Lines” of the Company or other factors. The said retirement of shares was completed on 24 May
2021.
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The 2021 Annual Report of Midea Group Co., Ltd.
b. The Company convened the 32nd Meeting of the 3rd Board of Directors, at which the Proposal on the
Satisfaction of the Conditions for the First Unlocking Period for the Reserved Restricted Shares of the
2018 Restricted Share Incentive Scheme was approved. A total of 24 personnel were eligible for this
unlocking, with 403,249 restricted shares (0.0057% of the Company’s total existing share capital)
unlocked and allowed for public trading on 4 June 2021.
c. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
Adjustment to the Repurchase Price for the 2018 Restricted Share Incentive Scheme was approved. As
the 2020 Annual Profit Distribution had been carried out, the repurchase price for the first grant was
revised from RMB24.68 to RMB23.11 per share, and the repurchase price for the reserved restricted
shares from RMB20.70 to RMB19.13 per share.
d. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018
Restricted Share Incentive Scheme was also approved. As such, it was agreed to repurchase and retire
761,121 restricted shares that had been granted to 67 personnel but were still in lockup, for the reasons
of their resignation, being reassigned, low individual or business division performance appraisals for
2020 or other factors. The Company has completed the retirement of the aforesaid shares on 30
November 2021.
e. The Proposal on the Satisfaction of the Conditions for the Second Unlocking Period for the First Grant
of the 2018 Restricted Share Incentive Scheme was also approved. A total of 209 personnel were
eligible for this unlocking, with 3,043,254 restricted shares (0.0432% of the Company’s total existing
share capital) unlocked and allowed for public trading on 30 June 2021, of which senior management Hu
Ziqiang, Zhang Xiaoyi and Zhong Zheng unlocked 25,000 shares, 25,000 shares and 20,000 shares,
respectively.
I. 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 28th Meeting of the 3rd Board of Directors. As
such, it was agreed to repurchase and retire 1,043,958 restricted shares that had been granted to 15
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The 2021 Annual Report of Midea Group Co., Ltd.
personnel but were still in lockup, for the reasons of their resignation, being reassigned, violation of the
“Red Lines” of the Company or other factors. The said retirement of shares was completed on 24 May
2021.
b. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
Adjustment to the Repurchase Price for the 2019 Restricted Share Incentive Scheme was approved. As
the 2020 Annual Profit Distribution had been carried out, the repurchase price was revised from
RMB24.20 to RMB22.63 per share.
c. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019
Restricted Share Incentive Scheme was also approved. As such, it was agreed to repurchase and retire
941,788 restricted shares that had been granted to 92 personnel but were still in lockup, for the reasons
of their resignation, being reassigned, low individual or business division performance appraisals for
2020, violation of the “Red Lines” of the Company or other factors. The Company has completed the
retirement of the aforesaid shares on 30 November 2021.
d. The Proposal on the Satisfaction of the Conditions for the First Unlocking Period of the 2019
Restricted Share Incentive Scheme was also approved. A total of 363 personnel were eligible for this
unlocking, with 5,654,629 restricted shares (0.0802% of the Company’s total existing share capital)
unlocked and allowed for public trading on 13 July 2021, of which senior management Wang Jinliang
unlocked 30,000 shares.
J. 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 28th Meeting of the 3rd Board of Directors. As
such, it was agreed to repurchase and retire 440,374 restricted shares that had been granted to 11
personnel but were still in lockup, for the reasons of their resignation, being reassigned, violation of the
“Red Lines” of the Company or other factors. The said retirement of shares was completed on 24 May
2021.
b. The Company convened the 34th Meeting of the 3rd Board of Directors, at which the Proposal for the
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The 2021 Annual Report of Midea Group Co., Ltd.
Adjustment to the Repurchase Price for the 2020 Restricted Share Incentive Scheme was approved. As
the 2020 Annual Profit Distribution had been carried out, the repurchase price was revised from
RMB24.42 to RMB22.85 per share.
c. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020
Restricted Share Incentive Scheme was also approved. As such, it was agreed to repurchase and retire
1,643,164 restricted shares that had been granted to 263 personnel but were still in lockup, for the
reasons of their resignation, being reassigned, low individual or business division performance
appraisals for 2020, violation of the “Red Lines” of the Company or other factors. The Company has
completed the retirement of the aforesaid shares on 30 November 2021.
d. The Proposal on the Satisfaction of the Conditions for the First Unlocking Period of the 2020
Restricted Share Incentive Scheme was also approved. A total of 487 personnel were eligible for this
unlocking, with 5,488,962 restricted shares (0.0778% of the Company’s total existing share capital)
unlocked and allowed for public trading on 20 July 2021, of which senior management Wang Jinliang
and Li Guolin unlocked 24,000 and 20,000 shares, respectively.
K. Overview of the 2021 Restricted Share Incentive Scheme
a. The Proposal on the 2021 Restricted Share Incentive Scheme (Draft) and its Abstract was approved
at the 32rd Meeting of the 3rd Board of Directors and the 2020 Annual General Meeting of Shareholders,
and the incentive recipient list for the 2021 Restricted Share Incentive Scheme (Draft) was reviewed at
the 21st Meeting of the 3rd Supervisory Committee.
b. On 16 July 2021, the Company granted 9,940,000 restricted shares to 139 incentive recipients with
the grant price being RMB39.92 per share, of which senior management Wang Jinliang, Li Guolin and
Jiang Peng were granted 100,000 shares, 100,000 shares and 80,000 shares, respectively.
Equity incentives for directors and senior management
√Applicable □N/A
Stock Exercis Unlock Restrict
Office Stock Exercis Exercis Stock Market Restrict Grant Restrict
Name options e price ed ed
title options able ed options price at ed price of ed
granted for shares shares
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The 2021 Annual Report of Midea Group Co., Ltd.
held at in the share share exercis held at the end shares in the granted the shares
the Reporti options options ed the end of the held at Reporti in the restrict held at
beginni ng for the in the share of the Reporti the ng Reporti ed the end
ng of Period Reporti Reporti options Reporti ng beginni Period ng shares of the
the ng ng in the ng Period ng of Period (RMB/s Reporti
Reporti Period Period Reporti Period (RMB / the hare) ng
ng ng share) Reporti Period
Period Period ng
(RMB / Period
share)
Vice
Zhang
Preside 75,000 25,000 50,000
Xiaoyi
nt
Vice
Hu
Preside 75,000 25,000 50,000
Ziqiang
nt
Vice
Wang 240,00 100,00 286,00
Preside 54,000 39.92
Jinliang 0 0 0
nt
Vice
Li 100,00 100,00 180,00
Preside 20,000 39.92
Guolin 0 0 0
nt
Vice
Guan 175,00 125,00
Preside 50,000
Jinwei 0 0
nt
CFO
and
Zhong Director
65,000 65,000 65,000 16.26 0 73.81 60,000 20,000 40,000
Zheng of
Financ
e
Board
Jiang
Secreta - 80,000 39.92 80,000
Peng
ry
Xiao Vice
105,00 105,00 105,00 125,00 130,00
Minggu Preside 16.26 0 73.81 75,000 80,000 39.92
0 0 0 0 0
ang nt
170,00 170,00 170,00 850,00 269,00 360,00 941,00
Total -- -- 0 -- --
0 0 0 0 0 0 0
1. A total of 1,292,083 shares were allowed for public trading in the Third Unlocking Period for the
Remark (if any)
Reserved Restricted Shares of the 2017 Restricted Share Incentive Scheme on 8 February 2021, of
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The 2021 Annual Report of Midea Group Co., Ltd.
which senior management Xiao Mingguang unlocked 50,000 shares.
2. A total of 3,043,254 shares were allowed for public trading in the Second Unlocking Period for the
First Grant of the 2018 Restricted Share Incentive Scheme on 30 June 2021, of which senior
management Hu Ziqiang, Zhang Xiaoyi and Zhong Zheng unlocked 25,000 shares, 25,000 shares and
20,000 shares, respectively.
3. A total of 5,654,629 shares were allowed for public trading in the First Unlocking Period of the 2019
Restricted Share Incentive Scheme on 13 July 2021, of which senior management Wang Jinliang
unlocked 30,000 shares.
4. A total of 5,488,962 shares were allowed for public trading in the First Unlocking Period of the 2020
Restricted Share Incentive Scheme on 20 July 2021, of which senior management Wang Jinliang and
Li Guolin unlocked 24,000 and 20,000 shares, respectively.
5. A total of 9,940,000 shares were granted under the 2021 Restricted Share Incentive Scheme on 16
July 2021, of which senior management Wang Jinliang, Li Guolin and Jiang Peng were granted
100,000 shares, 100,000 shares and 80,000 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
Number of Total shares
Scope of employees Change of the Company’s Funding source
employees held
total share capital
Employees under the Third
Special fund for the
Global Partner Stock 15 2,846,445 N/A 0.0407%
scheme
Ownership Scheme
Employees under the Fourth
Special fund for the
Global Partner Stock 20 3,318,540 N/A 0.0474%
scheme
Ownership Scheme
Special fund for the
Employees under the First
scheme and part of the
Business Partner Stock 50 1,779,300 N/A 0.0254%
performance bonuses for
Ownership Scheme
senior management
Employees under the Fifth 16 3,732,075 N/A 0.0533% Special fund for the
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The 2021 Annual Report of Midea Group Co., Ltd.
Global Partner Stock scheme
Ownership Scheme
Special fund for the
Employees under the Second
scheme and part of the
Business Partner Stock 45 1,867,845 N/A 0.0267%
performance bonuses for
Ownership Scheme
senior management
Employees under the Sixth
Special fund for the
Global Partner Stock 17 3,537,663 N/A 0.0506%
scheme
Ownership Scheme
Special fund for the
Employees under the Third
scheme and part of the
Business Partner Stock 46 1,873,559 N/A 0.0268%
performance bonuses for
Ownership Scheme
senior management
Employees under the Seventh
Special fund for the
Global Partner Stock 15 2,436,518 N/A 0.0348%
scheme
Ownership Scheme
Special fund for the
Employees under the Fourth
scheme and part of the
Business Partner Stock 44 1,985,611 N/A 0.0284%
performance bonuses for
Ownership Scheme
senior management
Shares held by directors, supervisors and senior management under employee stock ownership
schemes during the Reporting Period
Shares held at the As a percentage of the
Shares held at the end
Name Office title beginning of the Company’s total share
of the Reporting Period
Reporting Period capital
Fang Hongbo, Yin
Bitong, Gu Yanmin,
Wang Jianguo, Zhang
Certain directors and
Xiaoyi, Hu Ziqiang,
senior management of 8,461,254 8,625,838 0.1233%
Wang Jinliang, Li
the Company
Guolin, Fu Yongjun,
Guan Jinwei, Zhong
Zheng, and Jiang Peng
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
During the Reporting Period, a total of 2,846,445 shares (or 0.0407% of the Company’s total share
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The 2021 Annual Report of Midea Group Co., Ltd.
capital) under the Third Global Partner Stock Ownership Scheme were sold, upon the expiry of the
lockup period, by way of centralized bidding on 31 December 2021. As per the Third Global Partner
Stock Ownership Scheme (Draft), the implementation of the scheme has been completed and the
relevant asset clearing and distribution will be carried out subsequently. The benefits for the holders
under the scheme will be distributed in proportion to the shares invested in them after deducting the
relevant taxes and expenses.
Exercise of shareholder rights during the Reporting Period
During the Reporting Period, holders under employee stock ownership schemes exercised the
shareholder rights to receive the cash dividends for 2020. 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 RMB198.46 million for
2021, which was included in the relevant expense items and capital surplus.
Termination of employee stock ownership schemes during the Reporting Period
√Applicable □N/A
During the Reporting Period, the implementation of the Third Global Partner Stock Ownership Scheme
was completed, along with the relevant asset clearing and distribution. The benefits for the holders under
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The 2021 Annual Report of Midea Group Co., Ltd.
the scheme have be distributed in proportion to the shares invested in them after deducting the relevant
taxes and expenses.
Other information
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
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
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The 2021 Annual Report of Midea Group Co., Ltd.
14. Self-evaluation Report and Auditor’s Report on Internal Control
14.1 Self-evaluation report on internal control
Disclosure date of the internal control self-evaluation report 30 April 2022
For details, please refer to the 2021 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 2021 defects” under Section III of The 2021
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
disclosed on www.cninfo.com.cn dated 30 disclosed on www.cninfo.com.cn dated 30
April 2022. April 2022.
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 2021 defects” under Section III of The 2021
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
disclosed on www.cninfo.com.cn dated 30 disclosed on www.cninfo.com.cn dated 30
April 2022. April 2022.
Number of serious
0
financial-report-related defects
Number of serious
non-financial-report-related 0
defects
Number of important
0
financial-report-related defects
Number of important
non-financial-report-related 0
defects
14.2 Auditor’s report on internal control
√Applicable □N/A
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The 2021 Annual Report of Midea Group Co., Ltd.
Opinion paragraph in the auditor’s report on internal control
The internal control auditor holds the view that on 31 December 2021, 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 30 April 2022
control
Index to the disclosed full text of
For details, please refer to the 2021 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-related No
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
improve the governance and protect the gains of investors.
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The 2021 Annual Report of Midea Group Co., Ltd.
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 2021 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
Name of Num
the ber of Approved
Compan Major disch Distribution of discharge Concentration of the Pollutant discharge Total discharge total Excess
Discharge method
y or pollutants arge outlets discharge standards (ton) discharge discharge
subsidiar outlet (ton)
y s
COD 85 mg/L The Discharge Standard 6.89 9.59 No
Ammonia-nit of Water Pollutants for
The southeastern side 2.15 mg/L 1.41 1.510 No
rogen Discharge after being treated by Electroplating
GD 1 of 4# plant
wastewater treatment station (DB441597- 2015) Chart
Midea SS 24 mg/L 3.64 / No
2 PRD standard
Air-Cond /
Petroleum 4.21 mg/L 0.8 No
itioning
Equipme COD 70 mg/L 2.6 9.59 No
The Discharge Limits of
nt Co., SS The eastern side of 2# 55 mg/L 2.01 / No
Discharge after being treated by Water Pollutants
Ltd. 1 plan
Ammonia-nit /
wastewater treatment station 3.4 mg/L (DB44/26-2001) 2.53 No
rogen
Petroleum 7.14 mg/L 4.22 / No
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The 2021 Annual Report of Midea Group Co., Ltd.
Emission Standard of
Volatile Organic
15m high altitude discharge after
VOCs Compounds for Furniture
being treated by spray tower + 3 4# plant 21.23 mg/m 2.26
(dusting) Manufacturing
activated carbon
(DB44/814-2010) the
second time period
Emission Standard of
VOCs 15m high altitude discharge after Volatile Organic
/ No
(Screen being treated by environmental 4 1#, 5#, 9#, 11# plants 1.92 mg/m Compounds for Printing 0.244
Printing) protection equipment Industry
(DB44/815-2010)
Emission Standard of
15m high altitude discharge after Volatile Organic
VOCs
being treated by environmental 2 10# plants 25.21 mg/m Compounds for Printing 2.16
(electronic)
protection equipment Industry
(DB44/815-2010)
NMHC Emission Limits of Air
15m high altitude discharge after
(evaporator Pollutants (DB44/27-
being treated by environmental 6 2#, 5# plants 25 mg/m 13.8 / No
& 2001) the second time
protection equipment
condenser) period
Wuhu COD 42 mg/L 24.3 / No
Maty SS 55 mg/L 25.7 / No
Integrated Wastewater
Air-Cond Discharge after being treated by
BOD 1 The northern side of the 9 mg/L Discharge Standard 4.3 / No
itioning wastewater treatment station
park (GB8978-1996) chart 4
Equipme Ammonia-nit
37 mg/L Level 3 21.2 / No
nt Co., rogen
Ltd Petroleum 0.5 mg/L 0.3 / No
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The 2021 Annual Report of Midea Group Co., Ltd.
Integrated Emission
Standards for
Particles 5 2# plant < 20 mg/m 3.15 / No
Atmospheric Pollutants
(GB16297-1996)
Emission Control
15m high altitude discharge after
Standard for Industrial
being treated by environmental
VOCs 8 2#, 3# plants 17 mg/m Enterprises Volatile 24.6 / No
protection equipment
Organic Compounds
(DB13-2322- 2016)
NOX 3 3# plant 19 mg/m Integrated Emission 2.52 / No
Standards for
SO2 3 3# plant 8 mg/m Atmospheric Pollutants 0.98 / No
(GB16297-1996)
PH value 7-9 / / No
Suspended
45 mg/L / / No
solids
Midea
Five-day
Group 42.8 mg/L / / No
COD Discharge after being treated by West Gate 2 of 4# plant
Wuhan Integrated Wastewater
wastewater treatment system 1 on the west side of plant
COD 192 mg/L Discharge Standard 16.54 19.60 No
Refriger
and reaching the standard areas
ation Petroleum 3.45 mg/L GB8978-1996 / / No
Equipme Ammonia-nit
nt Co., 0.313 mg/L 0.021 1.764 No
rogen
Ltd.
Fluoride 4.98 mg/L / / No
Total zinc 0.96 mg/L / / No
Particles 1. Water spraying + 4 Northwest corner of 1# 3.1 mg/m Integrated Emission 5.91 6.09 No
153
The 2021 Annual Report of Midea Group Co., Ltd.
Sulfur low-temperature plasma; plant; central 1# plan; Standards for
3 < 3 mg/m 1.32 1.56 No
dioxide direct-fired TO furnace northeast corner of 3# Atmospheric Pollutants
2. Frame filtration + activated plan (GB16297-1996)
Nitrogen
carbon 1 < 3 mg/m 2.98 5.9 No
oxide
3. Frame filtration + Level 2
spraying + UV photolysis +
carbon absorption
VOCs 4. Activated carbon 2 6.94 mg/m 3.17 11.44 No
5. RTO regenerative combustion
CODcr 59 mg/L 8.24 15.304 No
Discharge Standard of
Discharge after being treated by Waste water treatment
Foshan Petroleum 0.075 mg/L Water Pollutants for 0.01 / No
wastewater treatment system and 2 stations 1 and 2 of 3#
Shunde Ammonia-nit Electroplating
reaching the standard plant 9.57 mg/L 1.339 1.913 No
Midea rogen (DB44/1597-2015)
Electrica
High altitude discharge after Waste gas sprayers 1
l Toluene and Table 1 of the Emission
being treated by waste gas and 2 at 3# plant, 0.68 mg/m 2.177 / No
Heating xylene Standard of Volatile
treatment station outlets 1, 2 and 3 for
Applianc Organic Compounds for
waste gas from
es Furniture Manufacturing
7 wave-soldering, painting
Manufac High altitude discharge after (DB44/814-2010):
and drying at 6# plant,
turing VOCs being treated by waste gas 5.42 mg/m Discharge Limits for 12.17 22.72 No
outlets 1 and 2 for waste
Co., Ltd. treatment station VOCs through Exhaust
gas from reflow
Funnel/for Time Period II
soldering at 6# plant
154
The 2021 Annual Report of Midea Group Co., Ltd.
Outlet of injection
Table 4 of the Emission
molding waste gas in
Standards of Industrial
High altitude discharge after the south side of 1#
Pollutants in the Synthetic
NMHC being treated by waste gas 2 plant, outlet of injection 1.8 mg/m 1.5125 / No
Resin Industry (GB
treatment station molding waste gas in
31572- 2015): Emission
the south side of 9#
Limits of Air Pollutants
plant
Table 2 of the Emission
Outlets 1 and 2 of
Limits of Air Pollutants
sanding waste gas at 3#
(DB44/27-2001):
Particles Pulse bag dust collecting 4 plant, outlets 1 and 2 of 6.4 mg/m 2.015 / No
Emission Limits of
polishing waste gas at
Industrial Waste Gas
3# plant
(Time Period 2), Level 2
Sulfur Oxidation wire roof of 3#
High altitude discharge after < 3 mg/m Emission Standard of Air 0.0152 3.8231 No
dioxide plant
being treated by waste gas 2 Pollutants for Boiler
Nitrogen Drying furnace of 3#
treatment station < 3 mg/m (DB44/765-2019) 0.0532 13.132 No
oxide plan
Emission Standard of
Cooking Discharge after being treated by South and north section
2 1.25 mg/m Cooking Fume (Trial) (GB 0.419 / No
fume waste gas treatment station canteens
18483-2001)
Guangd CODcr 46.25 mg/L 3.7349 4.8 No
ong Discharge Standard of
Petroleum Discharge after being treated by 0.06 mg/L 0.0048 / No
Midea Sewage treatment Water Pollutants for
SS wastewater treatment system and 1 13.25 mg/L 1.0817 / No
Consum station Electroplating
reaching the standard
er Ammonia-nit (DB44/1597-2015) 0.96
6.73 mg/L 0.5378 No
Electric rogen
Manufac Benzene High altitude discharge after 1 Spraying waste gas 0.025 mg/m Table 1 of the Emission 0.0019 / No
155
The 2021 Annual Report of Midea Group Co., Ltd.
turing Toluene being treated by waste gas outlet at 1# plant 0.2625 mg/m Standard of Volatile 0.0213 / No
Co., Ltd. treatment station Organic Compounds for
Xylene 2.8975 mg/m 0.2697 / No
Furniture Manufacturing
Toluene and
3.165 mg/m (DB44/814-2010): 0.2911 / No
xylene
Discharge Limits for
VOCs through Exhaust
VOCs 16.08 mg/m 0.5617 0.61 No
Funnel/for Time Period II
Injection molding waste Table 4 of the Emission
gas outlet in the Standards of Industrial
High altitude discharge after
southern side of 2# Pollutants in the Synthetic
NMHC being treated by waste gas 2 1.64 mg/m 0.198 / No
plant, injection molding Resin Industry (GB
treatment station
waste gas outlet in the 31572- 2015): Emission
northern side of 2# plant Limits of Air Pollutants
Furnace and welding
Table 2 of the Emission
waste gas outlet at 1#
Limits of Air Pollutants
High altitude discharge of furnace plant (5)
(DB44/27-2001):
Particles and welding fume after being 7 Spraying waste gas 5.32 mg/m 0.01915 / No
Emission Limits of
collecting outlet at 1# plant (1)
Industrial Waste Gas
Discharging dust &
(Time Period 2), Level 2
waste gas outlet (1)
High altitude discharge after 0.028
Sulfur
being treated by waste gas < 3 mg/m 0.02719 No
dioxide Emission Standard of Air
treatment station Spraying waste gas
1 Pollutants for Boiler
High altitude discharge after outlet at 1# plant 0.131
Nitrogen (DB44/765-2019)
being treated by waste gas < 3 mg/m 0.08583 No
oxide
treatment station
156
The 2021 Annual Report of Midea Group Co., Ltd.
Emission Standard of
Cooking Discharge after being treated by
1 Canteen of 1# plan 0.425 mg/m Cooking Fume (GB 0.0166 / No
fume waste gas treatment station
18483-2001)
Emission Standard of
Gas trap hood + dry filtering + UV
During the screen Volatile Organic
+ activated carbon + 15m high 2 0.94 mg/m 0.1986 / No
printing process Compounds for Printing
altitude discharge
Industry (DB44/815-2010)
Emission Control
Dry filtering + UV + activated Outlet for waste gas Standard for Industrial
carbon + catalytic combustion + 2 from dip coating, drying 24.73 mg/m Enterprises Volatile 1.5276 3.42 No
15m high altitude discharge and hardening Organic Compounds
GD (DB12/ 524-2020)
Midea Emission Limits of Air
Environ Pollutants
ment VOCs Gas trap hood + dry filtering + UV (DB44/27-2001): Time
During the manual
Applianc + activated carbon + 15m high 1 10.67 mg/m Period 2, Level 2 0.2964 / No
welding process
es Mfg. altitude discharge Emission Standards for
Co., Ltd. Odor Pollutants
(GB14554- 93)
Emission Limits of Air
Pollutants
During the wave
Gas trap hood + dry filtering + UV (DB44/27-2001): Time
soldering process
+ activated carbon + 15m high 3 6.735 mg/m Period 2, Level 2 0.9079 / No
(paste printing and
altitude discharge Emission Standards for
wave reflow)
Odor Pollutants
(GB14554- 93)
157
The 2021 Annual Report of Midea Group Co., Ltd.
Exhaust funnel for Emission Standards of
Gas trap hood + dry filtering + UV
waste gas from the Industrial Pollutants in the
+ activated carbon + 15m high 6 2.85 mg/m 1.7595 / No
baking and injection Synthetic Resin Industry
altitude discharge
molding processes (GB 31572-2015)
Emission Limits of Air
Gas trap hood + dry filtering + UV Outlet for organic waste
Pollutants
+ activated carbon + 15m high 2 gas from dusting, 2.35 mg/m 0.2495 / No
(DB44/27-2001): Time
altitude discharge baking and hardening
Period 2, Level 2
NMHC
Gas trap hood + water spraying + Emission Limits of Air
Outlet for waste gas
dry filtering + UV + activated Pollutants
1 from electrophoresis 13.6 mg/m 0.3390 / No
carbon + 15m high altitude (DB44/27-2001): Time
and hardening
discharge Period 2, Level 2
During the wave Emission Limits of Air
Gas trap hood + dry filtering + UV
soldering process Pollutants
+ activated carbon + 15m high 3 8.77 mg/m 1.8773 / No
(paste printing and (DB44/27-2001): Time
altitude discharge
wave reflow) Period 2, Level 2
Gas trap hood + water spraying + Emission Limits of Air
Outlet for waste gas
dry filtering + UV + activated Pollutants
1 from electrophoresis 22 mg/m 3.17239 / No
carbon + 15m high altitude (DB44/27-2001): Time
and hardening
discharge Period 2, Level 2
During the wave Emission Limits of Air
Gas trap hood + dry filtering + UV
soldering process Pollutants
Particles + activated carbon + 15m high 3 13.43 mg/m 2.3241 / No
(paste printing and (DB44/27-2001): Time
altitude discharge
wave reflow) Period 2, Level 2
Emission Limits of Air
Gas trap hood + dry filtering + UV Outlet for organic waste
Pollutants
+ activated carbon + 15m high 2 gas from dusting, 0.51 mg/m 0.0419 / No
(DB44/27-2001): Time
altitude discharge baking and hardening
Period 2, Level 2
158
The 2021 Annual Report of Midea Group Co., Ltd.
Fume hood + electrostatic range Emission Standard of
Cooking Cooking fume outlet at
hood + 15m high altitude 7 0.492 mg/m Cooking Fume (GB 0.1276 / No
fume canteen
discharge 18483-2001)
SS 21 mg/L 0.0378 / No
COD 35 mg/L 5.103 / No
Animal and Discharge Standard of
Oil separation and slagging - 0.18 mg/L 0.0241 / No
vegetable oil Domestic wastewater Pollutants for Municipal
hydrolysis and acidification - 1
Ammonia-nit treatment station Wastewater Treatment
contact oxidation - MRB 1.08 mg/L 0.145 2.16 No
rogen Plant (GB18918-2002)
PH value 7.26 / / No
BOD 28 mg/L 4.032 / No
Total zinc 0.000744 mg/L 0.0004 / No
COD 18.68 mg/L 4.215 / No
SS 9mg/L 0.015 / No
PH value 7.22 / / No
Total
Coagulation and sedimentation + Discharge Standard of
phosphorus 0.02 mg/L 0.040 / No
hydrolysis and acidification + Domestic wastewater Water Pollutants for
(in P) 1
aeration + biological tank + MBR treatment station Electroplating DB
Total + 50% water reuse 44/1597-2015 No
0.0194 mg/L 0.022 /
aluminum
Ammonia-nit No
0.28 mg/L 0.53 1.724
rogen
Total ferrum 0.00144 mg/L 0.0014 / No
Petroleum 0.06 mg/L 0.007 / No
159
The 2021 Annual Report of Midea Group Co., Ltd.
Anionic
0.404 mg/L 0.031 0.4936 No
surfactants
COD 117.75 mg/L GB/T4754-2011 4.125 12.3809 No
Suspended Discharge standards of
Discharge to municipal 7.5 mg/L 0.344 9.8857 No
solids General sewage chemical park water
wastewater treatment plant after
PH value 1 discharge exit of plant 7.645 pollutants DB50/457-2012 / / No
being treated by the wastewater
Ammonia-nit areas Discharge standards of
Chongqi treatment system
rogen 5.02 mg/L chemical park water 0.263 / No
ng
(NH3-N) pollutants
Midea
Five-day
General 28.2mg/L 2.105 7.4389 No
BOD
Refriger
Toluene 0.228 mg/m GB30981-2020 Limit of 0.011 8.7048 No
ation
Benzene 0.137 mg/m Harmful Substances in 0.007 1.404 No
Equipm
NMHC 3.759 mg/m Industrial Protective 0.592 28.08 No
ent Co.,
Xylene 1.118 mg/m Coatings; GB37822-2019 0.135 2.808 No
Ltd.
High altitude discharge after Volatile Organic
1#4# workshop paint
being treated by waste gas 4 Compounds Emission
waste gas outlets
treatment station Control Standards;
Particles 11.57 mg/m DB50-418-2016 0.964 2.2464 No
Integrated Emission
Standards for
Atmospheric Pollutants
Hefei COD Discharge after being treated by 1 The eastern side of 1# 45 mg/L Implementation of the 5.244 / No
160
The 2021 Annual Report of Midea Group Co., Ltd.
Midea wastewater treatment system and plant takeover standards of the
Heating reaching the standard Western Hefei Group
& wastewater treatment
Ammonia-nit
Ventilati 15 mg/L plant and Integrated 0.42 / No
rogen
ng Wastewater Discharge
Equipm Standard (GB8978-1996)
ent Co., Level 3
Ltd. 1 set at the northeastern
RTO equipment 1 3.5 mg/m 0.36 / No
side of 3# plant
Condensation + degreasing + 1 set at the
filtering+ activated carbon + 1 southwestern side of 4# 4 mg/m 0.69 / No
catalytic combustion equipment plant Integrated Emission
NMHC
Two-stage water spray + Standards for
2 sets at 1# plant and 1
two-stage dehumidification + 3 2.17 mg/m Atmospheric Pollutants 0.81 / No
set at 2# plant
activated carbon equipment GB16297-1996 Level 2
Two-stage activated carbon 1 set at the eastern side
1 2.3 mg/m 0.239 / No
equipment of 2# plant
2 at 2# plant and 1 at 4#
Particles Filter cartridge dust collector 3 16 mg/m 6.02 / No
plant
COD 65 mg/L 12.02 15 No
Hubei
Midea Ammonia-nit Discharge domestic sewage in Integrated Wastewater
Domestic sewage 3.49 mg/L 1.55 2.5 No
Refriger rogen the plant to the municipal sewage 1 Discharge Standard
outlets at the plant
ator Co., BOD system after pretreatment 22.35 mg/L (GB8978-1996) 4.13 / No
Ltd
SS 65.7 mg/L 12.1 / No
161
The 2021 Annual Report of Midea Group Co., Ltd.
Animal and
0.89 mg/L 0.59 / No
vegetable oil
COD 70 mg/L 2.8 15 No
Ammonia-nit
Freezer spaying waste water is 3.96 mg/L 0.158 2.5 No
rogen
discharged to the municipal
Integrated Wastewater
BOD sewage system after floatation + Waste water outlets at 22.82 mg/L 0.91 / No
1 Discharge Standard
SS acidification + aerobic sludge the freezer branch plant 56.5 mg/L 2.26 / No
(GB8978-1996)
digestion + filtration and other
Animal and
processes 1.01 mg/L 0.04 / No
vegetable oil
Petroleum 1.08 mg/L 0.04 / No
First installation branch
1 6.87 mg/m 1.47 / No
waste gas outlets
Second installation
15m discharge after light and
1 branch waste gas 15.4 mg/m 3.03 / No
NMHC oxygen purification + activated
outlets
carbon adsorption
Integrated Emission
Injection molding
Standards for
1 workshop waste gas 1.22 mg/m 0.35 / No
Atmospheric Pollutants
outlets
(GB16297-1996)
15m high altitude discharge after
Extrusion workshop
NMHC dry filtration +light and oxygen 1 0.97 mg/m 0.43 / No
waste gas outlets
purification + activated carbon
NMHC 8 Cold cabinet branch 1.02 mg/m 0.13 / No
15m high altitude emission
Particles 1 waste gas outlets < 20 mg/m 0.04 / No
Foshan COD Discharge after being treated by 1 The southern side of 2# 50 mg/L Discharge Limits of Water 0. 18 0.228 No
162
The 2021 Annual Report of Midea Group Co., Ltd.
Shunde SS wastewater treatment system and plant in the Washing 11 mg/L Pollutants 0.0396 / No
Midea reaching the standard and Sterilizing (DB44/26-2001) of
BOD5 12.2 mg/L 0.04392 / No
Washing Appliances Park Guangdong Province
Petroleum 0.0036 / No
Applianc 0.1 mg/L
es Ammonia-nit
0.964 mg/L 0.00571 / No
Manufac rogen
turing Benzene 0.03 mg/m 0.0197 / No
Co., Ltd.
Toluene and
(the 0.29 mg/m Emission Standard of 0.1406 / No
xylene The southern side of 2#
Washing High altitude discharge after Volatile Organic
plant in the Washing
and being treated by waste gas 1 Compounds for Furniture
and Sterilizing
Sterilizin treatment station Manufacturing
Appliances Park
g VOCS 6.43 mg/m (DB44/814-2010) 0.58372 / No
Applianc
es Park)
COD 167.75 mg/L 66.4 70.898 No
Ammonia-nit
5.87 mg/L 2.3 2.496 No
rogen
Wuhu Discharge after being treated by Integrated Wastewater
BOD5 Western gate of the 28.58 mg/L 11.3 / No
Midea wastewater treatment system and 1 Discharge Standard
Kitchen Petroleum Wuhu plant 5.63 mg/L 2.3 / No
reaching the standard (GB8978-1996)
& Bath Total
0.535 mg/L 0.21 / No
Applianc phosphorus
es Mfg.
Fluoride 1.43 mg/L 0.57 / No
Co., Ltd.
Soot < 20 mg/m Emission Standard of Air 0.032 0.48 No
Plants at each
Sulfur 15m high altitude discharge 45 Pollutants for Boiler
workshop 12.67 mg/m 1.75 0.658 No
dioxide (GB13271-2014)
163
The 2021 Annual Report of Midea Group Co., Ltd.
Nitrogen
56 mg/m 5.81 3.6 No
oxide
Particles < 20 mg/m Integrated Emission 17.37 / No
Standards for
Xylene 0.53 mg/m Atmospheric Pollutants 0.28 / No
High altitude discharge after (GB16297-1996)
being treated by waste gas Emission Control
treatment station Standard for Industrial
VOCs 0.2 mg/m Enterprises Volatile 0.67 / No
Organic Compounds
(DB13-2322- 2016)
COD 284 mg/L 56.4645 123.8994 No
SS 191 mg/L 25.151 87.2473 No
Animal and
2.41 mg/L 1.7278 10.7034 No
vegetable oil
Integrated Wastewater
Total Discharge to municipal sewage Exit at the middle gate
Wuxi 1 Discharge Standard
3.65 mg/L 0.6713 1.0701 No
phosphorus network of the plant
Little (GB8978-1996)
Swan Total
47.7 mg/L 7.0688 11.2612 No
Electric nitrogen
Co., Ltd
Ammonia-nit
36.5 mg/L 5.1779 6.6906 No
rogen
High altitude discharge after Integrated Emission
Particles ND 0.4382 2.0696 No
treatment 11 Buildings A, C, and D Standards for
VOCS Gas trap hood + water spraying + 1.35 mg/m Atmospheric Pollutants 0.8 1.2218 No
164
The 2021 Annual Report of Midea Group Co., Ltd.
Sulfur dry filtering + UV + activated (GB16297-1996)/Tianjin
ND 0.1187 0.624 No
dioxide carbon + 15m high altitude Emission Control
discharge Standard for Industrial
Enterprises Volatile
Organic Compounds
(DB12/524-
2014)/Emission
Nitrogen
27 mg/m Standards of Industrial 0.8784 3.38 No
oxide
Pollutants in the Synthetic
Resin Industry (GB
31572- 2015)/Emission
Standard of Air Pollutants
for Boiler (GB13271-2014)
COD Discharge to the municipal 59 mg/L 19.11 22.77 No
The eastern side of The Discharge Limits of
sewage system after being
Ammonia-nit 1 wastewater treatment Water Pollutants in
treated by wastewater treatment 0.572 mg/L 0.455 4.554 No
rogen station in Malong base Guangdong DB-44/26- 20
Guangd system
Emission Standard of
ong
Particles 10.1 mg/m Volatile Organic 11.15 / No
Midea
Sulfur 26 outlets at A1 plant, Compounds for Furniture
Kitchen 5 mg/m 0.444 1.055 No
dioxide 47 outlets at A2 plant, Manufacturing
Applianc
20m high altitude discharge after 21 outlets at B2 plant, 9 (DB44/814-2010)/Emissio
es Nitrogen
being treated by waste gas outlets at C2 plant, 2 7 mg/m n Standard of Volatile 3.083 10.314 No
Manufac oxide 112
treatment equipment and outlets at C3 plant, 1 Organic Compounds for
turing
Benzene ND 0.027 / No
reaching the standard outlet at wastewater Surface Coating of
Co., Ltd
Toluene and treatment station and 6 Automobile Manufacturing
0.276 mg/m 1.55 / No
xylene outlets at canteen Industry
VOCs 3.99 mg/m (DB44/816-2010)/Emissio 26.005 35.051 No
165
The 2021 Annual Report of Midea Group Co., Ltd.
NMHC 3.75 mg/m n Standards of Industrial 1.694 / No
Pollutants in the Synthetic
Styrene 2.6 mg/m 0.254 / No
Resin Industry (GB
31572- 2015)/Guangdong
Province Emission Limits
of Air Pollutants
(DB44/27-2001)/Emission
15m high altitude discharge after
Standard of Volatile
Cooking being treated by oil fume
0.77 mg/m Organic Compounds for 0.17 / No
fume purification facility and reaching
Printing Industry
the standard
(DB44/815-2010)/Emissio
n Standard of Cooking
Fume (on Trial)
(GB18483-2001)
Guangd COD 27 mg/L 13.12 16.28 No
ong The discharge limits of
Meizhi Near the wastewater water pollutants in
Discharge after being treated by
Precisio Ammonia-nit 1 treatment station in the Guangdong DB-44/26-
wastewater treatment station 2.12 mg/L 0.32 2.034 No
n-Manuf rogen north side of the plant 2001 the second time
acturing period Level 2
Co., Ltd
Guangd COD Discharge after being treated by 1 Near the wastewater 42 mg/L Guangdong discharge 5.94 6.046 No
166
The 2021 Annual Report of Midea Group Co., Ltd.
ong wastewater treatment station treatment station in the standard of water
Meizhi north side of the plant pollutants for
Ammonia-nit
Compre 0.282 mg/L electroplating 0.045 0.756 No
rogen
ssor DB-441597-2015, before
Limited 1 September 2012
COD 32 mg/L Implementation of the 7.01 / No
takeover standards of the
The western side of the Western Hefei Group
Discharge after being treated by
comprehensive wastewater treatment
Ammonia-nit wastewater treatment system and 1
wastewater treatment 1.60 mg/L plant and Integrated 0.23 / No
rogen reaching the standard
station Wastewater Discharge
Standard (GB8978-1996)
Level 3
Anhui No. 1 workshop welding
Meizhi soot discharge outlet for < 20 mg/m No
Integrated Emission
Compre waste gas Standards for
ssor
No. 3 workshop Atmospheric Pollutants
Co., Ltd.
discharge outlet for the < 20 mg/m (GB16297-1996) No
Collected by gas trap hood+15m welding waste gas
Particles 13 9.782 65.45
high exhaust cylinder Waste gas outlet of 1#
heat-treating furnace at < 20 mg/m Emission Standard of Air No
No. 2 workshop Pollutants for Industrial
Waste gas outlet of 2# Kiln and Furnace
heat-treating furnace at < 20 mg/m (GB9078- 1996) No
No. 2 workshop
167
The 2021 Annual Report of Midea Group Co., Ltd.
Integrated Emission
Waste gas outlet for die
Standards for
casting at No. 2 < 20 mg/m No
Atmospheric Pollutants
workshop
(GB16297-1996)
Waste gas outlet for die Integrated Emission
casting at No. 4 < 20 mg/m Standards for No
workshop Atmospheric Pollutants
(GB16297-1996)
Waste gas outlet of 1#
heat-treating furnace at < 20 mg/m Emission Standard of Air No
No. 4 workshop Pollutants for Industrial
Kiln and Furnace
(GB9078- 1996)
Waste gas outlet of 2#
Emission Standard of Air
heat-treating furnace at < 20 mg/m No
Pollutants for Industrial
No. 4 workshop
Kiln and Furnace
(GB9078- 1996)
Waste gas outlet for Integrated Emission
electrophoresis and Standards for
< 20 mg/m No
drying at No. 1 Atmospheric Pollutants
workshop (GB16297-1996)
Waste gas outlet for Integrated Emission
electrophoresis and Standards for
< 20 mg/m No
drying at No. 3 Atmospheric Pollutants
workshop (GB16297-1996)
Emission Standard of Air
Waste gas outlet of
< 20 mg/m Pollutants for Boiler No
1#-3# furnaces
(GB13271-2014)
168
The 2021 Annual Report of Midea Group Co., Ltd.
Emission Standard of Air
Waste gas outlet of
1.5 mg/m Pollutants for Boiler No
1#-3# furnaces
(GB13271-2014)
Outlet of 1#
heat-treating furnace at < 3 mg/m No
No. 2 workshop
Outlet of 2#
heat-treating furnace at < 3 mg/m No
No. 2 workshop
Waste gas outlet for die
Sulfur Collected by gas trap hood+15m
9 casting at No. 2 < 3 mg/m Air Pollutant Emission 5.67 112.2 No
dioxide high exhaust cylinder
workshop Standards
Outlet of 1# (GB16297-1996)
heat-treating furnace at < 3 mg/m Standard Level 2 No
No. 4 workshop
Outlet of 2#
heat-treating furnace at < 3 mg/m No
No. 4 workshop
Waste gas outlet for die
casting at No. 4 < 3 mg/m No
workshop
Emission Standard of Air
Waste gas outlet of
36 mg/m Pollutants for Boiler No
1#-3# furnaces
Nitrogen Collected by gas trap hood+15m (GB13271-2014)
9 4.13 33.24
oxide high exhaust cylinder Outlet of 1# Air Pollutant Emission
heat-treating furnace at < 3 mg/m Standards No
No. 2 workshop (GB16297-1996)
169
The 2021 Annual Report of Midea Group Co., Ltd.
Outlet of 2# Standard Level 2
heat-treating furnace at < 3 mg/m No
No. 2 workshop
Waste gas outlet for die
casting at No. 2 < 3 mg/m No
workshop
Outlet of 1#
heat-treating furnace at < 3 mg/m No
No. 4 workshop
Outlet of 2#
heat-treating furnace at < 3 mg/m No
No. 4 workshop
Waste gas outlet for die
casting at No. 4 < 3 mg/m No
workshop
Waste gas outlet of the
drying furnace at No. 1 1.35 mg/m
workshop
Collected by gas trap hood+15m Emission Control
Waste gas outlet of 1#
high exhaust cylinder Standard for Industrial
drying furnace at No. 3 0.985 mg/m
VOCs Direct-fired waste gas 4 Enterprises Volatile 0.279 21.6 No
workshop
incinerator+15m high exhaust Organic Compounds
Die casting at No. 2
cylinder 0.323 mg/m (DB12/ 524-2020)
workshop
Die casting at No. 4
0.52 mg/m
workshop
170
The 2021 Annual Report of Midea Group Co., Ltd.
Integrated Emission
Collected by gas trap hood + dust
Exhaust funnels 1 and 2 Standards for
Particles collector + activated carbon +15m 2 21.5 mg/m 7.59 23 No
for mold injection Atmospheric Pollutants
high exhaust cylinder
(GB16297-1996)
Emission Standard of Air
Waste gas outlets 1-7 of
Collected by gas trap hood+15m Pollutants for Industrial
VOCs 7 the die casting 2.75 mg/m 2.31 3.388 No
high exhaust cylinder Kiln and Furnace
workshop
Welling (GB9078- 1996)
(Wuhu) Hebei Province Standard
Motor DB13/2322-2016 The
Exhaust funnels 1 and 2
Manufac VOCs Activated carbon + UV photolysis 2 26.1 mg/m Concentration Limits at 5.28 31 No
for dip coating
turing Emission Reference Point
Co., Ltd. for Coating Operations
COD 80 mg/L 2.56 / No
Ammonia-nit Integrated Wastewater
Discharge after being treated by 20 mg/L 0.532 / No
rogen General wastewater Discharge Standard
wastewater treatment system and 1
BOD outlet 12.3 mg/L (GB8978-1996) chart 4 2.078 / No
reaching the standard
Level 3
SS 59 mg/L 1.9 / No
Petroleum 0.95 mg/L 0.2 / No
Anhui COD 221.75 mg/L 142.94 / No
Meizhi Ammonia-nit
The south side of 8.0 mg/L Integrated Wastewater 5.287 / No
Precisio rogen Discharge after being treated by
Building 6 for night shift Discharge Standard
n wastewater treatment system and 1
BOD at the north side of the 58.65 mg/L (GB8978-1996) chart 4 54.26 / No
Manufac reaching the standard
plant area Level 3
turing SS 41.51 mg/L 27.34 / No
Co., Ltd. Petroleum 1.955 mg/L 1.92 / No
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1-8# welding waste gas
14.77 mg/m / No
outlets
9#-10# welding waste
17.92 mg/m Integrated emission / No
gas outlets
standards for atmospheric
2# outlet of stator +
pollutants GB16297-1996,
rotor heat-treating 5.55 mg/m / No
chart 2, Level 2
furnace
3# outlet of 2# stator
6.7 mg/m / No
heat- treating furnace
1# outlet of stator +
rotor heat-treating 10.8 mg/m / No
furnace
Collected by gas trap hood +21m
Particles 10 Outlet at the head of 3# 13.20
high exhaust cylinder 9.17 mg/m / No
stator furnace
Outlets at the head of
Emission standard of air
2# stator furnace and 4# 8.675 mg/m / No
pollutants for industrial
rotor furnace
kiln and furnace
Outlets at the tail of 3# GB9078-1996, chart 2,
and 4# stator furnaces Level 2
and comprehensive 7.25 mg/m / No
outlet for 4 aluminum
melting furnaces
Waste gas outlet of
aluminum melting 7.575 mg/m / No
furnace
Sulfur Collected by gas trap hood +21m 1# heat-treating furnace 5.55 mg/m Emission limit standards / No
8 3.813
dioxide high exhaust cylinder 2# heat-treating furnace 6.725 mg/m for other industrial / No
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3# heat-treating furnace 10.8 mg/m furnaces and kilns in the / No
Comprehensive Control
Heat-treating furnace 9.175 mg/m / No
Plan for Air Pollution of
1# outlet for waste gas
3.25 mg/m Industrial Furnaces / No
from drying
(H.D.Q.[2019] NO.56)
2# outlet for waste gas
4.25 mg/m
from drying
3# outlet for waste gas
3 mg/m
from drying
4# outlet for waste gas
3 mg/m / No
from drying
1# heat-treating furnace 5.55 mg/m / No
2# heat-treating furnace 6.725 mg/m / No
3# heat-treating furnace 10.8 mg/m / No
Heat-treating furnace 9.175 mg/m / No
1# outlet for waste gas
3.75 mg/m / No
Nitrogen Collected by gas trap hood +21m from drying
8 14.49
oxide high exhaust cylinder
2# outlet for waste gas
4.75 mg/m / No
from drying
3# outlet for waste gas
3.75 mg/m / No
from drying
4# outlet for waste gas
4.5 mg/m / No
from drying
Direct-fired waste gas 1# outlet for waste gas NMHC emissions meet
VOCs 4 4.3975 mg/m 2.877 / No
incinerator+21m high exhaust from drying the relevant standard limit
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cylinder 2# outlet for waste gas requirements in Table 1 of
3.635 mg/m / No
from drying Shanghai Integrated
Emission Standards for
3# outlet for waste gas
4.6325 mg/m Atmospheric Pollutants / No
from drying
(DB31/933-2015)
4# outlet for waste gas
3.955 mg/m / No
from drying
Integrated Emission
Standards for
Particles 4.1 mg/m 0.338 0.97 No
Atmospheric Pollutants
Huaian 5# waste gas outlet: (GB16297-1996)
Welling outside the inductor dip
Gas trap hood + cotton filter + Integrated Emission
Motor coating room
activated carbon + 15m high 2 Standards for
Manufac NMHC 8# waste gas outlet: 2.5 mg/m 0.254 0.3078 No
exhaust cylinder Atmospheric Pollutants
turing outside the reactor dip
(GB16297-1996)
Co., Ltd coating room
Emission Standards for
Styrene 0.483 mg/m Odor Pollutants 0.03 0.032 No
(GB14554-93)
The eastern side of Implementation of the
Hefei COD 1 wastewater treatment 38.6 mg/L takeover standards of the 8.03 58.150 No
Midea station Western Hefei Group
Laundry Discharge after being treated by wastewater treatment
Applianc wastewater treatment station The eastern side of plant and Integrated
Ammonia-nit
e Co., wastewater treatment 1.35 mg/L Wastewater Discharge 0.799 / No
rogen
Ltd. station Standard (GB8978-1996)
Level 3
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15m high altitude discharge after
1 outlet at 2# plant, 1
Particles being treated by cyclone + filter 2 < 20 mg/m 0.28 / No
outlet at 6# plant
cartridge dust collector
Particles 15m high altitude discharge after < 20 mg/m 1.61 / No
being treated by water spraying +
1 1 outlet at 3# plant
NMHC dedusting+ UV photolysis + 1.52 mg/m 0.29 / No
activated carbon
Table 5 of the Emission
15m high altitude discharge after Standards of Industrial
NMHC being treated by waste gas 3 1 outlet at 2# plant 1.86 mg/m Pollutants in the Synthetic 0.28 / No
treatment station Resin Industry (GB
15m high altitude discharge after 31572- 2015): Special
NMHC being treated by waste gas 6 Six pieces of Plant No. 6 1.54 mg/m Emission Limit 0.37 / No
treatment station Requirements
15m high altitude discharge after
1 outlet at 1# plant, 1
NMHC being treated by low-temperature 2 1.48 mg/m 0.34 / No
outlet at 5# plant
plasma
15m high altitude discharge after
NMHC being treated by photocatalyst 1 1 outlet at 3# plant 3.96 mg/m 0.38 / No
and activated carbon
NMHC 9 1#, 2# plants 7.97 mg/m 7.01 / No
Handan 1) NMHC: Implementation
Midea Particles 7 1#, 2#, 3# plants 6.2 mg/m of the emission 3.68 / No
15m high altitude discharge after
Air-Con Nitrogen concentration limits on
being treated by environmental 7 1#, 2#, 3# plants < 3 mg/m 1.78 2.02 No
ditioning oxide organic chemicals in Table
protection equipment
Equipm 1 of Emission Control
Sulfur
ent Co., 7 1#, 2#, 3# plants < 3 mg/m Standard for Industrial 1.78 2.02 No
dioxide
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Ltd. Enterprises Volatile
Organic Compounds
(DB13/2322-2016)
2) Sulfur dioxide/nitrogen
oxides/particles:
Implementation of the new
furnace standards in Table
1 and Table 2 of Emission
Standard of Air Pollutants
Tin and its
4 2# plant 5.3 mg/m for Industrial Kiln and 1.99 / No
compounds
Furnace
(DB13/1640-2012)
3) Tin and its compounds:
Implementation of the
requirements of Level 2 in
the Integrated Emission
Standards for
Atmospheric Pollutants
(GB16297-1996)
COD 1 122 mg/L 3.05 8.97 No
Requirements for inflow
Ammonia-nit water quality of
1 7.51 mg/L 0.19 0.7 No
rogen wastewater treatment
Discharge after being treated by
North side of the power
pH wastewater treatment system and 1 6.94 plant in Handan Economic / / No
house
reaching the standard and Technological
Suspended
1 45 mg/L Development Zone 1.13 / No
solids
Petroleum 1 0.10 mg/L Integrated Wastewater / / No
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Fluoride Discharge Standard
1 2.91 mg/L (GB8978-1996) chart 4 / / No
Level 3
The construction of pollution prevention facilities and their operation
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.
The environmental effect evaluation of construction projects and other administrative permits in relation to environmental protection
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.
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
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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.
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)
Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis; 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.
Administrative punishments received during the Reporting Period due to environmental issues
The Company or Reason for Impact on the
Regulation violated Punishment Rectification
subsidiary punishment Company
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N/A N/A N/A N/A N/A N/A
Other environment-related information that should be made public
None
Measures taken to reduce carbon emissions during the Reporting Period and the results
√ Applicable □ N/A
(a) The Company released the Green Strategy and inspected the source of the carbon emissions across the Group so as to figure out its total carbon
emissions and intensity; (b) It built a professional team to analyze the measures and methods for energy saving and consumption reduction
scientifically and took measures to reduce the consumption of water, electricity, and gas with the incremental development of the Company as the
precondition, reducing the energy cost by approximately RMB60 million; (c) It reduced the energy/material consumption at source from the perspectives
of green design, green procurement, green manufacturing, green logistics, green recycling, and green services, as well as the full life cycle of the
products, and produced low-carbon products that are more eco-friendly, such as the natural R290 refrigerant, which can reduce carbon emissions by
approximately 2.2 million tons according to its annual sales.
Other environment-related information
None
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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 2021 released on www.cninfo.com.cn.
3. Efforts in Poverty Alleviation and Rural Revitalization
3.1 Support the development of education
In 2021, Midea Group donated a total of RMB20 million to the sponsorship of Shunde Midea School affiliated to East China Normal University
(hereinafter referred to as "Shunde Midea School of East China Normal University") and the school scholarship fund. In addition, Midea has also
supported the preparation, construction, and development of Shunde Midea School of East China Normal University by building resource platforms, etc.
On 28 March, the construction of Shunde Midea School of East China Normal University commenced in Beijiao Town, Shunde District. The school is
expected to provide a total of over 5,000 primary and junior high school places after completion, which is of far-reaching significance to the education
and comprehensive social development of Beijiao Town.
3.2 Support rural revitalization
The year 2021 is a key year for China to complete the battle against poverty and start the 14th Five-Year Plan. Midea Group continues to plow deeper
on the basis of the original help projects to support the rural revitalization strategy.
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Leishan National High School is the only general senior high school in Leishan County, Qiandongnan Miao and Dong Autonomous Prefecture, Guizhou
Province. The main structure of the school's gymnasium has long been constructed, but due to the constant lack of funds for interior decoration, the
gymnasium has not come into use. In order to ensure that the school gymnasium will be available as soon as possible, Midea Group invested
RMB350,000 in the construction of the gymnasium, thus helping Shunde Leishan National High School improve the quality of school teaching.
In addition, to further improve the medical care services of Yingmaili Township Health Center in Payzawat County, Xinjiang, Midea Group has spent
RMB150,000 on the construction of the health center, including the renovation, greening construction, and purchase of medical equipment.
3.3 Support the fight against the pandemic
During the critical period of pandemic prevention and control, Midea has been concerned about the front-line pandemic prevention personnel. In May
2021, Midea Group spent a total of RMB400,000 on the donation of 500 cool fans and 80 portable air conditioners to the pandemic prevention teams in
towns and subdistricts in Shunde District, sending coolness to the pandemic prevention teams in summer. In December 2021, as the pandemic
recurred in Xi'an, Midea spent RMB100,000 on the purchase of 1,200 camp beds to create a better environment for the front-line pandemic prevention
personnel of Xi'an Jiaotong University to have a rest.
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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 enterprises
Controll
will remain independent from Midea Group in respect of
Undertaki ing
Maintena personnel, finance, assets, business and institutions, in
ng made shareho
nce of accordance with relevant laws and regulations and regulatory 1. There has been no violation of this
in offering lder and 28/03/2013 Long-standing
independ documents. They will faithfully fulfill the above undertaking, and undertaking.
document actual
ence assume the corresponding legal liability. If they fail to fulfill their
s or controll
obligations and responsibilities conferred by the undertaking,
sharehold er
they will bear the corresponding legal liabilities according to
ing
relevant laws, rules, regulations and regulatory documents.
alternatio
Controll
n Avoiding 2. In order to avoid possible competition within the industry
ing
document competiti between Midea Group and Midea Holding and its controlled
shareho 2. There has been no violation of this
s on within enterprises as well as He Xiangjian, his immediate family and 28/03/2013 Long-standing
lder and undertaking.
the his controlled companies, Midea Holding and He Xiangjian
actual
industry have undertaken as follows:
controll
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er (1) None of the entities or individuals mentioned above is or will
be engaged in the same or similar business as the existing
main business of Midea Group and its controlled companies.
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;
(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.
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(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
immediate family and his controlled companies, Midea Holding
and He Xiangjian have undertaken as follows:
(1) They will regulate any related transactions with Midea Group
and its controlled companies using their utmost efforts to
Controll reduce them. For unavoidable related transactions with Midea
ing Regulatio Group and its controlled companies, including but not limited to
shareho n of commodity trading, providing services to each other or as
agent, they will sign legal normative agreements with Midea 28/03/2013 3. There has been no violation of this
lder and related Long-standing
undertaking.
actual transactio Group, and go through approval procedures in accordance with
controll ns related laws, regulations, rules, other regulatory documents,
er 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.
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(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.
On Midea
4. On 4 January 2001, the Midea Trade Union Committee
Trade
signed the "Equity Transfer Contract" with five people, namely
Controll Union
He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning and
ing Committe
Liang Jieyin, where it transferred all its limited equity of Midea 4. So far, this shareholding transfer has not
shareho e
Group (22. 85%) respectively to those five people. According to brought about any loss caused by any dispute
lder and transferri 28/03/2013 Long-standing
the confirmation letter issued by members of the Midea Trade or potential disputes. There has been no
actual ng its
Union Committee at that time, the equity transfer price was violation of this undertaking.
controll limited
determined after mutual discussion on the basis of their true
er equity of
opinions, therefore there was no dispute or potential dispute.
Midea
Group On 28 June 2013, Foshan Shunde Beijiao General Union,
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superior department of Midea Trade Union Committee, issued 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 liable
of the for (1) paying such expenses and related expenses on time
Controll Staff based on the requirements of relevant state departments if
ing Social Midea Group is required to be liable for the payment of staff 5. So far, the payment of the staff social
shareho Insurance social insurance, housing provident fund and the payment insurance and the housing provident fund has
lder and and the required by relevant state authorities prior to this merger, (2) 28/03/2013 Long-standing not brought about any controversy or potential
actual Housing paying corresponding compensation for all direct and indirect disputes. There has been no violation of this
controll Provident losses incurred by Midea Group and its subsidiaries due to this undertaking.
er Fund merger, (3) indemnifying and holding harmless Midea Group
involved and its subsidiaries in time from such expenses when Midea
in Midea Group and its subsidiaries are required to pay them in advance.
Group's
Overall
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The 2021 Annual Report of Midea Group Co., Ltd.
Listing
6. Undertakings on issues about asset alteration, asset flaw
and house leasing of Midea Group and its subsidiaries
Midea Holding and He Xiangjian have undertaken as follows:
(1) Midea Holding will do its utmost to assist and urge Midea
Group (including its subsidiaries) to complete renaming
procedures of related assets, such as land, housing,
trademarks, patents and stock rights, declared in the related
Issues
files of this merger. Midea Holding will be liable for all
about
compensations of losses caused by issues about renaming
asset
procedures of related assets mentioned above to Midea Group.
Controll alteration, 6. So far, the issues about asset alteration,
ing asset (2) Midea Holding shall do its utmost to assist Midea Group asset flaw and house leasing of Midea Group
shareho flaw and (including its subsidiaries) to apply for ownership certificates of and its subsidiaries have not brought about
lder and house land and housing or property declared in related files of this 28/03/2013 Long-standing any controversy or potential disputes. There
actual leasing of merger. has been no violation of this undertaking. And
controll Midea Midea Holding shall honor this undertaking
(3) Midea Holding shall assist Midea Group (including its
er Group before its expiration.
subsidiaries) to re-apply for corresponding construction
and its
procedures and apply for their ownership certificates for houses
subsidiari
without complete procedures, as happened in the past, to apply
es
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
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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
Group for losses caused by such defective land leasing.
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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
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The 2021 Annual Report of Midea Group Co., Ltd.
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
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
A. Accounting Standard No. 21 for Business Enterprises—Leases
Pursuant to the Notice of Revising and Issuing the Accounting Standard No. 21 for Business
Enterprises—Leases (CK [2018] No. 35) issued by the Ministry of Finance on 7 December 2018, the
Company has adopted, starting from 1 January 2021, the revised Accounting Standard No. 21 for
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Business Enterprises—Leases (hereinafter referred to as the “New Lease Standard”). Therefore, the
relevant accounting policies of the Company needed to be adjusted accordingly.
In accordance with the New Lease Standard, the adjustments to the Company's related accounting
policies are as follows:
a. Under the New Lease Standard, except for short-term leases and leases of low-value assets, the
lessees will no longer distinguish between finance leases and operating leases. All leases will be subject
to the same accounting treatment, and the right-of-use assets and lease liabilities shall be recognized.
b. For right-of-use assets, if the lessee can reasonably ascertain that the ownership of the leasehold
property will be obtained when the lease term expires, it shall depreciate the leasehold property over its
remaining service life. If it cannot reasonably ascertain whether the ownership of the leasehold property
will be obtained when the lease term expires, the Company will depreciate the leasehold property over
the lease term or the remaining service life, whichever is shorter. At the same time, the lessee shall
determine whether the right-of-use asset is impaired and perform the accounting treatment for the
identified impairment losses.
c. For lease liabilities, the lessee shall calculate the interest expenses incurred by the lease liabilities in
each period of the lease term and include them in the profit or loss for the current period.
d. For short-term leases and leases of low-value assets, the lessee may choose not to recognize the
right-of-use assets and lease liabilities, and include the relevant lease payments into relevant asset cost
or the profit or loss for the current period in the straight-line method or other systematically reasonable
methods in each period of the lease term.
As per the requirements for the transition to the New Lease Standard, the Company has prepared,
starting from 1 January 2021, its financial statements according to the New Lease Standard, with no
retrospective adjustments to the comparable data of 2020 and thus no impact on the relevant financial
information of 2020. The aforesaid changes in accounting policies did not have a material impact on the
financial condition, operating results and cash flows of the Company.
191
The 2021 Annual Report of Midea Group Co., Ltd.
B. Interpretation No. 14 of the Accounting Standards for Business Enterprises (CK [2021] No. 1)
Effective starting from 26 January 2021, this accounting policy contains regulations with respect to the
accounting treatments and disclosure requirements for adjustments to financial instruments and lease
liabilities caused by the benchmark interest rate reform. The Company has prepared the financial
statements for the year ended 31 December 2021 according to the aforesaid regulatory document,
which had no significant impact on the financial statements.
C. The Circular on Issuing Interpretation No. 15 of the Accounting Standards for Business
Enterprises
The regulations with respect to “the accounting treatments for sales of products or by-products produced
before a fixed asset is ready for its intended use or during the development process” and “judgments on
onerous contracts” in the Circular took effect on 1 January 2022; and those regarding “the presentation
of funds under centralized management” took effect on 31 December 2021. The Company has prepared
the financial statements for the year ended 31 December 2021 according to the aforesaid regulatory
document, which had no significant impact on the financial statements.
D. The Regulations of Accounting Treatments for Rental Waivers as a Result of COVID-19 (CK
[2020] No. 10)
This accounting policy provides a practical expedient for rental waivers directly as a result of COVID-19
that meet certain conditions. If a company applies the practical expedient, it does not need to assess
whether any change occurs to a lease, or re-assess the classification of leases. As per the regulatory
document CK [2021] No. 9, the practical expedient is for lease payables before 30 June 2022. The
Company has prepared the financial statements for the year ended 31 December 2021 according to the
aforesaid practical expedient, which had no significant impact on the financial statements.
E. The fifth Q&A for the Implementation of the Accounting Standards for Business Enterprises in
2021
These accounting policy changes will impact “cost of sales” and “selling and distribution expenses” in the
192
The 2021 Annual Report of Midea Group Co., Ltd.
income statement, but not “operating revenue” and “operating profit”. This is expected to affect financial
indicators such as “gross profit margin”, but with no material impact on the financial position and
operating results of the Company.
Note: For further information about the changes to the accounting policies, please refer to Note 2(31) to
the financial statements.
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 Notes 5 and 6. Entities newly included in the consolidation scope in the current period through
acquisition mainly include Beijing Wandong Medical Technology Co., Ltd. and its subsidiaries
(hereinafter, “WDM”) and Hitachi Compressor (Thailand) Ltd. (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).
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 RMB8.975 million
Consecutive years of the audit service provided by the
Seven years
domestic CPA firm
Names of the certified public accountants from the domestic
Yao Wenping and Wu Fangfang
CPA firm
Consecutive years of the audit service provided by the
Two years and one year 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
193
The 2021 Annual Report of Midea Group Co., Ltd.
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.
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 Obtaina
on in ble
the total Approv market Index
Transacti
Related Type of Content Pricin amount ed price to the
Trans on Over Mode of Disclos
transac Relatio the s of the g s of transact for the disclo
action amount approve settlem ure
tion n transac transac princip transact ion line transac sed
price (RMB’000 d line ent date
party tion tion le ion of (RMB’0 tion of inform
)
the 00) the ation
same same
kind kind
194
The 2021 Annual Report of Midea Group Co., Ltd.
(%)
Controll
ed by
family
membe
Guang r of
dong Compa
Yinghe ny’s
www.c
Enterpri actual Procure Payme
Procure Marke 0.5692 1,800,0 30 April ninfo.
se controll ment of - 1,481,457 No nt after -
ment t price % 00 2021 com.c
Manag er in goods delivery
n
ement the 12
Co., months
Ltd. before
the
Reporti
ng
Period
Controll
ed by
Orinko family
Advanc membe www.c
Procure Payme
ed r of Procure Marke 0.5789 1,700,0 30 April ninfo.
ment of - 1,506,809 No nt after -
Plastics Compa ment t price % 00 2021 com.c
goods delivery
Co., ny’s n
Ltd. actual
controll
er
Controll
Midea ed by
www.c
Real Compa Payme
Sale of Marke 0.0673 30 April ninfo.
Estate ny’s Sale - 202,625 471,000 No nt after -
goods t price % 2021 com.c
Holding actual delivery
n
Limited controll
er
3,971,0
Total -- -- 3,190,891 -- -- -- --
00
Details of any sales return of a
Zero
large amount
Give the actual situation in the The line for continuing related transactions between the Company and the related
Reporting Period (if any) where a parties and their subsidiaries did not exceed the total amount of continuing related
forecast had been made for the transactions estimated by the Company by type.
195
The 2021 Annual Report of Midea Group Co., Ltd.
total amounts of continuing
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)
Note: Guangdong Yinghe Enterprise Management Co., Ltd. is the holding/parent company of Guangdong Wellkey Electric
Material Co., Ltd. and Anhui Wellkey Electric Material 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 or any of its related parties.
14.6 Transactions between finance companies controlled by the Company and related parties
√Applicable □N/A
Making deposits
Upper limit for Opening Change in the current period Closing
Range of
Related party Relationship daily deposits balance Total amount Total amount balance
interest rate
(RMB’000) (RMB’000) deposited in withdrawn in (RMB’000)
196
The 2021 Annual Report of Midea Group Co., Ltd.
the current the current
period period
(RMB’000) (RMB’000)
Company
where a
former senior
executive of
Guangdong the Company
Shunde Rural acted as a
Commercial director within
10,000,000 0.30% 45,700 163,863,760 163,838,920 70,540
Bank 12 months
Company after the
Limited senior
executive’s
resignation
from the
Company
14.7 Other significant related transactions
□Applicable √N/A
No such cases in the Reporting Period.
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
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The 2021 Annual Report of Midea Group Co., Ltd.
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)
Disclosur Guar
Actual
e date of antee
occurrence Term
the Line of Actual for a
date (date Type of of Due
Guaranteed party guarante guarante guarante relate
of guarantee guara or not
e line e e amount d
agreement ntee
announce party
signing)
ment 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
Actual
antee
Disclosure occurrence Term
Actual for a
date of the Line of date (date Type of of Due
Guaranteed party guarantee relate
guarantee line guarantee of guarantee guara or not
amount d
announcement agreement ntee
party
signing)
or not
One
Midea Group Finance Co., Ltd. 2021-4-30 8,400,000 - Joint liability No No
year
GD Midea Air-Conditioning One
2021-4-30 17,440,000 2021-01-15 1,787,230 Joint liability No No
Equipment Co., Ltd. year
Guangzhou Hualing Refrigerating One
2021-4-30 1,160,000 2021-01-01 16,940 Joint liability No No
Equipment Co., Ltd. year
Foshan Midea Carrier
One
Air-Conditioning Equipment Co., 2021-4-30 360,000 2021-03-22 570 Joint liability No No
year
Ltd.
198
The 2021 Annual Report of Midea Group Co., Ltd.
GD Midea Group Wuhu
One
Air-Conditioning Equipment Co., 2021-4-30 500,000 - Joint liability No No
year
Ltd.
Wuhu Maty Air-Conditioning One
2021-4-30 690,000 2021-08-02 240 Joint liability No No
Equipment Co., Ltd. year
Guangdong Midea Precision One
2021-4-30 65,000 - Joint liability No No
Molding Technology Co., Ltd. year
Midea Group Wuhan Refrigeration One
2021-4-30 72,000 - Joint liability No No
Equipment Co., Ltd. year
Hainan Midea United Materials One
2021-4-30 200,000 - Joint liability No No
Supply Co. Ltd. year
Handan Midea Air-Conditioning One
2021-4-30 110,000 2021-06-21 740 Joint liability No No
Equipment Co., Ltd. year
Chongqing Midea Air-Conditioning One
2021-4-30 200,000 - Joint liability No No
Equipment Co., Ltd. year
Guangdong Midea Kitchen
One
Appliances Manufacturing Co., 2021-4-30 7,225,000 2021-01-29 2,302,270 Joint liability No No
year
Ltd.
Guangdong Witol Vacuum One
2021-4-30 100,000 2021-01-26 6,300 Joint liability No No
Electronic Manufacture Co., Ltd year
Wuhu Midea Kitchen Appliances One
2021-4-30 2,020,000 2021-12-03 6,640 Joint liability No No
Manufacturing Co., Ltd. year
Jiangsu Midea Cleaning One
2021-4-30 640,000 2021-01-04 83,780 Joint liability No No
Appliances Co., Ltd year
One
Maytech Technology Co., LTD. 2021-4-30 75,000 2021-05-21 5,000 Joint liability No No
year
Hainan Meizhi Canghai One
2021-4-30 20,000 - Joint liability No No
E-commerce Service Co., Ltd. year
Hainan Meizhi Hangjian Electric One
2021-4-30 20,000 - Joint liability No No
Appliance Co., Ltd. year
GD Midea Heating & Ventilating One
2021-4-30 2,000,000 2021-01-08 229,810 Joint liability No No
Equipment Co., Ltd. year
Guangdong Midea-SIIX One
2021-4-30 10,000 2021-01-19 430 Joint liability No No
Electronics Co., Ltd. year
Hefei Midea Heating & Ventilating One
2021-4-30 345,000 2021-03-30 11,380 Joint liability No No
Equipment Co., Ltd. year
Hefei Midea-SIIX Electronics Co., One
2021-4-30 123,000 2021-01-01 1,120 Joint liability No No
Ltd. year
199
The 2021 Annual Report of Midea Group Co., Ltd.
Hefei M&B Air Conditioning One
2021-4-30 31,500 - Joint liability No No
Equipment Co., Ltd. year
Chongqing Midea General One
2021-4-30 30,000 2021-01-14 9,940 Joint liability No No
Refrigeration Equipment Co., Ltd. year
Meitong Energy Technology One
2021-4-30 50,000 2021-10-26 3,210 Joint liability No No
(Chongqing) Co., Ltd. year
Guangdong MeiKong Intelligent One
2021-4-30 60,000 - Joint liability No No
Building Co., Ltd. year
Shanghai M-BMS Intelligent One
2021-4-30 60,000 - Joint liability No No
Construction Co., Ltd. year
One
Winone Elevator Company Limited 2021-4-30 500,000 2021-01-08 64,560 Joint liability No No
year
Guangdong Meizhi Compressor One
2021-4-30 230,000 2021-01-08 31,730 Joint liability No No
Limited year
Guangdong Meizhi One
2021-4-30 80,000 2021-01-01 - Joint liability No No
Precision-Manufacturing Co., Ltd year
Guangdong Welling Motor One
2021-4-30 210,000 2021-01-05 24,540 Joint liability No No
Manufacturing Co., Ltd. year
Foshan Welling Washer Motor One
2021-4-30 320,000 2021-01-08 69,240 Joint liability No No
Manufacturing Co., Ltd. year
Guangdong Midea Environmental One
2021-4-30 20,000 2021-01-01 - Joint liability No No
Technologies Co., Ltd. year
Huaian Welling Motor One
2021-4-30 10,000 2021-09-28 2,350 Joint liability No No
Manufacturing Co., Ltd. year
Guangdong Midea Intelligent One
2021-4-30 20,000 - Joint liability No No
Technologies Co., Ltd. year
Zhejiang Meizhi Compressor Co., One
2021-4-30 3,500,000 2021-12-02 570,000 Joint liability No No
Ltd. year
One
Anhui Meizhi Compressor Co., Ltd. 2021-4-30 80,000 2021-06-28 14,500 Joint liability No No
year
Anhui Meizhi Precision One
2021-4-30 270,000 2021-02-25 19,510 Joint liability No No
Manufacturing Co., Ltd. year
Welling (Wuhu) Motor One
2021-4-30 10,000 2021-06-28 60 Joint liability No No
Manufacturing Co., Ltd. year
Wuhu Welling Motor Sales Co., One
2021-4-30 500,000 - Joint liability No No
Ltd. year
One
Anhui Welling Auto Parts Co. , Ltd. 2021-4-30 40,000 2021-01-05 2,810 Joint liability No No
year
200
The 2021 Annual Report of Midea Group Co., Ltd.
One
Dorna Technology Co., Ltd. 2021-4-30 25,000 2021-07-15 10,620 Joint liability No No
year
Guangdong Midea
One
Electromechanical Technology 2021-4-30 50,000 - Joint liability No No
year
Co., Ltd.
Ningbo Midea United Materials One
2021-4-30 1,000,000 2021-01-28 - Joint liability No No
Supply Co. Ltd. year
Guangzhou Kaizhao Commercial One
2021-4-30 60,000 - Joint liability No No
and Trading Co., Ltd year
Guangdong Midea Consumer One
2021-4-30 185,000 2021-02-10 7,330 Joint liability No No
Electric Manufacturing Co., Ltd. year
Foshan Shunde Midea Electrical
One
Heating Appliances Manufacturing 2021-4-30 565,000 2021-01-11 154,240 Joint liability No No
year
Co., Ltd.
GD Midea Environment Appliances One
2021-4-30 400,000 2021-01-14 22,380 Joint liability No No
Mfg. Co.,Ltd. year
Guangdong Midea Cuchen One
2021-4-30 6,000 - Joint liability No No
Company Ltd. year
GD Midea Caffitaly Coffee One
2021-4-30 10,000 - Joint liability No No
Machine Manufacturing Co., Ltd. year
Wuhu Midea Life Appliances Mfg One
2021-4-30 3,000,000 2021-01-21 504,000 Joint liability No No
Co., Ltd. year
Foshan Shunde Midea Washing
One
Appliances Manufacturing Co., 2021-4-30 2,350,000 2021-01-06 65,760 Joint liability No No
year
Ltd.
Guangdong Midea Kitchen & Bath
One
Appliances Manufacturing Co., 2021-4-30 400,000 - Joint liability No No
year
Ltd.
Foshan Shunde Midea Water
One
Dispenser Manufacturing 2021-4-30 855,000 2021-01-28 19,670 Joint liability No No
year
Company Limited
Foshan Midea Chungho Water One
2021-4-30 230,000 2021-01-28 21,860 Joint liability No No
Purification Equipment. Co., Ltd. year
Wuhu Midea Kitchen & Bath One
2021-4-30 1,800,000 2021-01-26 32,250 Joint liability No No
Appliances Mfg. Co., Ltd. year
One
Wuxi Little Swan Electric Co., Ltd. 2021-4-30 2,600,000 2021-01-05 38,370 Joint liability No No
year
Hefei Midea Laundry Appliance One
2021-4-30 780,000 2021-12-17 15,380 Joint liability No No
Co., Ltd. year
201
The 2021 Annual Report of Midea Group Co., Ltd.
One
Wuxi Filin Electronics Co., Ltd. 2021-4-30 50,000 - Joint liability No No
year
Hubei Midea Laundry Appliance One
2021-4-30 100,000 - Joint liability No No
Co., Ltd. year
Hainan Midea Refrigerator & One
2021-4-30 100,000 - Joint liability No No
Washer Sales Co., Ltd. year
One
Hefei Hualing Co., Ltd. 2021-4-30 1,850,000 2021-04-26 109,620 Joint liability No No
year
One
Hubei Midea Refrigerator Co., Ltd. 2021-4-30 230,000 2021-01-01 8,520 Joint liability No No
year
One
Hefei Midea Refrigerator Co., Ltd. 2021-4-30 400,000 - Joint liability No No
year
Guangzhou Midea Hualing Refrige One
2021-4-30 1,345,000 2021-01-19 6,240 Joint liability No No
rator Co., Ltd. year
Little Swan (Jing Zhou) Sanjin One
2021-4-30 10,000 - Joint liability No No
Electronic Appliances Limited year
Guangdong Midea Intelligent One
2021-4-30 50,000 - Joint liability No No
Robotics Co., Ltd. year
Servotronix Motion Technology One
2021-4-30 10,000 - Joint liability No No
Development (Shenzhen) Ltd. year
Midea Group E-Commerce Co., One
2021-4-30 100,000 - Joint liability No No
Ltd. year
Guangdong Midea Smart Link One
2021-4-30 41,200 2021-01-11 7,630 Joint liability No No
Technologies Co., Ltd. year
One
Reis Robotics (Kunshan) Co., Ltd. 2021-4-30 63,000 2021-01-28 13,580 Joint liability No No
year
One
KUKA Systems (China) CO., Ltd. 2021-4-30 325,000 2021-03-08 190,200 Joint liability No No
year
KUKA Robotics Manufacturing One
2021-4-30 50,000 2021-03-23 33,850 Joint liability No No
China Co.,Ltd year
KUKA Robotics Guangdong Co., One
2021-4-30 100,000 - Joint liability No No
Ltd year
KUKA Robotics (Shanghai) One
2021-4-30 315,000 2021-01-07 98,650 Joint liability No No
Co.,Ltd. year
Shanghai Swisslog Healthcare One
2021-4-30 10,000 - Joint liability No No
Co., Ltd. year
Guangdong Swisslog Technology One
2021-4-30 50,000 - Joint liability No No
Co., Ltd. year
202
The 2021 Annual Report of Midea Group Co., Ltd.
One
Swisslog (Shanghai) Co., Ltd. 2021-4-30 230,000 2021-01-06 60,230 Joint liability No No
year
Shanghai Swisslog Logistics One
2021-4-30 80,000 2021-01-14 - Joint liability No No
Automation Co. Ltd. year
Annto Logistics Technology Co., One
2021-4-30 900,000 - Joint liability No No
Ltd. year
Midea International Corporation One
2021-4-30 12,330,000 2021-04-23 7,803,910 Joint liability No No
Company Limited year
Midea International Trading One
2021-4-30 2,222,430 2021-01-21 - Joint liability No No
Company Limited year
Welling International Hong Kong One
2021-4-30 182,000 - Joint liability No No
Ltd year
Midea Electric Trading (Singapore) One
2021-4-30 4,000,000 2021-01-05 35,530 Joint liability No No
Co.,Pte. Ltd. year
Orient Household Appliances One
2021-4-30 120,000 - Joint liability No No
Ltd.(Orient) year
One
Midea Consumer Electric Vietnam 2021-4-30 112,000 - Joint liability No No
year
One
Concepcion Midea Inc. 2021-4-30 112,000 - Joint liability No No
year
One
Midea Italia S.R.L. 2021-4-30 140,000 - Joint liability No No
year
Midea Scott & English Electronics One
2021-4-30 206,500 - Joint liability No No
Sdn. Bhd. year
One
Midea Mexico, S. De R.L. De C.V. 2021-4-30 180,000 - Joint liability No No
year
Midea Electric Trading (Thailand) One
2021-4-30 105,000 - Joint liability No No
Co.,Ltd. year
One
Midea America Corp 2021-4-30 669,000 - Joint liability No No
year
One
Pt. Midea Planet Indonesia 2021-4-30 56,000 - Joint liability No No
year
One
Midea Electrics Egypt 2021-4-30 175,000 - Joint liability No No
year
One
Midea Europe Gmbh 2021-4-30 70,000 - Joint liability No No
year
One
Midea America (Canada) Corp 2021-4-30 70,000 - Joint liability No No
year
203
The 2021 Annual Report of Midea Group Co., Ltd.
Toshiba Lifestyle Products & One
2021-4-30 2,667,450 2021-01-05 3,230 Joint liability No No
Services Corporation year
One
Midea Electric Netherlands (I) B.V. 2021-4-30 31,446,110 2021-01-01 28,856,400 Joint liability No No
year
One
Clivet Spa 2021-4-30 90,000 - Joint liability No No
year
One
Servotronix Motion Control Ltd. 2021-4-30 940 - Joint liability No No
year
One
Midea Austria Gmbh 2021-4-30 5,700 - Joint liability No No
year
Midea (Egypt) Kitchen & Water One
2021-4-30 70,000 - Joint liability No No
Heater Appliances Co., Ltd. year
Total actual guarantee
Total guarantee line for subsidiaries approved amount for subsidiaries
123,551,830 67,169,620
during the Reporting Period (B1) during the Reporting
Period (B2)
Total actual guarantee
Total approved guarantee line for subsidiaries at balance for subsidiaries
123,551,830 43,384,350
the 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
Actual for a
guarantee Line of date (date Type of of Due
Guaranteed party guarante relate
line guarantee of guarantee guara or not
e amount d
announceme agreement ntee
party
nt signing)
or not
Wuhu Midea Annto Logistics Co., - One
2021-4-30 1,500,000 2021-06-22 Joint liability No No
Ltd. year
- One
Ningbo Annto Logistics Co., Ltd. 2021-4-30 800,000 2021-03-22 Joint liability No No
year
- One
Nanjing Meian Logistics Co., Ltd. 2021-4-30 20,000 2021-08-05 Joint liability No No
year
Shenyang Annto Logistics - One
2021-4-30 20,000 Joint liability No No
Technology Co., Ltd. year
Wuhan Annto Logistics Technology - One
2021-4-30 20,000 2021-08-05 Joint liability No No
Co., Ltd. year
Tianjin Annto Logistics Technology 2021-4-30 20,000 - Joint liability One No No
204
The 2021 Annual Report of Midea Group Co., Ltd.
Co., Ltd. year
Xuzhou Annto Logistics Technology - One
2021-4-30 20,000 2021-09-29 Joint liability No No
Co., Ltd. year
Total actual guarantee
Total line for guarantees between subsidiaries amount between
2,400,000 346,100
approved during the Reporting Period (C1) subsidiaries during the
Reporting Period (C2)
Total actual guarantee
Total approved line for guarantees between
balance between
subsidiaries at the end of the Reporting Period 2,400,000 0
subsidiaries at the end of
(C3)
the Reporting Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved during the Reporting amount during the
125,951,830 67,515,720
Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total actual guarantee
Total approved guarantee line at the end of the balance at the end of the
125,951,830 43,384,350
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets
34.74%
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
32,608,180
liability-to-asset ratio over 70% (E)
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) 32,608,180
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.
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The 2021 Annual Report of Midea Group Co., Ltd.
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
17. Significant Events of Subsidiaries
□ Applicable √ N/A
206
The 2021 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
Before Increase/decrease in Reporting Period (+/-) After
Percen Percen
Shares tage New issue Others Subtotal Shares tage
(%) (%)
1. Restricted shares 182,862,631 2.60 -26,323,750 -26,323,750 156,538,881 2.24
1.1 Shares held by the
state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic 179,785,131 2.56 -26,012,050 -26,012,050 153,773,081 2.20
investors
Among which: Shares
held by domestic 2,363,601 0.03 2,363,601 0.03
corporations
Shares held by
177,421,530 2.52 -26,012,050 -26,012,050 151,409,480 2.17
domestic individuals
1.4 Shares held by
3,077,500 0.04 -311,700 -311,700 2,765,800 0.04
foreign investors
Among which: Shares
held by foreign
corporations
Shares held by
3,077,500 0.04 -311,700 -311,700 2,765,800 0.04
foreign individuals
2. Non-restricted shares 6,847,113,368 97.40 34,436,911 -51,525,316 -17,088,405 6,830,024,963 97.76
2.1 RMB common
6,847,113,368 97.40 34,436,911 -51,525,316 -17,088,405 6,830,024,963 97.76
shares
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The 2021 Annual Report of Midea Group Co., Ltd.
2.2 Domestically listed
foreign shares
2.3 Overseas listed
foreign shares
2.4 Other
3. Total shares 7,029,975,999 100.00 34,436,911 -77,849,066 -43,412,155 6,986,563,844 100.00
Reasons for the changes in shares
√Applicable □N/A
a. The 1,292,083 restricted shares of a total of 39 eligible employees for the third unlocking period of the
reserved restricted shares under the 2017 Restricted Share Incentive Scheme were unlocked from 8
February 2021, including 60,000 restricted shares of foreign employees.
b. The 403,249 restricted shares of a total of 24 eligible employees for the first unlocking period of the
reserved restricted shares under the 2018 Restricted Share Incentive Scheme were unlocked from 4
June 2021.
c. The 3,043,254 restricted shares of a total of 209 eligible employees for the second unlocking period of
the first grant under the 2018 Restricted Share Incentive Scheme were unlocked from 30 June 2021,
including 182,250 restricted shares of foreign employees.
d. The 5,654,629 restricted shares of a total of 363 eligible employees for the first unlocking period of the
2019 Restricted Share Incentive Scheme were unlocked from 13 July 2021, including 140,250 restricted
shares of foreign employees.
e. The 5,488,962 restricted shares of a total of 487 eligible employees for the first unlocking period of the
2020 Restricted Share Incentive Scheme were unlocked from 20 July 2021, including 217,800 restricted
shares of foreign employees.
f. For the reasons of certain incentive recipients’ resignation, violation of the Company’s “Red Lines”,
being reassigned or other factors, on 24 May 2021, the Company repurchased and retired 32,917
shares of 2 incentive recipients under the 2017 Restricted Share Incentive Scheme, 1,009,501 shares of
22 incentive recipients under the 2018 Restricted Share Incentive Scheme, 1,043,958 shares of 15
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The 2021 Annual Report of Midea Group Co., Ltd.
incentive recipients under the 2019 Restricted Share Incentive Scheme, and 440,374 shares of 11
incentive recipients under the 2020 Restricted Share Incentive Scheme, totaling 2,526,750 restricted
shares (including 4,000 restricted shares of foreign employees).
g. For the reasons of certain incentive recipients’ resignation, violation of the Company’s “Red Lines”,
being reassigned or other factors, on 30 November 2021, the Company repurchased and retired
761,121 shares of 67 incentive recipients under the 2018 Restricted Share Incentive Scheme, 941,788
shares of 92 incentive recipients under the 2019 Restricted Share Incentive Scheme, and 1,643,164
shares of 263 incentive recipients under the 2020 Restricted Share Incentive Scheme, totaling
3,346,073 restricted shares (including 152,400 restricted shares of foreign employees).
h. In 2021, the incentive recipients of stock options chose to exercise 34,436,911 shares, which have
been registered into the Company’s share capital.
i. In 2021, locked-up shares held by senior management decreased by 14,508,750 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
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The 2021 Annual Report of Midea Group Co., Ltd.
Opening Unlocked in Increased in Closing
Name of Repurchased Reason for
restricted current current restricted Date of unlocking
shareholder and retired change
shares period period shares
Incentive recipients
of reserved
Lockup
restricted shares
1,325,000 1,292,083 0 32,917 0 according to 8 February 2021
under 2017
the Scheme
Restricted Share
Incentive Scheme
Incentive recipients
of the first grant of Lockup
2018 Restricted 11,232,375 3,043,254 0 1,501,371 6,687,750 according to 30 June 2021
Share Incentive the Scheme
Scheme
Incentive recipients
of reserved
Lockup
restricted shares
1,970,000 403,249 0 269,251 1,297,500 according to 4 June 2021
under 2018
the Scheme
Restricted Share
Incentive Scheme
Incentive recipients
Lockup
of 2019 Restricted
26,309,000 5,654,629 0 1,985,746 18,668,625 according to 13 July 2021
Share Incentive
the Scheme
Scheme
Incentive recipients
Lockup
of 2020 Restricted
33,245,000 5,488,962 0 2,083,538 25,672,500 according to 20 July 2021
Share Incentive
the Scheme
Scheme
Incentive recipients
Lockup
of 2021 Restricted
0 0 9,940,000 0 9,940,000 according to -
Share Incentive
the Scheme
Scheme
Lockup for
senior
Fang Hongbo 102,742,869 15,000,000 0 0 87,742,869 -
management
position
Lockup for
senior
Zhang Xiaoyi 424,931 87,500 0 0 337,431 -
management
position
Lockup for
Jiang Peng 343,950 75,000 0 0 268,950 -
senior
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The 2021 Annual Report of Midea Group Co., Ltd.
management
position
Locked-up
shares of a
Xiao Mingguang 220,000 0 133,750 0 353,750 -
former senior
executive
Lockup for
senior
Zhong Zheng 98,364 0 68,750 0 167,114 -
management
position
Lockup for
senior
Hu Ziqiang 225,000 0 25,000 0 250,000 -
management
position
Lockup for
senior
Fu Yongjun 0 0 150,000 0 150,000 -
management
position
Lockup for
senior
Guan Jinwei 0 0 276,250 0 276,250 -
management
position
Total 178,136,489 31,044,677 10,593,750 5,872,823 151,812,739 -- --
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
2.3 Existing staff-held shares
□Applicable √N/A
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The 2021 Annual Report of Midea Group Co., Ltd.
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 374,562 the prior month-end before the disclosure 438,206
period-end date of the annual report
5% or greater common shareholders or top 10 common shareholders
Shareh Increase/dec Number of Number of Pledged or frozen
Nature of Total common
Name of olding rease during restricted non-restricted shares
shareholde shares held at
shareholder percent the Reporting common common
r the period-end Status Shares
age (%) Period shares held shares held
Domestic
Midea Holding non-state-o
31.05% 2,169,178,713 0 0 2,169,178,713 Pledged 100,000,000
Co., Ltd. wned
corporation
Hong Kong
Securities
Foreign
Clearing 17.42% 1,216,964,491 159,241,854 0 1,216,964,491
corporation
Company
Limited
China Domestic
Securities non-state-o
2.84% 198,145,134 0 0 198,145,134
Finance Co., wned
Ltd. corporation
Domestic
Fang Hongbo 1.67% 116,990,492 0 87,742,869 29,247,623
individual
Canada
Pension Plan
Investment Foreign
1.49% 103,913,897 0 0 103,913,897
Board－ own corporation
funds (stock
exchange)
Central Huijin
State-owne
Asset
d 1.26% 88,260,460 -1,908,894 0 88,260,460
Management
corporation
Ltd.
Domestic
Huang Jian 1.23% 86,140,000 -1,890,000 0 86,140,000
individual
Li Jianwei Foreign 0.71% 49,633,000 -667,000 0 49,633,000
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The 2021 Annual Report of Midea Group Co., Ltd.
individual
Merrill Lynch Foreign
0.63% 43,822,975 2,864,379 0 43,822,975
International corporation
Huang Domestic
0.56% 39,158,732 -449,100 0 39,158,732 Pledged 14,779,556
Xiaoxiang individual
Strategic investors or
general corporations
becoming top-ten common
N/A
shareholders due to placing
of new shares (if any) (see
Note 3)
Related-parties or
acting-in-concert parties
N/A
among the 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 116,828,832 shares (or 1.67% of the Company’s total share capital) were held in the special
repurchased shares among account for repurchased shares of Midea Group Co., Ltd. at the end of the Reporting
the top 10 shareholders Period.
Top 10 non-restricted common shareholders
Number of non-restricted common Type of shares
Name of shareholder
shares held at the period-end Type Shares
Midea Holding Co., Ltd. 2,169,178,713 RMB common stock 2,169,178,713
Hong Kong Securities Clearing Company
1,216,964,491 RMB common stock 1,216,964,491
Limited
China Securities Finance Co., Ltd. 198,145,134 RMB common stock 198,145,134
Canada Pension Plan Investment Board－
103,913,897 RMB common stock 103,913,897
own funds (stock exchange)
Central Huijin Asset Management Ltd. 88,260,460 RMB common stock 88,260,460
Huang Jian 86,140,000 RMB common stock 86,140,000
Li Jianwei 49,633,000 RMB common stock 49,633,000
Merrill Lynch International 43,822,975 RMB common stock 43,822,975
Huang Xiaoxiang 39,158,732 RMB common stock 39,158,732
Yuan Liqun 37,496,382 RMB common stock 37,496,382
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The 2021 Annual Report of Midea Group Co., Ltd.
Related-parties or acting-in-concert parties
among the top ten non-restricted common
shareholders and between the top ten N/A
non-restricted common shareholders and
the top ten common shareholders
The Company’s shareholder Huang Xiaoxiang holds 28,580,732 shares in
the Company through his common securities account and 10,578,000
shares in the Company through his account of collateral securities for
Explanation on the top 10 common margin trading, representing a total holding of 39,158,732 shares in the
shareholders participating in securities Company.
margin trading
The Company’s shareholder Yuan Liqun holds 705,000 shares in the
Company through her common securities account and 36,791,382 shares
in the Company through her account of collateral securities for margin
trading, representing a total holding of 37,496,382 shares in the Company.
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
No such cases in the Reporting Period.
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 Credibility code Main business scope
shareholder e / company
ent
principal
Manufacture and commerce investment;
domestic commerce and materials supply
and marketing industry (excluding
state-designated monopoly); CP software
and hardware development; industrial
product design; information technology
Midea Holding Co., Ltd. He Xiangjian 2002-08-05 914406067429989733
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 Apart from a direct control over the Company, Midea Holding does not directly control or have
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The 2021 Annual Report of Midea Group Co., Ltd.
controlling shareholder shares in other listed companies at home or abroad.
in other controlled or
non-controlled listed
companies at home or
abroad during the
Reporting Period
Change of the controlling shareholder during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
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.
Domestically and overseas listed Midea Group (000333.SZ), KUKA (KU2.DE), Hiconics (300048.SZ), WDM
companies controlled in the last (600055.SH), Midea Real Estate (3990.HK), Little Swan (A: 000418.SZ; B: 200418)
10 years (delisted in 2019), and Welling Holding (00382.HK) (delisted in 2018)
Change of the actual controller during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company
He Xiangjian
94.55%
0.46%
Midea Holding Co., Ltd.
31.05%
Midea Group Co., Ltd.
The actual controller controls the Company via trust or other ways of asset management
215
The 2021 Annual Report of Midea Group Co., Ltd.
□Applicable √N/A
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
repurchased
as a
As a
Disclosure Number of Number of percentage of
percentage of Amount to be Repurchase
date of the shares to be Purpose shares the total
the total share used period
scheme repurchased repurchased target number
capital
of the equity
incentive
scheme
Expectedly no
more than For use in
No more than RMB14 billion equity
100,000,000 No more than based on the incentive
shares and no 1.4313% and upper limit of 2021.02.25-2 and/or
2021.02.24 99,999,931 9.94%
less than no less than 100,000,000 021.04.02 employee
50,000,000 0.7157% shares and the stock
shares repurchase ownership
price ceiling of schemes
RMB140/share
2021.05.10 No more than No more than No more than 2021.06.03-2 The 71,976,243 N/A
216
The 2021 Annual Report of Midea Group Co., Ltd.
50,000,000 0.7157% and RMB5 billion 021.08.13 repurchased
shares and no no less than and no less shares are to
less than 0.3578% than RMB2.5 be retired,
25,000,000 based on the billion which will
shares based repurchase reduce the
on the price ceiling Company’s
repurchase of registered
price ceiling of RMB100/shar capital.
RMB100/shar e
e
Progress of any repurchased share reduction through centralized price bidding
□ Applicable √ N/A
217
The 2021 Annual Report of Midea Group Co., Ltd.
Section VIII Preference Shares
□ Applicable √ N/A
No such cases in the Reporting Period.
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The 2021 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
No such cases in the Reporting Period.
3. Debt Instruments as a Non-financial Enterprise
√ Applicable □ N/A
3.1 General information on debt instruments as a non-financial enterprise
Way of
principal
Name of Code of Outstandi
Date of Interest repayme Place of
debt Abbr. debt Value date Maturity ng
issuance rate nt and trading
instrument instrument balance
interest
payment
Super-shor
t-term
Commerci Principal
al Papers 21 Midea and
of Midea SCP001 interest
012101283 RMB3 Inter-bank
Group Co., (High 2021-03-29 2021-03-30 2021-09-24 2.7200% repayable
.IB billion market
Ltd. (High Growth in full
Growth Debt) upon
Debt) maturity
(Tranche
1, 2021)
Investor eligibility arrangements (if
N/A
any)
Trading system applicable N/A
219
The 2021 Annual Report of Midea Group Co., Ltd.
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue debt instruments
□ Applicable √ N/A
3.2 Triggering and execution of issuer or investor option clauses and investor protection clauses
□ Applicable √ N/A
3.3 Intermediary agencies
Intermediary Accountant writing
Bond name Office address Contact person Tel.
agency signatures
Agricultural Bank
69 Jianguomennei
of China Limited
Street, Dongcheng An Liwei 010-85109045
(lead underwriter
District, Beijing
21 Midea SCP001 and bookrunner)
(High Growth Debt Industrial and
Instrument) Commercial Bank 55 Fuxingmennei
of China Limited Street, Xicheng Dai Ying 010-66109649
(co-lead District, Beijing
underwriter)
F408, Yuanyang
Plaza, 158
Beijing Jiayuan
Fuxingmennei - Liu Xing 0755-8278 9766
Law Firm
Street, Xicheng
District, Beijing
Change of the agencies in the table above during the Reporting Period
□ Yes √ No
3.4 Use of raised funds
Unit: RMB
In compliance
Rectification for with the
Status of the
any irregularity purpose, use
Total amount special account
Bond name Amount used Amount unused (if any) in the plan and other
raised for raised funds
use of raised information
(if any)
funds stated in the
prospectus
21 Midea RMB3 billion RMB3 billion 0 Normal N/A Yes
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The 2021 Annual Report of Midea Group Co., Ltd.
SCP001 (High
Growth Debt)
Use of raised funds in construction projects
□ Applicable √ N/A
Indicate whether the raised funds were re-purposed during the Reporting Period
□ Applicable √ N/A
3.5 Changes in credit ratings in the Reporting Period
□ Applicable √ N/A
3.6 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
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
Item 31 December 2021 31 December 2020 Change
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The 2021 Annual Report of Midea Group Co., Ltd.
Current ratio 111.67% 131.23% -19.55%
Debt/asset ratio 65.25% 65.53% -0.28%
Quick ratio 86.92% 110.26% -23.33%
2021 2020 Change
Net profit before
non-recurring gains and 26,257,754 24,742,567 6.13%
losses
EBITDA/debt ratio 46.70% 41.76% 4.94%
Interest cover (times) 25.84 25.25 2.31%
Cash-to-interest cover
28.35 25.69 10.32%
(times)
EBITDA-to-interest cover
30.39 29.10 4.45%
(times)
Debt repayment ratio (%) 100.00% 100.00% 0.00%
Interest payment ratio (%) 100.00% 100.00% 0.00%
222
The 2021 Annual Report of Midea Group Co., Ltd.
Section X Financial Report
1. Auditor’s report
Type of the auditor’s opinion Unqualified opinion
Signing date of the auditor’s report 28 April 2022
Name of the auditor PricewaterhouseCoopers Zhong Tian LLP
No. of the auditor’s report PwC ZT Shen Zi (2022) No. 10017
Names of certified public accountants Yao Wenping and Wu Fangfang
223
[English Translation for Reference Only]
Auditor’s Report
PwC ZT Shen Zi (2022) 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 2021;
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 2021, 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
- 224 -
PwC ZT Shen Zi (2022) 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(25)(a) of accounting policy of 1. Interviewed management from operation and
“Revenue - sales of goods” and Note 4(46) financial departments to understand the necessary
“Operating revenue and cost of sales” to the details of sales processes of all distribution
financial statements. channels and evaluate the internal control of
processes relating to the revenue from sales of
The Group recognises relevant revenue at the HVAC and consumer appliances designed by
amount of the consideration which the Group management and tested the operating effectiveness
is expected to receive when the customer of key controls;
obtains control over relevant goods or
services. In 2021, the Group’s consolidated 2. Reviewed household appliance sales contract
operating revenue was approximately RMB template entered into by and between the Group
341,233,208,000 and the revenue from and the clients from all distribution channels, and
HVAC and consumer appliances was analysed and evaluated the appropriateness of the
approximately RMB 273,745,245,000. Group’s accounting policies on the revenue from
sales of HVAC and consumer appliances based on
We identified this as a key audit matter due to our interview with management, understanding of
the large size of both domestic and overseas the Group’s business operation and audit
customer base and high volume of sales experience;
through various distribution channels, the
amount of revenue recognised from HVAC and 3. Performed fluctuation analysis of monthly sales
consumer appliances is material to the and gross margin by product;
financial statements, completing the necessary
audit procedures required our focuses and 4. Reviewed supporting documents relevant to
substantial audit resources. revenue recognition on a sample basis, including
sales contracts, orders, sales invoices, shipping
orders, acknowledgement of goods receipts signed
by customers, billing agreements with customers,
etc.;
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 recognition
of revenue from sales of HVAC and consumer
appliances were supported by the available evidence.
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PwC ZT Shen Zi (2022) 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(18) of accounting policy of
“Impairment of long-term assets”, Note 1. Understood the internal controls and evaluation
2(30)(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 2021, the carrying amount subjectivity, changes and susceptibility to
of goodwill of the Group amounted to management’s bias and fraud;
approximately RMB 27,874,752,000,
including goodwill of RMB 20,544,697,000 2. Evaluated and tested the operating effectiveness of
and RMB 2,580,274,000 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(18) 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- reasonableness;
in-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 estimated
unit and cash generating units, to which the revenue growth rate, EBITDA margin, perpetual
goodwill was allocated, exceeded its carrying annual growth rate and discount rate by
value and therefore no impairment was considering the company’s historical operating
recorded. The recoverable amount of cash performance, future operation plan and market
generating unit and cash generating units developments;
was determined based on value-in-use using
cash flow projections. The key assumptions 6. Tested the mathematical accuracy of the
used in the goodwill impairment assessment calculation process of the impairment assessment;
included estimated revenue growth rate,
EBITDA margin, perpetual annual growth 7. Evaluated the appropriateness of the goodwill
rate and discount rate. impairment assessment model and discount rate
by involving our internal valuation experts.
We identified this as a key audit matter due
to the significance of the goodwill balance Based on the work performed, the management’s
arising from the business acquisition of judgements as adopted in the goodwill impairment
KUKA Group, and the significant accounting assessment of KUKA Group and TLSC were supported
estimates and judgements in key by the available evidence.
assumptions used in the impairment
assessment.
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PwC ZT Shen Zi (2022) 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 2021 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.
227
PwC ZT Shen Zi (2022) 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 consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
228
PwC ZT Shen Zi (2022) 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
28 April 2022 Signing CPA —————————
Wu Fangfang
229
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 31 December 31 December 31 December
ASSETS Note 2021 2020 2021 2020
Consolidated Consolidated Company Company
Current assets
Cash at bank and on hand 4(1) 71,875,556 81,210,482 48,153,997 49,240,180
Financial assets held for
trading 4(2) 5,879,202 28,239,601 3,442,317 16,614,658
Derivative financial assets 545,865 420,494 157,501 -
Notes receivable 4(3) 4,784,914 5,304,510 - -
Accounts receivable 4(4) 24,636,440 22,978,363 - -
Receivables financing 4(6) 10,273,552 13,901,856 - -
Advances to suppliers 4(7) 4,352,807 2,763,710 106,838 45,306
Contract assets 4(8) 3,823,476 3,236,848 - -
Loans and advances 4(9) 20,656,600 16,469,069 - -
Other receivables 4(5), 18(1) 3,104,065 2,973,945 31,447,849 28,318,670
Inventories 4(10) 45,924,439 31,076,529 - -
Current portion of non-
current assets 4(11) 19,851,577 - 19,095,262 -
Other current assets 4(12) 33,156,012 33,079,918 11,713,182 20,533,745
Total current assets 248,864,505 241,655,325 114,116,946 114,752,559
Non-current assets
Other debt investments 4(13) 7,893,935 21,456,155 6,034,563 20,064,155
Long-term receivables 4(14) 871,356 981,623 - -
Loans and advances 4(9) 851,927 1,113,501 - -
Long-term equity 4(15),
investments 18(2) 3,796,705 2,901,337 66,805,691 54,991,161
Investments in other
equity instruments 45,747 46,651 - -
Other non-current
financial assets 4(16) 5,912,873 3,360,849 537,214 80,937
Investment properties 859,195 405,559 428,460 476,839
Fixed assets 4(17) 22,852,848 22,239,214 661,692 749,835
Construction in progress 4(18) 2,690,930 1,477,302 800,243 204,304
Right-of-use assets 4(19) 2,297,354 — 2,585 —
Intangible assets 4(20) 17,173,072 15,422,393 669,158 684,997
Goodwill 4(21) 27,874,752 29,557,218 - -
Long-term prepaid
expenses 4(22) 1,394,240 1,300,962 79,799 97,078
Deferred tax assets 4(23) 8,192,309 7,208,635 289,964 287,360
Other non-current assets 4(24) 36,374,356 11,255,879 33,023,304 10,141,031
Total non-current assets 139,081,599 118,727,278 109,332,673 87,777,697
TOTAL ASSETS 387,946,104 360,382,603 223,449,619 202,530,256
- 230 -
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 31 DECEMBER 2021
(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 2021 2020 2021 2020
Consolidated Consolidated Company Company
Current liabilities
Short-term borrowings 4(27) 5,381,623 9,943,929 - 799,314
Borrowings from Central Bank 178,878 - - -
Customer deposits and
deposits from banks and
other financial institutions 78,180 87,535 - -
Derivative financial liabilities 157,602 161,225 - -
Notes payable 4(28) 32,752,007 28,249,939 - -
Accounts payable 4(29) 65,983,559 53,930,261 - -
Contract liabilities 4(30) 23,916,595 18,400,922 - -
Employee benefits payable 4(31) 7,535,168 6,954,822 420,536 562,954
Taxes payable 4(32) 5,404,267 5,758,058 1,184,813 1,326,219
Other payables 4(33) 4,288,104 4,501,391 151,450,555 123,120,354
Current portion of non-current
liabilities 4(34) 28,947,540 6,310,181 92,647 4,000,000
Other current liabilities 4(35) 48,227,953 49,852,239 35,932 3,048,794
Total current liabilities 222,851,476 184,150,502 153,184,483 132,857,635
Non-current liabilities
Long-term borrowings 4(36) 19,734,020 42,827,287 12,509,900 5,800,000
Lease liabilities 4(37) 1,533,552 — - —
Long-term payables - 13,260 - -
Provisions 310,571 298,110 - -
Deferred income 1,228,459 779,729 154,015 -
Long-term employee benefits
payable 4(38) 1,825,016 2,159,675 - -
Deferred tax liabilities 4(23) 4,950,245 5,223,954 17,028 67,792
Other non-current liabilities 4(39) 687,689 692,986 - -
Total non-current liabilities 30,269,552 51,995,001 12,680,943 5,867,792
Total liabilities 253,121,028 236,145,503 165,865,426 138,725,427
Shareholders’ equity
Share capital 4(40) 6,986,564 7,029,976 6,986,564 7,029,976
Capital surplus 4(42) 20,516,930 22,488,105 27,105,153 29,123,547
Less: Treasury stock 4(41) (14,044,550) (6,094,347) (14,044,550) (6,094,347)
Other comprehensive income 4(43) (1,758,948) (1,549,003) (7,295) (16,009)
General risk reserve 719,922 587,984 - -
Special reserve 15,542 12,730 - -
Surplus reserve 4(44) 9,449,901 7,966,362 9,449,901 7,966,362
Undistributed profits 4(45) 102,982,763 87,074,453 28,094,420 25,795,300
Total equity attributable to
shareholders of the
Company 124,868,124 117,516,260 57,584,193 63,804,829
Minority interests 9,956,952 6,720,840 - -
Total shareholders’ equity 134,825,076 124,237,100 57,584,193 63,804,829
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 387,946,104 360,382,603 223,449,619 202,530,256
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
- 231 -
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2021 2020 2021 2020
Consolidated Consolidated Company Company
Total revenue 343,360,825 285,709,729 1,865,278 1,852,312
4(46),
Including: Operating revenue 18(3) 341,233,208 284,221,249 1,865,278 1,852,312
Interest income 4(47) 2,127,043 1,488,211 - -
Fee and commission
income 574 269 - -
Less: Cost of sales 4(46) (264,525,999) (216,798,413) (58,510) (51,350)
Interest costs 4(47) (87,066) (105,168) - -
Fee and commission expenses (13,015) (6,972) - -
Taxes and surcharges 4(48) (1,609,384) (1,533,646) (48,126) (32,546)
Selling and distribution
expenses 4(49) (28,647,344) (23,563,455) - -
General and administrative
expenses 4(50) (10,266,283) (9,264,148) (684,794) (701,711)
Research and development
expenses 4(51) (12,014,907) (10,118,667) - -
Financial income 4(52) 4,386,111 2,638,032 2,107,914 1,421,019
Including: Interest expenses (1,357,564) (1,305,591) (2,257,440) (1,903,866)
Interest income 5,181,658 3,663,028 4,397,266 3,352,633
Add: Other income 4(58) 1,307,504 1,424,090 280,318 369,889
4(56),
Investment income 18(4) 2,365,773 2,362,462 12,462,103 12,578,455
Including: Investment income
from associates 560,679 402,528 265,491 216,318
Gains or losses on changes in
fair value 4(55) (166,406) 1,762,950 (203,057) 108,605
Credit impairment losses 4(54) (383,451) (247,605) (127,693) (6,340)
Asset impairment losses 4(53) (483,420) (705,209) - -
Gains/(Losses) on disposal of
assets 4(57) 58,257 (60,523) (272) 146
Operating profit 33,281,195 31,493,457 15,593,161 15,538,479
Add: Non-operating income 624,744 384,986 31,358 102,429
Less: Non-operating expenses (188,395) (214,904) (48,783) (116,120)
Total profit 33,717,544 31,663,539 15,575,736 15,524,788
Less: Income tax expenses 4(59) (4,702,168) (4,156,997) (740,348) (337,750)
Net profit 29,015,376 27,506,542 14,835,388 15,187,038
(1) Classified by continuity of
operations
Net profit from continuing
operations 29,015,376 27,506,542 14,835,388 15,187,038
Net profit from discontinued
operations - - - -
(2) Classified by ownership of the
equity
Attributable to shareholders of the
Company 28,573,650 27,222,969 14,835,388 15,187,038
Minority interests 441,726 283,573 - -
- 232 -
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2021 2020 2021 2020
Consolidated Consolidated Company Company
Other comprehensive income, net of tax (237,306) (1,177,809) 8,714 (17,744)
Other comprehensive income attributable to
shareholders of the Company, net of tax (207,079) (837,449) 8,714 (17,744)
(1) Other comprehensive income items
which will not be reclassified
subsequently to profit or loss (6,748) 112,388 - -
1) Changes arising from
remeasurement of defined
benefit plan (7,172) 111,895 - -
2) Changes in fair value of
investments in other equity
instruments 424 493 - -
(2) Other comprehensive income items
which will be reclassified
subsequently to profit or loss (200,331) (949,837) 8,714 (17,744)
1) Other comprehensive income
that will be transferred
subsequently to profit or
loss under the equity
method (3,032) (20,445) 8,714 (17,744)
2) Cash flow hedging reserve (6,997) 298,721 - -
3) Differences on translation of
foreign currency financial
statements (190,302) (1,228,113) - -
Other comprehensive income attributable to
minority shareholders, net of tax (30,227) (340,360) - -
Total comprehensive income 28,778,070 26,328,733 14,844,102 15,169,294
Attributable to shareholders of the Company 28,366,571 26,385,520 14,844,102 15,169,294
Minority interests 411,499 (56,787) - -
Earnings per share
Basic earnings per share (RMB Yuan) 4(60) 4.17 3.93 Not applicable Not applicable
Diluted earnings per share (RMB Yuan) 4(60) 4.14 3.90 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:
- 233 -
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2021 2020 2021 2020
Item Note Consolidated Consolidated Company Company
1 Cash flows from operating activities
Cash received from sales of goods or rendering of
services 310,489,824 240,052,501 - -
Net increase in customer deposits and deposits from
banks and other financial institutions - 25,058 - -
Net decrease in deposits with the Central Bank 1,287,927 - - -
Net increase in borrowings from the Central Bank 178,878 - - -
Cash received from interest, fee and commission 1,889,716 1,381,851 - -
Refund of taxes and surcharges 9,968,330 6,574,762 - -
Cash received relating to other operating activities 4(61)(a) 6,600,822 4,950,874 31,451,132 21,491,325
Sub-total of cash inflows 330,415,497 252,985,046 31,451,132 21,491,325
Cash paid for goods and services (209,216,044) (139,660,744) - -
Net increase in loans and advances (4,062,432) (6,078,053) - -
Net decrease in customer deposits and deposits from
banks and other financial institutions (9,355) - - -
Net increase in deposits with the Central Bank - (1,274,496) - -
Cash paid for interest, fee and commission (101,110) (113,517) - -
Cash paid to and on behalf of employees (32,095,846) (28,460,318) (32,879) (72,404)
Payments of taxes and surcharges (15,613,276) (13,407,607) (453,861) (342,190)
Cash paid relating to other operating activities 4(61)(b) (34,225,730) (34,433,194) (3,996,431) (10,178,648)
Sub-total of cash outflows (295,323,793) (223,427,929) (4,483,171) (10,593,242)
Net cash flows from operating activities 4(61)(c) 35,091,704 29,557,117 26,967,961 10,898,083
2 Cash flows from/(in) investing activities
Cash received from disposal of investments 121,628,148 141,821,724 59,767,847 103,460,300
Cash received from returns on investments 5,648,277 4,874,990 14,887,506 15,565,104
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 336,186 273,544 86 255
Net cash received from disposal of subsidiaries and
other business units 188,490 42,398 8,326 13,000
Sub-total of cash inflows 127,801,101 147,012,656 74,663,765 119,038,659
Cash paid to acquire fixed assets, intangible assets
and other long-term assets (6,825,357) (4,656,582) (752,937) (187,723)
Cash paid to acquire investments (105,347,246) (176,621,347) (68,932,311) (117,386,281)
Net cash paid to acquire subsidiaries and other
business units (2,028,912) (1,045,390) - -
Sub-total of cash outflows (114,201,515) (182,323,319) (69,685,248) (117,574,004)
Net cash flows from/(in) investing activities 13,599,586 (35,310,663) 4,978,517 1,464,655
3 Cash flows used in financing activities
Cash received from capital contributions 1,550,951 2,657,489 1,487,792 2,542,556
Including: Cash received from capital contributions by
minority shareholders of subsidiaries 63,159 114,933 - -
Cash received from borrowings 16,033,803 18,070,961 6,800,000 6,599,314
Cash received from issuance of short-term financing
bonds 2,999,629 33,998,238 2,999,629 33,998,238
Cash received relating to other financing activities 560,838 22,725 - -
Sub-total of cash inflows 21,145,221 54,749,413 11,287,421 43,140,108
Cash repayments of borrowings (18,225,351) (8,354,338) (4,799,414) (4,550,064)
Cash paid for repayment of short-term financing bonds (6,000,000) (31,000,000) (6,000,000) (31,000,000)
Cash payments for interest expenses and distribution
of dividends or profits (12,894,125) (12,822,636) (13,261,677) (12,831,949)
Including: Cash payments for dividends or profit to
minority shareholders of subsidiaries (426,947) (425,461) - -
Cash payments relating to other financing activities 4(61)(d) (15,230,284) (3,328,734) (13,810,829) (2,934,420)
Sub-total of cash outflows (52,349,760) (55,505,708) (37,871,920) (51,316,433)
Net cash flows used in financing activities (31,204,539) (756,295) (26,584,499) (8,176,325)
4 Effect of foreign exchange rate changes on cash
and cash equivalents (485,220) (383,411) - -
5 Net increase/(decrease) in cash and cash
equivalents 4(61)(c) 17,001,531 (6,893,252) 5,361,979 4,186,413
Add: Cash and cash equivalents at the beginning of the
year 23,548,508 30,441,760 16,595,063 12,408,650
6 Cash and cash equivalents at the end of the year 4(61)(e) 40,550,039 23,548,508 21,957,042 16,595,063
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
- 234 -
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Equity attributable to shareholders of the Company
Less: Other Total
Share Capital Treasury comprehensive General risk Special Surplus Undistributed Minority shareholders’
capital surplus stock income reserve reserve reserve profits interests equity
(Note 4(40)) (Note 4(42)) (Note 4(41)) (Note 4(43)) (Note 4(44)) (Note 4(45))
Balance at 1 January 2020 6,971,900 19,640,313 (3,759,732) (711,554) 366,947 - 6,447,658 72,713,631 5,826,934 107,496,097
Movements for the year ended
31 December 2020
Total comprehensive income
Net profit - - - - - - - 27,222,969 283,573 27,506,542
Other comprehensive
income, net of tax - - - (837,449) - - - - (340,360) (1,177,809)
Total comprehensive income - - - (837,449) - - - 27,222,969 (56,787) 26,328,733
Capital contribution and
withdrawal by shareholders
Ordinary shares invested by
shareholders 63,801 2,157,530 - - - - - - 89,465 2,310,796
Business combinations - - - - - 13,618 - - 1,663,792 1,677,410
Share-based payment
included in
shareholders' equity - 508,256 - - - - - - 55,314 563,570
Others (5,725) (193,357) (2,334,615) - - - - - (517,436) (3,051,133)
Profit distribution
Appropriation to general risk
reserve - - - - 221,037 - - (221,037) - -
Appropriation to surplus
reserve - - - - - - 1,518,704 (1,518,704) - -
Profit distribution to
shareholders - - - - - - - (11,122,406) (417,486) (11,539,892)
Special reserve
Appropriation in the current
period - - - - - 165 - - 41 206
Usein the current period - - - - - (1,053) - - (263) (1,316)
Others - 375,363 - - - - - - 77,266 452,629
Balance at 31 December 2020 7,029,976 22,488,105 (6,094,347) (1,549,003) 587,984 12,730 7,966,362 87,074,453 6,720,840 124,237,100
- 235 -
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Equity attributable to shareholders of the Company
Less: Other Total
Share Capital Treasury comprehensive General risk Special Surplus Undistributed Minority shareholders’
capital surplus stock income reserve reserve reserve profits interests equity
(Note 4(40)) (Note 4(42)) (Note 4(41)) (Note 4(43)) (Note 4(44)) (Note 4(45))
Balance at 1 January 2021 7,029,976 22,488,105 (6,094,347) (1,549,003) 587,984 12,730 7,966,362 87,074,453 6,720,840 124,237,100
Movements for the year
ended 31 December 2021
Total comprehensive income
Net profit - - - - - - - 28,573,650 441,726 29,015,376
Other comprehensive
income, net of tax - - - (207,079) - - - - (30,227) (237,306)
Total comprehensive income - - - (207,079) - - - 28,573,650 411,499 28,778,070
Capital contribution and
withdrawal by shareholders
Ordinary shares invested by
shareholders 34,437 1,495,004 - - - - - - 587,480 2,116,921
Business combinations - - - - - - - - 3,189,892 3,189,892
Share-based payment
included in
shareholders' equity - 1,190,124 - - - - - - 62,031 1,252,155
Others (77,849) (5,178,730) (7,950,203) - - - - - (449,682) (13,656,464)
Profit distribution
Appropriation to general risk
reserve - - - - 131,938 - - (131,938) - -
Appropriation to surplus
reserve - - - - - - 1,483,539 (1,483,539) - -
Profit distribution to
shareholders - - - - - - - (11,052,729) (401,397) (11,454,126)
Special reserve
Appropriation in the current
period - - - - - 2,812 - - 703 3,515
Use in the current period - - - - - - - - - -
Others - 522,427 - (2,866) - - - 2,866 (164,414) 358,013
Balance at 31 December 2021 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
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
- 236 -
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Less: Treasury comprehensive Surplus Undistributed shareholders’
Item Share capital Capital surplus stock income reserve profits equity
Balance at 1 January 2020 6,971,900 26,592,959 (3,759,732) 1,735 6,447,658 23,249,372 59,503,892
Movements for the year ended 31
December 2020
Total comprehensive income
Net profit - - - - - 15,187,038 15,187,038
Other comprehensive income, net
of tax - - - (17,744) - - (17,744)
Total comprehensive income - - - (17,744) - 15,187,038 15,169,294
Capital contribution and withdrawal
by shareholders
Ordinary shares invested by
shareholders 63,801 2,157,530 - - - - 2,221,331
Share-based payment included in
shareholders' equity - 566,167 - - - - 566,167
Others (5,725) (193,357) (2,334,615) - - - (2,533,697)
Profit distribution
Appropriation to surplus reserve - - - - 1,518,704 (1,518,704) -
Profit distribution to shareholders - - - - - (11,122,406) (11,122,406)
Others - 248 - - - - 248
Balance at 31 December 2020 7,029,976 29,123,547 (6,094,347) (16,009) 7,966,362 25,795,300 63,804,829
- 237 -
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Less: Treasury comprehensive Surplus Undistributed shareholders’
Item Share capital Capital surplus stock income reserve profits equity
Balance at 1 January 2021 7,029,976 29,123,547 (6,094,347) (16,009) 7,966,362 25,795,300 63,804,829
Movements for the year ended 31
December 2021
Total comprehensive income
Net profit - - - - - 14,835,388 14,835,388
Other comprehensive income, net
of tax - - - 8,714 - - 8,714
Total comprehensive income - - - 8,714 - 14,835,388 14,844,102
Capital contribution and withdrawal
by shareholders
Ordinary shares invested by
shareholders 34,437 1,495,004 - - - - 1,529,441
Share-based payment included in
shareholders' equity - 1,231,289 - - - - 1,231,289
Others (77,849) (5,178,730) (7,950,203) - - - (13,206,782)
Profit distribution
Appropriation to surplus reserve - - - - 1,483,539 (1,483,539) -
Profit distribution to shareholders - - - - - (11,052,729) (11,052,729)
Others - 434,043 - - - - 434,043
Balance at 31 December 2021 6,986,564 27,105,153 (14,044,550) (7,295) 9,449,901 28,094,420 57,584,193
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
- 238 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 and various small appliances, robotics and
automation system. Other services include the smart supply chain; sale, 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 2021, the Company's share capital was RMB 6,986,563,844, and the
total number of shares in issue was 6,986,563,844, of which 156,538,881 shares were
restricted tradable A shares and 6,830,024,963 shares were unrestricted tradable A shares.
The detailed information of major subsidiaries included in the consolidation scope in the
current year is set out in Notes 5 and 6. Subsidiaries newly included in the consolidation
scope via acquisition in the current year mainly include Beijing Wandong Medical
Technology Co., Ltd. and its subsidiaries (“Wandong Medical”) and Hitachi Compressor
(Thailand) Ltd., and are detailed in Note 5(1)(a); subsidiaries newly included in the
consolidation scope via establishment in the current year are detailed in 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 28 April 2022.
- 239 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
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(9)(a)), valuation method of inventory
(Note 2(10)), depreciation of fixed assets, amortisation of intangible assets and right-of-use
assets (Note 2(13), (16), (28)), impairment of long-term assets (Note 2(18)), and recognition
and measurement of revenue (Note 2(25)).
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(30).
(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 2021 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 2021 and their financial performance, cash flows and other information for the
year then 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. The financial statements are
presented in RMB.
- 240 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(5) 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.
- 241 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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 incomes 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.
(7) 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.
- 242 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(8) 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.
(9) 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 or a financial liability
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 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.
- 243 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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 method.
Such financial assets mainly comprise cash at bank and on hand, loans and advances,
notes receivable, accounts receivable, other receivables, other current assets, debt
investments, long-term receivables and other non-current assets, etc. 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 method which are recognised in profit or loss for the current period.
Such financial assets mainly include receivables financing, other debt investments, etc.
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 measured 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.
- 244 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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.
- 245 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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
The effective portion of gains or losses on hedging instruments is recognised in other
comprehensive income as cash flow hedging reserve, while the ineffective portion is
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 and forecasts of future economic conditions, 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.
- 246 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
As 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, determines
them as the financial instruments in Stage 1 and recognises the 12-month ECL provision.
For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest
income by applying the effective interest rate to the gross carrying amount (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 gross carrying amount).
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 related to
work in progress without invoice, essentially, their risk characteristics are the same as the
accounts receivable of similar contracts. Therefore, the Group believes that the ECL rate of
accounts receivable is an approximation to that of contract assets. For lease receivables,
the Group also determines to recognise the lifetime ECL provision.
- 247 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
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:
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
Security deposit and guarantee
Grouping of other receivables 1 receivables grouping
Receivables from related parties
Grouping of other receivables 2 grouping
Grouping of other receivables 3 Other receivables grouping
Grouping of long-term receivables Finance lease payable grouping
Grouping of loans and advances 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 and loans and advances 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.
- 248 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(iii) Derecognition of financial assets
A financial asset is derecognised when: (i) the contractual rights to the cash flows from the
financial asset expire, (ii) 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,
(iii) 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 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, long-term
payables, etc. Such financial liabilities are initially recognised at fair value, net of transaction
costs incurred, and subsequently measured using the effective interest 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.
- 249 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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.
(10) 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 costs necessary
to make the sale and related taxes.
- 250 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Inventories (Cont'd)
(c) Basis for determining net realisable values of inventories and method for making provision
for decline in the value of inventories (Cont'd)
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.
(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.
(11) 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.
Associates are the investees 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 joint ventures and associates 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 equity of the party being absorbed in the consolidated financial
statements of the ultimate controller 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 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. Shareholders' equity, which is
recognised due to changes in investee’s shareholders’ 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.
- 251 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Long-term equity investments (Cont’d)
(a) Determination of investment cost (Cont’d)
For investment in previously-held equity accounted for using the recognition and
measurement standards of financial instruments, 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. The difference between the fair value and carrying amount
for investment in previously-held equity and the accumulated changes in fair value
previously included in other comprehensive income are transferred to profit or loss for the
current period accounted for using the cost method.
For long-term equity investments acquired not through a business combination: for 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 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 amounts 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 of the investee’s owner's equity other than those arising from the net profit or loss,
other comprehensive income and profit distribution, are recognised in the Group’s capital
surplus and the carrying amounts of the long-term equity investment are adjusted
accordingly. The carrying amount of the investment is reduced by the Group’s share of the
profit distribution or cash dividends declared by the investees. 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
gain or losses are recognised. 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.
- 252 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Long-term equity investments (Cont’d)
(c) Basis for determining existence of control, joint control, significant influence over investees
(Cont’d)
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, joint ventures and
associates are reduced to the recoverable amounts when the recoverable amounts are
below their carrying amounts (Note 2(18)).
(12) 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.
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 fixed asset 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 fixed asset 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.
- 253 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, overseas land, machinery and equipment, motor vehicles,
electronic equipment and others.
Fixed assets 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 fixed
assets 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 fixed assets is determined based on Note 2(14).
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset
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.
(b) Depreciation method for fixed assets
Fixed assets 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 fixed assets
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 fixed assets 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 fixed assets
and the depreciation methods applied to the assets are reviewed, and adjusted as
appropriate at each year-end.
(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the
recoverable amount is below the carrying amount (Note 2(18)).
(d) Disposal of fixed assets
A fixed asset is 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 a fixed asset net of its carrying amount and related taxes and expenses is
recognised in profit or loss for the current period.
- 254 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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 fixed assets 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(18)).
(15) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a
fixed asset 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 fixed asset
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 fixed asset
qualifying for capitalisation, the amount of general borrowing costs eligible for capitalisation
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
estimated 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.
- 255 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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 fixed assets.
(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.
(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, the
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) 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.
- 256 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Intangible assets (Cont’d)
(f) Research and development (“R&D”)
The expenditure on an internal research and development project is classified into
expenditure on the research phase and expenditure on the development phase based on
its nature and whether there is material uncertainty that the research and development
activities can form an intangible asset at the end of the project.
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.
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.
(g) 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(18)).
(17) 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.
- 257 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(18) Impairment of long-term assets
Fixed assets, 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, joint ventures and associates 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 asset 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 cash generating
unit or cash generating units which are expected to benefit from the synergies of the
business combination. If the result of the test indicates that the recoverable amount of a
cash generating unit or cash generating units, 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 cash generating
unit or cash generating units, and then deducted from the carrying amounts of other assets
within the cash generating unit or cash generating units 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.
(19) Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits provided in various forms of
consideration in exchange for service rendered by employees or compensations for the
termination of employment relationship.
(a) Short-term employee benefits
Short-term employee benefits include employee wages or salaries, bonus, allowances and
subsidies, staff welfare, premiums or contributions on medical insurance, work injury
insurance, maternity insurance, housing funds, union running costs and employee
education costs, short-term paid absences, etc. The employee benefit liabilities are
recognised 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. Employee benefits which are non-monetary benefits are measured at fair value.
- 258 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(19) Employee benefits (Cont'd)
(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 KUKA
Aktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA Group”), etc. 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 prescribed 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 at the end of the reporting period 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 the supplemental
retirement benefits (including current service costs, past-service costs and gains or losses
on settlement) and net interest are recognised in the statement of profit or loss or included
in the cost of an asset, and the changes of remeasurement in net liabilities or net assets
arising from the benefit plan are charged or credited to equity in other comprehensive
income.
(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 the restructuring that involves the payment of
termination benefits.
- 259 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(19) Employee benefits (Cont'd)
(c) Termination benefits (Cont’d)
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 the 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.
(20) 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 loans and advances, long-term equity
investments, deposits with banks and other financial institutions and other receivables of
subsidiaries engaged in financial business.
(21) Dividend distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by
the shareholders’ meeting.
(22) 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.
- 260 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) 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 share option incentive plan,
restricted share plan and employee stock ownership plan. 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.
(b) Determination of fair value of equity instruments
The Group determines the fair value of share 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 exercised or tradable equity instruments.
(24) Treasury stock
The Group’s treasury stock mainly comes from the repurchase of equity instruments and
the issuance of restricted shares and so on.
Consideration and transaction costs paid by the Group for repurchasing equity instruments
are deducted from 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.
- 261 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Treasury stock (Cont’d)
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.
(25) 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.
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 manufacturing and sales of heating & ventilation,
as well as air-conditioner (hereinafter referred to as “HVAC”) (mainly comprises residential
air conditioner, central air-conditioner, heating and ventilation systems, etc.), consumer
appliances (mainly comprises kitchen appliances, refrigerators, washing machines and
various small appliances, etc.), robotics and automation system and related materials.
Revenue from domestic sales of HVAC and consumer appliances 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.
- 262 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(25) Revenue (Cont’d)
(a) Sales of goods (Cont'd)
Revenue from overseas sales of HVAC and consumer appliances is recognised when the
goods have been declared to the customs and shipped out of the port in accordance with
the sales contract.
Revenue from sales of robotics and automation system 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.
Revenue from sales of materials is recognised when the buyer has accepted the materials
as contracted and the delivery order is signed by both parties.
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. Generally, the retail customers of the Group are entitled to return the
products within 7 days after the confirmation of receipt.
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.
(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(9)). 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.
- 263 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(25) 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 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 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.
- 264 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(25) 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.
(26) 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, etc.
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 are government grants other than government grants related to assets.
Government grants related to assets are recorded as deferred income reasonably and
systematically amortised to profit or loss over the useful life of the related asset.
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 immediately 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.
- 265 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(27) 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). 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.
(28) 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.
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.
- 266 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Leases (Cont'd)
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 that the contract changes directly resulting from COVID-19 are accounted for by
applying the practical expedient. For a lease modification which decreases the scope of the
lease or shortens the lease term, the Group 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 rent concessions as a direct result of COVID-19 and for the period ended 30 June
2022 only, 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.
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.
- 267 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Leases (Cont'd)
(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 rent concessions as a direct result of COVID-19 and for the period ended 30 June
2022 only, 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 that the above contract changes directly resulting from COVID-19 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.
(29) 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.
(30) 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:
- 268 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(30) Critical accounting estimates and judgements (Cont’d)
(i) Provision for impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable
amount of the cash generating unit or cash generating units that contain the apportioned
goodwill is determined by the higher value between the use value 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 cash generating unit or cash generating units containing the
relevant goodwill, based on the present value of cash flows forecasts. Key assumptions
adopted in the impairment testing of goodwill included estimated revenue growth rate,
EBITDA margin, perpetual annual growth rate, discount rate, etc. which involved critical
accounting estimates and judgement.
If management revises the estimated revenue growth rate and perpetual annual growth rate
that are used in the calculation of the future cash flows of cash generating unit or cash
generating units, and the revised rates are lower than the current rates, the Group would
need to recognise further impairment against goodwill.
If management revises the EBITDA margin that is used in the calculation of the future cash
flows of cash generating unit or cash generating units, and the revised EBITDA margin is
lower than the current one, the Group would 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 would
need to recognise further impairment against goodwill.
If the actual estimated revenue growth rate, perpetual annual growth rate and EBITDA
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.
- 269 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(30) 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.
- 270 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Significant changes in accounting policies
The Ministry of Finance released the revised CAS 21 - Lease (hereinafter “new lease
standard”) in 2018, and released the Notice on Adjusting the Application Scope of the
Provisions on the Accounting Treatment Regarding COVID-19-Related Rent Concessions
(Cai Kuai [2021] No. 9), the Circular on Issuing Interpretation No. 14 of Accounting
Standards for Business Enterprises (Cai Kuai [2021] No. 1), Q&A on Implementation of
Accounting Standards for Business Enterprises in 2021 and the Circular on Issuing
Interpretation No. 15 of Accounting Standards for Business Enterprises. The financial
statements for the year ended 31 December 2021 have been prepared in accordance with
the above standards, circulars and Q&A, and the impacts on the financial statements of the
Group and the Company are as follows:
(a) Lease
The Group and the Company initially adopted the new lease standard on 1 January 2021.
According to new lease standard, the Group and the Company choose not to reassess the
contracts that have already existed prior to the date of initial application. The Group and
the Company recognised the cumulative effect of the standard as an adjustment to the
opening balance of retained earnings in 2021 and relevant line items in the financial
statements. The comparatives for the year ended 31 December 2020 were not restated.
The amounts affected
The nature and the reasons of the changes in accounting
(i) The line items affected 1 January 2021
policies
The Group The Company
For the operating lease contracts that have already existed Right-of-use assets 2,129,168 10,340
prior to the initial application of the new lease standard, the Lease liabilities 1,500,166 2,647
Group and the Company adopt different transition
approaches based on the remaining lease term: Current portion of non-
current liabilities 629,002 7,693
If the remaining lease term is more than 12 months, the
Group and the Company recognised lease liabilities based
on the remaining lease payments and the incremental
borrowing rate as at 1 January 2021, and determined the
carrying amount of the right-of-use assets based on the
incremental borrowing rate as at 1 January 2021. The
Group and the Company adopt the practical expedient to
evaluate whether assets are impaired or not at the date of
initial application. The adoption of the practical expedient
has no significant impact on the financial statements since
there are no onerous contracts for leases at the date of
initial application.
The Group and the Company apply the practical expedient
for leases with a remaining lease term of 12 months or less,
under which the right-of-use assets and lease liabilities are
not recognised. There is no significant impact on the
financial statements.
The Group and the Company apply the practical expedient
for operating lease contracts of low-value assets existing
prior to the initial application of the new lease standard,
under which the right-of-use assets and lease liabilities are
not recognised. There is no significant impact on the
financial statements.
In applying the new lease standard, except for prepaid
rentals and lease deposit expenditures relating to the short-
term leases and low-value asset leases which are still
recorded in cash outflows from operating activities using
practical expedient according to the new lease standard,
other prepaid rentals and lease deposit expenditures are
recorded in cash outflows from financing activities.
- 271 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Significant changes in accounting policies
(a) Lease (Cont’d)
The amounts affected
The nature and the reasons of the changes in accounting
The line items affected 1 January 2021
policies
The Group The Company
In applying the new lease standard, the Group and the Right-of-use assets 26,348 -
Company reclassified fixed assets held under finance Fixed assets (26,348) -
leases from “fixed assets” to “right-of-use assets”, and Long-term payables (13,260) -
finance lease payables from “long-term payables” to
“lease liabilities”. Lease liabilities 13,260 -
As at 1 January 2021, when measuring lease liabilities, the Group and the Company adopted
the same discount rate for lease contracts with similar characteristics, and the weighted
average of incremental borrowing rates adopted was 1.01% to 13.21%.
(ii) As at 1 January 2021, the Group and the Company reconciled the outstanding minimum
operating lease payments calculated under the old lease standard to lease liabilities under
the new lease standard as follows:
The Group The Company
Future minimum operating lease payments as at 31 December
2020 2,523,731 10,653
Present value of the above minimum operating lease payments
discounted using the incremental borrowing rate 2,253,525 10,340
Add: Finance lease payable as at 31 December 2020 20,943 -
Less: Present value of payments for leases with a term of 12
months or less and of lease payments for an individual
asset (when new) of low value (124,357) -
Lease liabilities recognised as at 1 January 2021 (including
current portion of non-current liabilities) 2,150,111 10,340
(b) Presentation of transportation costs
The nature and the reasons of the
changes in accounting policies The line items affected The amounts affected
2020
The Group The Company
The Group and the Company Selling and distribution
reclassified transportation costs from expenses (3,958,821) -
selling and distribution expenses to Cost of sales 3,958,821 -
cost of sales, which is incurred before
the control of goods is transferred to
the customer and for the fulfilment of
sales contract.
(c) Accounting treatment of rental concessions against COVID-19
For the rent concessions as a direct result of COVID-19, agreed with lessors and for the period
ended 30 June 2022 only, the Group and the Company have applied the practical expedient
in the above circular for the preparation of the financial statements for the year ended 31
December 2021, and there is no significant impact on the Group and the Company.
- 272 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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) Significant changes in accounting policies (Cont’d)
(d) The financial statements for the year ended 31 December 2021 have been prepared by the
Group and the Company in accordance with the accounting for changes in determination of
contract cash flows of financial assets or financial liabilities due to the reform of benchmark
interest rate in the Interpretation No. 14 of Accounting Standards for Business Enterprises,
and related accounting in the Interpretation No. 15 of Accounting Standards for Business
Enterprises. The interpretations have no significant impact on the financial statements for
the year ended 31 December 2021 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.
- 273 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 Company are subject to an enterprise income tax rate of
15% in 2021 as they qualified as high-tech enterprises and obtained the High-tech
Enterprise Certificate:
No. of the High-tech Term of
Name of taxpayer Enterprise Certificate Dates of issuance validity
Jiangsu Midea Cleaning Appliances Co., Ltd. GR202032012131 2 December 2020 3 years
GD Midea Environment Appliances Mfg. Co., Ltd. GR201944000430 2 December 2019 3 years
Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. GR202144008574 20 December 2021 3 years
Guangdong Witol Vacuum Electronic Manufacture
Co., Ltd. GR202044001986 1 December 2020 3 years
Foshan Shunde Midea Washing Appliances
Manufacturing Co., Ltd. GR202044003557 9 December 2020 3 years
Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. GR202144012791 31 December 2021 3 years
Foshan Shunde Midea Electric Science and
Technology Co., Ltd. GR201944000317 2 December 2019 3 years
GD Midea Heating & Ventilating Equipment Co.,
Ltd. GR202144001270 20 December 2021 3 years
Hefei Midea Heating & Ventilating Equipment Co.,
Ltd. GR201934001163 9 September 2019 3 years
Anhui Meizhi Precision Manufacturing Co., Ltd. GR202134004969 18 September 2021 3 years
Guangzhou Midea Hualing Refrigerator Co., Ltd. GR201944009238 2 December 2019 3 years
Guangdong Welling Motor Manufacturing Co., Ltd. GR202044006087 9 December 2020 3 years
Foshan Welling Washer Motor Manufacturing Co.,
Ltd. GR202044005425 9 December 2020 3 years
Huaian Welling Motor Manufacturing Co., Ltd. GR201932010033 6 December 2019 3 years
Wuxi Filin Electronics Co., Ltd. GR202132000964 3 November 2021 3 years
GD Midea Air-Conditioning Equipment Co., Ltd. GR202044003059 1 December 2020 3 years
Handan Midea Air-Conditioning Equipment Co.,
Ltd. GR202013000191 27 September 2020 3 years
Midea Group Wuhan Refrigeration Equipment
Co., Ltd. GR202042000684 1 December 2020 3 years
Guangzhou Hualing Refrigerating Equipment Co.,
Ltd. GR202044001953 1 December 2020 3 years
Guangdong Swisslog Technology Co., Ltd. GR202144005648 20 December 2021 3 years
- 274 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 Company are subject to an enterprise income tax rate of
15% in 2021 as they qualified as high-tech enterprises and obtained the High-tech
Enterprise Certificate (Cont’d):
No. of the High-tech Enterprise Term of
Name of taxpayer Certificate Dates of issuance validity
Wuhu Maty Air-Conditioning Equipment
Co., Ltd. GR202034001383 17 August 2020 3 years
Chongqing Midea General Refrigeration
Equipment Co., Ltd. GR202051100347 9 October 2020 3 years
Guangdong Meizhi Compressor Limited GR202044004270 9 December 2020 3 years
Hubei Midea Refrigerator Co., Ltd. GR202042000745 1 December 2020 3 years
Guangdong Midea Consumer Electric
Manufacturing Co., Ltd. GR202044007232 9 December 2020 3 years
Anhui Meizhi Compressor Co., Ltd. GR201934000046 9 September 2019 3 years
Foshan Shunde Midea Water Dispenser
Manufacturing Co., Ltd. GR202044004098 9 December 2020 3 years
Midea Welling Motor Technology
(Shanghai) Co., Ltd. GR202031001304 12 November 2020 3 years
Welling (Wuhu) Motor Manufacturing Co.,
Ltd. GR202134003666 18 November 2021 3 years
Hefei Midea Laundry Appliance Co., Ltd. GR202134003561 18 September 2021 3 years
Hefei Hualing Co., Ltd. GR202134000541 18 September 2021 3 years
Foshan Midea Chungho Water Purification
Equipment Co., Ltd. GR202144010400 31 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
Wuhu Midea Kitchen & Bath Appliances
Mfg. Co., Ltd. GR202134003382 18 September 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
Beijing Hiconics Eco-energy Frequency
Conversion Technology Co., Ltd. GR202011003365 21 October 2020 3 years
Wuhan Hiconics Electric Drive Technology
Co., Ltd. GR202042001428 1 December 2020 3 years
Changsha Sunye Electric Co., Ltd. GR202143000846 18 September 2021 3 years
Beijing Huatairunda Energy Saving Co.,
Ltd. GR202111004112 17 December 2021 3 years
Dorna Technology Co., Ltd. GR202033006717 1 December 2020 3 years
Wuxi Little Swan Company Limited GR202032006759 2 December 2020 3 years
KUKA Robotics Manufacturing China Co.,
Ltd. GR201931001602 28 October 2019 3 years
KUKA Robotics Guangdong Co., Ltd. GR202044003841 9 December 2020 3 years
Midea Intelligent Lighting & Controls
Technology Co., Ltd. GR202036000935 14 September 2020 3 years
Beijing Wandong Software Technology Co.,
Ltd. GR202011009515 2 December 2020 3 years
Wanliyun Medical Information Technology
(Beijing) Co., Ltd. GR201911005106 2 December 2019 3 years
Guangdong Midea Environmental
Technologies Co., Ltd. GR202144004692 20 December 2021 3 years
MR Semiconductor Ltd. GR202131000701 9 October 2021 3 years
Anhui Welling Auto Parts Corporation
Limited GR202134002578 18 September 2021 3 years
Guangdong Meicloud Technology Co., Ltd. GR202144008715 20 December 2021 3 years
- 275 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 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., 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 were subject to enterprise
income tax at a rate of 15% in 2021.
(a-5) On 24 March 2016, Luanping Huitong Photovoltaic Power Co., Ltd., a subsidiary of the
Company, obtained the Record Form for Enterprise Income Tax Preference issued by the
Luanping County Office of the State Taxation Administration. According to the
Announcement of the State Taxation Administration on the Income Tax Preference Policies
for New Power Grid Projects of Power Grid Enterprises (State Taxation Administration
Announcement in 2013, No.26), Phase I Project of the company was subject to the
preferential policy of enterprise income tax exemption from 2016 to 2018, and was subject
to the preferential policy of enterprise income tax reduction of 50% from 2019 to 2021. On
28 November 2017, the company also obtained the Record Form for Enterprise Income Tax
Preference issued by the Luanping County Office of the State Taxation Administration.
According to Item 2 of Article 27 in the Enterprise Income Tax Law of the People’s Republic
of China, Order of the President of the People’s Republic of China (No. 63), Phase II Project
of the company was subject to the preferential policy of enterprise income tax exemption
from 2017 to 2019, and is subject to the preferential policy of enterprise income tax reduction
of 50% from 2020 to 2022.
(a-6) The Company's subsidiaries in Mainland China other than those mentioned in (a-1) and (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 subject to the applicable preferential
income tax rate of 5.5% for 2021. Midea Singapore Trading 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%.
(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., and Midea Investment (Asia) Company Limited.
- 276 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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-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) TLSC, the Company's subsidiary in Japan, and its subsidiaries (“TLSC Group”), 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 between 20% and 31.4%.
(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 Egyptian enterprise income tax at the rate of 22.5%.
(b) Notes to the VAT rate of the principal tax payers with different tax rates
(b-1) Pursuant to 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 the Announcement on Relevant Policies for Deepening the Value-Added Tax
Reform (Announcement [2019] No. 39) issued by the Ministry of Finance, the State Taxation
Administration and the General Administration of Customs, certain subsidiaries of the
Company engaged in the production service sector, are eligible for a 10% additional VAT
deduction based on deductible input VAT in the current period from 1 April 2019 to 31
December 2021.
- 277 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Cash on hand 1,609 2,538
Cash at bank (a) 46,691,119 51,253,132
Other cash balances (b) 443,893 688,481
Statutory reserve with the Central
Bank (c) 419,718 1,707,645
Surplus reserve with the Central
Bank (d) 272,949 344,860
Deposits with banks and other
financial institutions (e) 23,351,878 26,515,276
Interest receivable 694,390 698,550
71,875,556 81,210,482
Including: Total amounts deposited
with banks overseas
(including Singapore,
Germany, Hong Kong
China, Japan, Thailand,
India etc.) 6,763,152 7,014,620
(a) As at 31 December 2021, cash at bank included fixed deposits with the term of over 3
months, amounting to RMB 28,767,516,000 (31 December 2020: RMB 37,067,298,000).
(b) Other cash balances mainly include letters of guarantee, bank acceptance notes 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,
which are calculated at 5% (2020: 6%) and 5% (2020: 5%) for eligible RMB deposits and
foreign currency deposits, respectively. 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 2021, deposits with banks and other financial institutions included fixed
deposits with the term of over 3 months, amounting to RMB 1,000,000,000 (31 December
2020: RMB 17,500,000,000).
- 278 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Structural deposits (a) 4,285,607 25,626,631
Investments in equity instrument
held for trading (b) 1,319,470 2,314,965
Others 274,125 298,005
5,879,202 28,239,601
(a) As at 31 December 2021, structural deposits were deposits with financial institutions due
within 1 year, which were measured at fair value through profit or loss.
(b) As at 31 December 2021, 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 2021 31 December 2020
Bank acceptance notes 4,689,898 5,086,749
Trade acceptance notes 126,640 218,108
Less: Provision for bad debts (a) (31,624) (347)
4,784,914 5,304,510
(a) Provision for bad debts
For notes receivable of the Group arising from sales of goods or rendering of services in the
ordinary course of business, the Group measures bad debts based on the lifetime ECL
regardless of whether there exists a significant financing component. As at 31 December
2021, 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.
(b) As at 31 December 2021, notes receivable endorsed or discounted but unmatured were as
follows:
Derecognised Not derecognised
Trade acceptance notes — 6,171
Bank acceptance notes (i) 16,000 2,996,275
16,000 3,002,446
- 279 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021, notes receivable endorsed or discounted but unmatured are as
follows (Cont’d):
(i) For the year ended 31 December 2021, insignificant portion of the bank acceptance notes
were endorsed or discounted and derecognised by some subsidiaries of the Group, which
thereby categorised the balance of other bank acceptance notes as financial assets at
amortised cost. Certain bank acceptance notes were discounted and endorsed and
derecognised by other subsidiaries for the purpose of daily treasury management, which
thereby categorised the balance of these bank acceptance notes as financial assets at fair
value through other comprehensive income and presented them as receivables financing
(Note 4(6)).
(4) Accounts receivable
31 December 2021 31 December 2020
Accounts receivable 25,495,619 23,854,936
Less: Provision for bad debts (859,179) (876,573)
24,636,440 22,978,363
(a) The ageing of accounts receivable is analysed as follows:
31 December 2021 31 December 2020
Within 1 year 24,566,401 23,015,280
1 to 2 years 617,355 580,644
2 to 3 years 144,300 159,427
3 to 5 years 134,460 87,938
Over 5 years 33,103 11,647
25,495,619 23,854,936
As at 31 December 2021, the Group had no significant overdue accounts receivable.
- 280 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 lifetime ECL regardless of whether there
exists a significant financing component.
As at 31 December 2021, accounts receivable for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
Domestic customers 111,443 47.74% (53,208) The debtor
encountered
financial
Overseas customers 561 100.00% (561) distress, etc.
112,004 (53,769)
As at 31 December 2020, accounts receivable for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
Domestic customers 14,288 100.00% (14,288) The debtor
encountered
financial
Overseas customers 1,000 100.00% (1,000) distress, etc.
15,288 (15,288)
As at 31 December 2021, accounts receivable for which the related provision for bad debts
was provided on the grouping basis were analysed as follows:
31 December 2021
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business
grouping 12,689,502 3.08% (390,701)
Overseas business
grouping 12,694,113 3.27% (414,709)
25,383,615 (805,410)
- 281 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2020, accounts receivable for which the related provision for bad debts
was provided on the grouping basis were analysed as follows:
31 December 2020
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business
grouping 11,521,032 3.71% (427,912)
Overseas business
grouping 12,318,616 3.52% (433,373)
23,839,648 (861,285)
(c) The provision for bad debts in the current year amounted to RMB 173,575,000 (2020: RMB
168,438,000). The provision for bad debts reversed in the current year amounted to RMB
88,386,000 (2020: RMB 81,179,000). The provision for bad debts written off in the current
year amounted to RMB 92,215,000 (2020: RMB 114,893,000).
(d) As at 31 December 2021, the five largest accounts receivable aggregated by debtor were
summarised and analysed as follows:
Provision for % of total
Amount bad debts balance
Total amount of the five largest
accounts receivable 1,761,735 (55,395) 6.91%
- 282 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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
31 December 2021 31 December 2020
Other receivables 3,147,595 3,026,970
Less: Provision for bad debts (43,530) (53,025)
3,104,065 2,973,945
(a) Other receivables mainly include security deposit and guarantee, commercial bills, current
accounts, petty cash to staff and receivables related to share options.
The ageing of other receivables is analysed as follows:
31 December 2021 31 December 2020
Within 1 year 2,856,634 2,708,730
1 to 2 years 149,331 222,785
2 to 3 years 97,424 50,457
3 to 5 years 28,029 30,867
Over 5 years 16,177 14,131
3,147,595 3,026,970
(b) Provision for losses and changes in book balance statements
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 2020 2,983,653 47,449 37,741 - 5,576 5,576 53,025
Transfer to Stage 3 (123,732) (12,373) - - 123,732 12,373 -
Net increase/(decrease)
in the current year 132,127 4,014 112,539 - (124,041) (12,592) (8,578)
Including: Write-off in the
current year - - - - (124,041) (124,041) (124,041)
Derecognition - - - - - - -
Differences on
translation of foreign
currency financial
statements - (827) - - - (90) (917)
31 December 2021 2,992,048 38,263 150,280 - 5,267 5,267 43,530
As at 31 December 2021 and 31 December 2020, the Group had no other receivables at
Stage 2.
- 283 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 statements (Cont’d)
(i) As at 31 December 2021, other receivables for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
ECL rate in the
Book following 12 Provision for
balance months bad debts Reason
Relatively low bad
Stage 1 150,280 0% - debt risks
Book Provision for
balance Lifetime ECL bad debts Reason
The debtor
encountered
financial distress,
Stage 3 5,267 100.00% (5,267) etc.
As at 31 December 2020, other receivables for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
ECL rate in the
Book following 12 Provision for
balance months bad debts Reason
Relatively low bad
Stage 1 37,741 0% - debt risks
Book Provision for
balance Lifetime ECL bad debts Reason
The debtor
encountered
financial distress,
Stage 3 5,576 100.00% (5,576) etc.
(ii) As at 31 December 2021 and 31 December 2020, other receivables for which the related
provision for bad debts was provided on the grouping basis were all at Stage 1, which were
analysed as follows:
31 December 2021 31 December 2020
Book Book
balance Provision for bad debts balance Provision for bad debts
Provision Provision
Amount Amount ratio Amount Amount ratio
Security
deposit/guarantee
and other receivables
grouping 2,992,048 (38,263) 1.28% 2,983,653 (47,449) 1.59%
- 284 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 158,923,000 (2020: RMB
19,151,000). The provision for bad debts reversed in the current year amounted to RMB
43,460,000 (2020: RMB 14,873,000). The provision for bad debts written off in the current
year amounted to RMB 124,041,000 (2020: RMB 3,772,000).
(d) As at 31 December 2021, the five largest other receivables aggregated by debtor were
summarised and analysed as follows:
Provision for % of total
Amount bad debts balance
Total amount of the five largest
other receivables 303,809 (1,971) 9.65%
(e) As at 31 December 2021, the Group had no significant government grants recognised at
amounts receivable.
(6) Receivables financing
31 December 2021 31 December 2020
Receivables financing 10,273,552 13,901,856
The Group’s receivables financing are mainly accounts receivable and bank acceptance
notes transferred, discounted and endorsed for the purpose of daily treasury management
and were qualified for derecognition.
As at 31 December 2021 and 31 December 2020, 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. The Group expected
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 2021, the Group’s notes receivable presented in receivables financing,
endorsed or discounted but unmatured were as follows:
Derecognised Not derecognised
Bank acceptance notes 10,944,665 -
- 285 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Prepayments for raw materials and
others 4,352,807 2,763,710
(a) The ageing of advances to suppliers is analysed below:
31 December 2021 31 December 2020
% of total % of total
Amount balance Amount balance
Within 1 year 4,241,867 97.45% 2,562,904 92.73%
1 to 2 years 74,391 1.71% 163,765 5.93%
2 to 3 years 18,798 0.43% 17,579 0.64%
Over 3 years 17,751 0.41% 19,462 0.70%
4,352,807 100.00% 2,763,710 100.00%
As at 31 December 2021, advances to suppliers with ageing over 1 year with a carrying
amount of RMB 110,940,000 (31 December 2020: RMB 200,806,000) were mainly unsettled
prepayments for raw materials.
As at 31 December 2021, the five largest advances to suppliers aggregated by debtors were
analysed as follows:
% of total
Amount balance
Total amount of the five largest
advances to suppliers 1,103,739 25.36%
(8) Contract assets
31 December 2021 31 December 2020
Contract assets 3,870,243 3,289,783
Less: Provision for impairment of
contract assets (46,767) (52,935)
Total 3,823,476 3,236,848
For contract assets, the Group measures the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
- 286 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021, contract assets for which the related provision for bad debts was
provided on the individual basis were analysed as follows:
Provision for
Book balance Lifetime ECL rate impairment Reason
The debtor
encountered
financial
Domestic business 11,444 26.70% (3,056) distress, etc.
As at 31 December 2021, contract assets for which the related provision for bad debts was
provided on the grouping basis were analysed as follows:
31 December 2021
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business
grouping 840,430 4.22% (35,436)
Overseas business
grouping 3,018,369 0.27% (8,275)
3,858,799 (43,711)
As at 31 December 2020, contract assets for which the related provision for bad debts was
provided on the grouping basis were analysed as follows:
31 December 2020
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business
grouping 749,521 5.23% (39,218)
Overseas business
grouping 2,540,262 0.54% (13,717)
3,289,783 (52,935)
- 287 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(9) Loans and advances
(a) By individual and corporation:
31 December 2021 31 December 2020
Loans and advances measured at
amortised cost
Loans and advances to
individuals 2,217,220 2,235,275
Loans and advances to
corporations 19,744,034 15,660,149
Including: Loans 12,790,285 10,133,447
Discount bills 6,953,749 5,526,702
21,961,254 17,895,424
Less: Provision for loan losses (452,727) (312,854)
21,508,527 17,582,570
As at 31 December 2021, loans and advances over 1 year amounted to RMB 851,927,000
(31 December 2020: RMB 1,113,501,000).
(b) By type of collateral held:
31 December 2021 31 December 2020
Unsecured loans 2,211,108 1,645,282
Guaranteed loans 587,936 885,659
Pledged loans 19,162,210 15,364,483
Total loans and advances 21,961,254 17,895,424
(c) The provision for bad debts in the current year amounted to RMB 144,691,000 (2020: RMB
169,043,000), the provision for bad debts written off in the current year amounted to RMB
3,070,000 (2020: RMB 1,786,000) and the provision for bad debts reversed in the current
year amounted to RMB 1,748,000 (2020: RMB 13,322,000) (Note 4(25)).
(d) As at 31 December 2021, the Group’s loans and advances for which the provision for bad
debts was provided on the individual basis amounted to RMB 6,332,961,000, and the
provision for bad debts amounted to RMB 198,193,000.
- 288 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Provision for Provision for
decline in decline in the
the value of Carrying value of Carrying
Book balance inventories amount Book balance inventories amount
Finished goods 33,636,462 (419,166) 33,217,296 21,718,749 (372,474) 21,346,275
Raw materials 9,592,914 (121,217) 9,471,697 7,402,034 (70,221) 7,331,813
Work in progress 2,406,866 - 2,406,866 1,875,881 - 1,875,881
Consigned processing
materials, etc. 828,580 - 828,580 522,560 - 522,560
46,464,822 (540,383) 45,924,439 31,519,224 (442,695) 31,076,529
(b) Analysis of provision for decline in the value of inventories is as follows:
Increase in Decrease in Differences on
the current the current translation of
year year foreign currency
31 December Reversal or financial 31 December
2020 Provision write-off statements 2021
Finished goods 372,474 363,940 (298,182) (19,066) 419,166
Raw materials 70,221 103,885 (47,533) (5,356) 121,217
442,695 467,825 (345,715) (24,422) 540,383
(c) Provision for decline in the value of inventories is as follows:
Specific basis for determining net Reason for reversal or write-off of provision
realisable value for decline in the value of inventories
Finished Stated at the lower of cost and
goods net realisable value Sales
Raw Stated at the lower of cost and
materials net realisable value Requisition for production
(11) Current portion of non-current assets
31 December 2021 31 December 2020
Other debt investments due within
1 year (Note 4(13)) 19,360,372 -
Long-term receivables due within
1 year (Note 4(14)) 491,205 -
19,851,577 -
- 289 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Fixed-income products (a) 23,696,825 25,542,595
Input VAT to be deducted 6,137,776 4,336,260
Prepaid expenses 828,675 786,140
Others (b) 2,492,736 2,414,923
33,156,012 33,079,918
(a) As at 31 December 2021, fixed-income products were monetary investment products
deposited in financial institutions with maturities of no more than one year at the time of
acquisition, which were subsequently measured at amortised cost.
(b) As at 31 December 2021, the Group's transferable certificate of deposit due within 1 year
since the time of acquisition amounted to approximately RMB 230,015,000 (31 December
2020: Nil), and were measured at fair value through other comprehensive income.
(13) Other debt investments
31 December 2021 31 December 2020
Fair value through other
comprehensive income
- Transferable certificate of deposit 27,254,307 21,456,155
Less: Other debt investments due
within 1 year (Note 4(11)) (19,360,372) -
7,893,935 21,456,155
As at 31 December 2021, the cost of the Group’s transferable certificate of deposit
approximated its fair value.
As at 31 December 2021, the Group expected 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 banks.
- 290 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Long-term receivables 1,371,022 981,623
Less: Provision for bad debts (8,461) -
1,362,561 981,623
Less: Long-term receivables due
within 1 year (Note 4(11)) (491,205) -
871,356 981,623
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 2021 31 December 2020
Investments in associates (a) 3,796,705 2,901,337
Less: Provision for impairment of
long-term equity investments - -
3,796,705 2,901,337
(a) Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., Carrier Midea North America LLC and Hefei Royalstar Motor
Co., Ltd. and other enterprises by the Group.
(16) Other non-current financial assets
31 December 2021 31 December 2020
Measured at fair value
- Equity of unlisted companies 5,912,873 3,360,849
Less: Provision for impairment of
other non-current financial
assets - -
5,912,873 3,360,849
- 291 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(17) Fixed assets
Electronic
Machinery and equipment and
Buildings Overseas land equipment Motor vehicles others Total
Cost
31 December 2020 19,012,262 1,394,439 20,891,842 812,751 5,003,386 47,114,680
Changes in accounting
policies - - (97,510) - - (97,510)
1 January 2021 19,012,262 1,394,439 20,794,332 812,751 5,003,386 47,017,170
Increase in the current year
Purchase 143,297 - 2,077,125 27,160 743,549 2,991,131
Transfer from
construction in
progress 911,993 - 151,920 1,846 29,347 1,095,106
Increase by business
combinations 488,940 29,364 137,946 2,615 32,266 691,131
Others 149,931 - 3,963 - - 153,894
Decrease in the current
year
Disposal and retirement (195,376) (11,628) (601,639) (32,948) (209,879) (1,051,470)
Others (77,624) - (100,026) (51,171) (6,898) (235,719)
Differences on translation of
foreign currency
financial statements (324,765) (81,319) (281,549) (1,510) (94,425) (783,568)
31 December 2021 20,108,658 1,330,856 22,182,072 758,743 5,497,346 49,877,675
Accumulated depreciation
31 December 2020 8,179,081 - 12,462,365 560,134 3,585,113 24,786,693
Changes in accounting
policies - - (71,162) - - (71,162)
1 January 2021 8,179,081 - 12,391,203 560,134 3,585,113 24,715,531
Increase in the current year
Provision 929,597 - 1,538,606 57,105 704,741 3,230,049
Others 75,818 - - - - 75,818
Decrease in the current
year
Disposal and retirement (93,265) - (427,815) (25,522) (178,621) (725,223)
Others (38,875) - (45,673) (19,678) (1,851) (106,077)
Differences on translation of
foreign currency
financial statements (48,998) - (124,141) (720) (41,732) (215,591)
31 December 2021 9,003,358 - 13,332,180 571,319 4,067,650 26,974,507
Provision for impairment
31 December 2020 7,331 5,892 33,601 33,171 8,778 88,773
Changes in accounting
policies - - - - - -
1 January 2021 7,331 5,892 33,601 33,171 8,778 88,773
Increase in the current year
Provision - - - - - -
Decrease in the current
year
Disposal and retirement - - (6,981) (31) (142) (7,154)
Others (821) - (16,517) (11,969) (25) (29,332)
Differences on translation of
foreign currency
financial statements (331) (423) (92) (78) (1,043) (1,967)
31 December 2021 6,179 5,469 10,011 21,093 7,568 50,320
Carrying amount
31 December 2021 11,099,121 1,325,387 8,839,881 166,331 1,422,128 22,852,848
31 December 2020 10,825,850 1,388,547 8,395,876 219,446 1,409,495 22,239,214
(a) In 2021, the depreciation of fixed assets amounted to RMB 3,230,049,000 (2020: RMB
3,409,521,000) and was included in the income statement.
(b) As at 31 December 2021, the Company was still in the course of obtaining the ownership
certificate for the fixed asset with a carrying amount of RMB 617,721,000 (31 December
2020: RMB 123,789,000).
- 292 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Provision for Provision for
Book balance impairment Carrying amount Book balance impairment Carrying amount
Early-stage Project of Shanghai R&D Centre 687,704 - 687,704 12,660 - 12,660
Midea Headquarters A04 Land Parcel Project 565,884 - 565,884 197,540 - 197,540
Midea Headquarters 08 Land Parcel Project 234,165 - 234,165 3,543 - 3,543
Thailand Factories 213,005 - 213,005 4,178 - 4,178
Indian Science Park 179,813 - 179,813 364,554 - 364,554
Other projects 843,547 (33,188) 810,359 944,143 (49,316) 894,827
2,724,118 (33,188) 2,690,930 1,526,618 (49,316) 1,477,302
(a) Movements of significant projects of construction in progress
Differences on
translation of
Transfer to fixed foreign currency
31 December 2020 Increase in the assets in the financial 31 December 2021
Book balance current year current year Other decreases statements Book balance Source of funds
Early-stage Project of Shanghai
R&D Centre 12,660 675,044 - - - 687,704 Self-financing
Midea Headquarters A04 Land
Parcel Project 197,540 368,344 - - - 565,884 Self-financing
Midea Headquarters 08 Land
Parcel Project 3,543 230,622 - - - 234,165 Self-financing
Thailand Factories 4,178 220,093 - - (11,266) 213,005 Self-financing
Indian Science Park 364,554 45,303 (219,410) - (10,634) 179,813 Self-financing
Other projects 944,143 841,609 (875,696) (24,473) (42,036) 843,547 Self-financing
1,526,618 2,381,015 (1,095,106) (24,473) (63,936) 2,724,118
(i) As at 31 December 2021, the cost of construction in progress matched the budget amount, and the projects were carried out on schedule.
- 293 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 and Land use rights
Buildings equipment and others Total
Cost
31 December 2020 — — — —
Changes in accounting
policies 1,983,934 193,960 48,784 2,226,678
1 January 2021 1,983,934 193,960 48,784 2,226,678
Increase in the current year
New lease contracts 1,031,414 79,140 71,362 1,181,916
Lease modifications and
others 60,051 4,581 - 64,632
Decrease in the current year
Lease modifications and
others (143,204) (15,628) (4,873) (163,705)
Differences on translation of
foreign currency financial
statements (79,778) (20,543) (3,772) (104,093)
31 December 2021 2,852,417 241,510 111,501 3,205,428
Accumulated depreciation
31 December 2020 — — — —
Changes in accounting
policies - 71,162 - 71,162
1 January 2021 - 71,162 - 71,162
Increase in the current year
Provision 800,954 88,786 22,718 912,458
Decrease in the current year
Lease modifications and
others (22,701) (11,713) (1,471) (35,885)
Differences on translation of
foreign currency financial
statements (26,717) (11,826) (1,118) (39,661)
31 December 2021 751,536 136,409 20,129 908,074
Carrying amount
31 December 2021 2,100,881 105,101 91,372 2,297,354
31 December 2020 — — — —
- 294 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2020 4,827,841 2,191,179 5,259,116 2,646,807 5,481,621 20,406,564
Increase in the current
year
Purchase 2,376,033 9,826 - - 334,236 2,720,095
Increase by business
combinations - 1,164,456 - - 167,694 1,332,150
Others 6,149 19,867 - - 86,454 112,470
Decrease in the current
year
Disposal (40,444) (6,784) - - (137,762) (184,990)
Others (9,256) (11,576) - - (4,797) (25,629)
Differences on
translation of foreign
currency financial
statements (1,813) (167,191) (489,302) (351,156) (351,151) (1,360,613)
31 December 2021 7,158,510 3,199,777 4,769,814 2,295,651 5,576,295 23,000,047
Accumulated
amortisation
31 December 2020 1,000,511 775,427 113,266 329,992 2,571,447 4,790,643
Increase in the current
year
Provision 146,430 222,437 57,630 42,478 743,578 1,212,553
Others 4,622 - - - 5,683 10,305
Decrease in the current
year
Disposal (9,299) (319) - - (89,124) (98,742)
Others (4,035) (3,351) - - (669) (8,055)
Differences on
translation of foreign
currency financial
statements (31) (72,337) (9,995) (30,470) (143,260) (256,093)
31 December 2021 1,138,198 921,857 160,901 342,000 3,087,655 5,650,611
Provision for
impairment
31 December 2020 - 114,609 - - 78,919 193,528
Increase in the current
year
Provision - - - - - -
Decrease in the current
year
Disposal - (5,109) - - - (5,109)
Differences on
translation of foreign
currency financial
statements - (1,490) - - (10,565) (12,055)
31 December 2021 - 108,010 - - 68,354 176,364
Carrying amount
31 December 2021 6,020,312 2,169,910 4,608,913 1,953,651 2,420,286 17,173,072
31 December 2020 3,827,330 1,301,143 5,145,850 2,316,815 2,831,255 15,422,393
(a) In 2021, the amortisation of intangible assets amounted to RMB 1,212,553,000 (2020: RMB
1,083,684,000) and was included in the income statement in full amount.
(b) As at 31 December 2021, the Group had no certificates of land use rights that were still in
process.
- 295 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 cash generating unit and cash generating
units at the acquisition date, without any change of goodwill allocation in 2021, and the
allocation is as follows:
31 December 2021 31 December 2020
Goodwill -
KUKA Group 20,544,697 22,836,294
TLSC Group 2,580,274 2,944,486
Little Swan 1,361,306 1,361,306
Others 3,893,186 2,931,654
28,379,463 30,073,740
Less: Provision for impairment (504,711) (516,522)
27,874,752 29,557,218
When making an impairment testing of goodwill, the Group compares the carrying amounts
of related 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. The Group’s goodwill allocation was unchanged in
2021.
As at 31 December 2021, the recoverable amount of cash generating unit or cash
generating units with goodwill is calculated using discounted future cash flows determined
according to the budget approved by management (the budget period is 5 to 6 years). The
future cash flows beyond the budget 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 estimated revenue
growth rates (mainly 2.00%-17.21%) and EBITDA margins (mainly 3.47%-10.84%) based
on past experience and forecast on future market development. The discount rates (mainly
9.32%-15.13%) used by management are the pre-tax rates that are able to reflect the risks
specific to the related cash generating unit and 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.
- 296 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Deductible Deductible
temporary temporary
differences and Deferred tax differences and Deferred tax
deductible losses assets deductible losses assets
Deductible losses 6,189,786 1,371,028 2,825,364 693,098
Provision for asset
impairment 2,891,362 596,763 2,023,621 409,576
Employee benefits
payable 1,214,088 285,263 1,821,805 426,845
Other current liabilities 29,984,331 5,531,170 29,914,787 5,305,009
Others 9,949,311 2,192,050 6,615,646 1,700,311
50,228,878 9,976,274 43,201,223 8,534,839
Including:
Expected to be
recovered within 1
year (inclusive) 7,205,683 6,415,757
Expected to be
recovered after 1 year 2,770,591 2,119,082
9,976,274 8,534,839
(b) Deferred tax liabilities before offsetting
31 December 2021 31 December 2020
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Changes in fair value 3,159,648 349,208 1,495,449 205,628
Business combinations
involving enterprises
not under common
control 11,683,474 3,145,282 11,673,627 3,415,470
Others 14,441,530 3,239,720 11,296,707 2,929,060
29,284,652 6,734,210 24,465,783 6,550,158
Including:
Expected to be
recovered within 1
year (inclusive) 1,268,054 1,026,806
Expected to be
recovered after 1 year 5,466,156 5,523,352
6,734,210 6,550,158
- 297 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Balance after offsetting Balance after offsetting
Deferred tax assets 8,192,309 7,208,635
Deferred tax liabilities 4,950,245 5,223,954
(24) Other non-current assets
31 December 2021 31 December 2020
Fixed-income products (a) 35,485,395 10,128,172
Others 888,961 1,127,707
36,374,356 11,255,879
(a) As at 31 December 2021, fixed-income products were monetary investment products and
non-transferable certificates of deposit deposited in financial institutions with maturities of
more than one year at the time of acquisition , which were subsequently measured at
amortised cost.
- 298 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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
Differences on
translation of
Changes in Increase in foreign currency
31 December accounting 1 January the current Decrease in the financial 31 December
2020 policies 2021 year current year statements 2021
Charge-off/
Reversal Written-off
Provision for bad debts 1,242,799 — 1,242,799 517,864 (134,413) (219,326) (11,403) 1,395,521
Including: Provision for bad debts of accounts
receivable 876,573 — 876,573 173,575 (88,386) (92,215) (10,368) 859,179
Provision for losses of loans and
advances 312,854 — 312,854 144,691 (1,748) (3,070) - 452,727
Provision for bad debts of notes
receivable 347 — 347 31,549 (272) - - 31,624
Provision for bad debts of other
receivables 53,025 — 53,025 158,923 (43,460) (124,041) (917) 43,530
Provision for impairment of long-
term receivables - — - 9,126 (547) - (118) 8,461
Provision for decline in the value of inventories 442,695 — 442,695 467,825 (20,477) (325,238) (24,422) 540,383
Provision for impairment of fixed assets 88,773 — 88,773 - - (36,486) (1,967) 50,320
Provision for impairment of intangible assets 193,528 — 193,528 - - (5,109) (12,055) 176,364
Provision for impairment of contract assets 52,935 — 52,935 5,022 (3,972) - (7,218) 46,767
Provision for impairment of investment
properties 12,576 — 12,576 - - - - 12,576
Provision for impairment of construction in
progress 49,316 — 49,316 35,022 - (49,316) (1,834) 33,188
Provision for impairment of right-of-use assets — - - - - - - -
Provision for impairment of goodwill 516,522 — 516,522 - - - (11,811) 504,711
2,599,144 - 2,599,144 1,025,733 (158,862) (635,475) (70,710) 2,759,830
- 299 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021, assets with use rights restricted were mainly as follows:
31 December 2021 31 December 2020
Cash at bank and on hand
Including: Cash at bank (Note 4(1)) 28,767,516 37,067,298
Other cash balances
(Note 4(1)) 443,893 688,481
Legal reserves with the
Central Bank (Note 4(1)) 419,718 1,707,645
Deposits with banks and
other financial institutions
(Note 4(1)) 1,000,000 17,500,000
30,631,127 56,963,424
(27) Short-term borrowings
31 December 2021 31 December 2020
Pledged borrowings 2,138,309 192,569
Guaranteed borrowings 1,982,534 7,402,260
Unsecured borrowings 1,260,780 2,281,509
Mortgage borrowings - 67,591
5,381,623 9,943,929
As at 31 December 2021, the annual interest rate range of short-term borrowings was 0.41%
to 9.75% (31 December 2020: 0.90% to 9.40%).
(28) Notes payable
31 December 2021 31 December 2020
Bank acceptance notes 32,752,007 28,233,818
Trade acceptance notes - 16,121
32,752,007 28,249,939
- 300 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(29) Accounts payable
31 December 2021 31 December 2020
Materials cost payable 61,527,747 49,451,076
Others 4,455,812 4,479,185
65,983,559 53,930,261
As at 31 December 2021, accounts payable with ageing over 1 year with a carrying amount
of RMB 1,271,088,000 (31 December 2020: RMB 985,248,000) were mainly unsettled
accounts payable for materials.
(30) Contract liabilities
31 December 2021 31 December 2020
Advances on sales and services 21,319,800 16,511,435
Advances for construction projects 2,596,795 1,889,487
23,916,595 18,400,922
More than 90% of contract liabilities included in the carrying amount as at 31 December
2020 were transferred to revenue in 2021.
As mentioned in Note 5(1), due to business combinations involving enterprises not under
common control in the current year, the amount of contract liabilities increased by RMB
99,835,000.
(31) Employee benefits payable
31 December 2021 31 December 2020
Short-term employee benefits
payable (a) 7,430,595 6,666,830
Others 104,573 287,992
7,535,168 6,954,822
- 301 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(31) Employee benefits payable (Cont'd)
(a) Short-term employee benefits
Increase in Decrease in
31 December the current the current 31 December
2020 year year 2021
Wages and salaries,
bonus, allowances
and subsidies 6,181,736 27,076,632 (26,308,530) 6,949,838
Staff welfare 341,810 1,538,749 (1,581,163) 299,396
Social security
contributions 73,818 1,610,052 (1,616,602) 67,268
Including: Medical
insurance 71,639 1,516,746 (1,522,722) 65,663
Work injury
insurance 1,056 33,402 (33,794) 664
Maternity
insurance 1,123 59,904 (60,086) 941
Housing funds 23,537 584,819 (585,277) 23,079
Labour union funds and
employee education
funds 17,513 132,071 (127,338) 22,246
Other short-term
employee benefits 28,416 575,477 (535,125) 68,768
6,666,830 31,517,800 (30,754,035) 7,430,595
(32) Taxes payable
31 December 2021 31 December 2020
Enterprise income tax payable 2,972,040 3,121,236
Unpaid VAT 1,032,688 1,013,378
Others 1,399,539 1,623,444
5,404,267 5,758,058
(33) Other payables
31 December 2021 31 December 2020
Other payables 4,288,104 4,501,391
(a) Other payables are mainly restricted share repurchase obligation, deposit and security
deposit payable, reimbursed logistics expense, etc.
(b) As at 31 December 2021, other payables with ageing over 1 year with a carrying amount of
RMB 1,288,937,000 (31 December 2020: RMB 1,392,059,000) were mainly those
recognised for performing equity incentive plan and deposit and security deposit payable,
which were unsettled since related projects were uncompleted.
- 302 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(34) Current portion of non-current liabilities
31 December 2021 1 January 2021 31 December 2020
Current portion of long-term
borrowings (Note 4(36)) 28,087,037 6,284,643 6,284,643
Current portion of lease
liabilities (Note 4(37)) 860,503 636,685 ——
Current portion of long-term
payables - 17,855 25,538
28,947,540 6,939,183 6,310,181
(35) Other current liabilities
31 December 2021 31 December 2020
Accrued sale rebates 31,307,753 31,192,652
Short-term financing bonds payable - 3,030,785
Others 16,920,200 15,628,802
48,227,953 49,852,239
(36) Long-term borrowings
31 December 2021 31 December 2020
Mortgage borrowings (a) 26,635,207 29,673,661
Unsecured borrowings 14,269,908 11,633,434
Guaranteed borrowings (b) 6,903,645 7,785,898
Pledged borrowings 12,297 18,937
47,821,057 49,111,930
Less: Current portion of mortgage
borrowings (26,626,623) (48,962)
Current portion of unsecured
borrowings (1,439,224) (4,054,593)
Current portion of
guaranteed borrowings (15,025) (2,174,775)
Current portion of pledged
borrowings (6,165) (6,313)
19,734,020 42,827,287
(a) As at 31 December 2021, bank mortgage borrowings were mainly mortgage borrowings with
a cost of EUR 3,686,857,000, equivalent to RMB approximately 26,617,999,000 (31
December 2020: a cost of EUR 3,691,857,000, equivalent to approximately RMB
29,627,150,000) and were pledged by 81.04% equity of KUKA Group, which was acquired
by the subsidiary of the Company. Interest is paid on a semi-annual basis, and the
borrowings are due in August 2022.
- 303 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(36) Long-term borrowings (Cont’d)
(b) As at 31 December 2021, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings with a cost of EUR 271,000,000, equivalent to RMB 1,956,539,000 (31
December 2020: a cost of EUR 271,000,000, equivalent to RMB 2,174,775,000) guaranteed
by the Company, with interest paid every 3 months, which will be due in April 2024; (ii)
guaranteed borrowings with a cost of JPY 69,460,000,000, equivalent to RMB
3,849,126,000 (31 December 2020: a cost of JPY 69,460,000,000, equivalent to RMB
4,392,373,000) guaranteed by the Company, with interest paid on a monthly basis, which
will be due in May 2024; (iii) guaranteed borrowings with a cost of EUR 150,000,000,
equivalent to RMB 1,082,955,000 (31 December 2020: a cost of EUR 150,000,000,
equivalent to RMB 1,203,750,000) guaranteed by the Company, with interest paid on a
monthly basis, which will be due in June 2025.
(c) As at 31 December 2021, the annual interest rate range of long-term borrowings was 0.49%
to 5.50% (31 December 2020: 0.49% to 6.08%).
(37) Lease liabilities
31 December 2021 1 January 2021 31 December 2020
Lease liabilities 2,394,055 2,150,111 —
Less: Current
portion of
non-current
liabilities
(Note 4(34)) (860,503) (636,685) —
1,533,552 1,513,426 —
(i) As at 31 December 2021, the future minimum lease payments of short-term leases and low-
value asset leases adopting the practical expedient according to the new lease standard
totalled RMB 151,561,000, which should be paid within one year.
- 304 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(38) Long-term employee benefits payable
31 December 2021 31 December 2020
Supplementary retirement benefits (a) 1,705,440 2,014,651
Others 119,576 145,024
1,825,016 2,159,675
(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 2021 31 December 2020
Defined benefit obligation 3,572,482 3,850,400
Less: Fair value of planned assets (1,867,042) (1,835,749)
Liabilities of defined benefit obligation 1,705,440 2,014,651
(ii) The actuarial assumptions used to determine the present value of defined benefit obligation
31 December 2021
Discount rate 0.06% - 7.75%
Inflation rate 1.00%
Salary growth rate 0.50% - 6.90%
Pension dynamics 0.00% - 3.70%
Retirement rate 0.00% - 11.60%
Changes in cost of medical services 6.25%
(39) Other non-current liabilities
Other non-current liabilities are mainly equity purchase payables.
- 305 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(40) Share capital
Movements in the current year
Share-based
31 December payment Additional Repurchases 31 December
2020 incentive plan (a) Desterilisation issuance and write-offs Sub-total 2021
RMB-denominated
ordinary shares
RMB-denominated
ordinary shares
subject to trading
restriction 182,863 9,940 (30,391) - (5,873) (26,324) 156,539
RMB-denominated
ordinary shares
not subject to
trading restriction 6,847,113 24,497 30,391 - (71,976) (17,088) 6,830,025
7,029,976 34,437 - - (77,849) (43,412) 6,986,564
Movements in the current year
Share-based
31 December payment Additional Repurchases 31 December
2019 incentive plan (a) Desterilisation issuance and write-offs Sub-total 2020
RMB-denominated
ordinary shares -
RMB-denominated
ordinary shares
subject to trading
restriction 165,403 33,245 (10,060) - (5,725) 17,460 182,863
RMB-denominated
ordinary shares
not subject to
trading restriction 6,806,497 30,556 10,060 - - 40,616 6,847,113
6,971,900 63,801 - - (5,725) 58,076 7,029,976
(a) In 2021, the share-based payment incentive plan increased the share capital by 34,437,000
shares (2020: 63,801,000 shares).
(41) Treasury stock
Increase in the Decrease in the
31 December 2020 current year current year 31 December 2021
Treasury stock used for share-
based payment incentive
plan 6,094,347 8,665,148 (714,945) 14,044,550
Repurchased shares that have
not yet been written off - 5,000,596 (5,000,596) -
6,094,347 13,665,744 (5,715,541) 14,044,550
Increase in the Decrease in the
31 December 2019 current year current year 31 December 2020
Treasury stock used for share-
based payment incentive
plan 3,759,732 2,798,468 (463,853) 6,094,347
In 2021, the Group’s repurchased treasury stock amounted to approximately RMB
13,665,744,000, and the restricted shares and employee stock ownership plans granted in
2021 were approximately RMB 1,187,859,000. As at 31 December 2021, treasury stock
mainly comprised treasury stock of approximately RMB 9,662,644,000 used for share-
based payment incentive plan and restricted shares amounting to approximately RMB
4,381,906,000 that have not met unlock condition, amounting to approximately RMB
14,044,550,000 in total (31 December 2020: RMB 6,094,347,000).
- 306 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(42) Capital surplus
Increase in Decrease in
31 December the current the current 31 December
2020 year year 2021
Share premium (a) 18,185,028 1,938,616 (5,178,730) 14,944,914
Share-based payment
incentive plan (b) 1,414,842 1,516,039 (769,527) 2,161,354
Others (c) 2,888,235 737,071 (214,644) 3,410,662
22,488,105 4,191,726 (6,162,901) 20,516,930
Increase in Decrease in
31 December the current the current 31 December
2019 year year 2020
Share premium 15,683,499 2,694,886 (193,357) 18,185,028
Share-based payment
incentive plan 1,443,942 1,022,236 (1,051,336) 1,414,842
Others 2,512,872 513,951 (138,588) 2,888,235
19,640,313 4,231,073 (1,383,281) 22,488,105
(a) The increase in share premium arose from the exercise of share options with the amount of
approximately RMB 1,495,004,000, the unlocking of restricted shares with the amount of
approximately RMB 443,612,000; the decrease in share premium arose from the
repurchase and cancellation of restricted shares and public shares with the amount of
approximately RMB 5,178,730,000.
(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 1,516,039,000, while the decrease arose from the
transfer of approximately RMB 769,527,000 to share premium due to exercise of share-
based payment incentive plan.
(c) Others in capital surplus mainly included the Group’s disposal of part of the equity of Annto
Logistics Supply Chain Technology Co., Ltd. to the minority shareholders without lost of
control, the acquisition of the minority shareholders of GD Midea Group Wuhu Air-
Conditioning Equipment Co.,Ltd. and SMC, the impact of income tax due to the exercise of
the share-based payment incentive plan, etc.
- 307 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(43) Other comprehensive income
Other comprehensive income in the balance sheet Other comprehensive income in the income statement for the year ended 31 December 2021
Attributable to Other Less: Reclassification Attributable to Attributable to
the parent comprehensive Amount arising of other the parent minority
31 December company after income transferred 31 December before income comprehensive income Less: Income tax company after shareholders
2020 tax to retained earnings 2021 tax to profit 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 19,210 (7,172) - 12,038 (20,242) - 19,213 (7,172) 6,143
Changes in fair value of investments in
other equity instruments 493 424 (2,866) (1,949) 2,238 - - 424 1,814
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 (86,181) (3,032) - (89,213) (3,032) - - (3,032) -
Cash flow hedging reserve 311,341 (6,997) - 304,344 359,992 (348,437) (14,925) (6,997) 3,627
Differences on translation of foreign
currency financial statements (1,793,866) (190,302) - (1,984,168) (232,113) - - (190,302) (41,811)
(1,549,003) (207,079) (2,866) (1,758,948) 106,843 (348,437) 4,288 (207,079) (30,227)
Other comprehensive income in the balance sheet Other comprehensive income in the income statement for the year ended 31 December 2020
Attributable to Other Less: Reclassification Attributable to Attributable to
the parent comprehensive Amount arising of other the parent minority
31 December company after income transferred 31 December before income comprehensive income Less: Income tax company after shareholders
2019 tax to retained earnings 2020 tax to profit 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 (92,685) 111,895 - 19,210 102,595 - 8,909 111,895 (391)
Changes in fair value of investments in
other equity instruments - 493 - 493 (5,132) - (594) 493 (6,219)
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 (65,736) (20,445) - (86,181) (20,445) - - (20,445) -
Cash flow hedging reserve 12,620 298,721 - 311,341 348,437 (13,175) (33,459) 298,721 3,082
Differences on translation of foreign
currency financial statements (565,753) (1,228,113) - (1,793,866) (1,564,945) - - (1,228,113) (336,832)
(711,554) (837,449) - (1,549,003) (1,139,490) (13,175) (25,144) (837,449) (340,360)
- 308 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(44) Surplus reserve
31 December Increase in the 31 December
2020 current year 2021
Statutory surplus reserve 7,966,362 1,483,539 9,449,901
31 December Increase in the 31 December
2019 current year 2020
Statutory surplus reserve 6,447,658 1,518,704 7,966,362
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 a resolution at the Board of Directors'
meeting, the Company appropriated 10% of net profit for the year, amounting to
approximately RMB 1,483,539,000 (2020: 10% of net profit, amounting to approximately
RMB 1,518,704,000) to the statutory surplus reserve in 2021.
(45) Undistributed profits
2021 2020
Undistributed profits at the beginning of the year 87,074,453 72,713,631
Add: Net profit attributable to shareholders of
the parent company for the current year 28,573,650 27,222,969
Transfer from other comprehensive
income (a) 2,866 -
Less: Ordinary share dividends payable (b) (11,052,729) (11,122,406)
Appropriation to general risk reserve (c) (131,938) (221,037)
Appropriation to statutory surplus reserve
(Note 4(44)) (1,483,539) (1,518,704)
Undistributed profits at the end of the year 102,982,763 87,074,453
(a) In 2021, due to the Group’s strategic adjustment, certain investments in other equity
instruments were disposed. Accordingly, the amount of approximately RMB 2,866,000
accumulated in other comprehensive income was transferred to undistributed profits.
- 309 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(45) Undistributed profits (Cont’d)
(b) Ordinary share dividends distributed in the current year
In accordance with the resolution at the Board of Shareholders’ meeting, dated 26 May
2021, the Company distributed a cash dividend to the shareholders at RMB 1.60 per share,
amounting to approximately RMB 11,066,392,000 calculated by 6,913,968,000 issued
shares less those repurchased; 5,873,000 repurchased incentive shares in the restricted
shares incentive plan were written off (Note 4(40)), and cash dividend amounting to
approximately RMB 13,663,000 was cancelled. The actual cash dividend distributed in the
current year amounted to approximately RMB 11,052,729,000.
(c) General risk reserve
In 2021, 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 amounting to approximately RMB 131,938,000 (2020: RMB
221,037,000).
(46) Operating revenue and cost of sales
2021 2020
Revenue from main operations 308,297,360 261,474,699
Revenue from other operations 32,935,848 22,746,550
341,233,208 284,221,249
2021 2020
Cost of sales from main operations 235,092,045 196,750,179
Cost of sales from other operations 29,433,954 20,048,234
264,525,999 216,798,413
(a) Revenue and cost of sales from main operations
2021 2020
Revenue from Cost of sales Revenue from Cost of sales
main from main main from main
operations operations operations operations
HVAC 141,879,146 112,012,603 121,215,043 93,458,352
Consumer appliances 131,866,099 95,279,340 113,890,764 81,538,458
Robotics and
automation system 27,281,328 21,349,939 21,588,782 17,297,837
Others 7,270,787 6,450,163 4,780,110 4,455,532
308,297,360 235,092,045 261,474,699 196,750,179
In 2021, 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 (2020: over 80%).
- 310 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(46) Operating revenue and cost of sales (Cont’d)
(b) Revenue and cost of sales from other operations
2021 2020
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 29,458,918 28,637,352 20,190,867 19,378,005
Others 3,476,930 796,602 2,555,683 670,229
32,935,848 29,433,954 22,746,550 20,048,234
In 2021, cost of sales from other operations was mainly material costs, which accounted for
over 80% of total cost of sales from other operations (2020: over 80%).
(c) In 2021, among the Group’s revenue from main operations, the amount recognised at a
point in time accounted for above 90% (2020: 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 revenue from other
operations was recognised at a point in time.
(47) Interest income and interest costs
The Group’s interest income and expenses arising from financial business are presented as
follows:
2021 2020
Interest income from loans and advances 1,818,709 1,229,255
Including: Interest income from loans and
advances to corporations and
individuals 1,710,237 1,072,209
Interest income from note
discounting 108,472 157,046
Interest income from deposits with banks,
other financial institutions and the
Central Bank 308,334 258,956
Interest income 2,127,043 1,488,211
Interest costs (87,066) (105,168)
2,039,977 1,383,043
(48) Taxes and surcharges
2021 2020
City maintenance and construction tax 593,476 642,902
Educational surcharge 438,826 470,229
Others 577,082 420,515
1,609,384 1,533,646
- 311 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(49) Selling and distribution expenses
2021 2020
Selling and distribution expenses 28,647,344 23,563,455
In 2021, selling and distribution expenses were mainly maintenance expenses,
advertisement and promotion fee, employee benefits, E-commerce service fee, storage
service fee and property management expenses, which accounted for over 70% of total
selling and distribution expenses (2020: over 70%).
(50) General and administrative expenses
2021 2020
General and administrative expenses 10,266,283 9,264,148
In 2021, general and administrative expenses were mainly employee benefits, depreciation
and amortisation expenses, technical maintenance expenses, administrative office
expenses, storage service fee and property management expenses, which accounted for
over 80% of total general and administrative expenses (2020: over 70%).
(51) R&D expenses
2021 2020
R&D expenses 12,014,907 10,118,667
In 2021, R&D expenses were mainly employee benefits, depreciation and amortisation
expenses, trial products and material inputs expenses, which accounted for over 80% of
total R&D expenses (2020: over 80%).
(52) Financial income
The Group's financial income, other than those arising from financial business (Note 4(47)),
are presented as follows:
2021 2020
Interest expenses (a) (1,357,564) (1,305,591)
Less: Interest income 5,181,658 3,663,028
Exchange gains or losses 798,120 446,352
Others (236,103) (165,757)
4,386,111 2,638,032
(a) In 2021, interest costs on lease liabilities of the Group amounted to approximately RMB
104,903,000.
- 312 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(53) Asset impairment losses
2021 2020
Losses on decline in the value of
inventories (Note 4(10)) 447,348 355,695
Impairment losses on construction in
progress 35,022 45,975
Impairment losses on contract assets 1,050 52,153
Impairment losses on fixed assets
(Note 4(17)) - 54,010
Impairment losses on intangible assets
(Note 4(20)) - 197,376
483,420 705,209
(54) Credit impairment losses
2021 2020
Losses on bad debts of accounts
receivable (Note 4(4)) 85,189 87,259
Losses on bad debts of other receivables
(Note 4(5)) 115,463 4,278
Losses on bad debts of notes receivable
(Note 4(3)) 31,277 347
Impairment losses on loans and advances
(Note 4(9)) 142,943 155,721
Impairment losses on long-term
receivables (Note 4(14)) 8,579 -
383,451 247,605
(55) Gains or losses on changes in fair value
2021 2020
Derivative financial assets and liabilities 129,248 86,950
Other financial assets (295,654) 1,676,000
(166,406) 1,762,950
- 313 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(56) Investment income
2021 2020
Investment income from associates 560,679 402,528
Investment income from holding of financial
assets held for trading 635,828 1,598,107
Investment income from disposal of
derivative financial assets and liabilities 510,932 122,576
Investment income from disposal of
financial assets held for trading 150,075 295,802
Others (i) 508,259 (56,551)
2,365,773 2,362,462
There is no significant restriction on recovery of investment income of the Group.
(i) As disclosed in Note 4(3)(b), few of notes receivables were discounted and derecognised
by certain subsidiaries of the Group, with loss incurred of approximately RMB 7,512,000
included in investment income for the current period.
(57) Gains/(Losses) on disposal of assets
2021 2020
Gains on disposal of non-current assets 110,439 26,876
Losses on disposal of non-current assets (52,182) (87,399)
58,257 (60,523)
(58) Other income
Asset related/
2021 2020 Income related
Special subsidy 1,307,504 1,424,090 Income related
- 314 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(59) Income tax expenses
2021 2020
Current income tax calculated based on tax
law and related regulations 5,959,551 4,928,687
Deferred income tax (1,257,383) (771,690)
4,702,168 4,156,997
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:
2021 2020
Total profit 33,717,544 31,663,539
Income tax calculated at tax rate of 25% 8,429,386 7,915,885
Effect of different tax rates applicable to
subsidiaries (2,703,750) (3,314,153)
Effect of income tax annual filing for prior
periods 1,453 (241,941)
Income not subject to tax (566,876) (163,339)
Costs, expenses and losses not deductible
for tax purposes 476,697 459,501
Utilisation of previous temporary
differences or deductible losses for
which no deferred tax assets were
recognised in prior periods (75,134) (33,534)
Others (859,608) (465,422)
Income tax expenses 4,702,168 4,156,997
- 315 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(60) Calculation of basic and diluted 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 Company by the weighted average number of outstanding
ordinary shares:
Unit 2021 2020
Consolidated net profit attributable to
ordinary shareholders of the parent
company RMB’000 28,573,650 27,222,969
Less: Dividends payable to restricted
shares RMB’000 (82,152) (64,930)
28,491,498 27,158,039
Weighted average number of
outstanding ordinary shares Thousand shares 6,837,497 6,908,891
Basic earnings per share RMB Yuan/share 4.17 3.93
Including:
- Basic earnings per share from
continuing operations: 4.17 3.93
- Basic earnings per share for
discontinued operations: - -
(b) Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the Company by the diluted weighted average number of
outstanding ordinary shares:
Unit 2021 2020
Consolidated net profit attributable to
ordinary shareholders of the
Company RMB’000 28,573,650 27,222,969
Weighted average number of
outstanding ordinary shares Thousand shares 6,837,497 6,908,891
Weighted average number of ordinary
shares increased from share-based
payment Thousand shares 68,827 63,495
Weighted average number of diluted
outstanding ordinary shares Thousand shares 6,906,324 6,972,386
Diluted earnings per share RMB Yuan/share 4.14 3.90
(61) Notes to the cash flow statement
(a) Cash received relating to other operating activities
2021 2020
Other income 1,749,871 1,522,883
Revenue from other operations 3,373,578 2,450,466
Non-operating income 568,484 383,436
Financial income - interest income 323,155 441,016
Others 585,734 153,073
6,600,822 4,950,874
- 316 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(61) Notes to the cash flow statement (Cont’d)
(b) Cash paid relating to other operating activities
2021 2020
Selling and distribution expenses
(excluding employee benefits and taxes
and surcharges) 22,917,401 22,851,294
General and administrative expenses and
R&D expenses (excluding employee
benefits and taxes and surcharges) 10,886,493 10,305,790
Others 421,836 1,276,110
34,225,730 34,433,194
(c) Supplementary information to the cash flow statement
Reconciliation of net profit to cash flows from operating activities is as follows:
2021 2020
Net profit 29,015,376 27,506,542
Add: Asset impairment losses 483,420 705,209
Credit impairment losses 383,451 247,605
Depreciation and amortisation 6,182,852 5,020,256
(Gains)/Losses on disposal of assets (58,257) 60,523
Gains or losses on changes in fair
value 166,406 (1,762,950)
Financial income (3,119,978) (1,714,530)
Investment income (2,365,773) (2,362,462)
Increase in deferred tax assets (779,754) (1,424,584)
(Decrease)/Increase in deferred tax
liabilities (647,495) 625,273
Increase in inventories (15,201,834) (1,803,072)
Increase in operating receivables (5,453,539) (16,538,695)
Increase in operating payables 24,908,660 19,916,109
Share-based payments and others 1,578,169 1,081,893
Net cash flows from operating activities 35,091,704 29,557,117
Net increase/(decrease) in cash and cash
equivalents:
Cash and cash equivalents at the end of
the year 40,550,039 23,548,508
Less: Cash and cash equivalents at the
beginning of the year (23,548,508) (30,441,760)
Net increase/(decrease) in cash and cash
equivalents 17,001,531 (6,893,252)
- 317 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(61) Notes to the cash flow statement (Cont’d)
(d) Cash payments relating to other financing activities
31 December 2021 31 December 2020
Repurchase of outstanding shares 13,665,744 2,798,468
Others 1,564,540 530,266
15,230,284 3,328,734
(e) Composition of cash and cash equivalents
31 December 2021 31 December 2020
Cash on hand 1,609 2,538
Cash at bank that can be readily drawn on
demand 17,923,603 14,185,834
Deposits with the Central Bank that can be
readily drawn on demand 272,949 344,860
Deposits with banks and other financial
institutions that can be readily drawn on
demand 22,351,878 9,015,276
Cash and cash equivalents at the end of
the year 40,550,039 23,548,508
- 318 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Monetary items denominated in foreign currencies
31 December 2021
Foreign currency Exchange RMB
balance rate balance
Cash at bank and on hand
USD 602,212 6.3757 3,839,525
JPY 12,142,726 0.0554 672,707
HKD 1,630,997 0.8176 1,333,503
EUR 148,197 7.2197 1,069,937
BRL 289,406 1.1425 330,646
VND 448,073,333 0.0003 134,422
Other currencies Not applicable Not applicable 1,452,778
Sub-total 8,833,518
Accounts receivable
USD 1,060,053 6.3757 6,758,578
JPY 11,614,937 0.0554 643,468
HKD 23,316 0.8176 19,063
EUR 394,600 7.2197 2,848,894
BRL 635,016 1.1425 725,506
VND 1,722,254,244 0.0003 516,676
Other currencies Not applicable Not applicable 2,475,054
Sub-total 13,987,239
Other receivables
USD 175,560 6.3757 1,119,315
JPY 1,379,057 0.0554 76,400
HKD 1,901 0.8176 1,555
EUR 43,768 7.2197 315,990
BRL 67,455 1.1425 77,067
Other currencies Not applicable Not applicable 328,047
Sub-total 1,918,374
- 319 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Monetary items dominated in foreign currencies (Cont’d)
31 December 2021
Foreign currency Exchange RMB
balance rate balance
Short-term borrowings
USD 200,000 6.3757 1,275,140
EUR 149,976 7.2197 1,082,782
Other currencies Not applicable Not applicable 185,393
Sub-total 2,543,315
Accounts payable
USD 330,786 6.3757 2,108,991
JPY 5,227,130 0.0554 289,583
HKD 12,987 0.8176 10,618
EUR 219,900 7.2197 1,587,612
BRL 370,864 1.1425 423,712
Other currencies Not applicable Not applicable 1,845,979
Sub-total 6,266,495
Other payables
USD 7,124 6.3757 45,423
JPY 7,415,640 0.0554 410,826
HKD 10,577 0.8176 8,648
EUR 2,410 7.2197 17,401
Other currencies Not applicable Not applicable 127,366
Sub-total 609,664
Current portion of non-
current liabilities
EUR 3,824,888 7.2197 27,614,541
USD 89,993 6.3757 573,767
Other currencies Not applicable Not applicable 115,468
Sub-total 28,303,776
Long-term borrowings
USD 49,910 6.3757 318,208
EUR 421,000 7.2197 3,039,494
JPY 69,460,000 0.0554 3,849,126
Other currencies Not applicable Not applicable 17,292
Sub-total 7,224,120
Lease liabilities
EUR 95,154 7.2197 686,986
JPY 1,965,358 0.0554 108,881
Other currencies Not applicable Not applicable 45,337
Sub-total 841,204
Foreign currencies in which the above monetary items are denominated refer to all
currencies other than RMB.
- 320 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Monetary items dominated in foreign currencies (Cont’d)
31 December 2020
Foreign currency Exchange RMB
balance rate balance
Cash at bank and on hand
USD 606,052 6.5249 3,954,427
JPY 12,604,953 0.0632 796,633
HKD 2,415,846 0.8416 2,033,176
EUR 118,549 8.0250 951,354
BRL 285,067 1.2556 357,930
VND 508,313,333 0.0003 152,494
Other currencies Not applicable Not applicable 1,422,214
Sub-total 9,668,228
Accounts receivable
USD 1,275,071 6.5249 8,319,713
JPY 12,798,608 0.0632 808,872
HKD 11,535 0.8416 9,708
EUR 361,026 8.0250 2,897,230
BRL 677,500 1.2556 850,669
VND 2,435,706,667 0.0003 730,712
Other currencies Not applicable Not applicable 2,034,429
Sub-total 15,651,333
Other receivables
USD 144,189 6.5249 940,820
JPY 1,329,367 0.0632 84,016
HKD 10,903 0.8416 9,176
EUR 55,540 8.0250 445,707
BRL 179,288 1.2556 225,114
Other currencies Not applicable Not applicable 253,468
Sub-total 1,958,301
- 321 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Monetary items dominated in foreign currencies (Cont’d)
31 December 2020
Foreign currency Exchange RMB
balance rate balance
Short-term borrowings
USD 280,000 6.5249 1,826,972
EUR 154,489 8.0250 1,239,777
BRL 105,884 1.2556 132,948
Other currencies Not applicable Not applicable 122,280
Sub-total 3,321,977
Accounts payable
USD 280,661 6.5249 1,831,288
JPY 5,637,532 0.0632 356,292
HKD 14,244 0.8416 11,988
EUR 156,419 8.0250 1,255,266
BRL 222,265 1.2556 279,076
Other currencies Not applicable Not applicable 1,656,574
Sub-total 5,390,484
Other payables
USD 12,737 6.5249 83,109
JPY 7,245,791 0.0632 457,934
HKD 7,272 0.8416 6,120
EUR 1,182 8.0250 9,485
Other currencies Not applicable Not applicable 173,688
Sub-total 730,336
Current portion of non-
current liabilities
USD 3,769 6.5249 24,593
EUR 276,000 8.0250 2,214,900
Other currencies Not applicable Not applicable 22,833
Sub-total 2,262,326
Long-term borrowings
USD 140,061 6.5249 913,886
EUR 3,944,261 8.0250 31,652,691
JPY 69,460,000 0.0632 4,392,373
Other currencies Not applicable Not applicable 3,039
Sub-total 36,961,989
Foreign currencies in which the above monetary items are denominated refer to all
currencies other than RMB.
- 322 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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
The Group acquired Hitachi Compressor (Thailand) Ltd., in March 2021 and Wandong
Medical in May 2021.
The above acquisitions had no significant impact on the Group's consolidated financial
statements.
(2) Changes of consolidation scope due to other reasons
(a) Increase of consolidation scope
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Midea International Logistics
Technology Co., Ltd. in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Midea Household Kitchen Appliance
Manufacturing Co., Ltd. in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Midea HVAC Equipment Co., Ltd. in
January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Meizhi Canghai E-commerce
Services Co., Ltd. in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Meizhi Hangjian Electric Appliance
Co., Ltd. in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hainan Zhiwei Electric Appliance Co., Ltd.
in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established MiSiliconn Semiconductor Technologies Co.,
Ltd. in January 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Midea Family Cultural Creativity &
Technologies (Shanghai) Corporation in January 2021, holding 95% and 5% of the shares
respectively.
Guangdong Welling Motor Manufacturing Co., Ltd., a wholly-owned subsidiary of the
Company, established Hainan Welling Motor Sales Co., Ltd. in January 2021, holding 100%
of the shares.
Midea Electrics Netherlands B.V., a wholly-owned subsidiary of the Company, established
Meco Innovations Technology, LLC in January 2021, holding 100% of the shares.
- 323 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes in consolidation scope due to other reasons (Cont'd)
(a) Increase of consolidation scope (Cont'd)
Annto Logistics Supply Chain Technology Co., Ltd. and Foshan Annto Logistics Technology
Co., Ltd., the Company's subsidiaries, established Hainan Annto Logistics Supply Chain
Management Co., Ltd. in January 2021, holding 99% and 1% of the shares respectively.
Wuxi Little Swan Electric Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Hainan Midea Refrigerator
& Laundry Appliance Sales Co., Ltd. in January 2021, holding 95% and 5% of the shares
respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Midea (Beijing) Technology Group Co., Ltd.
in February 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Midea (Hainan) Cross-border E-commerce
Co., Ltd. in February 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Midea Investment Co., Ltd. in February
2021, holding 90% and 10% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Wuhu Midea Smart Kitchen Appliances
Manufacturing Co., Ltd. in February 2021, holding 95% and 5% of the shares respectively.
Foshan Shunde Midea Household Appliances Industry Co., Ltd., a wholly-owned subsidiary
of the Company, and Foshan Shunde Shunsheng Investment Development Co., Ltd.,
established Guangdong Midea Supply Chain Finance Co., Ltd. in March 2021, holding 85%
and 15% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Handan Midea Smart Kitchen Appliances
Manufacturing Co., Ltd. in March 2021, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hefei Midea Biomedical Co., Ltd. in March
2021, holding 95% and 5% of the shares respectively.
Midea Group (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company, established
Zhejiang Meiqin Maternity & Baby Products Co., Ltd. in March 2021, holding 100% of the
shares.
Midea Group (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company, established
Zhejiang Meixin Pet Technology Co., Ltd. in March 2021, holding 100% of the shares.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Midea (Hangzhou) E-commerce Co., Ltd. in
April 2021, holding 95% and 5% of the shares respectively.
- 324 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes in consolidation scope due to other reasons (Cont'd)
(a) Increase of consolidation scope (Cont'd)
Guangdong Meicloud Technology Co., Ltd., the Company’s subsidiary, established Wuhan
Midea Cloud Technology Co., Ltd. in April 2021, holding 100% of the shares.
Foshan Shunde Midea Household Appliances Industry Co., Ltd., and Foshan Midea Air-
conditioning Industry Investment Co., Ltd., the Company’s wholly-owned subsidiaries,
established Tianjin Midea Financial Leasing Co., Ltd. in May 2021, holding 95% and 5% of
the shares respectively.
Swisslog Malaysia Sdn Bhd and Swisslog Singapore Pte Ltd., the Company's subsidiaries,
established PT Swisslog Logistics Automation in May 2021, holding 99% and 1% of the
shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-
owned subsidiary of the Company, established Hubei Midea Commercial Refrigeration
Equipment Co., Ltd. in June 2021, holding 95% and 5% of the shares respectively.
The Company and Midea Group (Shanghai) Co., Ltd., a wholly-owned subsidiary of the
Company, established Guangdong Jiya Precision Machinery Technology Co., Ltd. in July
2021, holding 90% and 10% of the shares respectively.
Wuxi Little Swan Electric Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Little Swan (Wuxi) Cross-
border E-commerce Co., Ltd. in July 2021, holding 95% and 5% of the shares respectively.
Midea Group (Shanghai) Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Eureka Intelligent
Technology Co., Ltd. in August 2021, holding 95% and 5% of the shares respectively.
Guangdong Meicloud Technology Co., Ltd., a wholly-owned subsidiary of the Company,
established Suzhou Midea Cloud Technology Co., Ltd. in September 2021, holding 100% of
the shares.
Midea Group (Shanghai) Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Hubei Midea Building
Technology Co., Ltd. in November 2021, holding 95% and 5% of the shares respectively.
Midea Group (Shanghai) Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Meminent Science and
Technology Co., Ltd. in November 2021, holding 95% and 5% of the shares respectively.
Beijing Hiconics Eco-energy Frequency Conversion Technology Co., Ltd., the Company’s
subsidiary, established Wuhu Jumei New Energy Co., Ltd. in November 2021, holding 100%
of the shares.
- 325 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes in consolidation scope due to other reasons (Cont'd)
(a) Increase of consolidation scope (Cont'd)
Western-style Electric Products Company, a wholly-owned subsidiary of the Company,
established Hangzhou Long-termism Tech Co., Ltd. in December 2021, holding 100% of the
shares.
Maytech Technology Co., LTD., the Company’s subsidiary, established Midea Robometa
Technology Co., Ltd. in December 2021, holding 100% of the shares.
(b) Decrease of consolidation scope
Decrease of consolidation scope in the current year mainly includes deregistration of
subsidiaries. Details are as follows:
Disposal method Disposal time-
Name of company of the equity point of the equity
Reis Espana S.L. Deregistration January 2021
Hiconics International Financial Leasing Co., Ltd. Change of equity January 2021
Beijing Ruihe New Energy Technology Co., Ltd. Change of equity January 2021
Jiangsu Little Swan Marketing and Sales Co., Ltd. Deregistration March 2021
Wuhan Hiconics Intelligent Electric Co., Ltd. Change of equity March 2021
Guangzhou Chang Dee Technology Co., Ltd. Change of equity March 2021
Wuhan Hiconics Power Technology Co., Ltd. Change of equity April 2021
Wuxi Little Swan Import and Export Co., Ltd. Deregistration June 2021
Toshiba Home Appliances Manufacturing
(Shenzhen) Co., Ltd. Deregistration June 2021
Zhengzhou Chang Dee Technology Co., Ltd. Change of equity June 2021
Hangzhou Fields Technology Co., Ltd. Deregistration June 2021
Pingdingshan Changdi Technology Co., Ltd. Change of equity August 2021
Sloan Elevator (Guangdong) Co., Ltd. Deregistration August 2021
Changzhou Honglu Huate Motor Co., Ltd. Deregistration September 2021
Shenzhen Sunye Electric Co., Ltd. Deregistration September 2021
Ningbo Annto Logistics Technology Co., Ltd. Deregistration December 2021
Changzhou Welling Motor Manufacturing Co., Ltd. Deregistration December 2021
Reis GmbH Deregistration December 2021
Verwaltungsgesellschaft Walter Reis GmbH Deregistration December 2021
Walter Reis GmbH&Co KG Deregistration December 2021
KUKA Industries GmbH & Co. KG Deregistration December 2021
- 326 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 significant subsidiaries
Major business Place of
Subsidiaries location registration Nature of business Shareholding (%) Acquisition method
Direct Indirect
Manufacture and sales of air Business combinations involving
GD Midea Air-Conditioning Equipment Co., Ltd. Foshan, PRC Foshan, PRC conditioner 73% 7% enterprises not under common control
GD Midea Group Wuhu Air-Conditioning Manufacture and sales of air Business combinations involving
Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC conditioner 93% 7% enterprises not under common control
Midea Group Wuhan Refrigeration Equipment
Co., Ltd. Wuhan, PRC Wuhan, PRC Manufacture of air conditioner 73% 7% Establishment
Wuhu Maty Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioner 87% 13% Establishment
Chongqing Midea Air-Conditioning Equipment Manufacture and sales of air
Co., Ltd. Chongqing, PRC Chongqing, PRC conditioner 95% 5% Establishment
GD Midea Heating & Ventilating Equipment Co.,
Ltd. Foshan, PRC Foshan, PRC Manufacture of air conditioner 90% 10% Establishment
Zhejiang Meizhi Compressor Co., Ltd. Ningbo, PRC Ningbo, PRC Manufacture of air conditioner 100% - Establishment
Business combinations involving
Hefei Midea Refrigerator Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerator 75% 25% enterprises not under common control
Business combinations involving
Hefei Hualing Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerator 75% 25% enterprises not under common control
Guangdong Midea Kitchen Appliances Manufacture of small household
Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Foshan Shunde Midea Electrical Heating Manufacture of small household
Appliances Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Wuhu Midea Kitchen & Bath Appliances Mfg. Manufacture of small household Business combination involving
Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 90% 10% enterprises under common control
Wuxi Little Swan Electric Co., Ltd. Wuxi, PRC Wuxi, PRC Manufacture of washing machine 100% - Establishment
Midea Electric Trading (Singapore) Co., Pte. Ltd. Singapore Singapore Export trade - 100% Establishment
- 327 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 significant subsidiaries (Cont'd)
Major business Place of
Subsidiaries location registration Nature of business Shareholding (%) Acquisition method
Direct Indirect
Midea Group Finance Co., Ltd. Foshan, PRC Foshan, PRC Financial industry 95% 5% Establishment
Business combinations involving
Midea Microfinance Loan Co., Ltd. Wuhu, PRC Wuhu, PRC Petty loan 5% 95% enterprises not under common control
British Virgin
Mecca International (BVI) Limited British Virgin Islands Islands Investment holding - 100% Establishment
Midea International Corporation Company
Limited Hong Kong Hong Kong Investment holding 100% - Establishment
Manufacture of small household
Wuhu Midea Life Appliances Mfg Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 100% - Establishment
Midea Electric Netherlands (I) B.V. Netherlands Netherlands Investment holding - 100% Establishment
Business combinations involving
Toshiba Consumer Marketing Corporation Japan Japan Manufacture of home appliances - 100% enterprises not under common control
Business combinations involving
TLSC Japan Japan Manufacture of home appliances - 100% enterprises not under common control
Business combinations involving
KUKA Germany Germany Manufacture and sales of robots - 95% enterprises not under common control
Ningbo Midea United Materials Supply Co., Ltd. Ningbo, PRC Ningbo, PRC Wholesale and retail 100% - Establishment
Wuhu Midea Annto Logistics Co., Ltd. Wuhu, PRC Wuhu, PRC Logistics - 76% Establishment
Midea Innovation Investment Co., Ltd. Shenzhen, PRC Shenzhen, PRC Investment holding 85% 15% Establishment
Manufacture and sales of
Midea Group (Shanghai) Co. Ltd. Shanghai, PRC Shanghai, PRC household appliances 90% 10% Establishment
Chongqing Midea Commercial Factoring Co.,
Ltd. Chongqing, PRC Chongqing, PRC Factoring - 100% Establishment
Tianjin Midea Commercial Factoring Co., Ltd. Tianjin, PRC Tianjin, PRC Factoring - 100% Establishment
Midea Investment Co., Ltd. Hainan, PRC Hainan, PRC Investment 90% 10% Establishment
- 328 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont'd)
(2) Interest in associates
The Group’s associates have no significant influence on the Group and are summarised as
follows:
2021 2020
Aggregated carrying amount of
investments 3,796,705 2,901,337
Aggregate of the following items in
proportion
Net profit (i) 560,679 402,528
Other comprehensive income (i) (3,032) (20,445)
Total comprehensive income 557,647 382,083
(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 the unification of accounting policies adopted by the
associates to those adopted by the Company.
(ii) The adoption of the new financial instruments standards, new revenue standard and new
lease standard by the Group’s associates exerted no significant impact on the opening
balances of the financial statements for the year ended 31 December 2021.
7 Segment information
The reportable segments of the Group are the business units that provide different products
or service, 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 each segment are allocated to the segments 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.
- 329 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 is as follows:
Heating &
ventilation, as well Consumer Robotics and Other segments
as air-conditioner appliances automation system and unallocated Elimination Total
Revenue from external customers 165,428,603 140,406,787 27,545,334 9,980,101 - 343,360,825
Inter-segment revenue 3,548,892 497,761 255,284 8,032,181 (12,334,118) -
Operating expenses (155,063,889) (127,385,637) (27,349,260) (15,285,750) 12,306,649 (312,777,887)
Segment profit 13,913,606 13,518,911 451,358 2,726,532 (27,469) 30,582,938
Other profit or loss 3,134,606
Total profit 33,717,544
Total assets 159,934,918 150,200,053 34,442,640 186,546,737 (143,178,244) 387,946,104
Total liabilities 116,536,045 115,848,036 23,383,691 167,205,006 (169,851,750) 253,121,028
Long-term equity investments in
associates 312,249 109,982 36,564 3,337,910 - 3,796,705
Investment income from associates 185,835 5,976 2,182 366,686 - 560,679
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax assets) 4,946,978 2,923,405 981,504 3,996,272 - 12,848,159
Asset impairment losses 85,227 292,077 95,462 10,654 - 483,420
Losses on/(Reversal of) credit
impairment 76,301 (84,444) 82,143 383,414 (73,963) 383,451
Depreciation of right-of-use assets 73,261 163,480 275,105 400,612 - 912,458
Depreciation and amortisation 2,075,059 1,441,245 1,161,783 592,307 - 5,270,394
- 330 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2020 is as follows:
Heating &
ventilation, as well Consumer Robotics and Other segments
as air-conditioner appliances automation system and unallocated Elimination Total
Revenue from external customers 137,750,899 120,229,314 21,743,789 5,985,727 - 285,709,729
Inter-segment revenue 2,969,649 417,949 174,762 7,504,091 (11,066,451) -
Operating expenses (127,623,183) (107,643,923) (23,045,690) (11,197,652) 10,758,011 (258,752,437)
Segment profit 13,097,365 13,003,340 (1,127,139) 2,292,166 (308,440) 26,957,292
Other profit or loss 4,706,247
Total profit 31,663,539
Total assets 141,224,648 126,922,410 34,082,837 174,557,282 (116,404,574) 360,382,603
Total liabilities 100,386,504 100,604,599 24,094,633 150,399,172 (139,339,405) 236,145,503
Long-term equity investments in
associates 240,925 124,128 31,877 2,504,407 - 2,901,337
Investment income from associates 115,265 12,692 (19,464) 294,035 - 402,528
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax assets) 2,958,978 1,558,622 1,872,743 352,374 - 6,742,717
Asset impairment losses 22,389 252,621 424,710 5,489 - 705,209
(Reversal of)/losses on credit
impairment (11,271) (79,131) 25,641 311,653 713 247,605
Depreciation and amortisation 1,660,118 1,629,611 1,104,376 626,151 - 5,020,256
- 331 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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, Singapore, Japan,
the USA, Italy, South America, etc.) are as follows:
Revenue from external customers 2021 2020
Domestic 205,706,997 164,628,321
In other countries/geographical areas 137,653,828 121,081,408
343,360,825 285,709,729
Total non-current assets 31 December 2021 31 December 2020
Domestic 31,293,535 24,258,048
In other countries/geographical areas 16,863,065 17,715,088
48,156,600 41,973,136
In 2021 and 2020, 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
Name of the parent company Relationship Place of 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 2021 and
31 December 2020
Midea Holding Co., Ltd. 330,000
- 332 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Shareholding (%) Voting rights (%) Shareholding (%) Voting rights %
Direct Indirect Direct Indirect
Midea Holding Co.,
Ltd. 31.05% - 31.05% 30.86% - 30.86%
(2) Information of the Company's subsidiaries
Please refer to Note 6(1) for the information of the Company’s significant subsidiaries.
(3) Information of other related parties
Name of other related parties Relationship
Under the common control of the direct relatives of
Guangdong Wellkey Electrician Material Co., the Company’s ultimate controlling shareholder
Ltd. within the past 12 months
Under the common control of the direct relatives of
the Company’s ultimate controlling shareholder
Anhui Wellkey Electrician Material Co., Ltd. within the past 12 months
Under the common control of the direct relatives of
Orinko New Material Co., Ltd. the Company’s ultimate controlling shareholder
Under the common control of the direct relatives of
Guangdong Infore Material-Tech Co., Ltd. the Company’s ultimate controlling shareholder
Guangdong Ruizhu Intelligent Technology Under the common control of the Company’s
Co., Ltd. ultimate controlling shareholder
Foshan Micro Midea Filter Mfg. Co., Ltd Associate of the Company
Guangdong Shunde Rural Commercial Bank
Co., Ltd. Associate of the Company
(4) Information of related party transactions
The following primary related party transactions with major related parties are conducted in
accordance with normal commercial terms by both parties involved and by making reference
to the market price.
(a) Purchase of goods:
Content of related
Related parties party transactions 2021 2020
Guangdong Wellkey
Electrician Material Co., Ltd. Purchase of goods 958,908 708,793
Foshan Micro Midea Filter
Mfg. Co., Ltd Purchase of goods 358,641 312,860
Anhui Wellkey Electrician
Material Co., Ltd. Purchase of goods 522,549 242,408
Orinko New Material Co., Ltd. Purchase of goods 1,506,809 1,238,817
3,346,907 2,502,878
- 333 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(b) Sales of goods
Content of related
Related parties party transactions 2021 2020
Guangdong Ruizhu
Intelligent
Technology Co., Ltd. Sales of goods 202,625 198,903
(c) Investment income and interest income
2021 2020
Guangdong Shunde Rural Commercial Bank Co., Ltd. 223,659 130,457
(d) Remuneration of key management
2021 2020
Remuneration of key management 83,530 76,940
(5) Balances with related parties
31 December 31 December
2021 2020
Cash at bank and on hand,
other debt investments Guangdong Shunde
and current portion of Rural Commercial
non-current assets, etc. Bank Co., Ltd. 6,218,638 3,653,592
31 December 31 December
2021 2020
Guangdong Wellkey Electrician
Accounts payable Material Co., Ltd. 186,309 133,290
Foshan Micro Midea Filter Mfg.
Co., Ltd 80,498 62,837
Anhui Wellkey Electrician
Material Co., Ltd. 96,106 53,889
Orinko New Material Co., Ltd. 150,002 218,888
Guangdong Wellkey Electrician
Notes payable Material Co., Ltd. 54,613 52,246
- 334 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment
(1) Share option incentive plan
(a) Pursuant to the eighth share option incentive plan (the “Eighth Share Option Incentive Plan”)
approved at the 2020 annual shareholders’ meeting in 2021, the Company granted
82,260,000 share options with exercise price of RMB 81.41 to 1,897 employees. Under the
circumstance that the Company meets expected performance, 30%, 30%, 40% of the total
share options granted will become effective after 2 years, 3 years and 4 years respectively
since 4 June 2021.
Determination method for fair value of share options at the grant date
Exercise price of options: RMB 81.41
Effective period of options: 5 years
Current price of underlying shares: RMB 77.73
Estimated fluctuation rate of share price: 35.78%
Estimated dividend rate: 2.42%
Risk-free interest rate within effective period of options: 2.34%
The fair value of the Eighth Share Option Incentive Plan calculated pursuant to the above
parameters is: RMB 1,457,678,000.
(b) Movements in share options during the year
2021
(Share in thousands)
Share options issued at the beginning of the year 168,231
Share options granted during the year 82,260
Share options exercised during the year (34,437)
Share options lapsed during the year (17,284)
Share options issued at the end of the year 198,770
As at 31 December 2021, the residual contractual maturity date of the Fifth Share Option
Incentive Plan is on 6 May 2024. The residual contractual maturity date of the Fifth Reserved
Share Option Incentive Plan is on 10 March 2025. The residual contractual maturity date of
the Sixth Share Option Incentive Plan is on 29 May 2025. The residual contractual maturity
date of the Seventh Share Option Incentive Plan is on 4 June 2024. The residual contractual
maturity date of the Eighth Share Option Incentive Plan is 3 June 2026.
- 335 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont'd)
(2) Restricted share plan
(a) Pursuant to the restricted shares incentive plan for 2021 approved at the 2020 annual
shareholders’ meeting in 2021 (the “Restricted Shares Incentive Plan for 2021”), the
Company granted 9,940,000 restricted shares with exercise price of RMB 39.92 to 139
employees. Under the circumstance that the Company meets expected performance, 30%,
30%, 40% of the total restricted shares granted will be unlocked after 2 years, 3 years and
4 years respectively since 4 June 2021. The listing date for the granted restricted shares of
this plan is 16 July 2021.
(b) Movements in restricted shares during the year
2021
(Share in thousands)
Restricted shares issued at the beginning of the year 74,082
Restricted shares granted during the year 9,940
Restricted shares unlocked during the year (15,882)
Restricted shares lapsed during the year (5,873)
Restricted shares issued at the end of the year 62,267
(3) Employee stock ownership plan
Pursuant to the seventh stock ownership plan of the Midea Global Partner Plan (the
“Seventh Global Partner Plan”) approved at the shareholders' meeting for the year ended
31 December 2020 held during the year 2021, the Company would purchase a total of
2,436,518 shares of Midea Group from the secondary market, with an average purchase
price of RMB 82.70 per share and the purchase fund was the special fund of approximately
RMB 201,500,000 accrued by the Company. The Company then entrusted China
International Capital Corporation Limited (“CICC”) to provide an asset management plan.
The lock-up period of shares under this plan is from 4 August 2021 to 4 August 2022.
Pursuant to the fourth stock ownership plan of the Midea Business Partner Plan (the “Fourth
Business Partner Plan”) approved at the shareholders' meeting for the year ended 31
December 2020 held during the year 2021. The Company would purchase a total of
1,985,611 shares of Midea Group from the secondary market, with an average purchase
price of RMB 82.70 per share. The purchase fund was the special fund for the stock
ownership plan and part of performance bonus for management of approximately RMB
164,210,000 in total accrued by the Company. The Company then entrusted CICC to provide
an asset management plan. The lock-up period of shares under this plan is from 13 August
2021 to 13 August 2022.
(4) The total expenses due to the above share-based payment incentive plan, which were
granted, recognised for the year ended 31 December 2021 were approximately RMB
1,578,070,000 (2020: RMB 1,077,550,000). As at 31 December 2021, the balance relating
to the share-based payment incentive plan and accrued from capital surplus was
approximately RMB 2,161,354,000 (31 December 2020: RMB 1,414,842,000).
- 336 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
11 Contingencies
As at 31 December 2021, the amount in tax disputes involving Brazilian subsidiary with 51%
interests held by the Company was about BRL 614 million (equivalent to about RMB 702
million) (Some cases have lasted for more than 10 years. The above amount included the
principal and interest). As at the date on which the financial statements were authorised for
issue, relevant cases is 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 accrued sufficient amount of provisions based on the probability of making
compensation. In addition, original shareholders of 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 179 million).
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 2021 31 December 2020
Buildings, machinery and equipment 5,990,809 2,896,245
13 Events after the balance sheet date
(1) Repurchased shares
Pursuant to the Proposal on the Scheme for the Repurchase of Certain Social Public Shares
approved at the sixth meeting of the fourth Board of Directors dated 10 March 2022, the
Company is allowed to use its own funds to repurchase some of the Company’s shares
through centralised price bidding, with number of shares to be repurchased ranging from
35,714,285 to 71,428,571 and purchase price not exceeding RMB 70 per share. The
scheme is to be implemented within 12 months from the date of approval by the Board of
Directors. As at the date on which the financial statements were authorised for issue, the
Group has repurchased approximately 947,400 shares, and purchase price was
approximately RMB 53,910,000.
(2) Overview of profit distribution
On 28 April 2022, on the basis of the total shares 6,869,123,038 to be distributed (total
existing 6,997,053,441 shares net of repurchased 127,930,403 shares) of the Company, the
Board of Directors proposed a distribution of cash dividends of approximately RMB
11,677,509,000 at RMB 17 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.
- 337 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021
Within 1 year 53,370
1 to 2 years 52,871
2 to 3 years 45,965
3 to 4 years 44,678
4 to 5 years 43,903
Over 5 years 501,571
742,358
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.
- 338 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(1) Market risk
(a) Foreign exchange risk
The Group mainly operates in China, Europe, America, 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
foreign exchange exposure.
The Group’s finance department at its headquarters has a professional team to manage
foreign exchange risk, 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.
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term
borrowings. 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. As at 31 December 2021, the
Group’s long-term interest bearing borrowings at floating rates amounted to RMB
891,817,000 (31 December 2020: RMB 933,886,000) (Note 4(36)).
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. The
Group 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 2021, if the borrowing rate had risen or fallen by 50 base points while
other factors had been remained constant, the Group’s profit before tax would decrease or
increase by approximately RMB 4,459,000 (31 December 2020: RMB 4,669,000).
(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 (Note 4(16)) and investments in other equity instruments
measured at fair value. As at 31 December 2021, 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 2021, if the Group’s expected price of equity instruments investment
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
723,234,000 (31 December 2020: approximately RMB 567,581,000), and an increase or
decrease in other comprehensive income amounting to approximately RMB 4,574,700 (31
December 2020: approximately RMB 4,665,000).
- 339 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(2) Credit risk
Credit risk is managed on the 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, loans and
advances, 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 counterparties.
In addition, the Group has policies to limit the credit exposure on notes receivable, accounts
receivable, contract assets, loans and advances, 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.
As at 31 December 2021, the Group had no significant collateral or other credit
enhancements held as a result of the debtor's mortgage (31 December 2020: 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
- 340 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
The financial liabilities of the Group at the balance sheet date are analysed by their maturity
date below at their undiscounted contractual cash flows :
31 December 2021
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 5,420,066 - - - 5,420,066
Borrowings from Central
Bank (including interest) 180,000 - - - 180,000
Customer deposits and
deposits from banks
and other financial
institutions (including
interest) 78,235 - - - 78,235
Notes payable 32,752,007 - - - 32,752,007
Accounts payable 65,983,559 - - - 65,983,559
Other payables 4,288,104 - - - 4,288,104
Derivative financial
liabilities 157,602 - - - 157,602
Other current liabilities 16,920,200 - - - 16,920,200
Current portion of non-
current liabilities
(including interest) 28,995,245 - - - 28,995,245
Long-term borrowings
(including interest) 409,056 6,656,015 13,726,837 - 20,791,908
Lease liabilities
(including interest) - 667,710 879,105 143,316 1,690,131
Other non-current liabilities - - 687,689 - 687,689
155,184,074 7,323,725 15,293,631 143,316 177,944,746
31 December 2020
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 10,033,656 - - - 10,033,656
Customer deposits and
deposits from banks
and other financial
institutions (including
interest) 87,596 - - - 87,596
Notes payable 28,249,939 - - - 28,249,939
Accounts payable 53,930,261 - - - 53,930,261
Other payables 4,501,391 - - - 4,501,391
Derivative financial
liabilities 161,225 - - - 161,225
Other current liabilities
(including interest) 18,661,350 - - - 18,661,350
Current portion of non-
current liabilities
(including interest) 6,355,016 - - - 6,355,016
Long-term borrowings
(including interest) 557,805 31,435,123 12,002,785 - 43,995,713
Long-term payables - 8,870 4,390 - 13,260
Other non-current liabilities - - 692,986 - 692,986
122,538,239 31,443,993 12,700,161 - 166,682,393
(i) As at the balance sheet date, the Group did not provide financial guarantees to external
parties or loan commitments to related parties.
- 341 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
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.
(1) Assets and liabilities measured at fair value on a recurring basis
As at 31 December 2021, 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 1,319,470 4,559,732 - 5,879,202
Derivative financial assets - 545,865 - 545,865
Receivables financing - 10,273,552 - 10,273,552
Other current assets - hedging
instruments and transferable
certificate of deposit - 982,965 - 982,965
Other debt investments - 27,254,307 - 27,254,307
Investments in other equity
instruments - - 45,747 45,747
Other non-current financial
assets - - 5,912,873 5,912,873
Total assets 1,319,470 43,616,421 5,958,620 50,894,511
Financial liabilities measured at fair
value -
Derivative financial liabilities - 157,602 - 157,602
Other financial liabilities -
hedging instruments - 9,047 - 9,047
Total liabilities - 166,649 - 166,649
- 342 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
As at 31 December 2020, 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 2,324,965 25,914,636 - 28,239,601
Derivative financial assets - 420,494 - 420,494
Receivables financing - 13,901,856 - 13,901,856
Other current assets - hedging
instruments - 767,934 - 767,934
Other debt investments - 21,456,155 - 21,456,155
Investments in other equity
instruments - - 46,651 46,651
Other non-current financial
assets - - 3,360,849 3,360,849
Total assets 2,324,965 62,461,075 3,407,500 68,193,540
Financial liabilities measured at fair
value -
Derivative financial liabilities - 161,225 - 161,225
Other financial liabilities -
hedging instruments - 19,511 - 19,511
Total liabilities - 180,736 - 180,736
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 among the three levels.
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, estimated interest rate and estimated annual yield.
- 343 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
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 financial assets are analysed below:
Financial assets held for trading,
investments in other equity
instruments and other non-current
financial assets
1 January 2021 3,407,500
Increase 2,492,898
Decrease (869,794)
Transfer to Level 3 28,666
Total gains of current period
Investment income recognised in the
income statement 943,969
Gains recognised in other
comprehensive income (44,619)
31 December 2021 5,958,620
Financial assets held for trading,
investments in other equity
instruments and other non-current
financial assets
1 January 2020 1,750,107
Increase 1,872,884
Decrease (63,570)
Transfer out of Level 3 (226,060)
Total gains of current period
Investment income recognised in the
income statement 181,583
Gains recognised in other
comprehensive income (107,444)
31 December 2020 3,407,500
(a) The fair value of this part of other non-current financial assets is measured using discounted
cash flows approach. The judgement of Level 3 of the fair value hierarchy is based on the
materiality of unobservable inputs towards calculation of whole fair value. Significant
unobservable inputs mainly include the financial data of targeted company and risk adjusted
discount rates.
Assets and liabilities subject to Level 2 fair value measurement are mainly structural
deposits, receivables financing and forward exchange contracts and are evaluated by
market approach and income approach.
- 344 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Fair value estimates (Cont'd)
(2) Assets and liabilities not measured at fair value but disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly
include: cash at bank and on hand, deposits with the Central Bank, deposits with banks and
other financial institutions, notes receivable, accounts receivable, contract assets, loans and
advances, other receivables, lease receivables, current portion of non-current assets, other
current assets (excluding those mentioned in Note 16(1)), notes payable, accounts payable,
contract liabilities, short-term borrowings, lease liabilities, long-term borrowings, current
portion of non-current liabilities, customer deposits and deposits from banks and other
financial institutions, other payables, other current liabilities, etc.
Carrying amounts of the Group’s financial assets and financial liabilities measured at
amortised cost as at 31 December 2021 and 31 December 2020 approximated to their fair
value.
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 2021 and 31 December 2020, the Group's gearing ratio was as follows:
31 December 2021 31 December 2020
Total liabilities 253,121,028 236,145,503
Total assets 387,946,104 360,382,603
Gearing ratio 65.25% 65.53%
- 345 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 2021 31 December 2020
Other receivables 31,465,557 28,332,268
Less: Provision for bad debts (17,708) (13,598)
31,447,849 28,318,670
(a) Other receivables are analysed by ageing as follows:
31 December 2021 31 December 2020
Within 1 year 31,461,940 28,205,960
1 to 2 years 1,708 125,127
Over 2 years 1,909 1,181
31,465,557 28,332,268
(b) Provision for losses and changes in book balance statements
Stage 1 Stage 3
12-month ECL 12-month ECL Lifetime ECL
(Grouping) (Individual) (Credit impaired) Sub-total
Provision Provision Provision Provision
Book for bad Book for bad Book for bad for bad
balance debts balance(i) debts balance debts debts
31 December 2020 423,516 13,540 27,908,694 - 58 58 13,598
Transfer to Stage 3 in the
current year (123,583) (12,358) - - 123,583 12,358 -
Net increase/(decrease) in
the current year 31,015,301 16,526 (27,758,371) - (123,641) (12,416) 4,110
Including: Written-off in the
current year - - - - (123,641) (123,641) (123,641)
Derecognition - - - - - - -
31 December 2021 31,315,234 17,708 150,323 - - - 17,708
(i) In the current year, the Company changed the provision for bad debts of other receivables
of RMB 27,758,371,000 from individual basis to collective basis.
(ii) As at 31 December 2021 and 31 December 2020, the Company did not have other
receivables in Stage 2.
- 346 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 bad debts
As at 31 December 2021 and 31 December 2020, other receivables of the Company in
Stage 1 and Stage 3 were analysed as follows:
(i) As at 31 December 2021, other receivables for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 150,323 0% - expected loss risk
As at 31 December 2020, other receivables for which the related provision for bad debts
was provided on the individual basis were analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 27,908,694 0% - expected loss risk
Lifetime ECL Provision for
Book balance rate bad debts Reason
The debtor
encountered
financial
Stage 3 58 100.00% (58) distress, etc.
(ii) As at 31 December 2021 and 31 December 2020, other receivables of which provision for
bad debts was calculated on grouping basis were all in Stage 1, which was analysed as
follows:
31 December 2021 31 December 2020
Book Book
balance Provision for bad debts balance Provision for bad debts
Provision Provision
Amount Amount ratio Amount Amount ratio
Security
deposit/
guarantee
payables
grouping 31,315,234 (17,708) 0.06% 423,516 (13,540) 3.20%
- 347 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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)
(d) As at 31 December 2021, the five largest other receivables aggregated by debtors were
analysed as follows:
% of total Provision for
Nature Balance Ageing balance bad debts
Company A Current accounts 27,310,000 Within 1 year 86.79% (15,116)
Company B Current accounts 1,442,999 Within 1 year 4.59% (799)
Company C Current accounts 1,058,011 Within 1 year 3.36% (586)
Company D Current accounts 451,072 Within 1 year 1.43% (250)
Company E Current accounts 225,000 Within 1 year 0.72% (125)
30,487,082 96.89% (16,876)
(2) Long-term equity investments
Long-term equity investments are classified as follows:
31 December 2021 31 December 2020
Subsidiaries (a) 64,376,850 53,320,578
Associates (b) 2,428,841 1,670,583
66,805,691 54,991,161
Less: Provision for impairment - -
66,805,691 54,991,161
- 348 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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
Cash dividends
Provision for attributable to the parent
31 December Increase in Decrease in Provision for 31 December impairment company declared in the
2020 investment investment impairment Others 2021 Ending balance current year
Wuxi Little Swan Electric Co., Ltd. 20,194,240 - - - 72,344 20,266,584 - 1,120,685
Guangdong Midea Electric Co., Ltd. 5,000,000 - - - - 5,000,000 - -
Midea Group Finance Co., Ltd. 3,360,577 - - - 1,279 3,361,856 - -
Foshan Shunde Midea Household Appliances Industry Co., Ltd. 2,949,000 3,000,000 - - - 5,949,000 - -
Guangdong Midea Microwave Oven Manufacturing Co., Ltd. 1,880,041 - - - - 1,880,041 - -
GD Midea Air-Conditioning Equipment Co., Ltd. 1,792,170 - - - 114,350 1,906,520 - 322,962
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 1,146,142 - - - 25,307 1,171,449 - -
Hefei Midea Heating & Ventilation Equipment Co., Ltd. 1,076,253 - - - 3,796 1,080,049 - 1,501,888
Guangdong Midea Intelligent Technologies Co., Ltd. 1,053,484 - - - 5,967 1,059,451 - -
Midea Group (Shanghai) Co. Ltd. 903,368 - - - 9,217 912,585 - -
Hubei Midea Refrigerator Co., Ltd. 855,003 - - - 19,837 874,840 - 642,040
Anhui Meizhi Precision Manufacturing Co., Ltd. 827,603 - - - 4,095 831,698 - 974,185
GD Midea Heating & Ventilating Equipment Co., Ltd. 780,128 - - - 70,620 850,748 - 529,444
Wuhu Maty Air-Conditioning Equipment Co., Ltd. 764,440 - - - 8,228 772,668 - 1,522,615
Annto Logistics Technology Co., Ltd. 742,684 - - - - 742,684 - -
Hefei Midea Refrigerator Co., Ltd. 532,048 - - - 19,838 551,886 - -
Ningbo Midea United Materials Supply Co., Ltd. 497,867 - - - 3,177 501,044 - 662,907
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. 352,061 129,708 - - - 481,769 - -
Hefei Hualing Co., Ltd. 265,630 - - - 47,582 313,212 - -
Midea International Corporation Company Limited 176,974 - - - - 176,974 - -
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. 172,612 - - - 20,977 193,589 - 830,542
Midea Group Wuhan Refrigeration Equipment Co., Ltd. 110,327 - - - 5,900 116,227 - 255,963
Chongqing Midea Air-Conditioning Equipment Co., Ltd. 83,953 - - - 4,443 88,396 - 723,803
Zhejiang Meizhi Compressor Co., Ltd. 66,280 - - - 273 66,553 - 832,515
Wuhu Midea Life Appliances Mfg Co., Ltd. 56,223 - - - 321 56,544 - -
Wandong Medical - 2,297,093 - - - 2,297,093 - 20,454
Midea Innovation Investment Co., Ltd. 35,000 2,100,000 - - - 2,135,000 - -
Hainan Midea Building Technology Co., Ltd. - 921,500 - - - 921,500 - -
Guangdong Midea Electromechanical Technology Co., Ltd. - 500,000 - - - 500,000 - -
Guangdong Midea Commercial Air-Conditioning Equipment Co.,
Ltd. 569,430 200,000 - - - 769,430 - -
Others 7,077,040 805,010 (15,935) - 681,345 8,547,460 - 1,348,470
53,320,578 9,953,311 (15,935) - 1,118,896 64,376,850 - 11,288,473
- 349 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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
Investment in associates mainly refers to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd. and Hefei Royalstar Motor Co., Ltd. and other enterprises by the
Company.
(3) Operating revenue
Operating revenue mainly comprises other operating revenue including the trademark
royalty income, rental income, management fee income, etc. obtained by the Company from
the subsidiaries.
(4) Investment income
2021 2020
Income from long-term equity
investments under cost method 11,288,473 11,355,426
Investment income from associates 265,491 216,318
Investment income from holding of
financial assets held for trading 292,890 1,063,774
Others 615,249 (57,063)
12,462,103 12,578,455
There is no significant restriction on repatriation of the Company's investment income.
- 350 -
MIDEA GROUP CO., LTD.
SUPPLEMENTARY INFORMATION
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
1 Details of non-recurring profit or loss
2021 2020
Gains or losses on disposal of non-current
assets 77,527 (52,424)
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. 995,824 2,204,165
Others (mainly including government
grants, compensation income, penalty
income and other non-operating income
and expenses) 2,352,849 1,378,105
3,426,200 3,529,846
Less: Effect of income tax (668,578) (765,871)
Effect of minority interests (after tax) (113,058) (155,659)
2,644,564 2,608,316
Basis of preparation of details of non-recurring profit or loss:
Under the requirements of the Explanatory Announcement No. 1 on Information Disclosure
by Companies Offering Securities to the Public – Non-recurring Profit or Loss [2008] from
CSRC, 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 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:
Earnings per share (in RMB Yuan)
Weighted average Basic earnings Diluted earnings
return on net asset (%) per share per share
2021 2020 2021 2020 2021 2020
Net profit attributable
to shareholders of
the Company 24.09% 24.95% 4.17 3.93 4.14 3.90
Net profit attributable
to shareholders of
the Company net
of non-recurring
profit or loss 21.86% 22.56% 3.78 3.55 3.75 3.53
- 351 -
The 2021 Annual Report of Midea Group Co., Ltd.
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
30 April 2022
352
