The 2022 Annual Report of Midea Group Co., Ltd.
Annual Report
Midea Group Co., Ltd.
Stock code: 000333
1
April 2023
The 2022 Annual Report of Midea Group Co., Ltd.
Letter to Shareholders
The year 2022 was an unforgettable year, one in which we continued to look toward and
envision the future but also had to persevere through many uncertainties and hardships in
reality. Although it might seem that we have remained in place, each of us has in fact
completed a long journey of growth in our mindsets. In the end, what we now have is the
courage to be tenacious and maintain everlasting hope. We would like to express our full
and sincerest gratitude to all Mideans. Your perseverance in forging ahead has made you
dedicated contributors to the future of Midea. We would also like to thank our shareholders
for accompanying Midea on our growth journey. Despite market fluctuations and
everything else we have gone through, your understanding and trust have been and will
continue to be critical to boosting our confidence as we continue our value growth journey.
In 2022, Midea mainly adhered to the business principles of “Generate Income & Drive
Profit”. In keeping with its strategy of “refocusing” on and “returning” to the basics, Midea
worked hard to improve its profitability, achieve robust operations, and make new strides in
terms of its strategic layout. Midea rose to No. 245 on the 2022 Fortune Global 500 list and
No. 36 on the 2022 Brand Finance Tech 100 list. The Company was also selected as one
of the ESG case companies with practical reference significance according to the “ESG
Inspiring Cases” results released by Forbes China. By early 2023, five of Midea’s factories
had been included in the “Global Lighthouse Network” initiated by the World Economic
Forum, demonstrating Midea’s leading position in intelligent manufacturing and digital
development among manufacturers worldwide.
In this bustling age of uncertainty, industries have undergone tremendous changes. Given
this context, no business can maintain rapid growth forever, because the nature of the
world is that industries, the economy, technologies, and even globalization itself are
cyclical. Nevertheless, a few companies can still achieve sustained growth and earnings
and create value. How to build Midea into one of those “few companies”? This is one of
the core issues that must be resolved. To this end, we must bid farewell to the past and
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The 2022 Annual Report of Midea Group Co., Ltd.
push ahead with transformation and innovation going forward in order to build the
Company’s strengths for whatever the next round of competition may bring. In order to
make this happen, this is the only option we can choose now.
We need to first experience life's ups and downs before we can understand the simple
truth. As the writer Albert Camus once said, “Whenever it seemed to me that I felt a deep
sense of the world, it was its simplicity that always moved me.” Successful businesses
understand the basic principles of corporate organization, while decaying businesses all
have distinct causes that are responsible for this decay. The most basic principle, law, and
truth are what keeps driving the world. Therefore, when running a business, we must
return to the basics and continue to uphold these basic principles. More specifically, we
must maintain our cash flows and product capabilities and continue to accumulate
technology; this is the law and orientation to which we must adhere. Additionally, the secret
to the success of any company lies in such basic principles as “corporate culture and
values”, “corporate governance structure”, “entrepreneurship”, “a value-creating business
model”, “being capable of persistent learning and introspection”, and “being capable of
creating a second growth curve”. To evolve into a great enterprise that stands out from our
peers, we must not only possess these basic principles, but also hold fast to them.
When facing this era of tremendous changes, long-term development is no longer an
option, but an intrinsic competence that must be built up on an ongoing basis. Strategies
tell us what we should do to ensure that we have a tomorrow; they do not necessarily tell
us what we will actually end up doing in the future. Therefore, Midea must be cautiously
open-minded, always be prepared for the worst-case scenario, and stay alert to potential
challenges. A coordinated emphasis will be placed on breakthroughs in our ToC and ToB
businesses. We will strive to boost the strength of our products and core technologies in
our ToC business while stabilizing and improving our profitability to provide strategic
support for the transformation of our ToB business. Additionally, the transformation of
Midea from a Chinese business into an international one will be advanced by expediting
the layout and growth of the Company’s overseas business, developing the capabilities of
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global industrial chains, and continually enhancing the impact of our brands. We will also
extend Midea’s advantages in efficiency to products, technologies, and innovation, and
continue to consolidate and develop Midea’s capabilities over the long term in terms of
sustainable development.
Midea’s business principle for 2023 is “Stabilize Profit & Drive Growth”. “Drive Profit”
means going outside our comfort zone and rising to meet the challenge of unknowns and
uncertainties. This requires Midea to keep pace with the times and dare to take risks that
arise from the exploration of new markets, product categories, mechanisms, and growth
opportunities, and seek out new paths, new growth drivers, and new methodologies. “Drive
Profit” does not necessarily refer to organic or natural growth. It is both an option and a
commitment, one that urges Midea to seek out a new intrinsic motivation:
Entrepreneurship. To this end, Midea must curb any tendency towards institutionalization,
fully delegate power, and find and inspire talent with the elements of entrepreneurship. By
doing so, the density of Midea’s entrepreneurship will take shape and become stronger.
Concurrently, internal entrepreneurial groups can be formed, and that will help Midea
achieve even more breakthroughs. During the three decades starting from the
establishment of Midea through all the hardships it endured and overcame to achieve its
listing, Midea has evolved into a great company that engages in more than just one
product, one market, or one industry. Behind this significant progress lies the power of
perseverance and conviction. Midea’s most invaluable assets include sharing the fruits
and gains of its efforts, sharing a sense of achievement and impact, and sharing dreams
and visions, as well as its advanced governance mechanism, its future-proof values, and
its entrepreneurial spirit.
As time goes by, some businesses decay while others prosper. No matter what, there are
always businesses that remain unshakable and become stronger, even as many of their
peers fall. Likewise, even as some existing industries decay, new ones will emerge.
Despite the many hardships and challenges, the current era is still the best-ever in terms
of the number of opportunities. “Ever Onwards, Look to the Stars.” We cannot speak of the
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The 2022 Annual Report of Midea Group Co., Ltd.
ocean to a frog that lives in a well, as it is a creature of a narrower sphere. We also cannot
speak of ice to a summer insect, as it is a creature of a single season. What we can do,
however, is stay calm and composed, even when confronted with all the changes and
challenges of this era. We can also push ahead with Midea’s growth, upward and onward,
by stabilizing our principal business, creating a second growth curve, and fearlessly going
global to achieve our “Global Impact”.
Ever Onwards, I hope I possess the courage that you do! As always, we look forward to
sharing and witnessing Midea’s transformation and its every breakthrough with all of you.
Board of Directors, Midea Group
April 2023
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The 2022 Annual Report of Midea Group Co., Ltd.
Section I Important Statements, Contents and Definitions
The Board of Directors, the Supervisory Committee, directors, supervisors and senior
management of Midea Group Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report is free of any misrepresentations,
misleading statements or material omissions, and shall together be wholly liable for the
truthfulness, accuracy and completeness of its contents.
Mr. Fang Hongbo, Chairman of the Board and CEO of the Company, Ms. Zhong Zheng, Vice
President, CFO and Director of Finance of the Company, and Ms. Chen Lihong, head of the
accounting department (equivalent to accounting manager) of the Company, have represented
and warranted that the financial statements in this report are true, accurate and complete.
All directors of the Company attended the Board meeting to review this report.
The future plans and other forward-looking statements mentioned in this report shall not be
considered as promises of the Company to investors. Therefore, investors are kindly reminded
to pay attention to possible investment risks.
The Board has considered and approved the following dividend payout plan: based on the
6,875,060,728 shares at the disclosure date of this report (the total share capital of 7,021,698,756
shares minus the repurchased 146,638,028 shares in the repurchased share account at that
date), it is proposed that the Company should distribute a cash dividend of RMB25 (tax
inclusive) per 10 shares to all the shareholders and should not carry out any bonus issue or
convert capital surplus into share capital. When implementing the profit distribution plan, if
there is a change in the total share capital that enjoys the right to share in the profit distribution,
the total share capital that enjoys the right to share in the profit distribution on the equity
registration date of the implementation of the distribution plan shall be used as the base, and
the total amount of dividends shall be adjusted according to the principle that the dividend per
share remains unchanged.
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 2022 Annual Report of Midea Group Co., Ltd.
Contents
LETTER TO SHAREHOLDERS ................................................................................................ 2
SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ............................. 6
SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ...................................... 10
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS ................................................. 14
SECTION IV CORPORATE GOVERNANCE ........................................................................ 122
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ....................................... 160
SECTION VI SIGNIFICANT EVENTS ................................................................................... 183
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ..... 200
SECTION VIII PREFERENCE SHARES ............................................................................... 209
SECTION IX BONDS ............................................................................................................ 210
SECTION X FINANCIAL REPORT ........................................................................................ 217
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The 2022 Annual Report of Midea Group Co., Ltd.
Documents Available for Reference
1. The original of The 2022 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 2022 Annual Report that is released on
http://www.cninfo.com.cn.
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The 2022 Annual Report of Midea Group Co., Ltd.
Definitions
Term Definition
The “Company”, “Midea”, “Midea Group” or the “Group” Midea Group Co., Ltd.
Midea Holding Midea Holding Co., Ltd.
KUKA KUKA Aktiengesellschaft
TLSC Toshiba Lifestyle Products & Services Corporation
Hiconics Hiconics Eco-energy Technology Co., Ltd.
WDM Beijing Wandong Medical Technology Co., Ltd.
Swisslog Swisslog Holding AG
Servotronix Servotronix Motion Control Ltd.
WINONE WINONE Elevator Company Limited
Reporting Period 1 January 2022 to 31 December 2022
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The 2022 Annual Report of Midea Group Co., Ltd.
Section II Company Profile and Key Financial Results
1. Corporate Information
Stock name Midea Group Stock code 000333
Stock exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
美的集团股份有限公司
Chinese
Abbr. of the Company name in
美的集团
Chinese
Name of the Company in
Midea Group Co., Ltd.
English (if any)
Abbr. of the Company name in
Midea Group
English (if any)
Legal representative Fang Hongbo
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Registered address
Foshan City, Guangdong Province, China
Postal code 528311
Past changes of registered
N/A
address
Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,
Business address
Foshan City, Guangdong Province, China
Postal code 528311
Company website http://www.midea.com
E-mail IR@midea.com
2. Contact Us
Board Secretary Representative for Securities Affairs
Name Jiang Peng You Mingyang
Midea Headquarters Building, No. 6 Midea Headquarters Building, No. 6
Midea Avenue, Beijiao Town, Shunde Midea Avenue, Beijiao Town, Shunde
Address
District, Foshan City, Guangdong District, Foshan City, Guangdong
Province, China Province, China
Tel. 0757-22607708 0757-23274957
Fax 0757-26605456 0757-26605456
E-mail IR@midea.com IR@midea.com
3. Information Disclosure and Place Where this Report Is Kept
The website of the Shenzhen Stock Exchange
Stock exchange website where this Report is disclosed
(http://www.szse.cn)
China Securities Journal, Securities Times and Shanghai
Media and website where this Report is disclosed
Securities News, as well as http://www.cninfo.com.cn
Place where this Report is kept Company Investor Relations Department
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The 2022 Annual Report of Midea Group Co., Ltd.
4. Company Registration and Alteration
Unified social credit code 91440606722473344C
Changes in main business activities
None
since the Company was listed (if any)
Changes of controlling shareholder of
None
the Company (if any)
5. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm PricewaterhouseCoopers Zhong Tian LLP
Business address of the 11/F., PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road,
accounting firm Huangpu District, Shanghai 200021, PRC
Name of accountants writing
Yao Wenping and Wu Fangfang
signatures
Sponsor engaged by the Company to continuously perform its supervisory function during the
Reporting Period
□Applicable √N/A
Financial advisor engaged by the Company to continuously perform its supervisory function during
the Reporting Period
□Applicable √N/A
6. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□ Yes √ No
2022-over-2021
2022 2021 2020
change (%)
Operating revenue (RMB'000) 343,917,531 341,233,208 0.79% 284,221,249
Net profit attributable to shareholders of
29,553,507 28,573,650 3.43% 27,222,969
the Company (RMB'000)
Net profit attributable to shareholders of
the Company before non-recurring 28,607,973 25,929,086 10.33% 24,614,653
gains and losses (RMB'000)
Net cash flows from operating activities
34,657,828 35,091,704 -1.24% 29,557,117
(RMB'000)
Basic earnings per share (RMB/share) 4.34 4.17 4.08% 3.93
Diluted earnings per share (RMB/share) 4.33 4.14 4.59% 3.90
Weighted average ROE (%) 22.21% 24.09% -1.88% 24.95%
31 December 31 December Change of 31 31 December
2022 2021 December 2022 2020
over 31 December
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The 2022 Annual Report of Midea Group Co., Ltd.
2021
Total assets (RMB'000) 422,555,267 387,946,104 8.92% 360,382,603
Net assets attributable to shareholders
142,935,236 124,868,124 14.47% 117,516,260
of the Company (RMB'000)
Indicate whether the lower of the net profit before and after non-recurring gains and losses was
negative for the last three accounting years, and the latest auditor’s report indicated that there was
uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate whether the lower of the net profit before and after non-recurring gains and losses was
negative.
□ Yes √ No
7. Differences in Accounting Data under Domestic and Overseas Accounting
Standards
7.1 Differences in the net profit and net assets disclosed in the financial reports prepared
under China Accounting Standards (CAS) and International Financial Reporting Standards
(IFRS)
□Applicable √N/A
No such differences for the Reporting Period.
7.2 Differences in the net profit and net assets disclosed in the financial reports prepared
under CAS and foreign accounting standards
□Applicable √N/A
No such differences for the Reporting Period.
8. Key Financial Results by Quarter
RMB'000
Q1 2022 Q2 2022 Q3 2022 Q4 2022
Operating revenue 90,381,167 92,279,842 87,705,744 73,550,778
Net profit attributable to
7,177,925 8,817,571 8,474,425 5,083,586
shareholders of the Company
Net profit attributable to
shareholders of the Company
6,993,023 8,698,489 8,374,107 4,542,354
before non-recurring gains and
losses
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The 2022 Annual Report of Midea Group Co., Ltd.
Net cash flows from operating
7,978,986 13,415,724 8,077,642 5,185,476
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 2022 2021 2020 Note
Gain or loss from disposal of non-current
-59,854 77,527 -52,424
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 -604,446 995,824 2,204,165
financial liabilities, and other non-current
financial assets, as well as investment
income or loss produced from the disposal
of the aforesaid financial assets and
liabilities
Other non-operating income and expenses
1,777,103 2,352,849 1,378,105
except above-mentioned items
Less: Corporate income tax 103,624 668,578 765,871
Minority interests (after tax) 63,645 113,058 155,659
Total 945,534 2,644,564 2,608,316 --
Particulars about other items that meet the definition of non-recurring gain/loss:
□Applicable √N/A
Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is
enumerated as a non-recurring gain/loss in the .
□Applicable √N/A
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The 2022 Annual Report of Midea Group Co., Ltd.
Section III Management Discussion and Analysis
1. Industry Overview for the Reporting Period
1.1 Summary of the business scope
Midea is a global technology group comprising the Smart Home, Industrial Technology, Building
Technologies, Robotics & Automation, and Other Innovation businesses. With a business portfolio
that is focused on the coordinated development of the ToC and ToB businesses, Midea offers
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 entire-house smart home
appliances and service. The Industrial Technology Business Group, with technology as the core driver,
commands key technologies in intelligent transportation, industrial automation, green energy and
consumer appliances. It operates many brands including GMCC, Welling, HICONICS, SUNYE,
SERVOTRONIX, DORNA, MR, MSCT, TOSHIBA, etc., with its products covering high-precision core
components such as compressors, motors, chips, auto parts, electronic expansion valves, variable
frequency drive, servo and motion control systems, speed reducers and cooling modules. It provides
green, efficient and intelligent products and technology solutions for industrial customers across the
world. The Building Technologies Division is responsible for providing products and services in
relation to buildings, as well as the relevant operations. With iBUILDING, Midea’s digital building
service platform, as the core, its business covers HVAC, elevators, energy, building control, etc. Its
primary products include VRF units, large chillers, unitary units, machine room air conditioners,
escalators, passenger elevators, freight elevators, etc., as well as building automation software and
building weak electricity integrated solutions. Supported by “Building Equipment and Facilities +
Digital Technology + Industrial Ecosystem”, it facilitates logistics, information, feeling and energy flows
of buildings to empower buildings with digital and low-carbon technologies and build sustainable
smart space. The Robotics & Automation Division primarily focuses on providing solutions of industrial
robotics, automatic logistics systems, and transmission systems for future factory-related fields, as
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The 2022 Annual Report of Midea Group Co., Ltd.
well as solutions for health care, entertainment, new consumption, etc. The Other Innovation
Business 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.
With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your
Future” as its mission, “Embrace what’s next - Aspiration、Customer First、Innovation、Collaboration、
Dedication” as its values, “High-quality Development and High-performance Operations” as its
management and operation standard, Midea integrates global resources and promotes technological
innovation to create a better life for over 400 million users, major customers and strategic partners in
different areas worldwide every year with satisfying products and services. In face of higher
requirements for products and services in the digital Internet era, Midea continues to promote its
strategic focus of “Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and
Global Impact”, so as to rebuild Midea in the new era. To be specific, it strives to achieve Technology
Leadership by building scale advantages in R&D and strengthening the efforts and investment in core
and cutting-edge technologies; be Direct to Users through direct contact and interaction with users
and reinventing product service and business models; be Digitization & Intelligence Driven through
“Comprehensive Digitalization and Comprehensive Intellectualization”, as well as improving efficiency
internally and focusing on users externally; and achieve Global Impact by seeking breakthroughs in
key regions in terms of market, channel and business model dimensions and serving global users.
Midea, a global operating company, has now established a global platform with around 200
subsidiaries, 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 took, in 2022, full ownership of KUKA, a
Germany-based world-leading provider of robotics and automation solutions.
1.2 Position in the home appliance industry
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The 2022 Annual Report of Midea Group Co., Ltd.
Midea ranks No. 245 on the Fortune Global 500 list unveiled in August 2022, moving up 43 places
from the year before and marking its seventh year on the list. In July 2022, the Fortune China 500 list
was released and Midea ranks No. 35, moving up four places compared with the previous year. In
August 2022, Forbes China and the China Electronics Chamber of Commerce jointly released the list
of “China Digital 100”, and Midea was in sixth place for its comprehensive strength in the area of
digital economy. In the “2022 Forbes China Sustainable Development Industrial Enterprises Top 50
Selection” held in February 2023, Midea was selected as an Industry Benchmark for Sustainable
Development Industrial Enterprises by virtue of its solid performance in green manufacturing, carbon
neutrality, sustainable development and ESG practices. In March 2023, the Company was also
selected as one of the ESG case companies with practical reference significance according to the
“2023 ESG Inspiring Cases” results released by Forbes China. In March 2023, Midea won the China
Industrial Grand Prize at the Seventh China Industrial Grand Prize Ceremony jointly organized by the
China Federation of Industrial Economics and 13 national industry associations for its excellent
performance in technology innovation, quality management and branding, among others. In August
2022, Midea Group topped the list of “Top 200 Enterprises of China’s Light Industry in 2021” at CLIE
Summit 2022 organized by the China National Light Industry Council. By early 2023, five of Midea’s
factories had been included in the “Global Lighthouse Network” initiated by the World Economic
Forum, covering air conditioners, refrigerators, laundry appliances, microwave ovens, dishwashers,
etc., which demonstrates Midea’s leading position in intelligent manufacturing and digital
development among manufacturers worldwide. Meanwhile, Midea takes the lead among domestic
home appliance makers by ranking No. 36 on the 2022 Brand Finance Tech 100 list released by
Brand Finance, a British brand assessment institution. Also, Midea ranks No. 35 on the 2022 Kantar
BrandZ Top 100 Most Valuable Chinese Brands list. Midea has been given excellent credit ratings by
the three major international credit rating agencies, Standard & Poor’s, Fitch Ratings and Moody’s.
The ratings are in a leading position among home appliance manufacturers worldwide as well as
among Chinese non-state-owned enterprises. Particularly, Standard & Poor’s has raised the credit
rating on Midea to “A”, making it the highest-rated private manufacturer in China.
In 2022, Midea has successfully retained the "Number One Engine" of ToC business on the domestic
market. According to data provider AVC, Midea ranks first in the industry with respect to both the
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The 2022 Annual Report of Midea Group Co., Ltd.
online and offline domestic market share for six home appliance categories, namely, residential air
conditioners, countertop pan-microwave ovens, countertop ovens, electric radiators, induction
cookers, and electric kettles.
The table below shows the offline market shares and rankings of the Company’s primary home
appliance products (by retail sales) in 2022:
Product category Market share Ranking
Residential air conditioners 33.7% 1
Laundry appliances 25.1% 2
Clothes dryers 23.1% 2
Refrigerators 13.5% 2
Rice cookers 40.2% 1
Countertop pan-microwave ovens 55.2% 1
Electric radiators 50.8% 1
Induction cookers 46.6% 1
Water dispensers 40.0% 1
Electric fans 39.8% 1
Countertop electric ovens 37.1% 1
Electric kettles 37.0% 1
Electric baking pans 36.7% 1
Air fryers 34.7% 1
Electric pressure cookers 39.0% 2
Blenders 29.9% 2
Water purifiers 18.1% 2
Freezers 12.3% 2
Electric water heaters 17.3% 3
The table below shows the online market shares and rankings of the Company’s primary home
appliance products (by retail sales) in 2022:
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The 2022 Annual Report of Midea Group Co., Ltd.
Product category Market share Ranking
Residential air conditioners 33.6% 1
Laundry appliances 34.6% 2
Clothes dryers 35.6% 1
Refrigerators 17.9% 2
Induction cookers 49.7% 1
Countertop pan-microwave ovens 46.5% 1
Electric kettles 25.3% 1
Countertop electric ovens 23.0% 1
Electric radiators 22.2% 1
Water purifiers 18.7% 1
Electric pressure cookers 37.2% 2
Electric water heaters 31.4% 2
Rice cookers 25.8% 2
Electric baking pans 21.4% 2
Electric fans 20.4% 2
Freezers 12.6% 2
Air fryers 13.6% 3
Water dispensers 13.0% 3
Blenders 11.3% 3
1.3 Industry Overview
A. Home Appliance Industry
In 2022, the domestic economy bumped along under multiple pressures, and the domestic GDP
growth slowed down to 3%. The decline in home appliance consumption was closely related to
macroeconomic development. On the one hand, personal income was directly hit. On the other,
consumer confidence significantly dropped, especially in offline consumption. These factors inhibited
people's willingness to consume, leading to a setback in the consumption of consumer durables.
Concurrently, the support of the real estate sector for the home appliance industry was draining.
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The 2022 Annual Report of Midea Group Co., Ltd.
Nevertheless, as policies at the end of 2022 were optimised, consumption, business activities, and
social mobility recovered better than expected after a brief absence of consumption scenes.
According to the 2022 Annual Report on China’s Household Electrical Appliance Industry prepared by
the National Household Appliance Industry Information Center under the guidance of the China
Household Electric Appliance Research Institute (CHEARI), the exports and domestic sales of the
home appliance industry showed a decline in 2022. Specifically, the exports and domestic sales
reached RMB568.16 billion and RMB730.72 billion, reducing by 10.9% and 9.5% year on year,
respectively. Although the overall growth of the sales of home appliances plummeted, the
consumption upgrading in 2022 did not slow down. The market competition got increasingly fierce,
driving the improvement of the market structure. As a result, high quality and performance became
the common pursuit of enterprises and consumers. Meanwhile, in the medium and long run,
upgrading of the industrial structure, relatively stable increase of household income, diversified
consumption, the national policy support for the green and smart industries, as well as continuous
upgrading of the standards for home appliances will create new opportunities for growth. In July 2022,
the Ministry of Commerce and 12 other authorities issued the Notice on Several Measures to
Promote Consumption of Green and Smart Household Appliances, proposing nine policy measures to
promote consumption of green and smart home appliances, which mainly cover four aspects: First, to
carry out nationwide household appliance trade-in; second, to promote the use of green and smart
home appliances in rural areas; third, to strengthen the whole chain of service and guarantee; and
fourth, to consolidate infrastructure support.
According to the data from the National Household Appliance Industry Information Center, the
domestic retail sales of air conditioners were RMB141.1 billion in 2022, down by 8.7% year on year.
In terms of the product structure, the market share of high-end products kept rising, with the online
market share by retail sales of Energy Efficiency Grade 1 products exceeding 65% and the total
market share by retail sales of 3-HP floor-standing and 1.5-HP wall-mounted air conditioner units
surpassing 70% in 2022. In terms of product functions, the concept of air conditioners kept expanding
from the functions of cooling and heating to fresh air, self-cleaning, dehumidification, odour removal,
air purification, etc. As the comfort of product experience has been focused on, the fresh air function
products have developed rapidly, with their market shares (by retail sales) reaching 8.8% and 13.4%,
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respectively, in 2022.
According to the data from the National Household Appliance Industry Information Center, the
domestic retail sales of laundry appliances were RMB62.4 billion in 2022, down 12.6% year on year,
with the retail sales of clothes dryers reaching RMB8.3 billion, up 12.3% year on year. 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 clothes dryer market absolutely dominated by the heat pump
dryers, of which the offline market share by retail sales was increased to 99.6%. In terms of product
capacity, large-capacity products were obviously replacing small-capacity ones. The online market
share by retail sales of front-loading washers with a capacity of more than 10 kg reached 36.6%, and
that of clothes dryers with a capacity of more than 10 kg was nearly 60%. In terms of product
functions, the intelligent wash and care function of high-end washers represented by COLMO was
placed under the spotlight of the market.
According to the data from the National Household Appliance Industry Information Center, the
domestic retail sales of refrigerators were RMB91.7 billion in 2022, down by 8.2% year on year. The
product structure of refrigerators was significantly optimised. In terms of capacity, the offline market
share by retail sales of large refrigerators with a capacity of more than 500 L reached nearly 50%. In
terms of product structure, the offline market shares by retail sales of side-by-side refrigerators and
multi-door refrigerators with more than four doors totaled nearly 70%. 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 "anti-bacterial and fresh", "ultra-thin and built-in",
and "intelligent".
According to the data from the National Household Appliance Industry Information Center, the
domestic retail sales of kitchen appliances were RMB183.1 billion in 2022, down 9.5% year on year.
As dishwashers became more popular on the domestic market, the retail sales reached RMB10.2
billion, up 7.6%% year on year. And product upgrading continued. In terms of functions, functions
such as the integration of functions of washing, sterilisation, drying and storage, layered and separate
washing, and automatic recognition and program matching have become mainstream. With respect to
models and specifications, the offline market share by retail sales of built-in products approximated
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85%, and the online market share by retail sales of dishwashers with 13 place settings capacity
soared to 37.7%. Integrated stove sales reached RMB25.2 billion in the domestic market, an increase
of 2.8% year on year. Due to the surge in demand for high-end kitchen appliances, in particular
steamers and ovens, integrated stove products trended towards style diversification and function
upgrading. In terms of specifications, the all-in-one models with a kitchen hood, stove, steamer and
oven have developed rapidly, with an online market share by retail sales rising to 53.6%. In terms of
the exhaust air volume, the online market share by retail sales of integrated stove products with an
exhaust air volume of at least 18m3/min reached nearly 70%. In terms of the heat load, the online
market share by retail sales of integrated stove products with a heat load of more than 4.5 kw
surpassed 90%. These statistics indicate that there is still great development potential for integrated
kitchen appliances in the future.
According to the data from the National Household Appliance Industry Information Center, the
domestic sales of small domestic appliances were RMB131.1 billion in 2022, down 6.4% year on year.
With respect to the market performance of all categories, traditional products such as rice cookers,
blenders and electric fans saw a decline in domestic sales while the sales of health-friendly cleaning
appliances were relatively strong over the past three years. By categories, the robot cleaner industry
registered a slowdown in growth as a result of slow innovation of production functions. In 2022, the
retail sales of robot cleaners were RMB12.1 billion, up 1.2% year on year. Meanwhile, functions and
experience of floor scrubbers have been improved as a result of the advancement of technology,
represented by the application of new technologies such as roller brush and mop self-drying,
sterilisation through electrolysed water, push-and-pull. Floor scrubbers recorded retail sales of
RMB10 billion in 2022, up 75.3% year on year. In the meantime, competition is increasingly fierce. In
2022, more than 160 floor-scrubber brands competed in the online market, and the average online
retail price of floor scrubbers also fell by 9.3% year on year. Additionally, as air fryers meet
consumers' demand for healthy diets, they developed rapidly over the past three years, thanks to
vigorous promotion on social media platforms. In 2022, the retail sales of air fryers were RMB5.6
billion, up 58.1% year on year.
According to the data from the National Household Electrical Appliance Industry Information Center,
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The 2022 Annual Report of Midea Group Co., Ltd.
the online retail sales accounted for 57.8% of the total retail sales of home appliances in China during
2022, up 6% from last year, while the share of the offline retail sales fell to 42.2%. From the
perspective of the development trend of the domestic household appliance industry: First, the
phenomena of brand concentration and new brand rise coexist, where the concentration of large
household appliance brands increase, and brands in the field of kitchen appliances and small
household appliances still have opportunities and develop rapidly. Second, the product upgrade is still
continuing, mainly focusing on the four development trends of high-end, innovation, integration, and
product suites. In particular, the proportion of "high-value" products such as air conditioners with the
First-class Energy Efficiency, refrigerators with a capacity of over 500L and clothes dryers with a
capacity of over 10 kg increased significantly in online channels. Third, a variety of channels and
scenes jointly promote the progress of the industry. On the one hand, in addition to the traditional
offline and online channels and platforms, emerging channels such as Pinduoduo, Douyin, and
Kuaishou are rapidly rising and changing the channel landscape. During the "618" period in 2022, the
total transaction amount of livestreaming marketing reached RMB144.5 billion, accounting for around
20% of the online transaction amount. On the other hand, new applications and scenes tapped based
on insight into new user needs are increasing, expanding from diet, personal care, cleaning, and
sleep to health care, pets, fitness, mother and infant products, security, and more scenes.
B. Robotics and Industrial Automation Industry
World Robotics 2022 Industrial Robotics released by the International Federation of Robotics
(hereinafter referred to as "IFR") showed that there would be five trends in the robot industry in 2023,
which refer to that the performance of robots will get promoted, it will be easier to operate robots,
robots will support more AI and digital automation technologies, the manufacturing comeback and
localised production will be more significant, and the repair and reuse of robots will be emphasised
more. Global industrial robot installations rebounded strongly in 2021, with IFR indicating a
substantial increase of 31% in global robot installations, amounting to 517,000 units. By regions,
Americas achieved an increase of 30.8% year on year, Europe achieved an increase of 23.5% year
on year, and Asia achieved an increase of 37.5% year on year, which China's industrial robot
installations numbering 268,195 units, up 51% year on year, 50% higher than the total installations of
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The 2022 Annual Report of Midea Group Co., Ltd.
the world in the same period. IFR also predicted that the annual new installations of industrial robots
worldwide would exceed 690,000 units in 2025.
In 2022, uncertainties in domestic and external environments were mounting, and the instability of the
global supply chains was worsened by external factors such as geopolitical conflicts overseas.
Nevertheless, with the constantly optimised policies in H2 and the introduction of economic stimulus
policies introduced one after another, the industrial robot industry "recorded growth despite its
unsatisfactory beginning". According to the data released by the National Bureau of Statistics, the
domestic production volume of industrial robotics stood at 443,100 units in 2022, up more than 20%
year on year. According to the statistical analysis of MIR, in 2022, the shipments and market share of
six-axis robots above 20 kg grew by nearly 30% and to 34%, respectively, due to the increasing
number of robots applied in new energy vehicles, related parts and components, and power batteries.
The shipments of collaborative robots increased by 26.5% year on year, as a result of the excellent
performance of automotive parts and components, automotive electronic, medical, metal, and
semiconductor products in the industrial market. Additionally, driven by the demand in such emerging
industries as lithium batteries, PV power, and medical services, the shipments of SCARA robots rose
by 3.9% year on year. Concurrently, the prices of the raw materials of commodities climbed, and the
exports shrank, resulting in a decline in the demand for machine processing and welding. Given this
reason, coupled with the sluggish consumption of electronics, the shipments of six-axis robots below
20 kg dropped by 3.9% year on year. Furthermore, the sluggish consumption caused the shipments
of delta robotics in the food & beverage and household necessities industries to fall by 2.8% year on
year. Meanwhile, non-manufacturing industries, such as new retail, health, food & beverage, and
education were also influenced by the macro-environment, thus having a lower demand for robots.
Nevertheless, robots were in demand in the power, inspection, and medical service industries.
Moreover, MIR predicts that the demand in the downstream industries of the industrial robot market in
China will be further differentiated in 2023, with new energy vehicles and emerging industries
maintaining high demand for robots. Therefore, the year-on-year growth of sales is predicted to be
more than 12%.
According to the latest statistics of IFR, in terms of industrial robotic density (the average number of
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industrial robotics per 10,000 workers), South Korea ranks No.1 in the world with 1,000 robotics,
while the robotic density of China has increased from 49 robotics in 2015 to 322, surpassing the US
for the first time and making the country a global top five in this respect. Since 2016, China has been
the fastest growing and largest industrial robotics market in the world. Supported by diverse factors
such as flexible demands of the manufacturing sector, declining demographic dividend, emerging
markets and the development of innovative technologies, industrial robotics will be applied to more
and more areas, with great potential and prospects.
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 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 2022
was about 45%, 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 2022, 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 2022 was RMB128.6 billion, up 4% year on year, of which domestic sales accounted
for about 90%; the compound growth rate of the industry in the past three years was 9%. The
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The 2022 Annual Report of Midea Group Co., Ltd.
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 2022, the
production of domestic elevators, escalators and lifts was 1.45 million sets, down 7% year on year,
which was mainly for domestic sales. The sector has maintained a solid expansion trend over the
past three years, despite the short-term impacts of policy adjustments and the property market.
Judging from the operating data of major manufacturers, the output value of a single elevator was
about RMB200,000, considering the average factory price of a single elevator equipment and the
maintenance business; the annual market size of domestic elevator equipment was RMB250-300
billion, and the scale of the elevator industry was even larger. The data from EqualOcean Intelligence
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 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). Meanwhile, with the
improvement of the macro environment and policy optimization, the real estate industry is picking up,
which may bring stronger demand.
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. According to the "2022 China Urban and Rural Construction
Carbon Emissions Research Report" published by the China Association of Building Energy Efficiency,
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The 2022 Annual Report of Midea Group Co., Ltd.
the carbon emissions of building operation accounted for about 22% of the total domestic carbon
emissions in 2020, 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 "carbon emissions peaking and carbon neutrality" policies were
successively issued, such as the Opinions on Implementing the New Development Concept to
Achieve Peak Carbon Emissions and Carbon Neutrality in a Complete, Accurate and Comprehensive
Manner, the Opinions on Advancing the Green Development of Urban and Rural Development, the
Action Plan for Peak Carbon Emissions by 2030, and the 14th Five-Year Plan for Comprehensive
Work on Energy Conservation and Emission Reduction. China’s local governments have issued their
action plans for peaking carbon emissions while the ministries and committees of the central
government rolled out documents for the same purpose, such as the Opinion on Fiscal Support for
Peaking Carbon Emissions and Achieving Carbon Neutrality issued by the Ministry of Finance, and
the 14th Five-Year Plan for Building Energy Efficiency and Green Buildings issued by the Ministry of
Housing and Urban-Rural Development. All these policies mention buildings and constructions, with a
view to improving the building energy consumption management system, enhancing the building
energy consumption monitoring capacity, building energy saving management capacity, and building
energy efficiency level, and promoting the large-scale development of ultra-low energy consumption,
near-zero energy consumption, and low-carbon buildings. With stronger policy incentives and
constraints, the building energy-saving upgrading, intelligent operation, and cooperative energy
management are bound to become the main measures for the targets in addition to the construction
of low-carbon building standards and administrative supervision. As to the market side, the electricity
price reform, "power rationing" and other measures have raised the cost and the input-output ratio in
building energy saving renovation, energy management, and digital operation, and thus more and
more market entities begin to positively carry out the “dual carbon” strategy and energy saving
renovation. Taken as a whole, under the background of "dual carbon", the building construction, as
one of the main sources of energy consumption and carbon emissions in the whole society,
accelerates the process of energy conservation and carbon reduction, and catalyzes the outbreak of
demand for efficient low-carbon building solutions. The demand for digital intelligent building will also
increase significantly, as the development level of buildings is a key link in "smart city" and still
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The 2022 Annual Report of Midea Group Co., Ltd.
lagging behind under the trend of digital economy. At the same time, with continuous progress of
communication, computing power and algorithms, the system-level control such as HVAC and
elevators will move to the building-level control - the first is the space expansion brought by changes
from "control" to "service"; the second is the narrowing gap to foreign enterprises with first mover
advantage. Additionally, the more positive and clear signal comes from the transformation and
upgrading of the elevator industry driven by digital intelligence. In 2018, the General Office of the
State Council issued the Opinions on Strengthening the Quality and Safety of Elevators for the
purpose of promoting the elevator installation on existing residences and the maintenance of old
elevators. Specifically, the maintenance should press for quality, and resources should be allocated
on the basis of fully grasping the operation of elevators, hence the application of information
technology such as big data and IoT is getting more important. In 2020, the State Administration for
Market Regulation divided the maintenance methods of different elevators according to the standard
of "whether there is a remote monitoring system based on IoT". The domestic replacement of
commercial air conditioner has undergone three processes: single unit, multi-split unit, and large
chiller. The share of homegrown brands has risen to 55% in 2022, and that of the homegrown brands
of large chillers, where the barriers are relatively high, is also increasing. The commercial air
conditioner industry has entered the stage of domestic replacement in all aspects, and thus there is a
large space for future growth. Compared with air conditioner, the domestic replacement process of
elevator is relatively slow, but the relevant market pattern will be 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.
2. Business Scope in the Reporting Period
The business environment remained harsh in 2022. Affected by macro factors and overseas
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The 2022 Annual Report of Midea Group Co., Ltd.
geopolitical conflicts, the political and economic environment became more complicated both at home
and abroad. Meanwhile, due to supply chain disruptions, the prices of bulk raw materials such as
copper and aluminum remained at high levels. In face of these hardships and challenges, Midea
adhered to the profit-oriented annual operational principle of “Generate Income & Drive Profit”. At the
very beginning of 2022, it made swift plan adjustments to concentrate on the core businesses and
products and return to the basics of business. Upon relentless efforts, remarkable results were
achieved. Midea delivered expected operating results, with substantial improvement in key indicators
such as profitability and cash flow. Meanwhile, the strategic plans have been further implemented and
new steps have been taken in the strategic layout, reflecting the good corporate genes of Midea. For
2022, Midea achieved, on a consolidated basis, total revenue of RMB345.7 billion, up 0.68%
YoY; and a net profit attributable to shareholders of the Company of RMB29.6 billion, up 3.43%
YoY.
A. Focused on users and scene-based product planning, and continuously refined the whole
value chain leveraging Midea’s multi-category advantages and digital technologies, so as to
upgrade business scenes, products and services
In order to carry on with the “customer-oriented” strategic reform, the Company creates more user
value in business scenes, products and services which are in direct contact with users. Based on
users' yearning and pursuit for a better life, Midea pursues higher goals such as originality,
sustainable selling points and technology explicitness, and continues to empower itself with the tool of
big data, so as to achieve the vision of "Bring Great Innovations to Life". In addition, based on user
needs and 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 improving
experience and happiness for consumers. By doing so, it aims to lead the way in the innovation of
smart household appliances. In terms of industrial design, Midea leads the way in user experience
and interaction upgrading with ongoing innovations. In 2022, Midea won a total of 132 industrial
design awards, including 35 Red Dot Design Awards, 58 iF Design Awards, 28 IDEA Awards, and 11
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The 2022 Annual Report of Midea Group Co., Ltd.
G-mark Awards.
For smart living room scenes:
Midea Air Conditioner has been pursuing low-carbon development. To this end, it has been working
on the development of next-generation cooling technology and staying focused on the arrangements
for next-generation cooling technology in the low-GWP environmentally friendly refrigerant field,
including R290, R454B, CO2, and H2O. In 2022, the world's first R290 new Energy Efficiency Grade
1 air conditioner was produced by Midea. The product's annual performance factor ("APF") reached
5.29, 5.8% higher than Energy Efficiency Grade 1 of the new national standards, earning the product
the first health and hygiene certificate for R290 products. With a rotatory global air duct design, the
product enables the air duct to rotate 180 degrees, removing the limitations on the airflow angle of
traditional air conditioners. Additionally, Midea took the lead in developing and producing a new
efficient product using R454B, a new environmental refrigerant. The product was the world's first
product to be certified by the Air-Conditioning, Heating, and Refrigeration Institute ("AHRI") and the
first Chinese R454B refrigerant product to pass the international safety certification of Underwriters
Laboratories Inc. ("UL"). Midea developed and released the first CO2-based and H2O-based
residential air conditioner prototypes in the residential air conditioner industry. It replaced traditional
refrigerants with CO2 and H2O to achieve fluorine-free refrigeration, thereby seeking out an ultimate
solution using environmentally friendly refrigerants. COLMO AVANT Air Conditioner took the lead in
using the Cyclone technology applicable to the carrier propulsion system, enabling soft, comfortable
air exhaust and sufficient cool air output. With this product, users can enjoy a comfortable breeze
"anytime and anywhere". Additionally, the innovative AI-powered full-stack air algorithm was used for
this product series, combining the top structure hardware and advanced AI-powered intelligent control
technology, delivering a comfortable feeling to users far beyond the industry standard. Concurrently,
the voice recognition technology with a strong sense of technology used in the series could set
distinct mode and operational parameters for different family members, thereby enabling users to
"activate their exclusive mode with their voice". Additionally, Midea was the first air conditioner
business to define AI as the core of its products. COLMO AI-powered Villa Commercial Air
Conditioner and entire-house high-end smart standards have been unveiled, in which the innovative
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The 2022 Annual Report of Midea Group Co., Ltd.
AI-powered smart system that integrated 135 air, body, and equipment sensors was applied, enabling
users to understand the air and equipment statuses instantly. With the intelligent central control
interactive centre and the built-in algorithm for automatically regulating the global air, entire-house
high-end smart solutions are provided for customers. Moreover, the 3 + 1 temperature and humidity
precise control system integrated the dual-coil three-pipe control and central humidification system,
achieving the ±0.3℃ temperature control and 1% humidity regulation, thereby providing whole-space
and whole-scene comfortable air. The Ideal Home III Multi-split Commercial Air Conditioner was rolled
out. Its four leading performance indicators enable the product to work at an ambient temperature of -
20 ℃ . Additionally, compared with the traditional enhanced vapour injection technology, the
continuous enthalpy injection technology enables the product to have a better heating performance.
Moreover, the product can quickly cool the air at an ambient temperature of 58℃. Concurrently,
refrigerant heat dissipation technology is employed to ensure that the product can run properly even
on hot days. Additionally, a new indoor side air duct has been developed to achieve double noise
reduction and lower the sound of the product when working to no higher than 20 dB. What's more, the
energy efficiency that is far better than Energy Efficiency Grade 1 can maximise the operational
efficiency of core components, and the product's APF value is 15% higher than the national Energy
Efficiency Grade 1. These features have made the product a "benchmark with strong cooling and
heating performance". In 2022, Toshiba-branded flagship air conditioner "Daqingkuai" was launched
in Japan. Focusing on the core needs for "comfort", "cleaning", and "energy conservation", Toshiba
developed such pioneer technological features in Japan as "automatic wind blow and people
avoidance" and "separate breezeless". Moreover, core technologies, such as the innovative fin-
shaped high-density irregular pipe diameter integrated heat exchanger, efficient inverter electric
control and ultra-efficient rotary compressor, enable the product to possess world-leading energy-
saving performance.
To create a more comfortable living environment, Midea continued to research and apply various fan
technologies. Midea achieved self-adaptive comfortable wind adjustment through research on the
comfort wind control technology of wind changing with temperature. Midea realized entire-house 3D
surround stereo wind of thermostatic warm air through research on dual-engine PTC control
technology of staggered temperature difference. Midea also achieved multi-angle positioning blowing
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The 2022 Annual Report of Midea Group Co., Ltd.
and intelligent obstacle avoidance through research on contactless detection control positioning
technology of oscillating stepping motors. Midea Micro-electrolysis Water Washing Air Cooling Tower
Fan uses innovative micro-electrolysis sterilization to electrolyze tap water into sterilized water with a
sterilization efficiency of 99.9%. The tower fan uses a water curtain waterfall to flush and clean the air
in depth and is equipped with an air-conditioner-level cross flow turbine to offer healthy, fresh and
clean wind. The detachable and washable tower fan applies the industry's original patented
technology to achieve a full-machine washable design and one-click detachment. The air duct system,
if not powered on, can be flushed out with water, providing users with clean wind.
In 2022, Midea swiftly adjusted the product structure of floor scrubbers, and gradually established a
complete product portfolio of floor scrubbers under the two brands of Eureka and Midea. Its new high-
end flagship floor scrubber meet consumers' demand for floor cleaning with its functional integration
of suction, dragging, and washing, further optimizing the product performance and user experience.
The handle sensor offers two-way forward and backward boost to reduce the burden of cleaning. The
forward and reverse rotation control technology for the integrated self-cleaning roller brush improves
the self-cleaning effect and fully cleans hidden corners with no residue of stains from the water jet.
The integrated roller brush drying technology prevents long-time moisture which breeds bacteria. The
"flat lying" design with a tilt angle of up to 170° allows cleaning deep to the bottom of furniture,
preventing sewage backflow. The integrated electrolytic water sterilization technology, with a
sterilization efficiency of 99.9%. The close-to-edge dead-angle-free design and unique detachable
roller brush design constitute the pioneer truly close-to-edge and dead-angle-free design in the
industry, cleaning any dead angle with a single push. The application of intelligent technology allows
human-computer interaction, so water volume, suction power, and other parameters can be adjusted
as needed. In 2022, Midea released the first intelligent robot W11, Midea Small White Box, M9, P8,
A8, A8+, and other products successively, adhering to the innovative design principle of focusing on
user experience. These products integrate the innovative functions of automatic water refill and brush
lift, dual duct dust collection, base station self-cleaning, automatic rag washing, rag drying, bacterial
inhibition and deodorization, and other new cleaning technology to provide users with a better
cleaning experience. These products are equipped with the industry's leading power management
unit to achieve accurate and intelligent charge and discharge control and enhance the service life and
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The 2022 Annual Report of Midea Group Co., Ltd.
safety of the battery. In the overseas markets, Midea rolled out several vacuum and mop robots under
self-owned brands with such innovative core technologies as automatic obstacle avoidance driven by
3D LIDAR and dual nanometre band line laser. Additionally, based on the cleaning habits and pain
points of North American users, Midea launched Innova Upright Vacuum Cleaner NEU700, a high-
end product designed to optimise the structure of upright vacuum cleaner products. The product is
equipped with innovative functions, such as the anti-tangle floor brush, fully sealed design, electric
pet grooming brush, and silent design.
For smart balcony scenes:
To meet the demand for "healthy washing and drying", the Light Dry Cleaning 2.0 steam care
technology offers the industry's pioneer special program for ten types of odor elimination, it achieves
A-class rapid odor elimination in five minutes and low temperature bacteria removal of no more than
60°C with a bacteria removal rate of 99.9%, winning the China Aerospace Science and
Technology|ASES Certification. "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 Light Dry Cleaning Technology 2.0 have also been certified as "Internationally Advanced" by the
China National Light Industry Council. The original TM technology uses the industry's smallest dual
engine system of two-appliance coordination and electric auxiliary heating to meet the demand for
fast drying and whole-machine lean design and achieve product suite cost optimization. The
industry's pioneer hole-free inner drum washing machine technology introduces a new water inlet to
rinse clothes with running water in a dynamic manner and prevent dirt from flowing back. In addition,
the formation of water film effect reduces friction between the clothing and the drum wall, minimizing
the rate of clothing wear and tear. Meanwhile, the independent chamber water storage not only
reduces the water use between the inner and outer drums but also meets the consumers' demands
for intimate underwear washing. Additionally, the cycle spray technology and fast cleaning 2.0
technology achieve the full utilisation of detergent and can shorten laundry time by up to 30%. To
minimise the thickness of the case of the built-in washing machine, Midea developed the first 440-mm
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The 2022 Annual Report of Midea Group Co., Ltd.
ultra-slim platform in the industry, which can be completely embedded into most home cabinets. In
terms of functions, although the platform is quite slim and can be fully embedded into the 600-mm-
wide cabinets, it ensures that the washing machine still has a capacity of 10 kg and is capable of
washing and drying clothes. Moreover, washers with a drum diameter of 535 mm have a better
washing performance, and dryers with a drum diameter of 580mm can unfold and fluff up clothes. The
washing machine in COLMO Interstellar Station Dry Cleaning Care Suite applies the OCDC DC
frequency conversion motor and is equipped with the function of cleaning and delicate, soft care of
fibre and luxurious fabrics, such as wool, certified by the international green woolmark. Additionally,
with the aerospace-level cold-brewed silver disinfection and water purification technology, the
washing machine can fully disinfect clothes. Through sterilisation and cleaning using hot running
water and steam, Candida albicans and the H1N1 virus can be removed, achieving a disinfection rate
of 99.99%. Moreover, the "Pickup Prompt" program with a miniature snap-action switch is designed to
intelligently remind users to pick up clothes after they are cleaned. Concerning COLMO Interstellar
Station Clothes Dryer, it enables multiple innovative functions in the industry and has passed the
international blue woolmark certification for drying. With the mainstream low-temperature soft drying
technology and dual-inverter soft drying technology, the dryer can precisely recognise clothes of
distinct fabrics and provide delicate care for 99 luxurious fabrics. It also enables 12-min quick drying
and 5-min quick odour removal. Facilitated by the advanced technology, AI-powered Light Dry
Cleaning 2.0, the nano-grade saturated steam generated through the steam generator can penetrate
the fabric fibres and to the greatest extent, retain the toughness of the fibres and separate the fibres
from other materials, thereby achieving effective dust removal and crease smoothing. Furthermore,
the dual-inverter system enables active noise reduction at the source, and the air duct and rear cover
are optimised, achieving silent night drying (55 dB). Compared with the products at the same level in
the industry, COLMO Interstellar Station Dry Cleaning Care Suite applies the slimmest body design,
enabling it to be fully incorporated into most home scenes and spaces. Meanwhile, the ergonomic
design employed makes it easy for users to pick up clothes. Little Swan Lingyun Tiancheng Washer-
Dryer, with its advanced integrated design, can be perfectly incorporated into the home scene. Its
detergent drawer-free design helps users use the machine more conveniently and efficiently. Besides,
users can control the machine through the unbounded intelligent display. Moreover, with five unique
water flow modes, the machine can wash clothes while avoiding deformation, and thoroughly remove
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stains. In terms of the drying function, the machine can dry clothes evenly in 20 minutes, and its
automatic forward and reverse rotation can shake out clothes. Concurrently, the machine's
microelectromechanical system enables precise clothes drying through intelligent control.
Furthermore, the quick multi-dimensional bacterial removal function can remove the odours of
dampness, mould, hot pot, tobacco, and alcohol. The independent built-in steam generation device
can generate wet, hot steam, which can penetrate the fibres of clothes and requires. With this feature,
clothes needn't be ironed. What's more, the rubbing and softening functions of the machine can
prevent clothes from swelling and smooth creases, thus maintaining clothes' smoothness and style.
Midea Vigor Series Washer-Dryer Suite is equipped with hole-free inner drum technology to prevent
sewage laundry and reduce clothing wear and tear and achieves efficient cleaning of clothes while
maintaining the original quality of clothing. This product is the industry's first to be awarded the
medical-grade laundry certification. The cycle spray technology and fast cleaning 2.0 technology
achieve the full utilisation of detergent and can shorten laundry time by up to 30%. Moreover, it is
equipped with multi-functional Vigor Rods: The blue rod can steadily and constantly release silver
ions in the high oxidation state in cold water environment without electricity or heating; the red rod
scale inhibition module can adjust the concentration of calcium and magnesium ions and maintain the
softness and colour of clothing. Vigor Series Clothes Dryer is the first medical-grade fungus dryer and
can remove more than 99% of bacteria, fungi, and viruses. It is an expert at protecting the health of
underwear. The product is also equipped with anti-bacterial drying technology, and its hybrid drying
system enables the intelligent precise control of heat, time, and temperature, thus avoiding fibre
damage caused by high temperature. Additionally, while drying clothes, the machine can remove
mites instantly and penetrate fibre gaps for full anti-bacterial mite removal, through its built-in high-
frequency short-wave ultraviolet lamp, thereby achieving healthy drying and caring. Toshiba T16 Top-
loading Fully Automatic Washing Machine oriented toward the ASEAN market is equipped with the
industry's first EX-dot detergent input technology and employs the innovative "small backpack"
detergent loading design. It is also equipped with a manually pressing detergent input system. The
EX-dot technology can load 1 L detergent and 1 L softener at most, meeting users' demand for
convenient, visualised, and quantifiable input. Toshiba XP2 Series Japanese-style Washer-Dryer for
the Japanese market employs heat pump drying technology. It can precisely control and regulate
temperature and maintain the looseness and smoothness of clothes. The product's fast drying
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function at high air volume enables 7 kg of clothes to be dried within 96 minutes. Equipped with the
UFB-EX cleaning technology, the product washes clothes by making two types of fine bubbles
penetrate fibres through the double microbubble generator, thereby effectively keeping clothes clean
and bright. Additionally, with ultraviolet irradiation and warm air sterilisation functions, the product can
sterilise clothes in all respects. Furthermore, the direct-drive motor and six-dimensional lint filtration
system enable the product to work efficiently and keep the drum clean.
For smart kitchen scenes:
The "rapid purification technology" of Midea Refrigerator has been awarded the certification of first-
class purification and healthy preservation, creating a secure storage environment. Specifically, the
technology of high concentration AC silent ion field generation can significantly increase the
discharge area and active particle concentration while effectively reducing the short circuit risk arising
from high voltage discharge in the low temperature and high humidity environment in the refrigerator.
The high odor affinity nano-catalysis technology enhances the catalyst's affinity to odor molecules
and its own stability. The ionomer induced high current-carrying migration catalysis technology
ensures that the catalytic efficiency basically does not decay, meeting the long-cycle use demand of
refrigerators. The "light quantum nutrition enhancement technology" of Midea Refrigerator is a
nutrition enhancement technology for fruits and vegetables. Specifically, the 450 nm high-energy blue
light can induce the high level of expression of anthocyanin genes, increasing anthocyanin content by
more than 220%. The intelligent sensing moisture control technology achieves the upgrade from
passive freshness storage to active freshness locking, accurately identifying the type of food
ingredients and matching it with the best storage humidity, so as to ensure the first-class seven-day
freshness of fruits and vegetables. The three-layer waterproof design and super scale surface area
heat dissipation significantly increase the waterproof performance. Through the construction of the
polymeric three-dimensional self-similar network and the innovation of the non-agglomerated
nanoparticle modification technology, Midea has developed an anti-bacterial coating with nano
hydrophobic and oleophobic properties featuring high mechanical stability and high adhesion. As a
result, it has boosted the industrialisation of anti-bacterial and easy-to-clean products with a broader
disinfection scope and a bacteria removal rate of 99% and developed hydrophobic, oleophobic, and
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The 2022 Annual Report of Midea Group Co., Ltd.
easy-to-clean panels, thereby safeguarding consumers' health on all fronts. With the introduction of
China's carbon peak and neutrality policy and the upgraded European new energy efficiency directive,
inverter refrigerators with a capacity of less than 300 L, accounting for a low percentage in the
refrigerator market, has huge potential for energy-saving improvement. Therefore, Midea developed
mini, micro, and nano inverter platforms based on the capacity of each type of case. As for the
inverter boards of small refrigerators, highly integrated IC control chips and potting and heat
dissipation technologies are employed. Additionally, the compressor is equipped with a 12-slot 8-pole
permanent-magnet synchronous motor for the purpose of higher efficiency and better size. With the
compression-control integrated design, the inverter control system will have a smaller size and cost
less. COLMO Zero Built-in Series Refrigerator applies the bottom front-migratory heat dissipation
system, so that no heat dissipation space needs to be set aside on both sides and the back of the
refrigerators. Additionally, the innovative seagull wing pivot hinge enables the refrigerator doors to be
opened at right angles. By minimizing the overall thickness and the size of the compressor, as well as
centering the compressor, the 600-mm ultra-slim case is developed, which requires only 2mm to be
set aside on both sides, fully demonstrating the spatial build-in aesthetics and enabling the
refrigerator to be incorporated into the home. Concerning refrigerator doors, the industry's first quick-
disassembly panel design is adopted. Concurrently, Midea also provides instant panel customisation
services in order to perfectly match various spatial decoration styles and help users maintain their
diversified and novel spatial styles. Furthermore, the series is equipped with a hidden focusing handle,
which is designed to identify the user's intention to open the door and achieve a large plane view
without any segment difference. As a butler in charge of a family's health and nutrition, the series
adopts a "temperature + humidity + air + light + cleaning" five-dimensional technology combo to
create an ecological environment featuring constant temperature and humidity and low oxygen,
thereby keeping fruits and vegetables fresh for a longer time and increase the nutritional content.
Toshiba Zhiwei Series Refrigerator, equipped with star cuisine freshness technology, precisely
matches the ecological storage environment required for meat and seafood ingredients with the three
modes of quick micro-freezing, quick chilling, and original flavour defrosting. It is also equipped with
Toshiba's patented UNIT moisture-permeable film, achieving the effect of moisture-permeability and
air-impermeability, which prevents cold air from blowing directly on fruits and vegetables, delivers
delicate water vapor that directly reaches the cells of fruits and vegetables, creates a constant
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The 2022 Annual Report of Midea Group Co., Ltd.
moisture environment suitable for fruit and vegetable storage, and guarantees the freshness of fruits
and vegetables for seven days. The industry's pioneer Toshiba patented "iTouch" technology, is used
to solve the pain point of the kitchen scene where both hands are occupied and inconvenient to open
the door. It has the 60-minute rapid ice making function. In addition, special clean water filters cold air
to avoid taint of odor, ice making parts are treated by antibacterial treatment, and the built-in water
filter ensures the cleanliness of the ice. The height design of the middle fruit and vegetable chamber
fits Asian consumers' body shape, so it is comfortable to use. With a small volume and a large
capacity, the inner wall of the refrigerator is made of an imported vacuum insulation material, the
thickness of which is only 1/3 of ordinary insulation materials, and the dual frequency conversion
technology is used to achieve ultra-low energy consumption.
Midea Smoke-free Range Hood ZA8 adopts the eagle wing-shaped wide-area negative pressure
chamber design, which enables 155° ultra-wide angle fast smoke suction and can fully prevent
cooking smoke, grease and odors from spreading and escaping. The innovative 40-cm low smoke
suction design is employed to remove cooking smoke, grease and odors as closer to the source as
possible. Additionally, the built-in FCS future chip power engine, a strong intelligent control algorithm
chip equipped with an intelligent inverter cruise system, enables the 26m/min suction and 1,100 Pa
air pressure, thus effectively preventing the backflow of cooking smoke, grease and odors between
high and low floors during the peak period of cooking. Moreover, the quasi-aviation payload fairing
design enables direct suction and exhaust by reducing wind resistance and promoting smoke suction.
With the help of smoke removal technologies, the regional PM2.5 concentration is lower than 40
ug/m beyond the grade-1 smoke removal standards of the authority and bringing users a novel
experience of healthy kitchens. Wireless radio-frequency technology can be used to facilitate the
management of cookers. With it, cookers needn't be attended in scenes that will keep users waiting
for a constant length of time, such as steaming, and users will be reminded after the process is
complete. Additionally, the kitchen hood will automatically issue a prompt in the event of an overly
high cooking temperature, thereby protecting users from getting hurt. Furthermore, equipped with the
inverter high-pressure automatic cleaning technology, the kitchen hood can be automatically cleaned
by removing the oil on the impeller through the strengthened 300,000 Pa pressure and shaking off it
through high-speed rotation. Inspired by the aerospace industry, Midea has used a space colour
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The 2022 Annual Report of Midea Group Co., Ltd.
scheme, a minimalist appearance, and a starry unbounded comprehensive colour screen for the
product.
COLMO G35 Dishwasher, equipped with AI Natural Cleaning 2.0 technology, facilitates dishwashing.
Specifically, the AI Dosing System has been invented to satisfy the requirements for simplicity and
convenience, materials conservation, and environmental protection. In terms of the sensing process,
the micro-spectral turbidity sensing system can monitor water quality and stains in real time.
Additionally, the fuzzy algorithm is employed to intelligently identify how dirty the dishes are and then
automatically select the corresponding washing mode. Then, the corresponding detergent volume will
be determined based on the accurate measurement by AI of the stains. With the help of the dual-
sensing accurate input function, the detergent is intelligently input based on the scenes. A detergent
input can satisfy the need for 14 to 28 rounds of long-term use. The X-wash disrotatory bionic spray
arm system enables the same effect as meticulous manual washing. More specifically, the double
arms spray high-pressure water in reverse rotation in order to achieve full coverage. They enable
water to fully penetrate the dishes and decompose tea and oil stains, greatly boosting the washing
efficiency. The IPS+ intelligent cleaning technology, with high-voltage ionisation and precious metal
catalyst technology, is employed to generate 1 million per second high-energy active ions and
conduct efficient bacterial and odour removal on the cleaned dishes. It also enables ion preservation
for 168 hours, thereby keeping dishes clean, dry and odourless. Equipped with the I-Brain intelligent
drying system as well as dynamic hybrid air technology, zero-pressure drying system, and intelligent
adaptive power matching hot air system, the product enables "active drying and storage
management" and long-term anti-bacterial storage.
Always focusing on users' pain points in installation and use, COLMO Star Atlas Water Purifier X1500
adopts modular design based on the global platform development concept. The thickness is only 105
mm, easily meeting the demands of under-sink space installation in various scenes. The product is
the industry's first to be equipped with an intelligent front solenoid valve, sensing water quality and
temperature in real time and effectively solving the problem that in the winter the water stored in the
machine easily freezes and damages the filter cartridge. The pioneer dual-membrane fine filtration
system has a larger contact area with water, greatly enhancing the flow and water-saving efficiency.
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Moreover, the product implements the green concept and is the first to adopt a recyclable metal body,
greatly reducing environmental pollution. The product has won the "Valuable Product" award of the
water purification industry in 2022, the "Industry Contribution Award” for the water purifier category in
2022, and the iF Award 2022. COLMO EVOLUTION Water Purifier-Dispenser T1500 demonstrates
the exploration of a new, intelligent water-catching experience. The industry's first ultra-real interactive
design enables users to catch water through gesture sensing. Additionally, the temperature regulation
and precise control valve equipped with a built-in precise algorithm enable water temperature and
volume to be precisely controlled. Moreover, the innovative quick water replenishment system
ensures that the hot water flow speed reaches 1.5 L/min.
Midea Xunwei Pro Series G3E Microwave-Steamer-Oven-Fryer Combo has been upgraded to an
efficient and energy-saving inverter microwave oven. The upgraded product is characterised by its
thin-wall hot-air structure, smaller dimensions, lighter weight, more efficient third-generation
magnetron, and more compact internal structure. In terms of the steaming function, Midea's unique
superheated steaming function can retain more anthocyanins in food. In terms of the oven function,
the combination of upper and lower baking tubes and the hot air mode enables the baking effect of
professional ovens. Additionally, based on the needs of young users, Midea has developed an oil-free
air frying function for the product. Equipped with the patented graphene baking tube independently
developed by Midea that enables the temperature to rise to 1300℃ within 0.2 seconds as well as the
3D circulation of hot air, the machine can bring out the food's flavour as much as possible. To meet
users' needs for "low-fat and low-salt healthy diets" and "internal heat avoidance", Midea has
developed the no-fat, low-salt, and low-calorie baking technology and the lighter internal feat curve,
helping users keep their bodies in good shape and stay healthy. Midea has developed "light-oil, light-
salt, light-internal heat, and light-sugar" healthy diet modes. Its no-fat and low-salt technology can
remove the fat and salt in food, while its low-sugar baking mode ensures the taste of the baked food
and reduces the amount of sugar used. Besides, light-fire cooking can effectively inhibit the
production of heterocyclic amines in the roast. Furthermore, the built-in 44 + N auto menu includes a
map of local food from 18 places and more than 200 customised cloud recipes. Midea Built-in
Microwave-Steamer-Oven-Fryer Combo R6, equipped with the industry's first full-field dual colour
screen function, integrates the functions of microwave, steaming, oven, and frying, substantially
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The 2022 Annual Report of Midea Group Co., Ltd.
shortening the cooking. With the help of the intelligent algorithm, the microwave function is
incorporated into the pure steaming and oven functions. With the efficient inverter microwave system,
the machine can precisely control fire at different stages. Concurrently, the microwave steaming mode
can help retain the freshness and nutrition of the food. Based on users' need for healthy diets, Midea
has developed calorie-burning cooking technology and a unique light internal heat low-sugar
algorithm. Additionally, the three built-in no-fat, light-sugar, and light-internal heat intelligent calorie-
burning cooking recipes enable "intelligent + customised" healthy diets. Moreover, the one-piece
snowflake enamel inner tank characterised by its high-temperature resistance, scratch resistance,
and no blind angles for cleaning is fully applied, enabling oil stains to be removed in just one wipe. In
order to resolve users' pain points in the storage of frying and baking machines, Midea launched the
"Ultra-thin Electric Grill", which is equipped with the industry's latest film heating technology and
adopts high-efficiency HP insulation materials. The thickness of the whole machine is only 62 mm,
which reduces the thickness by 40% in comparison with traditional products. The heating plate
adopting film heating technology makes heating more uniform and more efficient and can achieve a
whole-machine heating power of more than 2,200 W, increasing the preheating speed by 50%.
Graphene composite is added to the food-safe coating of the baking tray to achieve better thermal
conductivity. The upper and lower baking trays of the product are free to disassemble and wash and
easy to clean and can also be put into the dishwasher for automatic cleaning. Based on an in-depth
insight into user needs, Midea launched a series of innovative rice cooker products, such as Red
Flame Premium Aroma, Live Rice Fresh Aroma, Wind-blown Rice Aroma, Watery Pleasant Aroma,
and Rapid Aroma. When the rice leaves the rice field for the table, it experiences a long period of
storage and multiple shipments and can be easily oxidised and lose the original rice aroma.
Specifically, the original second-generation rice grain activation technology of the Wind-blown Rice
Aroma cooker can solve the pain point of "stale rice".
COLMO Multi-split Kitchen Air Conditioner responds to the core needs of users with the anti-oily-fume
design of the indoor unit. Specifically, the Premium Golden Fin of the evaporator reduces the
accumulation of grease and oil, and the return air panel equipped with dual filters realizes seven-layer
filtration. It also has a smart self-cleaning function through the indoor unit evaporator and a stepless
speed control air supply function. In addition, the indoor unit is as slim as 200 mm, easy to install and
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The 2022 Annual Report of Midea Group Co., Ltd.
space-saving.
For smart bathroom scenes:
To meet users' urgent needs for "constant temperature" and "silence" of gas water heaters, Midea
Gas Water Heater rolled out the "Coldness-free" and "Level-1 Silence" series of products. Midea
Coldness-free Gas Water Heater is equipped with an anti-disturbance thermostatic system as well as
three innovative core technologies (intelligent start/stop thermostatic valve, ADRC2.0 anti-disturbance
thermostatic algorithm, and 3D V-shape fire row) and seven special technologies (segmented burning
technology, top drive enhanced fan, quick-burning dual-spark technology, high-sensitivity water flow
sensor, dual solenoid gas proportional valve, ultra-precision dual-temperature probe, and thermostatic
mixing valve). It effectively resolves the issue of water temperature fluctuation in disturbance scenes,
enabling water temperature not to fluctuate when the machine starts or stops working and users not
to feel cold when taking a shower. With a precise water control valve core and large-small dual duct
design, the intelligent star/stop thermostatic valve enables a quick switch to a single duct and water
flow regulation when the water heater is stopped and resumes working during the shower, effectively
reducing the cold water mixed. The ADRC2.0 anti-disturbance thermostatic algorithm dynamically
detects the actual water pressure and flow changes in real time and accurately regulates the water-
gas ratio in full consideration of the disturbance of the water environment. The 3D V-shape fire row
enables a larger burning area and more thorough burning, achieving precise and stable fire control.
Additionally, the product has passed the Graded Evaluation Norms for Whole-process Constant
Temperature of Domestic Gas Water Heaters issued by the China Association for Quality Inspection
and obtained the certification for grade-1 intelligent constant temperature of the CHEARI (Beijing)
Certification & Testing. Midea New-generation Silent Gas Water Heater is equipped with a dual-gill
respiratory silent system that enables in-depth noise reduction in six dimensions. Additionally, it
minimises the noise of gas water heaters at the noise sources, on the transmission path, and from the
noise barrier using such technologies as spoiler noise-reduction cover, labyrinth-type sound-
deadening cabin, direct current inverter low-noise fan, tempered soundproof glass, waterway silencer,
vibration-damping sound-deadening cotton, and integrated seal structure. As a result, the operating
noise is lowered to 40 dB. The gas water heater has been awarded the Silence Grade 1 certificate by
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The 2022 Annual Report of Midea Group Co., Ltd.
the Certification Center of Light Industry Council Co., Ltd. (CCLC). Besides, innovative technologies
such as AI precise temperature control, energy-saving zero cold water, and inverter booster pump
have been used to bring users a comfortable shower experience. Midea Water-cooled Low-nitrogen
Gas Water Heater, equipped with the world's first three-point injection and four-pipe cooling water-
cooled low-nitrogen burning technology, meets the European requirement for energy conservation
and environmental protection. It transcends the technological barriers created by rival European
products. Additionally, it is China's first water-cooled gas water heater with independent property
exported to Europe, as well as the world's first low-nitrogen gas water heater that meets the
requirement for multi-gas source energy conservation and environmental protection. Moreover, the
product is equipped with hundreds of patented technologies. Midea Fully Premixed Gas Water Heater
is equipped with the world's first integrated stainless steel condensing heat exchange technology.
Through fully premixed burning, the product enables low nitrogen and carbon emissions and is
characterised by its environmental protection and high energy efficiency. The dual-channel large and
small venturi premix technology developed by Midea enables a wide heat load regulation range and
stable burning. Besides, it has a wide scope of application. The product is China's first fully premixed
gas water heater certified by the Canadian Standards Association (CAS). It is equipped with hundreds
of patented technologies and has won the gold medal at the 2022 International Exhibition of
Inventions of Geneva. Toshiba Yunjian Series Gas Water Heater applies a new lean, small-volume
structure platform, which reduces the volume of the product by 20%, thereby facilitating the
installation. It has won the iF Design Award and the Red Dot Design Award. It has adopted an
innovative harmonised interactive design, with the key area using a 150°curved concave design that
can fit the curvature of the finger and 1.5-mm simulated Braille dots. Additionally, an indicator is
designed for the key area to facilitate regulation in a dim environment. Concurrently, the real voice
feedback function is added to the keys to achieve precise temperature regulation and remind users of
the high temperature and the completion of the zero cold water preheating. The industry-leading 3D
whole-area temperature control technology, coupled with the three-point temperature measurement
for the entire pipeline and patented Toshiba temperature control algorithm, enables the continuous
flow of water with less than ±0.5°C temperature difference. If users turn off the water and then turn it
on, the fastest pulse ignition will be completed in 1.5 seconds. Through four silencing technologies,
including the flying saucer-shaped body, shark-gill bionic respiratory mouth, micro-hole sound-
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The 2022 Annual Report of Midea Group Co., Ltd.
deadening cotton, and direct current inverter fan, the noise can be lowered below 45 dB. Moreover,
the temperature control chip imported from Japan and the thickened corrosion-resistant oxygen-free
copper water tank to enhance reliability and durability are used for the product to enhance its
reliability and durability. Midea "Huoshuixin" Electric Water Heater is an innovative combination of the
traditional electric water heater and the filter cartridge technology. Additionally, Midea put forward the
"Cartridge Ensures High-quality Shower Water" idea for the first time for the product. To achieve high-
quality shower water in the "showering, caring, nourishment, and fostering" dimensions, Midea has
selected a transparent and visualised filter cup. Besides, it has developed full-time water freshness
inspection and intelligent cruise skin cleaning functions, enabling a sterilisation rate of 99.99%.
Moreover, the product is equipped with a stainless-steel filter, which can effectively filter water
impurities and achieve micron-level filtration and water purification-level protection. Concurrently, it is
equipped with patented living water technology that enables active cleaning. The PCC ore activation
technology is employed to provide natural strontium-rich shower water and prevent skin from ageing.
Additionally, the third-generation chlorine removal technology, non-toxic, non-harmful, and non-
allergenic, can remove chlorine within 0.2 seconds, earning the product a number of industry awards.
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
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The 2022 Annual Report of Midea Group Co., Ltd.
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, building a global product
platform, as well as increasing product development efficiency by way of group planning and group
development, Midea is building “Technology Leadership”. As of the end of 2022, 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 provincial levels. By doing so, it builds competitive edges with its
strength in technology. Under the guidance of the strategy of “Technology Leadership”, the innovation
platform serves as the core of its technology innovation system and is responsible for the
implementation of technology development strategies and the commercialization and application of
technology innovation achievements, thus driving Midea’s transformation towards a global technology
group in a faster manner.
Midea Group is committed to investing in the research of core technologies and has made significant
breakthroughs in the main tracks and in the field of new industrial technology. In the project of
"Research on the Application of Precision Washing System based on AI Vision and Electric Spray
Arms in Household Dishwashers", Midea invented the precision washing technology based on multi-
task image intelligent recognition and realized a truly intelligent and fully automatic mode to meet the
demands of Chinese families for the cleanness and hygiene, convenience and efficiency, and
precision washing of dishwasher. In the project of "Key Technology and Application of Multi-Grade
High-Efficiency Heat Energy Supply of Air Source Heat Pumps", an innovative breakthrough of key
technology of air source heat pump water heaters is made to solve the problem that conventional air
source heat pumps cannot operate reliably in the cold areas in the north and to ensure the high
efficiency and low-carbon supply of industrial steam, which leads the technical progress and industrial
development of air source heat pump heating, achieves pollution and carbon reduction, energy
saving, and efficiency increase, and produces significant economic and social benefits. In the project
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The 2022 Annual Report of Midea Group Co., Ltd.
of "Research and Application of Key Technology of Low-noise Heavy-rare-earth-free Permanent
Magnet Motors for Compressors", the multiplicative noise of compressors is reduced through the
electromagnetic force of the motor body, and its "double pioneer" technology makes household
appliances quieter and more environment-friendly and significantly improves the noise of air
conditioning system. In addition, the dependence of permanent magnet motors on heavy rare earth
materials is effectively relieved through the comprehensive optimization of the magnetic circuit
structure of the stator and rotor. Through the "Magnetic Levitation Inverter Centrifugal Ice Storage
Dual-condition Unit" project, Midea removed bottlenecks in conventional technologies and developed
such innovative technologies as the centrifugal compressor wide-range adaptive anti-surge control
technology, multi-condition wide-area energy efficiency improvement technology, and high-reliability
maglev compressor drive and control technology. By doing so, it achieved double high efficiency in air
conditioning and ice storage conditions. Through the "Supersonic Cold Air Power Spray Technology"
project, Midea achieved major technological breakthroughs by focusing on the supercritical-rate cold-
spraying efficient deposition technology and the flake-bridging low-potential metal mix anti-corrosion
coating. Additionally, it developed long-life, high-binding force, and high-corrosion resistance
magnetic conductive coating for cooking utensils, achieving efficient electromagnetic heating of non-
magnetic utensils. Midea also independently developed new aluminum-containing austenitic heat-
resistant stainless steel, solving the problem that the core parts and components of cold spray
equipment are prone to cracking and damage in high-temperature and high-pressure coupled
environment. Meanwhile, Midea has taken the initiative in building the first large automated cold spray
assembly line in the home appliance industry. Through the "Key Technology for Low-carbon, Efficient
Heat Exchangers" project, Midea developed the topology-optimised small-diameter inner grooved
tube large corrugated fin heat exchanger technology based on its self-developed 3D and 1D coupled
heat exchanger simulation platform. The technology can inhibit the increase in the flow pressure drop
in the tube and boost the heat exchange capacity per unit volume on the air side of the heat
exchanger while improving heat exchange efficiency. Additionally, by strengthening the heat
exchanging capacity in frosting conditions through the optimised corrugated structure, the technology
reduces the materials consumption and improves the energy efficiency of system operation. By the
end of 2022, Midea had won a total of three national science and technology awards, and more than
340 provincial and ministerial science and technology awards, as well as received over 280
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The 2022 Annual Report of Midea Group Co., Ltd.
"Internationally Leading/Advanced" certificates for its technologies.
Midea has strengthened the transformation of R&D achievements while carrying out the core
technology research. By the end of 2022, Midea (inclusive of TLSC) held more than 80,000 valid
patents. In 2022, Midea was granted more than 4,000 invention patents around the globe. Midea
continues to improve patent quality. It won multiple awards at the 2022 23rd China Patent Awards. To
be specific, the "Dishwasher" and the "Control Method, Controller, and Refrigerator of Meat
Subcooling Preservation" won two Silver Invention Awards, the "Window Air Conditioner" won a Silver
Design Award, and the "Compressor and the Heat Exchange System with it", "Recommendation
Method, System, and Big Data Server of the Air Conditioner and Its Operation Parameters" and other
patents won six Excellence Awards. In addition, Midea received more than 20 provincial patent
awards in 2022.
In order to provide strong support for the fulfillment of the strategic objective of “Technology
Leadership”, Midea further implements the “3+1” standardization strategy of “Innovation Patentability,
Patent Standardization, Standard Internationalization and Midea Standard Goes Out”, and a two-tier
(Group-business divisions) standardization management system has been put in place. Meanwhile, to
ensure the effective execution of the standardization strategy, the Group has set up a standardization
management committee. With the double drivers of “standard innovation + production innovation”,
Midea shifts innovation achievements to advanced technological standards. Additionally, it endeavors
to play a bigger part with respect to advanced technology standards of the industries, aiming to create
more value for users, partners and industries. During 2022, Midea took part in the formulation/revision
of 314 technological standards, including 11 international standards, 65 national standards, 22
industry standards, and 216 local and group standards, including "Technical Requirements for
Temperature Controllers for Air Conditioning Systems for Household and Similar Purposes",
"Domestic Electric Dishwashers-Methods for Measuring Performance", "Minimum Allowable Values of
Energy Efficiency and Energy Efficiency Grades for Electric Ovens for Household and Similar
Purposes", "A.C. Ventilating Fans and Regulators for Household and Similar Purposes-Methods for
Measuring Performance", "Medical-grade Washing Machines", "Systems and Software Engineering --
Software Product Quality Requirements and Evaluation (SQuaRE) -- Common Industry Format (CIF)
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for Usability: User Requirements Specification", "Method of Measurement and Rating of Air
Conditioning System with Thermal Storage", "Wiring Harnesses for Household Appliances",
"Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Electric Pressure
Cooker", "Cleaning Robots for Household and Similar Purposes", "Technical Requirements for
Artificial Intelligence-based Household Central Air Conditioner", "Evaluation of the Lifecycles of Home
Appliances-Part 10: Electric Washing Machines for Household and Similar Purposes", "Evaluation
Methods and Technical Requirements for the Refrigerators with Healthy Purification Functions",
"Methods for Testing the Heating Uniformity Grade of Household Induction Cooker", "Technical
Specifications for Energy Storage System for Phase-change Water Heater", "Microwave, Steaming,
and Baking Integrated Machine for Household and Similar Purposes", "Evaluation of the Lifecycles of
Home Appliances-Part 3: Special Requirements for Electric Motors-Compressors", "Evaluation of
Carbon Emission Grading in the Operation Phase of Civil Buildings", "Household Robots-Intelligent
Grading and Evaluation", "Technical Requirements for Low-carbon and Efficient Refrigerator Heat
Exchangers", and "Accounting and Reporting Requirements for Greenhouse Gas Emissions of
Refrigerant-containing Electrical Appliance Manufacturers". In terms of recognition and honors
received for standardization, Midea won the 2022 China Standard Innovation Contribution Award, and
the Standard Innovation Organization Award at the Third Science and Technology Awards organized
by the China Society for the Promotion of Science and Technology Commercialization. In addition, it
has been recognized as an “Enterprise Standard Leader” for five consecutive years, and a group
standard, for which Midea served as the main contributor, has been selected by the Ministry of
Industry and Information Technology as one of the 100 group standard application demonstration
projects.
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
Being customer-oriented, Midea continues to enhance vertical efficiency and horizontal synergy
efficiency, as well as accelerate retail growth and retail transformation. Through the reform of direct
retailing, Midea has been continuously promoting the "vertical efficiency improvement" of offline
channels, with the shift from distributors to operators completed and the retail operation capability
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The 2022 Annual Report of Midea Group Co., Ltd.
greatly improved. Meanwhile, organizational reform has provided effective support for the "horizontal
synergy efficiency enhancement". The operation center is made the “main battlefield”, with deep
coordination among all product categories. Horizontal synergy efficiency has been greatly improved in
channel expansion, scenario-based transformation at the retail end, etc. Midea has realized "One
Midea" for all markets, ensuring the consistency of user service and experience. In 2022, online sales
as a percentage of Midea's total sales reached over 48%. In terms of e-commerce, Midea continued
to push ahead with the upgrade of the product structure, product suite development, and new
services such as "green home appliances". Additionally, Midea redoubled its efforts at channel
segmentation and made arrangements for content platforms, and finally recorded new growth.
Concurrently, the construction of Midea's platform for e-commercial business was advanced. Midea
focused on the development and improvement of new capabilities, such as self-operation, self-live-
streaming, and whole-chain marketing. By strengthening content and digital marketing and gaining an
insight into the differentiated needs of different customer groups, Midea achieved integrated quality
and efficiency improvement through the "Digitization & Intelligence Driven" strategy and accomplished
the upgrade-based transformation from traffic operation toward user operation. As online and offline
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. To be specific, first, to strengthen
stores' retail capabilities and improve their whole-chain retail experiences, Midea helped stores carry
out digital retail transformation driven by new systems and tools. Specifically, the "Midea Cloud
Sales+" ecosystem was upgraded and transformed to develop Midea's own retail business platform,
thereby achieving the physical transformation of the operations centre and full upgrade of the "Midea
Cloud Sales" system. Additionally, customer experiences were substantially boosted. As a result, the
"Midea Cloud Sales" App recorded a year-on-year increase of over 300% in the daily average page
views (PV), and the efficiency of direct retail was significantly boosted. Meanwhile, the retail system of
stores was reconstructed based on the "Midea Cloud Sales" App and the "Midea Home Delivery"
mini-app, and the cloud warehouse services were formally launched. Moreover, to facilitate stores'
online and offline whole-scene marketing and promotions, Midea provided digital marketing tools for
merchants, thereby empowering stores' customer acquisition and potential customer conversion.
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Midea also developed a digital and intelligent platform operations system to improve stores'
management efficiency. It conducted classified product operation and hierarchical store management
based on the label-based system for products and stores. By doing so, retail data and business
activities can be reviewed online, enabling rapid analysis and precise operation of stores. Second,
vigorous efforts were made to expand into the sinking markets. As a result, Midea gained the largest
overall share of the core sinking channel platforms in the industry. Midea has fully expanded into
stores in lower-tier markets, achieving a product penetration of more than 90%. At the same time,
Midea has fully entered the booths of core stores. It has constantly upgraded retail store standards in
order to deliver quick, professional services to consumers in the lower-tier markets. Focusing on user
demands, Midea has been refining its product distribution. As a result, Midea has outperformed its
peers in terms of the sales of emerging products such as household central air conditioners,
dishwashers, air fryers, and clothes dryers. Concurrently, Midea has kept delving into new
consumption potential in the lower-tier markets. With the introduction of consumption policies for
green home appliances and trade-in activities, marketing modes such as vouchers are leveraged to
improve consumption quality. In this context, the average prices of Midea's home appliance products
in all categories have risen by more than 30% in the lower-tier channels. Third, centering on
consumer experiences in retail, Midea carried out green home appliance campaigns with entire-
house appliances trade-in and subsidies for buying eco-friendly intelligent home appliances at the
core by fully leveraging its strengths in entire-house appliances. Midea also organised quality
marketing activities by focusing on product experiences and brand volume, user traffic, and retail
sales. Additionally, Midea has carried out several tour exhibitions in markets at different tiers
nationwide for products such as "AI-powered Villa Commercial Air Conditioner", "AI-powered Light
Dry Cleaning Washer-Dryer Suite", "Microcrystalline Ultra-thin Zero Built-in Refrigerator", and "Fresh
Air Fryer". Moreover, with active services as a breakthrough, Midea has unblocked the user operation
chain that covers public and private domains as well as membership, doing so to optimise the
consumer experience and perception. Fourth, to achieve consistent consumer experiences, Midea
has integrated the online capabilities of "Midea Mall", "MSmartLife", and "Midea Service" and rolled
out "M-Smart", a retail platform that integrates Midea's online and offline capabilities designed to
strengthen offline franchise stores' distribution capabilities on e-commerce platforms and out-of-store
marketing capabilities and expand the coverage of after-sales services. By doing so, Midea ensures
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that consumers can achieve the same shopping experience at franchised stores as they do on e-
commerce platforms. Additionally, Midea expedited the optimisation of the layout of retail outlets of
"M-Smart". By securing intelligent product shelves and establishing the "M-Smart" online store, Midea
has provided consistent shopping services and strengthened the marketing capabilities of offline
stores. Fifth, 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. Adhering to the "Create Value for Users" principle, Midea has
deepened the business transformation toward the retail end. Additionally, Midea has carried out all-
around user connection by relying on media matrices such as WeChat enterprise account, official
account, mini-app, and video account, as well as terminal experience contacts such as service
engineers, experience consultants, and intelligent scenes. Also, Midea has pushed ahead with the
optimisation of product iteration, shopping experience, and service experience with user experience
as a driver. Concurrently, it has strengthened private domain operation and improved customer royalty.
By the end of 2022, the total number of registered members exceeded 140 million, and the Net
Promoter Score (Net Promoter Score) rose by 6% than that in the same period of 2021. Meanwhile,
the development of Midea's business data analysis capability has been constantly refined. Analysis of
user consumption behaviour data serves as a strong support for business decision-making.
Centering around three types of targets: users, customers, and engineers, Midea perseveres in
reconstructing service procedures, upgrading service standards, and improving its capability of
offering free installation services for consumers that buy a collection of products. Additionally, it
deepens the business model change of the user service system to provide one-stop entire-house
smart home appliance service solutions for users and improve service quality and user experience.
First, Midea reconstructed user experience procedures from the users' perspective. It has achieved a
user confirmation rate of 90% through users' participation in the service process and closed-loop
result confirmation. Additionally, professional service reports have been directly sent to users to
enhance users' perception of the whole service procedure. Concurrently, Midea emphasises quick
satisfaction with user demands. It has achieved a 24-hour completion rate of 88%. Midea has
reconstructed the return and replacement procedure experience. Replacement instead of repair has
been fully implemented for small domestic appliances and partly piloted for major domestic
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appliances. The return and replacement time has been shortened to three days through online
identification/no identification or the simultaneous delivery of the new appliance and recovery of the
old one. Second, Midea accelerated the construction of active service capabilities, transformed from
passive waiting to active service for users, and built the active service platform. Thirty-three active
service scenes were launched, with more than 5 million active service times, more than 1.5 million
private domain users, and a year-on-year increase of 12.9% in the re-purchase rate. Third, Midea
built a whole-chain closed-loop system for the voice of customers (VOC) and launched the user voice
intelligent analysis platform to achieve rapid discovery, exploration, distribution, closed-loop
management, and monitoring of all-channel problems. Fourth, Midea improved the customer service
experience of high-end brands. On the one hand, it boosted its basic service capabilities, including
promoting the suite-based construction of the high-end brand network, selecting high-quality service
providers, establishing suite-based outlets for high-end brands, and setting up specialised high-end
brand outlets in some regions on a pilot basis. Additionally, it formulated and optimised the manual on
whole-procedure services of high-end brands and carried out training and certification for authorised
engineers of high-end brands, thereby raising the requirements for engineer authorisation. So far,
specialised engineers for high-end brands have numbered more than 1,100. On the other, based on
the authorisation and certification mechanism, Midea has set up exclusive customer services,
exclusive high-end service engineer teams, and exclusive service rights of high-end brands, doing so
to develop differentiated high-end brand services. Besides, Midea has raised the standards for high-
end brand services by shortening the response time limit and upgrading service tools and protective
measures. It has also created high-end service experiences by rolling out service surprises for special
festivals, designing personalised service rituals, and continuously maintaining customer royalty. Fifth,
Midea carried out green recycling business, cooperated with qualified dismantling enterprises,
deployed the two modes of self-owned channel recycling and external cooperation for the market
recycling end, and built the "Internet +" recycling platform. Additionally, it completed the launch of the
green recycling system, enabling a closed loop of reporting by users online, automatic distribution
and transfer in the work order system, and monitoring of recycling information.
Transformation of the ToB business model has been further deepened. The business model has been
upgraded from traditional hardware product packages to scene-based solutions targeting customers
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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. 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 Other Innovation Business through industry-
wide solution development and promotion. During the promotion of the ToB business in 2022, Midea
strengthened horizontal collaboration among business groups (divisions). To facilitate work in
information sharing, business opportunity sharing, channel sharing, and delivery collaboration, Midea
developed a regular collaboration mechanism and project promotion procedure. As a result, particular
headway was made in intelligent manufacturing and medical services and health. In intelligent
manufacturing, Midea Industrial Internet Platform (MIoT) was selected by the Ministry of Industry and
Information Technology among the "New Cross-industry and Cross-field Industrial Internet Platforms
in 2022". Integrating Midea's eight matrices, including KUKA, Midea Cloud, Annto, and Midea Finance,
MIoT has demonstrated Midea's industrial cloud ecosystem. To empower the digital transformation of
the whole industrial chain, MIoT has been empowering different industries and fields through
industrial solutions, software, and network by relying on the all-in-one feature of "manufacturing know-
how, software and hardware". So far, MIoT has been applied by more than 400 large enterprises in
more than 40 segmentations. In medical services and health, Midea has established partnership with
approximately 6,000 hospitals. Midea Medical unveiled the brand mission of "Respect Every Second
in Life" in July 2022 and five hospital scenario solutions, covering the medical technology building
scenario, the surgery department scenario, the outpatient pharmacy scenario, the inpatient ward
scenario, and the logistics command scenario. To be specific, the medical technology building
scenario, through the integration of technologies of WDM and Midea Biomedical, provides imaging
examination and diagnosis of all parts of the body as well as the intelligent cold chain monitoring
system and intelligent laboratory management system. The surgery department scenario, through the
integration of technologies of KUKA Robotics, Swisslog Healthcare, WDM, Midea Biomedical, and
Building Technologies, provides environment and behaviour management for interventional
procedures, such as cardiac interventional therapy, and particle radiotherapy, supply distribution
tracing and inventory management, and intelligent lighting application. The inpatient ward scenario,
through the technological collaboration of Swisslog Healthcare, Midea Biomedical, and Building
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The 2022 Annual Report of Midea Group Co., Ltd.
Technologies, provides integrated ward management, integrated in-hospital logistics management,
intelligent infusion and reminder, and other system applications, thereby developing spatial solutions
for intelligent wards. Through the collaboration between Swisslog Healthcare and Midea Biomedical
under Midea, the outpatient pharmacy scenario demonstrates Midea's exploration of hospital
pharmacy and logistics automation and provides integrated solutions in this regard. The logistics
command scenario achieves dual drivers through clinical medical technologies and construction
operation and maintenance. It provides systematic solutions that cover the whole construction
process of the hospital and establishes the LIFE20 intelligent hospital framework system. With the
top-down top-level design and planning of Midea Building Technologies Division's iBUILDING
platform, the scenario completes the whole-chain development of system integration, data insight,
auxiliary decision-making, and action closed-loop, thereby helping the medical industry complete
intelligent hospital upgrading.
Annto, a subsidiary of Midea Group, is a technological innovation-based provider of supply chain
(logistics) service. 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 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. Annto refines the integrated delivery and
installation service network and connects the links from manufacturing to consumption, providing
support for the achievement of Midea’s “Direct to Users” strategy. Annto has established an integrated
and smart logistics 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 2022, Annto completed the deepening and
application of urban delivery capacity scheduling algorithm and corresponding scheduling system in
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The 2022 Annual Report of Midea Group Co., Ltd.
65 operation centers nationwide and launched research and application projects on core warehouse
operation capabilities such as storage network optimization and warehouse storage and sorting
efficiency optimization, in order to form practical results such as solutions, key algorithms, and
decision support tools. The service network of Annto of warehousing, trunk line transportation,
distribution, delivery, and installation has realized the whole-procedure visualized direct distribution to
districts, counties, and towns, and the service capacity has been continuously upgraded. Relying on
the end-to-end supply chain, Annto has been able to connect the entire chain of orders from front-end
factory logistics of production and sales to back-end logistics of warehousing, distribution and
installation, so as to efficiently and transparently manage the entire lifecycle of orders, improve
delivery efficiency and user satisfaction, and effectively consolidate the operational foundation
through project implementation. In terms of warehouse network layout, Annto has laid out large
logistics distribution centers and thousands of distributed mini warehouses in more than 140 cities
across China, realized real-time inventory sharing and allocation, and effectively reduced inventory
costs and capital occupation through unified warehouse and unified distribution. In terms of
warehouse management, Annto realized intelligent unmanned warehouse management through
intelligent equipment and advanced technology in high-standard automated warehouses for
expensive consumer goods, reduced sorting operation, and improved sorting efficiency through
procedure optimization and information system function enhancement. Annto optimized the layout
through online big data analysis and scientific algorithms and achieved a 500,000 square meter
saving in warehousing space. Also, it optimized the integration services of terminal warehousing and
distribution and of delivery and installation through inventory sharing and intelligent replenishment. In
terms of intelligence, Annto focused on "smart parks" to realize the whole-procedure intelligent
management system for parks, promote the improvement of the operational capacity of self-built
parks, and create integrated products of smart parks. In terms of production logistics, Annto realized
the functions of factory logistics planning collaboration, wave-based sorting, JIT delivery, inventory
sharing and visualization, intelligent replenishment, etc. through the whole-procedure digital
construction of Vendor Managed Inventory (VMI), which increased the human efficiency of the VMI
intelligent warehouse by 50%, the surface efficiency by 46%, and the inventory reconciliation
efficiency by 45%. In terms of trunk line urban distribution, Annto realized direct inter-city delivery
through the LCL trunk line network, and achieved optimal timing configuration through route planning.
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The 2022 Annual Report of Midea Group Co., Ltd.
Meanwhile, it strengthened the cultivation and expansion of terminal outlets, built a "scheduling
center" platform based on the whole procedure of order-scheduling-capacity-operation-system, broke
the management boundary between the project system and shipping capacity resources, integrated
line resources, and built the operation capacity of domestic trunk line network, thus improving user
experience comprehensively. In terms of end services, Annto has placed great emphasis on
standardised service products, including the integration of delivery and installation of home
appliances, "three-guarantee and five-guarantee" services, and new energy-related services, based
on the development of retail-end capabilities and relying on the intelligent management platform, in
order to support corporate customers in reaching users. In terms of capacity optimisation, Annto has
deepened the construction of online freight platform capacity, realised online capacity and cost
transparency through digital construction, accumulated valuable capacity resources and cost data,
and realised the integration of logistics, capital flow, information flow, contract flow, and bill flow.
Additionally, in terms of the delivery and installation of home appliances, Annto optimized the
integrated delivery and installation and rebuilt the main procedure of the after-sales platform in 2022
and realized the digitalization of order and engineer management. The per capita order receiving
efficiency of engineers increased by 34% year-on-year, and Annto effectively supported business
models such as complied delivery and installation and delivery of the new and recovery of the old,
with more than 3,000 delivery and installation outlets and a team of more than 32,000 professional
engineers, covering more than 2,700 districts and counties in China. In terms of home appliance
delivery and installation capabilities, Annto has been capable of providing services such as quick
entry and exit, prompt delivery, and self-collection by users by refining the procedures and
mechanism for inventory management of outlets. In terms of new energy service capabilities, Annto
has mainly provided services such as "surveying, installation, inspection, and repair" for midstream
manufacturers and constructors of power charging equipment and downstream equipment operators
and original equipment manufacturers of new energy equipment.
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. In 2022, Annto focused on industry customers and depth, and relied on
the "1+3" service model, i.e., "whole chain" + "a shared inventory system, integration of delivery and
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The 2022 Annual Report of Midea Group Co., Ltd.
installation, production and logistics" to help customers develop core operation foundation and
product operation capabilities. By developing an intelligent logistics platform that integrates the whole
chain, including production logistics, warehousing, trunk line logistics, urban distribution, and delivery
and installation, Annto has provided customers with quality products and digital solutions, thereby
helping customers promote channel transformation and supply chain efficiency optimisation Annto's
integrated supply chain services serve two aspects. They can provide system and operational
services for enterprises in the logistics environment and facilitate enterprises' transformation and
upgrading and achieve business transformation in product flow. By supporting enterprises' whole-
chain value boost through intelligent logistics, Annto has achieved a steady increase in market share
year by year. Annto can provide integrated supply chain services covering the whole chain of "parts-
finished products-stores-users" and help customers to solve problems such as rising fulfillment costs
caused by diversified channels and fragmented orders "through a shared inventory system" and to
establish a whole-value-chain monitoring system for operation indicators, continuously optimize costs,
strengthen risk control capabilities, and provide effective data support for enterprises' operation
decisions. "Integrated delivery and installation" can help customers to better reach users and improve
service experience. "Production and logistics" means transforming Midea's years of experience in
lean manufacturing into the "Lighthouse Factory Supply Chain Solution" and to realize the output of
systematic solutions based on customer needs and industrial characteristics. 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.
D. Promoted “Global Impact”, enhanced localized operations overseas and accelerated the
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
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The 2022 Annual Report of Midea Group Co., Ltd.
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. Midea
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 2022, 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. Being customer-oriented, Midea promoted the transformation of overseas
channels towards the retail end, and kept expanding and improving the distribution of overseas
channels. In 2022, Midea had more than 3,000 new partners in this respect, and significantly
improved its profitability at the retail end. Besides, it constantly promoted the flattening of channels,
directly contacted more than 1,200 small business customers through streamlining channel hierarchy
on a pilot basis in Vietnam, and recorded an annual revenue of tens of millions of US dollars through
rolling out the pilot DTC retail model in Brazil and Egypt. Additionally, it promoted digital reform to
improve channel efficiency and data transparency, rolled out the pilot digital channel management
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The 2022 Annual Report of Midea Group Co., Ltd.
mode in ASEAN region, and launched in batches the overseas "Midea Cloud Sales" platform in
ASEAN market, which has been adopted by thousands of small business customers, thereby
effectively optimizing store management. Midea made continuous efforts for the overseas e-
commence business, and recorded a year-on-year increase of 14% in e-commerce sales revenue in
2022. While steadily improving the fine operation capability and resource allocation efficiency, Midea
built a self-developed e-commerce data analysis system to realise the digital upgrade of e-commerce
business, gain insight into the development trend of products, and precipitate portrait data about core
customers, thereby analysing and controlling operating efficiency and profit more quickly, more
comprehensively and more conveniently. Besides, Midea continuously promoted the optimisation of
product structure, and increased the average price of products under its own brands by more than 20%
on the online channel in 2022. Particularly, Midea's microwave oven products made a breakthrough in
the high-end market, becoming a model for product upgrade in overseas market. In addition, Midea
made sustained efforts to maintain the dominant market position and channel vitality of its core
product categories. Over 60 products made their way onto the top 10 best seller lists on e-commerce
platforms in the US, Germany, UK, Italy and Japan. Specifically, in the online market of the US, the
market share of Midea's microwave ovens and window air conditioners respectively exceeded 50%
and 25%, and the sales revenue of such product categories as range hoods, refrigerators and laundry
appliances also achieved a significant growth. Moreover, Midea actively fostered the ToC capability
for self-operation of e-commerce. The Amazon business operated by Midea itself as a seller in the US
grew tens of times in sales during 2022. Meanwhile, Midea has been actively exploring new channels
and new models in the US, Japan, Australia, Singapore and other countries, and has settled in more
than ten new platforms such as Otto, Rakuten, Wayfair and Microsoft. Midea strengthened overseas
own branding, expedited the pace of "Global Impact" of its own brands by launching a special project
for branding in North America, and enhanced the penetration of its own brands in key markets in
multiple dimensions, including offline retail experience, guide team development, social media
campaign and entire-house product suite marketing. Besides, Midea intensified efforts on online
content marketing inside and outside relevant websites, promoted the building of Amazon flagship
stores and official brand websites, gradually formed a brand flagship store matrix of three major
brands and seven major websites, comprehensively upgraded content planning, visual presentation
and shopping experience, established a marketing resource pool, newly cooperated with nearly 400
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The 2022 Annual Report of Midea Group Co., Ltd.
international famous chefs and Internet celebrities, and attracted the attention of 22 million users.
Based on the expansion of diversified interactive sales scenes and the layout of diversified live
broadcast modes, Midea managed to hold more than 1,500 live broadcasts with tens of millions of
user interactions throughout the year. Additionally, Midea worked to, through sponsoring and
cooperating with well-known foreign football clubs and sports events, especially the Manchester City
Football Club in the US, the New York City Football Club in the UK, the Corinthians Football Team in
Brazil, and the FF Championship, enhance the exposure of Midea brand, and expand the localised
marketing of Midea brand in local markets, thereby improving the global visibility of Midea brand.
Midea has created a mechanism for co-creating smart scenes overseas. By setting up the positions
of IoT Product Manager and Engineer in the markets of key countries, it has localised the connectivity
testing of new IoT products. As of the end of 2022, the shipment of IoT products in overseas markets
had surpassed 1.8 million units, among which more than 570,000 units had been activated.
Additionally, Midea had completed the construction of the international MSmartLife App as a globally
unified platform for online support services, built a service team for the global application market such
as App Store and Googleplay and for "in-app feedback" applications, and completed the localisation
of the webpage of frequently asked questions (FAQ) for the markets of five core countries. Based on
increasing resource investment, a digital ecosystem of user growth was constructed with the six
major touch points of user co-creation, user services, brand official website, social media, overseas e-
commerce and the MSmartLife App, and the best modes of overseas user data storage, content
iteration and operation were explored. In addition, Midea promoted user growth projects worldwide,
established a global digital marketing management system, improved overseas private domain traffic
operation and overseas digital marketing through marketing communication and promotion, consumer
touch point and user life cycle data management, and significantly improved such indicators as user
conversion rate and customer acquisition of the after-sales system, thereby effectively supporting the
sustained growth of sales. In 2022, Midea contacted a total of 1.9 billion people through overseas
social media and interacted with 37 million users, with its official website being visited more than 9
million times. In the future, Midea will, based on the digital building of retail marketing, additionally
cover 20 countries and seven languages to increase retail efficiency and improve user experience.
Midea kept improving the overseas manufacturing layout and expedited the introduction of the
"China-based Supply for the World + Local Supply" model. In 2022, the manufacturing base in Egypt
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and the new air conditioning base in Thailand were completed and put into operation, further
improving the overseas capacity layout of major household appliance products. Meanwhile, efforts
were stepped up to promote the construction of the manufacturing bases base in Brazil and Mexico to
effectively cover the American market. In addition, the domestic refined manufacturing system was
promoted in overseas manufacturing bases, and overseas talent development was enhanced with
respect to lean management, driving improvement in global manufacturing efficiency and delivery
capacity. The constantly refined EHS management system provides firm assurance for the safe and
stable operation of overseas manufacturing bases. Global logistics and warehousing capacity were
enhanced. On the one hand, Midea 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 built an agile and efficient global
spare parts supply chain system, set up a global spare parts centre, constantly optimised the delivery
efficiency of spare parts, established a global sales operation system, improved the performance
organisation capacity, promoted the transformation toward global professional operation, achieved
online and visual implementation of overseas plans and orders, and refined and improved services
from the four dimensions of spare parts delivery, customer contact, service network and service
technology engineering to improve the overall service quality. Midea improved its global service
system and global service capacity, optimised service networks of iService system (an overseas after-
sales system) and cloud call centre platform, and master data management of global outlets and
service projects, realised interface sharing between call centre and after-sales service system, and
greatly improved the accuracy and efficiency of service. Meanwhile, it additionally incorporated such
functions as speech analysis, semantic recognition and access to social media by intelligent voice
robots in an effort to construct a fast-response and proactive global service system. In 2022, the
introduction of Amazon Connect, a global, omnichannel cloud contact centre, into Midea enabled the
Company to achieve the iterative upgrade of its global contact centre and directly reach the end
customers worldwide, thereby achieving the whole-procedure closed-loop management ranging from
user reaching to service completion, and dramatically improving service efficiency and user
experience, while significantly reducing operating cost and improving voice call quality through the
cloud-based transformation of the call centre. Amazon cloud security tool was adopted to satisfy the
compliance requirements of all relevant countries for data security management. By the end of 2002,
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Midea had launched the cloud call system in the six countries and regions such as Italy, Singapore,
Hong Kong, Malaysia, Germany and Mexico.
In 2022, the rising cost of raw materials and the depreciation of the Japanese yen continuously
affected the operations in the Japanese market. Meanwhile, the difficulty in cross-border personnel
flow and the continuous fluctuation of the supply chain arising from the impact of relevant macro
factors, kept all links of the business value chain under pressure. TLSC continued to deepen the
synergy with the Group's product divisions in the value chain to ensure the supply of products.
Measures such as price adjustments through the faster 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 product costs, currency fluctuations and other factors and
ensure the accomplishment of the operating objectives. During 2022, the retail sales of the Japanese
home appliance market grew 3% compared to 2021, while that of TLSC grew 15%. Its market share
of six major product categories combined has increased to over 14%, with the respective market
share of air conditioners, refrigerators, laundry appliances, microwave ovens and rice cookers
continuously growing. The organisational structure has been optimised and adjusted according to the
different user scenarios, and the whole process of the business model has also been optimised and
upgraded to improve organisational efficiency and market response speed, while the after-sales
system has been further strengthened to improve user experience. 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 2022, the business of TLSC has covered more than 120 countries and regions.
E. Stepped up the comprehensive digitalization to materialize data- and platform-based
operations in the whole value chain, and thus to become more competitive in the digital era
Focusing on the “Digitization & Intelligence Driven” strategy, 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
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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 availability, high-value data assets constructed relying on the public layer, data products and data
applications have been created with data technology.
In terms of domestic sales, Midea adhered to the "Direct to Users" and "Digitization & Intelligence
Driven" strategies and the "customer-oriented" principle, and worked to improve the efficiency of the
omnichannel value chain with data-driven measures. Specifically, Midea launched the Midea Cloud
Sales platform to continuously promote the reform and development of its domestic sales channels by
a "non-face-to-face" transaction mode. Through such business reforms as entire-house sample store,
cloud warehouse, omnichain inventory sharing, omnichain big data application, and auxiliary
decision-making, Midea continued to support the efficient implementation of the reform of direct retail
in combination with the optimisation and iteration of the Midea Cloud Sales platform system.
Meanwhile, Midea further improved the brand mindset of users and the platform-based retail
operation, launched 360 series data products covering online and offline product sales chains,
realised omnichain data monitoring and problem diagnosis, provided sales optimisation strategies to
improve product sales, and increased the return on investment (ROI) in marketing by 15%.
Additionally, Midea optimised store site selection using a data algorithm, and kept empowering
channel reform by digital means. In August 2022, Midea launched a data model for store siting, which
can rapidly improve the efficiency and accuracy of siting. Particularly, the hit rate of the recommended
digital siting for COLMO brand stores reached 86%, with the siting efficiency increasing by more than
10 times. In terms of overseas sales, Midea effectively supported the "Global Impact" strategy,
deepened the development of digital capabilities of the system driven by the original equipment
manufacturer (OEM) and own branding & manufacturing (OBM), promoted the digital transformation
of overseas business in line with local circumstances, and supported the product plan based on user
insights to upgrade its overseas products in an all-around way. Besides, Midea refined the capability
for OEM best practice, improve the business capability for in-depth cooperation with OEM customers
and the customer service capability with respect to corresponding functions. Based on new
technology architecture, Midea built the iBOS platform for the integration of overseas sales. With the
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collaborative planning, forecasting and replenishment (CPFR) model, whole-procedure visualisation
of overseas orders, and other features, the iBOS platform can improve the execution and delivery
efficiency of overseas orders at a much lower cost. Additionally, Midea independently developed the
MCC channel management system to support the channel management reform for overseas markets,
and promoted digital products and experience with respect to domestic sales to overseas markets,
with great pilot results being obtained in retail and channel distribution. Furthermore, Midea
comprehensively upgraded the overseas localised digital marketing platform in Brazil on a pilot basis,
to shore up the ToC capability development of overseas markets. Midea also pushed ahead with the
establishment of the overseas user operation and membership system, and rolled out the overseas
contact centre system in the Asia-Pacific region in an all-around way, thereby providing better
services for users of the OBM business. The construction of digital systems in manufacturing bases in
Thailand, Italy and Egypt was completed, contributing to the improvement of the efficiency of
overseas manufacturing. In terms of R&D, following the "Technology Leadership" strategy, Midea
steadily promoted the digitalisation of R&D, improved its digitisation and intelligence capabilities in
multiple application areas such as technology innovation, user research, digital simulation and
verification, software-defined hardware, development of the global platform cluster, and C2M
customisation, increasing the online processing rate, transparency rate and digitalisation rate of R&D
to 85%, 80% and 40% respectively. In addition, Midea built a digital planning platform to rapidly
translate technological capabilities into popular products, and kept promoting the modularisation of
platform, increasing the hit rate of product planning and the benchmark efficiency of platform by 15%
year on year, and shortening the average development period by 10%. Furthermore, Midea started
the digital simulation era, established a unified digital simulation platform and simulation talent system,
and drove the transformation toward an efficient and collaborative R&D. In terms of supply chain and
manufacturing, Midea promoted the transformation toward an end-to-end integrated supply chain,
established the management system for integrated supply chain (ISC), developed industry-leading
capabilities in regard to order execution, global supply chain management and agile delivery as well
as highly-flexible, highly-efficient, and highly-elastic agile delivery capabilities to achieve intelligent
channel replenishment and improve inventory turnover, built the sales and operations planning
(S&OP) cockpit to improve the synergy efficiency of production, supply and sales of the whole value
chain, and established the commitment mechanism of sales and production by order pre-scheduling
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rules. In addition, Midea improved resource sharing in such aspects as electronics, sheet metal,
injection molding, mold and labour, adopted the big data technology for intelligent stocking and
replenishment, and managed to complete the stocking and replenishing of all product portfolios
warehoused in an hour, thereby supporting the improvement of manufacturing capability. The data
linkage between the intelligent order centre and the intelligent plan centre was constantly upgraded to
support the global operation of Midea as planned, and the MIoT industrial Internet platform was
continuously improved and recognized as a "cross-industry and cross-field platform” by the Ministry of
Industry and Information Technology. Based on the MIoT industrial Internet platform, Midea has built
a number of green benchmark factories and dark workshops with high quality and great flexibility, as
well as benchmark factories featuring the full access of washing machine to 5G. Increasing the
production efficiency and reducing the defective rate by more than 30%, the benchmark factories are
being rapidly replicated to multiple manufacturing bases. Moreover, the project "Pilot Demonstration
of Information-based Digital Navigation for Air Conditioning" was selected into the "List of Pilot
Demonstration Projects for the Integrated Development of Next-generation Information Technology
and Manufacturing in 2022" of the Ministry of Industry and Information Technology. For external
customers in the industry, MIoT has created a total of 75 effective solutions in combination with
industry application scenes. Covering nine key areas such as R&D, design, manufacturing, and
supply chain management, the aforesaid solutions have helped more than 400 large-scale
enterprises achieve digital transformation and upgrade. In the process of operation and management,
Midea has fully promoted the objective and key result (OKR) system as well as management by
objectives and collaboration, improved the digital collaboration platform, strengthened the
fundamental capabilities of office platforms, and enhanced the efficiency and transparency of cross-
team collaboration. The five scenes of smart logistics have been extended to more than 30 industrial
parks across the country, expanding the coverage of administrative services and improved customers'
experiences when they provide services. By creating a unified bidding invitation and procurement
platform for Midea Group, all scenes designed for non-production materials have been unified,
network-based, and process-based. With the optimization of the process efficiency as the core lever,
Midea has further clarified the decentralization system and has achieved reciprocity between power
and responsibility. It also has constantly boosted organizational vitality. As a result, the process
efficiency of the core value chain covering research, production, sales, and supply has increased by
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10%; the process efficiency of finance and other functions has risen by 30%; the process efficiency of
the office automation (OA) system has climbed by 50%.
Midea strengthened the construction of the digital base, and built a new CloudNative platform for
corporate digital application to reshape the business foundation model by virtue of the CloudNative
architecture. In 2022, the number of micro services accessed to the CloudNative platform increased
by 87%. Media further developed the PaaS technology platform by initiating the overseas layout
thereof and building PaaS stations in Hong Kong, North America and Europe, thereby empowering
the international OTC projects of Midea and increasing the overall response efficiency of overseas
business by more than 50%. As of the end of 2022, the number of services accessed to PaaS
Technology had increased by three times, and the total amount of API requests of PaaS components
increased by five times. The big data base of the one-stop data platform was comprehensively
upgraded, accompanied by a 40% reduction in overall cost and a 30% increase in resource efficiency.
Continuous efforts were made to promote the security transformation and performance optimisation of
databases and to optimise the power usage efficiency (PUE) of data centres. As a result, the overall
performance of databases was improved by three times, and the PUE of data centres decreased by
more than 10%. In March 2022, the contract for the cloud project in Guian New Area was officially
signed. The project will meet the computing need of Digital Midea in the next ten years and provide a
guarantee for Midea to develop into a leader in the IoT era. The data-empowered business was
comprehensively promoted, and data governance strengthened. Through covering core business
scenes such as R&D, supply chain, marketing and manufacturing, Midea boosted the standardisation
of data and the efficiency improvement and cost reduction of relevant business. Moreover, Midea
cultivated more high-quality digital talents through establishing the standards and systems for
cultivating digital talents. Midea systematically trained nearly 10,000 people in 2022. In addition, in
terms of information security, Midea has basically established a system of security defence in both
depth and breadth, and a 7*24h safety operation system, which can, in combination with the
integrated and efficient digital operation maintenance base, effectively ensure the safe and stable
operation of business.
Midea put continuous efforts into the R&D of artificial intelligence (AI) technologies, and
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comprehensively promoted the application of intelligent technologies. In 2022, Midea AI Innovation
Center put continuous efforts and achieved application breakthroughs in four fields, namely smart
home empowered by AI, smart manufacturing empowered by AI, smart medical services empowered
by AI, and household robots. WISHUG, the home service robot brand of Midea, has been unveiled,
together with XIAOWEI, the first-generation robot product of the brand. XIAOWEI has been mass-
produced and put on sale. XIAOWEI has four core features, namely AI housekeeper, home assistant,
security guard, and technology playmate. Besides, the voice full-stack technology developed by
Midea has been applied to its home appliances of all categories. At present, five voicers with different
characteristics have been launched online together with stable text-to-speech (TTS) services, with a
successful voice recognition rate of over 90% in home appliance control. Midea has also created a
graph of nutrition and health knowledge for the vertical field of the home appliance industry, the
largest of its kind, which can provide fundamental data support for such scenes as human-robot
interaction, smart customer services, and active services. Additionally, Midea has achieved the
combination of navigation technology, SLAM (simultaneous localisation and mapping) scheme
framework, and SLAM algorithm based on multi-sensor fusion, providing more stable and reliable
positioning and better environmental adaptability for the robot system. Meanwhile, Aidget, an edge AI
deployment tool chain independently developed by Midea, has been delivered, mass-produced and
applied in such products as smart refrigerators, dishwashers and home service robots, and has been
simultaneously launched in the two communities of GitHub and OpenAI under the support of its
developer, which is expected to help Midea boost the co-creation of AI ecology together with the
developed, and thus empower technical development of the industry. Thanks to its continuous efforts
in the AI-based platform empowerment R&D system, Midea has already launched data annotation
platform, model training platform, knowledge graph development platform, AI dialogue development
platform, visual open platform, XiaoMei voice interaction platform, etc., greatly improving the product
development efficiency. Furthermore, the first voice AI chip of Midea has also completed the
preliminary module manufacturing on a trial basis. In 2022, the Ministry of Science and Technology
announced the latest batch of "National Open Innovation Platforms for the New Generation Artificial
Intelligence", clearly supporting Midea's construction of the "National Open Innovation Platform for the
New Generation Artificial Intelligence on Intelligent Service Robot". Midea will rely on the aforesaid
platform to achieve innovation breakthroughs in key core technologies.
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F. Promoted the strategy of “Digitization & Intelligence Driven” and accelerated the
implementation of “Comprehensive Intellectualization” to “Customize a Smarter Midea Life for
You”
In 2022, MIoT remained committed to improving the comprehensive user experience of Midea
products, perfecting the building of open platform capability, consolidating the entire-house basic
guarantee capability, and creating customer-oriented Midea Smart Life solutions, so as to provide
users with whole-scene experience services and more quality ecosystem value-added services, and
create more convenient, open and reliable "Midea Smart Life". Focusing on themes such as kitchen,
balcony, bathroom, living room, bedroom, entire-house air and entire-house water, MIoT accelerated
the launch of smart entire-house solutions with full-scenario experience in the pre-installation market,
while continuously iterating and optimizing such solutions based on the demand of the pre-installation
market, thereby satisfying the demands of customers. Midea offered users with stable and smooth
client end usage experience through improving the comprehensive performance indicators of the
MSmartLife App to industry-leading level, and further improved the capability for configuring smart
home scenes and improved the linkage efficiency of device access scene through creating an
industry-leading IoT technology platform. Over 95% of smart devices support scenario-based
interaction by the end of 2022. Midea's smart scenarios were executed more than 300 million times.
Through scenario-based user connection, the number of users of multiple scenario-based devices
has been growing steadily.
Midea has built a comprehensive test and experiment base covering communication modules, smart
home control applications, entire-house intelligence and other business fields, which can provide
basic guarantee for Midea to offer the best entire-house intelligent experience for hundreds of millions
of families around the world. 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, ISO 17025, UL, and SGS
certified by many authorities. In 2022, the China National App Administration Center (CNAAC) carried
out an all-around inspection of information security and privacy protection of the MSmartLife App and
awarded the app "CNAAC App Security Mark". The MIoT Laboratory was granted the radio
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frequency QTL qualification by UL Solutions, which allows Midea to complete all tests on relevant
products by virtue of its own laboratory equipment. The authorisation of QTL qualification will help
Midea effectively shorten its product testing cycle, further improve the efficiency of product testing,
and support and promote its product layout in overseas markets. According to the result of the
appraisal of excellent cases for practicing the national standards on cybersecurity on the 20th
anniversary released by the National Information Security Standardization Technical Committee,
Midea was the only home appliance business that was included in the list and won a case award for
"the application of personal information security standards to smart home". Besides, the mobile
security technology of Midea's MSmartLife App was included in the "2022 Security Guard Program
Excellent Cases" by the China Academy of Information and Communications Technology (CAICT)
and the China Communications Standards Association (CCSA). As such, M-Smart is considered
industry-leading in terms of data security. Meanwhile, as a member unit of the Council of the
Connectivity Standards Association (CSA) and a contributor to and participant in the formulation of
the Matter Protocol, MIoT joined hands with ecosystem partners such as Amazon, Google and Apple,
to promote the establishment and application of the Matter Protocol, and Midea U-shaped Window Air
Conditioner has been among the first to be Matter-certified, thus contributing to the building of an
open global smart home ecosystem. During 2022, MIoT played an active part in the drafting and
formulation of relevant industry standards, thereby promoting the wider popularization and application
of new industry technologies. In the year, four of these group standards in the smart home appliance
industry were issued, including Technical Requirements for Smart Home Appliance Sets, Application
Guide for Knowledge Graph of Smart Home Appliances, Assessment Model of Intelligence
Capabilities of Smart Home, and Technical Specifications for WLAN Modules of Smart Home
Appliances and Connection Performance of the Whole Machine.
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 RMB8
billion in 2022, up 100% year on year. In terms of product, after three years of development,
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COLMO's entire-house high-end smart products have basically satisfied all the demands for electrical
appliances in home life by covering the five entire-house systems of entire-house distributed
intelligent control, entire-house air, entire-house water, entire-house food nutrition and enjoyment, and
entire-house washing and care, preliminarily establishing a leading high-end smart life solution in the
home appliance market. In 2022, COLMO launched the EVO suite to, following the product concept
of "extremely built-in, on-demand customisation, and home integration" and the brand spirit of being
rationally aggressive, continuously satisfy the new demands of high-end users for kitchen life and
provide a natural kitchen life. With a vision of "providing global high-end users with an all-inclusive
high-end smart life solution", COLMO started in 2021 the evolution and upgrade from high-end smart
product suites to high-end entire-house smart systems, took the lead in proposing higher-end entire-
house intelligent solutions cantered on "Smart Villa Expert" in early 2022, achieved in-depth intelligent
control of smart home by integrating entire-house appliances with the smart screen of central air
conditioner, sketched a new picture of smart entire-villa control, and launched the "Smart Villa Expert"
solution together with five core "Smart Villa" systems to consolidate the industry positioning of "smart
entire-villa control". In terms of branding, COLMO takes the lead in proposing the concept of "Smart
Villa Life, COLMO Lifestyle" to lead the life evolution of 1% high-net-worth customers worldwide,
exclusively sponsors the third season of Life Evolution, a high-end talk show, and becomes the entire-
house smart home partner of Our Folks 2022, an annual super variety show in 2022, with a view to,
through cooperation with various fields such as culture, art, sports and architecture, presenting a
higher-end COLMO Lifestyle from different dimensions. In terms of user and market, COLMO has
made continuous efforts to reach and spiritually resonate with high-end users, and has worked hand-
in-hand with more than 520,000 high-net-worth customers since its launch. According to the data from
AVC, the proportion of COLMO products in the high-end market increased significantly in 2022, with
the water dispenser products occupying more than 65% of the offline high-end market, water purifier
products and floor-standing air conditioners more than 20%, and dishwashers more than 13%. In
terms of sales channels, to provide high-end users with better entire-house smart experiences,
COLMO collaborated with the international fashion media group Marie Clarie to build a high-end,
stylist architectural and cultural landmark, the COLMO "Villa Intelligence Beautiful Home" Experience
Space, in Sino-Ocean Taikoo Li Chengdu. Additionally, it further expanded the high-end whole-scene
channel by setting up over 270 smart experience pavilions across more than 120 major cities.
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As a world-renowned home appliances brand with a century-old history, Toshiba is committed to
providing users with inspiring, perfect products and services. With strict requirements for the entire
production flow and quality inspection criteria higher than international standards, Toshiba has
become the bellwether of international quality in the home appliance industry. In recent years,
Toshiba's increasing sales in China have made it a new choice for high-end home appliances in the
country. To create a leader in a high-end, exquisite and star-level lifestyle, Toshiba continued its
efforts in 2022. In terms of product, it constantly improved the layout of home appliances of all
categories, created an industry-leading mainline of core technology, and launched a series of annual
popular single products such as the "479 Large White Peach" and "429 Small White Peach"
refrigerators, X10 Heat Pump Washer-dryer, XD95 Superheated Steam Oven, Dishwasher S5W with
15 place settings capacity, and RC-10IH Rice Cooker, with a view to building the ingenuity and
craftsmanship mindset following the "product as band" concept. In terms of marketing, campaigns
were carried out for different user circles, including food lovers and mothers, to achieve precise
marketing and sustain inbound marketing through targeted membership coverage combined with KOL
recommendations. Toshiba's brand proposition of "Details Matter" is aimed at a wide range of
sophisticated lifestyle consumers, and in 2022, Toshiba gathered celebrities to promote the IP
"Craftsman of Life" at Xiaohongshu for all product categories, and launched a series of shop
experience activities under the theme of “Details Matter for Toshiba”. In terms of channel, Toshiba
actively promoted retail transformation. In 2022, Toshiba completed the cooperation with nearly 80
brand operators, built 130 star-level life pavilions, promoted the joint development of Toshiba's white
goods of all categories, and made continuous efforts to ensure a unified image at the retail end. In
terms of market, the total retail sales of Toshiba products in the domestic market surpassed RMB2
billion in 2022, a year-on-year increase of more than 55%. During the "Double 11" sale, the online
sales of Toshiba increased by 100% year on year.
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”. Its operating revenue exceeded RMB7 billion during 2022. It has established the slogan
“Young and Daring” for branding, and positioned itself as a brand of "young, high-tech and trendy
appliances", continuing to provide users with good-looking, interesting and surprising products with
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easy-to-use technology. In 2022, WAHIN integrated marketing and upgraded the anime IP WAHIN
Girl to an ultra-high-simulation digital human, who won the 2021 Forbes Business Value Award for
Virtual Humans in Chinese Home Appliance Industry and reached 150 million users while serving as
the brand's digital manager. In the meantime, WAHIN cooperated with the School of Journalism &
Communication of the Peking University and the School of Arts Administration and Education of the
Central Academy of Fine Arts, using a young brand positioning to gain penetration into and resonance
with young consumers. On the May 4th Youth Day, WAHIN announced a full range of new products at
its "Dare to Be a Youth to Step Forward" Launch, being the first to provide good-looking suite
products in all categories. Meanwhile, with the help of professional esports players, its new products
kept breaking the circle, attracting over 200 million unique visitors overall. Additionally, the brand
released the idea of "Lite Smart" that gradually covered all product categories, with the philosophy of
being instantly discovered, instantly connected and instantly controlled for the “Lite Smart 2.0”
software products. During the "Double 11" sale, WAHIN launched the "resume-based customized
package", achieving an overall exposure of more than 100 million UV in collaboration with the TV
program “Exciting Offer". In terms of sales, the sales of WAHIN products reached close to RMB1.6
billion during the "618" promotion in 2022, up 80% year on year. Particularly, WAHIN refrigerators
ranked among the top three in JD.com, Tmall and Douyin, grew 10 times from the previous year at
the self-operated store on Pinduoduo, and sold 95,000 units via livestreaming. During the "Double 11"
sale, WAHIN air conditioner products ranked top three in retail sales on JD.com, and Douyin
platforms, among which WAHIN 2 HP wall-mounted air conditioner ranked first online. In terms of
branding, in 2022, WAHIN air conditioner products kept expanding content precipitation and
improving brand volume by the strategy of "professional expert content + user recommendation".
Furthermore, more than 10,000 articles were published online in WAHIN's air conditioner-focused
content marketing during the "618" promotion. Notably, the search index of "WAHIN air conditioner"
increased by 300% on Xiaohongshu and by 260% on Zhihu. During the "Double 11" sale, by
positioning crowd portraits and accurately matching KOL matrix, WAHIN triggered a social media
topic of "WAHIN 2 HP Wall-mounted Air Conditioner", with an exposure of more than 40 million UV
outside the online channel.
H. Seized market opportunities amid domestic and international circulations, responded to
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China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological
breakthroughs and innovations, and kept improving the ToB business landscape
Midea Industrial Technology Business Group is a co-builder in digital transformation and green
sustainable development across the global pan-manufacturing sector. With the vision of "Technology
Drives the Whole World”, it provides high-tech, reliable, and eco-friendly industrial products and
solutions in four major fields: intelligent transportation, industrial automation, green energy, and
consumer appliances. The Industrial Technology Research Institute and a strategic development
organisation have been established in 2021. It focuses on both independent development and
acquisitions, and centres around a solid technical foundation, including heat management technology,
drive technology, control technology, energy technology, chip technology, etc. In the four major areas,
a complete industrial chain layout and technical matrix have been formed, covering information,
control, drive, and execution. It continues to increase investments in the development of key and
cutting-edge technologies, with R&D investment exceeding RMB1 billion in 2022, and over 50% of
R&D personnel having master's or doctoral degrees. At the same time, it continues to increase the
recruitment of senior experts in the industry. In 2022, Midea Industrial Technology received numerous
industry awards, including an Excellence Award at the 23rd China Patent Awards for the invention
patent "Compressor and Heat Exchange System with it”, in addition to one Gold Award and two Silver
Awards at the Guangdong Patent Awards, as well as one Gold Award and two Silver Awards at the
Anhui Patent Awards. The Industrial Technology Business Group's "Research and Application of Key
Technology of Low-noise, Heavy Rare Earth-free Permanent Magnet Motor for Compressors",
"Research and Application of Key Technology of Lightweight, Silent and High-efficiency Compressor
for Refrigerators with High Volume Rate", "Research and Application of Key Technology of High-
overload Permanent Magnet Synchronous Motor Drive System for Home Appliances", "Key
Technology and Application of Variable Capacitance Driven High-efficiency and Miniaturized Memory
Motor System for Home Appliances", and "Application of Micro Phase Change Heat Pump
Technology for Typical Home Appliances" were all certified as "Internationally Advanced" by the China
National Light Industry Council. "Research and Application of Key Technology of High-overload
Permanent Magnet Synchronous Motor Drive System for Home Appliances" also won the 2022 China
National Light Industry Council Technology Progress Award (First Prize). Additionally, three products,
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including "New-type High-efficiency, High-speed Variable Frequency Scroll Compressor", "New-
generation Ultra-efficient Air Conditioner BLDC Motor", and "New-generation High-volume-rate
Refrigerator Variable Frequency Compressor" were selected as the 2022 Energy-saving and Eco-
friendly Products by the China Association of Refrigeration.
Midea Industrial Technology made constant efforts for consumer appliances and consolidated its
leading position in the industry. According to data provider ChinaIOL, in 2022, the global market share
of residential A/C compressors rose to 44%, continuing to be the largest, while the sales volume of
compressors for heat-pump heating and chilling units went up 50% year on year. The global market
share of refrigerator compressors reached 16.7%, thus ranking at the forefront of the industry. The
unit sales of motors for residential air conditioners and laundry appliances accounted for 39% and
17.5% of the global figures respectively, still leading the way in the industry. The whole-new M Series
DC Compressor for car refrigerators has been launched to the market in May 2022, with the sales
volume surpassing 150,000 units in 2022. Furthermore, Midea Industrial Technology continues to
expand its focus on the four major product lines of MCU, IoT, power supply, and power chips. Annual
sales have surpassed 10 million, with quality indicators ranking at the international leading level
among comparable products. Concurrently, the company has supplied products to more than 30
manufacturers. Midea continues with digital and intelligent transformation and keeps expanding and
improving its capacities. The Foshan Xingtan Base for components of consumer appliances has been
established to make a forward-looking layout in intelligent manufacturing of mechanical and electrical
products. Midea has comprehensively automated, digitalized and intellectualized the production
layout, process design and production management, seeking to build an Industry 4.0 intelligent
manufacturing demonstration base in China. The integration work on the Thai compressor company
proceeded well, which has helped significantly increase the overseas production capacity of
refrigerator compressors. The first phase of the Thai motor factory's construction has been completed,
initially establishing overseas production capacity for ECM motors. Midea Industrial Technology
remains dedicated to developing the Indian market, and its first self-built overseas A/C compressor
base completed the delivery of its initial batch of orders by the end of 2022. This accomplishment lays
the groundwork for rapid growth in overseas strategic markets and further enhances the global supply
capability of core components. Deepening its focus on intelligent transportation components, Midea
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Industrial Technology leverages its solid core technology in the consumer electronics field to quickly
develop three major product lines: Automotive Grade thermal management, electric drive systems,
and chassis execution systems. The existing eight product lines of the three major systems gradually
went into production. In terms of technological breakthroughs, it has developed cutting-edge CO
automotive electric compressor technology to overcome the industry's pain points in low-temperature
heating and has launched the world's first high-speed electric SiC compressor operating at 800V and
12,000rpm to address user pain points such as slow charging and short range. Simultaneously, it has
broken through the bottleneck of large-scale flexible production of flat-wire motors. In terms of market
expansion, an overseas local marketing team has been established. In 2022, the cumulative sales of
products reached nearly 200,000 sets, with nearly 30 new designated cooperation projects added,
and the total output value of orders generated by designated cooperation projects is expected to
exceed RMB8 billion in the future. In terms of production capacity assurance, the new energy vehicle
parts manufacturing base in Anqing was completed and put into production in 2022, with an annual
production capacity of 1 million electric compressors, 1.2 million EPS steering motors, and 200,000
drive motors. Midea Industrial Technology Business Group acquired WuHan TTium Motor in April
2022, officially entering the field of two-wheeled travel and expanding the core components of two-
wheeled pedelecs. By introducing Midea's supply-chain system and advanced experience of large-
scale production, it set up modern factories in China and Vietnam to continuously provide customers
with high-quality products. Additionally, at the Eurobike 2022, it launched three large crankset center
motor products with technical advantages such as high power density, high efficiency, quick response
and low loss rate, attracting extensive attention. In the field of industrial automation, Midea Industrial
Technology's two major brands, Servotronix and Hiconics, provide complete solutions from the
sensing to the control level for customers in the process, hybrid and discrete industries, helping
industrial customers improve quality and efficiency, and achieve digital transformation and green
development. As an integrated solution provider in the field of automation equipment, Servotronix
focuses on the entire industrial automation chain, including software tools, equipment control, servo
drives, servo motors, and encoders, continuously providing customised motion control solutions for
customers in various fields. In 2022, its linear drive product revenue increased by over 55% year on
year, and it actively cultivated and expanded overseas markets, with overseas revenue in 2022
significantly increasing by approximately 140% year on year. Relying on its leading technology
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advantages, Servotronix successfully developed and launched the enhanced DS2P servo drive in
2022, significantly improving the comprehensive performance of the servo system, and introduced
core products and solutions such as the softMC703 High-performance Multi-axis Controller, softMC
Compact 301 Compact Motion Controller, and CDHD and CDHD2 High-performance Servo Drives.
With "high-speed, high-precision, and high-performance" customised solutions, it continues to expand
the application of existing products in new fields, covering industries such as lithium batteries,
photovoltaics, semiconductors, robots, laser processing, and consumer electronics. Meanwhile, it
focuses on pain points in emerging markets, launching a series of product combination solutions, and
demonstrating superior performance in intelligent manufacturing scenarios such as laser precision
cutting, lean manufacturing of die-bonding machines, precise control of six-axis robots, and precise
positioning of visual inspection equipment. At the 2022 China Motion Control and Linear Drive
Technology Industry Development Summit, Servotronix won the "2022 Linear Drive Brand Influence
Enterprise of the Year" award for its contributions and innovative technology to the industry. Hiconics
successfully developed and launched a new generation of high-performance high-voltage frequency
converter HCA series products in the high-voltage inverter field, comprehensively improving
operational efficiency, energy-saving effects, and human-machine operation. The leading domestic
power plant's "First Domestic Water Pump High-Speed Direct Drive Frequency Conversion Energy
Saving Retrofit Project" was successfully retrofitted and put into operation without stopping the
machine, significantly improving the overall power-saving rate after the retrofit. In the low-voltage
inverter field, a new generation of high-performance vector inverters CM530H-PLUS, which can be
widely used in asynchronous motor/synchronous motor speed control, was introduced. It can achieve
higher performance and precision in motor drive control, compatible with multiple bus
communications, with rich functionality and strong interconnectivity. Through the perfect "Motor +
Drive + Oil Pump" industry solution, the high-end low-voltage inverter product ES300 was launched,
successfully entering the top hydraulic industry customers. Midea Industrial Technology actively
deployed core component technologies such as valves and reducers, and achieved mass production
of HVAC electronic expansion valves in 2022. The independently developed "Harmonic Reducer High
Precision Long Life Design Technology Research and Application" was certified as “Internationally
Advanced” by the Guangdong Mechanical Engineering Society. In the green energy field, Midea
Industrial Technology continued to lay out the entire energy value chain of "sources, grids, load, and
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storage". On the "source" side, photovoltaic engineering projects made breakthroughs in multiple
scenarios, saving customers millions in annual electricity costs; on the "grid" side, intelligent micro-
grid adopted the "self-generation and self-use, surplus power to the grid" model, providing corporate
customers with whole life cycle solutions including project planning, design, construction, and
operation and maintenance, helping to achieve "low cost, low risk, low carbon emissions", and
providing intelligent micro-grid and SVG dynamic reactive power compensation devices for intelligent
and stable grid and micro-grid management; on the "load" side, the use of high and low voltage
inverters significantly improved energy-saving and consumption reduction for industrial enterprises;
on the "storage" side, household energy storage products and integrated photovoltaic storage
solutions were successfully launched, with overseas market orders exceeding RMB100 million.
Midea Building Technologies, with the mission of "co-building sustainable smart space" and the vision
"to be a global leader in building technology", has transformed from a commercial air conditioning
product supplier to an integrated solution service provider for intelligent building ecosystems.
Currently, Midea Building Technologies has six major product manufacturing bases and seven R&D
centres worldwide, with a sales network covering global markets. It has formed the largest and most
comprehensive professional smart building product matrix and service network in China. At the "Make
iBuilding come TRUE" building technology conference held in early 2022, Midea Building
Technologies released the "iBUILDING, Midea Building Digital Platform" to empower hardware
products and promote business transformation. The platform serves as a digital foundation and
integrates hardware equipment such as MDV multi-unit central air conditioning, K WING chiller
central air conditioning, LINVOL smart elevators, KONG building automation, and business services
such as carbon consulting, carbon management, and contract energy management. This integration
forms four industry solutions for smart low-carbon, smart rail transit, smart hospitals, and smart
industrial parks.
In the domestic market, according to the data from ChinaIOL.com, Midea Commercial Air Conditioner
has continued to rank first with respect to domestic market share in 2022. It leads the domestic
brands in the multi-split market with a market share exceeding 18%. According to Commercial Air
Conditioner Market data, the market share of both Midea’s air-cooled screw chillers and water-cooled
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screw chillers is the highest among domestic brands, and the annual sales volume of Midea’s
centrifugal chillers exceeds 1,600 units, ranking first among domestic brands. In the overseas market,
data from ChinaIOL.com show that in 2022, Midea accounted for 29% of China's total central air
conditioning export value, ranking first. Midea's air source heat pump product exports increased by
more than 160% year on year. According to the European Heat Pump Association's data forecasts, to
achieve the REPowerEU plan, the number of heat pumps in the European market will increase from
the current 17 million units to 60 million units by 2030. Midea Building Technologies is continuously
expanding its heat pump production base in Italy, with an annual production capacity of 300,000 units.
The future delivery cycle of heat pump products will be shortened to one month, comprehensively
enhancing Midea's competitiveness in the European market. Midea Building Technologies has
launched the iEasyEnergy "light storage and heat flex" integrated solution in Europe. Based on the
"dual storage" system, combined with "zero-carbon" heat pumps and flexible control, the energy self-
sufficiency rate can be increased to 90%. The Aqua Thermal Super commercial hot water product,
with its high efficiency, reliability, and energy-saving features, can provide hot water at 65°C even at -
25°C extreme low temperature. The ESG series frequency conversion swimming pool heat pump is
Midea's first net-zero energy consumption product, manufactured on a zero-carbon production line
and certified by SGS for zero-carbon emissions. The product uses recyclable materials for the body
and packaging, environmentally friendly R32 refrigerant, and can utilise clean energy from rooftop
photovoltaic panels and connect to energy storage systems during operation to achieve energy-
saving and emission reduction.
In terms of product innovation, Midea Building Technologies launched many new products in 2022 to
strengthen its business in areas such as commercial air conditioning, building automation, and
elevators. This includes the launch of two innovative products under the new chiller brand "K WING",
where the magnetic levitation ice storage dual-condition unit uses industry-first horizontally-opposed
compression technology to help bearings overcome disturbances caused by inertial forces generated
during compressor operation, thereby improving the machine's reliability. The air levitation centrifugal
unit adopts the industry's first non-equal height foil oil-free air-floating bearing, solving the problem of
low bearing capacity in traditional units, increasing the overall bearing capacity by 52%, and
improving energy efficiency by over 40% compared to traditional units. The unit has a small size and
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occupies an area of only 0.78m with modular installation and easy disassembly. The MDV8
Unbounded VRF, loaded with digital sensors and MDV-Link chips, reconstructs the integrated value of
space, air, and people. Midea's fully variable frequency air-cooled chiller (heat pump) offers heating
and cooling, environmental protection, energy saving, intelligent technology, and health and safety
features. The energy-saving, comfortable, and smart MDV FIT unit is designed specifically for small
and medium-sized commercial spaces. The modular evaporative cooling scroll chiller has smart
control, high-efficiency energy-saving, and modular combination features, with independent dual
systems and a whole-machine anti-corrosion design. Midea Precision Machine Room Air Conditioner
offers a variety of modes, such as fluorine pump natural cooling, variable frequency regulation,
precise control, wet film humidification, and mixed cooling. In the field of building automation, Midea
launched the building intelligent control system "NZ" with cloud-edge collaborative capabilities based
on the KONG C3SI building automation strategic path, as well as the "WU KONG Smart Ward
Solution" aimed at smart medical scenarios, efficiently and rapidly promoting the application of IoT
technology in the field of smart buildings from three aspects, i.e. software, data, and services. Midea
Building Technologies' digital and intelligent elevator brand LINVOL launched two new villa elevators,
“HOMI" and “CUBY", the first digital and intelligent passenger elevator series, “EVIN" Machine Room
Less and “EVIK” Mini Machine Room, as well as the retrofitted digital elevator with safety protection
and intelligent and convenient access for the elderly, “EVIN-X”. Meanwhile, an iBUILDING-based
intelligent elevator management platform has been launched, empowering building traffic with whole-
new digital and intelligent solutions.
As building energy consumption is increasing its proportion of the energy consumption of the whole
society in the progress of urbanization, accelerated efforts have been made in the construction of
"zero-carbon buildings" with "green energy system" as the core. In building energy management, the
iBUILDING Midea Building Digital Platform conducts intelligent energy adaptation and management
with a customized design based on the building's characteristics. In 2022, iBUILDING expanded its
smart building business from industrial parks to hospitals and public facilities. Midea Building
Technologies secured project orders for the Shanghai Citigroup Tower, Douyin Group's Shanghai
Headquarters, iSoftStone, and Vanke Group. iBUILDING's zero-carbon solutions continuously
strengthened their presence in zero-carbon parks, assisting projects like the Midea Industrial Park
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West District, Chongqing Chiller Factory, and Jingzhou Factory in achieving carbon neutrality. In the
western part of Midea Industrial Park, iBUILDING connects the systems of power grid, carbon trading,
energy and HVAC to deliver "low-carbon and energy-saving" in every link. In terms of power
generation, the platform developed a distributed photovoltaic + energy storage integrated project on
the roof of Midea office buildings. In terms of power consumption, energy is saved by the MDV8
Unbounded Multi-split Machine with digital sensors through space characteristic recognition, system
refrigerant temperature judgment, and self-adaptive indoor machine air and flow volume. Moreover,
by connecting the park's carbon management system, iBUILDING provides the trading of carbon
emission rights and green certificates, building a model project for zero-carbon buildings. In Shanghai
Tongji Hospital, centering on people and equipment, iBUILDING makes deep involvement of building
automation system and new technologies such as cloud computing, bid data, IoT and artificial
intelligence in smart building management. For example, the whole process of staff entry and exit is
visualized though 3D virtual hospital modeling, and the hyper-converged application of building
automation system, medical special system and medical information system is realized by using the
IOC platform to connect information islands. In the He Art Museum (HEM) in Foshan, iBUILDING
used a digital twin model to create a "Virtual HEM", which senses the museum's temperature and
humidity as well as monitors the status of precious collections in the storage cabinet in real time.
Additionally, iBUILDING integrates security, operation and maintenance, elevators, and energy
management into unified management to achieve interconnection between devices, customer-
oriented experience and full life cycle management of buildings, effectively supporting the better
operation of HEM. In Shenzhen's Meilin Vanke Center, the Space Tech Energy Management System
was built based on iBUILDING. It not only solves the energy data statistics and predictive analysis of
existing buildings but also provides energy optimization suggestions based on self-developed
algorithms, delivering consumption reduction targets for building through a smart operation. During
the 24th Winter Olympics, Midea Building Technologies provided a wide range of products for multiple
scenes, from the opening ceremony to the closing ceremony, from sports venues to logistical support,
and at the window of broadcasting the event globally and the transportation hub connecting the world.
It provided low-carbon, efficient and smart HVAC solutions for Winter Olympic venues and supporting
buildings, including the National Stadium "Bird's Nest", the mountain broadcasting center in
Zhangjiakou, Shougang Park, the National Speed Skating Stadium, Beijing-Zhangjiakou High-speed
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Railway, Winter Olympic Village, and Taizicheng Snow Town, helping the event to fulfill its green
commitment. In May 2022, the first phase of the Guangzhou Metro Line 7 West Extension Shunde
Section officially opened. Midea transitioned from supplying single equipment for rail transit to
providing integrated procurement, design, and operation services, implementing wind-water linkage
and intelligent, energy-efficient system solutions at all stations for the first time. In June 2022, the final
piece of the world's first desert railway, the Haruo Railway, officially opened. Midea addressed the
cooling challenges faced by communication base stations in 70°C heat through technological
innovation and equipment upgrades. With professional solutions and extensive global service
experience in rail transit, Midea also became the air conditioning system supplier for Southeast Asia's
first high-speed railway, the Jakarta-Bandung High-Speed Railway. They provided design optimisation,
equipment supply, electromechanical installation, and after-sales maintenance for six building clusters,
including apartments, station buildings, and train depots, in support of the Belt and Road Initiative. In
December 2022, Midea Building Technologies signed a cooperation agreement with China Southern
Power Grid to jointly promote the implementation of virtual power plants across five southern
provinces and launch a pilot program in Shenzhen, actively exploring the commercial model and
industrialisation of virtual power plants and related businesses. Additionally, several projects powered
by the iBUILDING Midea Building Digital Platform received industry recognition, such as Midea
Building Technologies iBUILDING IOC for He Art Museum winning the "Red Dot Award: Brands &
Communication Design 2022"; Midea Headquarters Building, Shanghai Tongji Hospital, and Midea
Smart Building Integrated Digital Management Cloud Platform iBUILDING Portal each winning the
16th IDA Award; and the Midea West District Industrial Park project receiving the "LEED & WELL
Dual Gold Certification" from the U.S. Green Building Council (USGBC) and the International WELL
Building Institute.
In terms of technology development, in 2022, Midea Building Technologies' "Key Technologies and
Equipment for Urban Sustainable Development" project, focusing on "Key Technologies and Products
for Human Factors Engineering in Public Buildings", was approved and included in China's 14th Five-
Year Plan for National Key R&D Projects. Several technological achievements, such as "High-
efficiency Supply of Multi-flavor Heat Energy from Air Source Heat Pumps" and "Key Technologies
and Industrialization of Wide Temperature Range Full Condition High-efficiency Multi-split Air
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Conditioning Systems", have been certified by authorities as “Internationally Advanced”. Midea
Building Technologies' independently developed "Variable Frequency Screw High-Temperature Water
Source Heat Pump" was selected for the 2022 China Association of Refrigeration Energy-saving and
Eco-friendly Product Catalog, while "Horizontal Opposed Maglev Variable Frequency Centrifugal
Compressor Technology" and "Digital Simulation Key Technology for Multi-split System" were
included in the 2022 China Association of Refrigeration Energy-saving and Eco-friendly Technology
Catalog. Midea MDV8 Series Multi-split Air Conditioner (Heat Pump) Unit was granted the certificates
of "professional, characteristic, energy-saving and refined products", low-carbon certification and
carbon footprint evaluation in the inspection and assessment by Hefei General Machinery & Electrical
Products Inspection Institute (National Quality Supervision and Inspection Center of Compressors
and Refrigeration Equipment). MDV8 VRF was honored with multiple Tick-Mark performance
certifications issued by Intertek, three of which are free topology high reliability, ultra-high temperature
stable operation and ultra-high energy efficiency. In April 2022, two of Midea's star products,
"Medium- and High-temperature Water Outlet Variable Frequency Direct Drive Centrifugal Unit" and
"High-efficiency Modular Integrated Cooling Station", were listed in the "2021 Excellent Cold Source
Products for Data Center Cooling" selected by the China Association of Refrigeration. In July 2022, at
the 2022 China Heat Pump Industry Annual Conference and the 11th International Heat Pump
Industry Development Summit Forum, Midea Building Technologies' "Ultra-low Temperature Air
Source Heat Pump Heating and Hot Water Integrated Blaze Series Products" won the "Energy-saving
and Emission Reduction Technology Progress Award for Heat Pump Technology Innovation". With the
winners of the 2022 International Exhibition of Inventions of Geneva announced, Midea Building
Technologies’ "MDV8 Smart Building Energy Solution" project won the Gold Medal, and its "KONG
Cell: Empowering Traditional DDC with IoT Technology" and "M-thermal Arctic Heating Heat Pump"
projects won the Silver Awards. Meanwhile, its "Maglev Compressor High-precision Control
Technology" and "VRF Smart Control Technology" won the Patent Gold Award and Silver Award of
Guangdong Province. The "Control Method, Controller, and Air Conditioner for an Outdoor Fan in
Heating Mode" was honoured with a Gold Award at the Anhui Patent Awards. Midea Building
Technologies has a mature technology research and product development system, a research and
development team of nearly 1,000 people, and invested over RMB1 billion in R&D in 2022. It has
established joint research centres with Tsinghua University, Shanghai Jiao Tong University, and Xi'an
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Jiao Tong University, leading or participating in multiple national and provincial-level research projects.
In 2022, Midea Building Technologies reached strategic cooperation with Nanjing Yangtze River
Urban Architectural Design Co., Ltd., Space Tech and Shanghai Tongji Hospital in cloud computing,
big data, information security and other fields.
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 a world-renown robotics manufacturer. Relying on its industry-leading
movement algorithm, KUKA can ensure superior movement performance of robotics products
throughout their life cycle, and its mature design concept can continuously give birth to new products
able to lead the market. In 2022, KUKA continued to promote the innovation of various products and
technologies. In the software field, KUKA won the German Innovation Award with its new iiQKA
robotic operating system and ecosystem. Relying on its excellent applicability, modern and modular
software architecture, and high performance and flexibility, iiQKA.OS can help improve development
efficiency, and enable users to easily and quickly achieve automation. In the field of general industry,
KUKA’s new-generation KR CYBERTECH nano robotics will operate on the KR C5 micro robotics
controller, which can ensure excellent operating accuracy in continuous path motion, and can thus be
applied in multiple scenarios such as PCB assembly, painting, bonding, machining, polishing,
packaging and arc welding. The all-new KR 3 D1200, made from innovative materials, is lighter in
weight, faster in speed, and more flexible, with a maximum load capacity of 6kg and a standard cycle
time of less than 0.32 seconds. It also features a self-lubricating ball bearing design. Targeting the
electric vehicle and renewable energy sectors, KUKA has introduced four standard products and
three cleanroom versions of KR SCARA robots, capable of handling loads up to 12kg. The 12kg-class
standard and cleanroom robots both offer three different working ranges of 650, 750, and 850 mm,
with the standard model's shortest cycle time ranging between 0.4 and 0.42 seconds. Moreover, the
Irish technology company Votechnik has developed the ALR-4000 automation system based on
KUKA's KR QUANTEC series industrial robots, which extracts hasardous gases and removes sharp-
edged components to reduce harm to humans and the environment, enabling the recycling and
disposal of electronic components such as LCD devices. In the field of human-robot collaboration,
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KUKA's LBR iisy collaborative robot and the smartPAD pro robot controller duo have won a total of
four Red Dot Design Awards and iF Design Awards. The LBR iisy is a sensitive, precise, and easy-to-
operate collaborative robot. Its edgeless arm design allows personnel and collaborative robots to
work safely side by side, and all joints are equipped with integrated torque sensors that can instantly
detect the slightest touch. The smartPAD pro robot controller makes robot operation intuitive and
simple, featuring an ergonomic product design and robust durability. In the medical field, KUKA LBR
Med is a certified collaborative robotics applied in medical products. At the International Conference
on Robotics and Automation (ICRA) held in May 2022, KUKA and its partners demonstrated how the
LBR Med robotics could be applied in highly complex and sensitive medical scenarios such as brain
tumor biopsies. Considering that the food, medicine and cosmetics industries have special hygiene
requirements for robotic automation, the new "Hygienic Oil" product portfolios and "Hygienic Machine"
products of KUKA are designed to avoid potential contamination and meet the higher hygiene
requirements, while maintaining excellent performance in packaging, palletizing and other application
scenarios that prioritize hygiene requirements. Applied with lubricants compatible with food and
boasting smooth surfaces easy to clean, KUKA’s "Hygienic Oil" also complies with the hygiene
requirements of such standards as the EU Machinery Directive 2006/42/EC and the international DIN
ISO 14159. In 2022, in terms of market expansion, KUKA and Ford Otosan signed a framework
agreement, based on which KUKA will provide more than 700 robotics for the new generation of
electrically interconnected commercial vehicle project at Ford's Kocaeli Plant in Turkey for such fields
as the production of white vehicle body. KUKA's proprietary technologies also serve the Swedish
Automotive Group. Specifically, KUKA provides such services as design and assembly of production
lines for the chassis systems of the two new electric vehicles of Swedish Automotive Group at its
Southern California Plant. Meanwhile, KUKA is also responsible for the transformation of the
production line's logistics transportation system, which includes technologies such as spot welding,
self-piercing riveting, flow drilling screw assembly and connection, and gluing. KUKA has received an
order from Germany's ZF Group, a globally renowned automotive systems supplier, to provide 36 KR
IONTEC series robots for use in the die-casting manufacturing of plug-in hybrid transmission casings.
KUKA continuously promotes the integration and expansion of the robotics business in the Chinese
market and deepens the promotion of organizational reform with a focus on industrial applications
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and key customers. Its product varieties are further enriched, supply chain bottlenecks such as core
components are gradually addressed, and operating trend keeps improving overall. In terms of
market expansion, KUKA China set historical records in orders and deliveries in 2022. According to
MIR Industrial's forecast analysis, KUKA China's domestic industrial robot shipment share reached 8%
in 2022. KUKA continued to deepen its cooperation with leading clients such as BYD, Tesla, FAW-
Volkswagen, NIO, and CATL, providing comprehensive solutions for new energy vehicle
manufacturing. Additionally, after 2017, 2019, and 2021, KUKA won the "Outstanding Partner" award
from FAW-Volkswagen again in 2022 due to its excellent project execution capabilities and efficient
project collaboration performance. It also achieved breakthroughs in multiple industries such as food
and beverages, photovoltaics, consumer electronics, and pharmaceuticals, by integrating intelligent
warehousing and manufacturing products to optimise supply chain resources, provide one-stop full-
chain solutions, enhance customer value, and user experience. Sales have also significantly
increased as they actively expand waste systems while maintaining growth in traditional pneumatic
logistics systems. In product development, KUKA continuously enriches its product matrix. For
general industrial sectors, they launched the KR CYBERTECH nano E series six-axis robot, with two
models catering to different demands and multiple process packages. The compact structure and
hollow arm meet various arc welding application requirements. The optimised body design improves
rigidity and effectively prevents welding jitter, combined with high trajectory accuracy to ensure
excellent welding results. Targeting the consumer electronics and new energy sectors, KUKA
introduced the full series of four-axis robots, KR SCARA CS, with compact, minimalist, intelligent, and
easy-to-use controllers and a new generation operating system. Payloads cover 3kg-12kg, with a
maximum working distance of 850mm, suitable for high-speed handling and high-precision picking
applications. For logistics, KUKA released mobile robot products such as KMP 600i and KMP 1500i,
covering mainstream 600 kg and 1500 kg material handling scenarios, and expanding KMP+ series
products for a broader range of industrial manufacturing scenarios. They also released the
KMP600S-2 product for overseas businesses, meeting IP54 protection level and CE standards,
compatible with K-arOS body control system, K-Studio deployment system, and K-MReS intelligent
factory logistics scheduling system. In the medical field, the TransGuard rail logistics transportation
system completed localisation development, and KMP mobile robots and stackers have been
successfully localised for a series of tray storage and transportation solutions. In terms of capacity
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expansion, KUKA China fully leveraged Midea's experience and advantages in production and
operational efficiency in 2022. KUKA's first fully automated production line for heavy-duty robotics in
China, which was developed and designed independently, was put into operation, and was the first
production line of "robotics-produced robotics" in Guangdong Province. The entire process, from the
first operation to the final product, was unmanned, significantly increasing single-shift capacity. In
terms of technical research and development, KUKA China's laboratory was rated as the first
"National Robot Testing and Evaluation Center (Headquarters)" data exchange laboratory and CNAS
authorised and approved digital evaluation centre. This authorised listing signifies the high recognition
of KUKA China's product quality control and laboratory level by the National Evaluation Center
(Headquarters). In the future, KUKA China can independently issue CNAS-approved test reports,
significantly improving research and development verification testing efficiency, and providing
"Laboratory CE level" product certification externally. The patented technology of "control method,
device, computer equipment and storage media for robotics motion" independently developed by
KUKA China won the Silver Award of the 9th Guangdong Patent Award. The new KR DELTA robot
won the 2022 G-Mark GOOD DESIGN Award for outstanding industrial design. In addition, KUKA has
been playing an active part in raising Midea Group’s intelligent manufacturing level. By the end of
2022, the robot density of Midea reached 500 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.
J. Deepened the long-term incentive and protected the interests of shareholders
In 2022, Midea continued to encourage the core management to take responsibility for the
Company’s long-term development and growth by further enhancing its long-term incentive schemes.
Midea has launched nine stock option incentive schemes, six restricted share incentive schemes,
eight global partner stock ownership schemes and five 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 with a total amount of more than
RMB86 billion (inclusive of the 2022 dividend plan) since Group listing in 2013. In addition to the
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consistent dividend payouts, the Company has carried out a string of share repurchase plans. To
further stabilize the market capitalization and protect the shareholders’ interests, the Company has
launched share repurchase plans for four consecutive years since 2019. And the repurchased shares
would be used for equity incentive schemes and employee stock ownership schemes. During the
Reporting Period ended 31 December 2022, Midea has used more than RMB2.6 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 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. Adherence to the strategy of “Technology Leadership”, global R&D resource
integration capabilities, 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 globally competitive R&D capability and system. It has
established a three-tier technical committee system responsible for the formulation and
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implementation of technology strategies. And the four-tier R&D system has been improved 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 RMB50 billion in R&D over the past five years, with the investment of
more than RMB12 billion in 2022. In order to deepen its global technology ecosystem in a faster way,
the Group has set up a total of 35 research centers in 12 countries. It has over 20,000 R&D personnel.
With the “2+4+N” global R&D network, it has gained the advantage of scale in R&D across the world.
Domestically, Midea Global Innovation Center in Shunde District, Foshan City and Midea Global
Innovation Center in Shanghai are the cores of Midea’s R&D arm. Overseas, with Midea America
Research Center, Midea Germany Research Center, Midea Japan Research Center and Midea Italy
Research Center as the cores, Midea makes use of the regional technological advantages, integrates
global R&D resources, and builds complementary global R&D capabilities. Following the strategy of
“Technology Leadership”, it attracts more professional talent and builds an organic global R&D
network.
Midea’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 product and technological
superiority. While strengthening its global R&D network, Midea also works on constructing an open
platform of innovative ecosystems. Through deepening the implementation of technology projects to
integrate quality technological resources across the world, a global innovation system has been put in
place. By way of integrating various resources of large companies, technology companies,
universities, research institutes and innovation consulting agencies, a technology ecosystem has
been put in place and continuously expanded, which has access to enormous resources for
technological innovation. Additionally, a scientist system has been established with eight academician
workstations/workshops and 19 academicians on more than 200 cooperation projects. These projects
cover green, energy-saving, health, intelligent, robotics and automaton technologies, among others.
In terms of basic research, the Group cooperates with domestic and foreign scientific research
institutions, such as Massachusetts Institute of Technology, University of California, Berkeley,
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University of Illinois at Urbana-Champaign, Stanford, Purdue University, University of Maryland, The
University of Sheffield, Tsinghua University, Shanghai Jiao Tong University, Zhejiang University, the
Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong University, Huazhong
University of Science and Technology and South China University of Technology, in order to establish
joint labs for deepening technological cooperation. The Group also upgrades and make innovations
on cooperation models by carrying out strategic cooperation with tech companies such as BASF,
Honeywell, 3M, and SCHOTT to build a global innovation ecosystem through multiple channels.
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) 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 on the domestic market
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With its continuous efforts over the years, Midea has formed a multi-channel network which has a
complete business layout and covers a wide range of areas, thus meeting the purchase needs of
online and offline consumers for household appliances. Midea continues to improve its offline
business layout around user needs, and has created a network layout of comprehensive household
appliance stores, specialty stores of self-owned products, traditional retailers and e-commerce
franchise stores. It provides easy access to Midea's products and services for individual customers,
as well as professional scenario-based solutions for corporate customers, covering the entire market
from first-tier cities to townships. Particularly, Midea boasts a unique exclusive shop system in the
industry with nearly 20,000 outlets, where various needs of users from new decoration to updates can
be met in pre-decoration stores, flagship stores, professional stores, combo stores and other stores.
Midea continuously provides industry-leading digital platform services to retail stores, having
completed multi-product-category, pre-decoration, and retail transformations for more than 9,000
existing store outlets. Over 6,000 digital retail benchmark stores have been established, with a focus
on expanding and constructing premium brand stores for COLMO and Toshiba. Cantered around
"smart suite operation" and "entire-house renovation solutions", Midea actively cooperates with home
decoration, furniture, building materials, and design channels, seeking to capture front-end traffic. The
Company has built over 500 "home decoration + appliances" deeply integrated brand stores,
providing one-stop services for customers. Midea also explores nationwide property cooperation
channels, offering localised renovation and replacement services to homeowners through various
methods such as model rooms in residential communities, and developing a systematic solution for
partial renovation of existing houses. The Company promotes layered operations for pre-decoration
stores, creating an integrated decoration style for home appliances and home decoration, and
launching exclusive smart product suites for the pre-decoration market. In 2022, the retail sales on
the pre-decoration market saw a year-on-year increase of over 100%. In 2022, Midea combined the
exclusive store business and the pre-decoration store business to create “Midea Cloud Sales+”. With
a unified platform, unified management and unified operation, the “Midea Cloud Sales+” ecosystem
has been enhanced, with its business covering markets of all tiers. Upholding the customer-oriented
principle, Midea continuously promotes digital transformation on the direct retail end, providing
customers with digital platform services that are industry-leading. By providing offline stores with
professional digital platform support such as capacity enhancement, purchasing guarantee, and user
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operation, it can help improve the actuarial rate, order review timeliness and logistics efficiency to
ensure store supply experience. The Company continues to refine the Midea Cloud Sales App,
improve the supply chain capability, and increase logistics efficiency. It also builds an online shopping
mall for offline stores through the Midea Home Delivery mini-app, empowering offline retail by using
tools such as marketing tool packages, user operation platforms, and the home delivery platform.
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. Meanwhile, Midea specifically promotes product structure breakthroughs,
accurately identifying user needs through data insights, using innovative approaches to drive growth
in emerging categories, and continuously enhancing its intelligent scenario operation capabilities and
breaking into the high-end market.
Annto, a technological innovation-based provider of new supply chain (logistics) services under Midea
Group, makes full use of digital and big data technologies to refine and manage its comprehensive
logistics network. Annto gathers data from all aspects of the logistics chain and leverages information
technology to optimise process execution, enabling seamless coordination among people, goods,
vehicles, and sites. Through intelligent management and decision-making related to orders,
information, and logistics, building a smart and digital integrated logistics service platform. Annto
creates a supply chain business model that has been successfully validated through corporate
practice while focusing on industry characteristics, deeply exploring pain points in the entire value
chain, and forming a business framework and operation management system that combines software
and hardware capabilities. Annto provides systematic and in-depth solutions for different industry
clients. Annto concentrates its resources on urban and rural 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 over 77% of) towns and villages within 24 hours
and to 37,260 (or over 94% of) towns and villages within 48 hours in the country. Additionally, Annto
strengthens the shared inventory system for online and offline channels and the competitive edge of
integrated delivery for the ToB/ToC business, refines its network of integrated delivery and installation
services, drives connectivity through the whole process from manufacturing to sale, provides quality
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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 “MIoT”, 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 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,
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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, Other Innovation Business
and other organs, Midea has established a unified IoT technology platform. Its Industrial Internet
platform has been upgraded to “MIoT 2.0”, and five 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 400 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 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, with an average length of service of over 15 years in the Group.
They have rich management experience and practices in the relevant industries, deep understanding
and insights of the relevant industries with respect to ToC and ToB, and accurate understanding of the
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industry environment and corporate operations and 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 nine Stock Option Incentive Schemes, six Restricted Share
Incentive Schemes, eight Global Partner Stock Ownership Schemes and five Business Partner Stock
Ownership Schemes for key managerial and technical personnel at different levels, 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”.
4.2 Revenues and Costs
4.2.1 Breakdown of operating revenue
Unit: RMB’000
2022 2021
As a percentage of As a percentage of YoY Change (%)
Amount total operating Amount total operating
revenue (%) revenue (%)
Total 343,917,531 100% 341,233,208 100% 0.79%
By business segment
Manufacturing 305,846,997 88.93% 301,026,573 88.22% 1.60%
By product category
HVAC 150,634,586 43.80% 141,879,146 41.58% 6.17%
Consumer
125,284,737 36.43% 131,866,099 38.64% -4.99%
appliances
Robotics &
automation 29,927,674 8.70% 27,281,328 7.99% 9.70%
systems
By geographical segment
PRC 201,272,589 58.52% 203,579,380 59.66% -1.13%
Outside PRC 142,644,942 41.48% 137,653,828 40.34% 3.63%
By sales model
Online 68,012,355 19.78% 62,103,887 18.20% 9.51%
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Offline 275,905,176 80.22% 279,129,321 81.80% -1.16%
Note: Consumer appliances in the table above primarily include refrigerators, laundry appliances, kitchen appliances
and small domestic appliances.
The Industrial Technology Business Group, the Building Technologies Division, and the Robotics &
Automation Division recorded revenue of RMB21.6 billion (up 7% year-on-year), RMB22.8 billion (up
16% year-on-year), and RMB27.7 billion (up 10% year-on-year) respectively during the Reporting
Period.
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 305,846,997 227,347,877 25.67% 1.60% -0.57% 1.62%
By product category
HVAC 150,634,586 116,234,025 22.84% 6.17% 3.77% 1.79%
Consumer
125,284,737 87,449,080 30.20% -4.99% -8.22% 2.45%
appliances
Robotics &
automation 29,927,674 23,664,772 20.93% 9.70% 10.84% -0.81%
systems
By geographical segment
PRC 201,272,589 151,542,264 24.71% -1.13% -3.37% 1.74%
Outside PRC 142,644,942 108,996,437 23.59% 3.63% 1.20% 1.83%
By sales model
Online 68,012,355 47,374,843 30.34% 9.51% 5.29% 2.80%
Offline 275,905,176 213,163,858 22.74% -1.16% -2.90% 1.39%
Under the circumstances that the statistical standards for the Company's main business data
adjusted in the Reporting Period, the Company's main business data in the recent year is calculated
based on adjusted statistical standards at the end of the Reporting Period
□Applicable √N/A
4.2.3 Whether revenue from physical sales is higher than service revenue
√Yes □No
Business
Item Unit 2022 2021 YoY Change (%)
segment
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In thousand
Sales 547,765.0 562,677.2 -2.65%
Home units/sets
appliances Output Ditto 539,852.5 585,074.7 -7.73%
Inventory Ditto 87,067.8 87,636.3 -0.65%
Reason for any over 30% YoY movements in the data above
□Applicable √N/A
4.2.4 Execution of significant sales and purchase contracts in the Reporting Period
□Applicable √N/A
4.2.5 Breakdown of cost of sales
Unit: RMB’000
2022 2021
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 170,337,613 83.63% 175,102,256 84.47% -2.72%
Home Labor costs 12,746,704 6.26% 12,186,025 5.88% 4.60%
appliances Depreciation 3,242,335 1.59% 3,203,362 1.55% 1.22%
Energy 2,760,289 1.36% 2,846,166 1.37% -3.02%
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 Midea Capital Co., Ltd. and its subsidiaries (inclusive of
structured entities), WuHan TTium Motor Technology Co., Ltd. and its subsidiaries, as well as KONG
Smart Environment (Xi'an) Co., Ltd. (formerly known as “Shaanxi Construction Investment Group Co.,
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
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Total sales to top five customers (RMB'000) 39,056,405
Total sales to top five customers as a percentage of the
11.36%
total sales for the year (%)
Total sales to related parties among top five customers
0
as a percentage of the total sales for the year (%)
Information about top five customers
As a percentage of the total
No. Customer Sales revenue (RMB'000)
sales revenue (%)
1 Customer A 23,909,634 6.95%
2 Customer B 6,425,663 1.87%
3 Customer C 3,667,310 1.07%
4 Customer D 2,949,572 0.86%
5 Customer E 2,104,226 0.61%
Total -- 39,056,405 11.36%
Other information about top five customers
□Applicable √N/A
Major suppliers of the Company
Total purchases from top five suppliers (RMB'000) 15,589,950
Total purchases from top five suppliers as a percentage
6.36%
of 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 5,288,172 2.16%
2 Supplier B 3,740,282 1.53%
3 Supplier C 2,331,059 0.95%
4 Supplier D 2,233,939 0.91%
5 Supplier E 1,996,498 0.81%
Total -- 15,589,950 6.36%
Other information about top five suppliers
□Applicable √N/A
4.3 Expense
Unit: RMB'000
Reason for any significant
2022 2021 YoY Change (%)
change
Selling and
distribution 28,716,121 28,647,344 0.24%
expenses
General and
administrative 11,582,664 10,266,283 12.82%
expenses
Finance costs 3,387,491 4,386,111 -22.77%
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Research and
development 12,618,506 12,014,907 5.02%
expenses
4.4 R&D investment
√Applicable □N/A
Information about R&D personnel
2022 2021 YoY Change (%)
Number of R&D personnel 20,782 18,105 14.79%
R&D personnel as a
percentage of total 12.50% 10.92% 1.58%
employees
Educational background of —— —— ——
R&D personnel
Bachelor’s degree 12,353 10,881 13.53%
Master’s degree 4,457 3,934 13.29%
Doctoral degree 548 427 28.34%
Other 3,424 2,863 19.59%
Age structure of R&D —— —— ——
personnel
Below 30 6,566 5,956 10.24%
30~40 11,208 9,532 17.58%
Over 40 3,008 2,617 14.94%
Information about R&D investment
2022 2021 YoY Change (%)
R&D investment (RMB’000) 12,618,506 12,014,907 5.02%
R&D investment as a
percentage of operating 3.67% 3.52% 0.15%
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 2022 2021 YoY Change (%)
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Subtotal of cash inflows from
343,767,987 330,415,497 4.04%
operating activities
Subtotal of cash outflows due to
309,110,159 295,323,793 4.67%
operating activities
Net cash flows from operating
34,657,828 35,091,704 -1.24%
activities
Subtotal of cash inflows from
102,953,948 127,801,101 -19.44%
investing activities
Subtotal of cash outflows due to
116,463,458 114,201,515 1.98%
investing activities
Net cash flows from investing
-13,509,510 13,599,586 -199.34%
activities
Subtotal of cash inflows from
54,739,462 21,145,221 158.87%
financing activities
Subtotal of cash outflows due to
65,594,343 52,349,760 25.30%
financing activities
Net cash flows from financing
-10,854,881 -31,204,539 65.21%
activities
Net increase in cash and cash
10,581,929 17,001,531 -37.76%
equivalents
Explanation of why the data above varied significantly
√Applicable □N/A
a. Primarily driven by a decrease in cash received from disposal of investments, net cash flows from
investing activities decreased 199.34% from last year.
b. Primarily driven by an increase in cash received from borrowings, net cash flows from financing
activities increased 65.21% from last year.
c. Primarily driven by a decrease in net cash flows from investing activities, net increase in cash and
cash equivalents decreased 37.76% 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 2022 1 January 2022 Change in Explanation about any
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As a As a percentage material change
percentage of percentage of (%)
Amount Amount
total assets total assets
(%) (%)
Cash at bank
55,270,099 13.08% 71,875,556 18.53% -5.45%
and on hand
Accounts
28,237,973 6.68% 24,636,440 6.35% 0.33%
receivable
Contract assets 4,498,956 1.06% 3,823,476 0.99% 0.07%
Inventories 46,044,897 10.90% 45,924,439 11.84% -0.94%
Investment
809,936 0.19% 859,195 0.22% -0.03%
properties
Long-term
equity 5,188,817 1.23% 3,796,705 0.98% 0.25%
investments
Fixed assets 26,082,992 6.17% 22,852,848 5.89% 0.28%
Construction in
3,843,777 0.91% 2,690,930 0.69% 0.22%
progress
Right-of-use
2,339,878 0.55% 2,297,354 0.59% -0.04%
assets
Short-term
5,169,480 1.22% 5,381,623 1.39% -0.17%
borrowings
Long-term
50,685,948 12.00% 19,734,020 5.09% 6.91%
borrowings
Contract
27,960,038 6.62% 23,916,595 6.16% 0.46%
liabilities
Lease liabilities 1,507,480 0.36% 1,533,552 0.40% -0.04%
Indicate whether overseas assets account for a larger proportion in total assets.
□Applicable √N/A
6.2 Assets and liabilities measured at fair value
√Applicable □N/A
Unit: RMB'000
Profit or Amount
loss from Cumulative provide
change in fair value d for Purchased
Opening Sold in Other Closing
Item fair value change impairm in the
balance the period changes balance
during recorded in ent in period
the equity the
period period
Financial assets
1. Financial assets held for
10,231,57
trading (excluding derivative 5,879,202 -661,037 8,229,719 68,287 3,284,593
8
financial assets)
2. Derivative financial assets 1,298,815 -802,930 -304,606 506,664 6,072 60,580 752,451
13,526,54
3. Receivables financing 10,273,552 3,252,988 -
0
4. Other debt investments and 21,290,89 17,626,30
27,484,322 10,468,000 964,875
other 5 2
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5. Investments in other equity
45,747 -2,481 - 2,062 155 41,359
instruments
6. Other non-current financial 10,625,24
5,912,873 -797,785 732,939 5,368,375 1,142,919 551,761
assets 4
-
32,673,52 1,645,65 45,856,48
Sub-total of financial assets 50,894,511 2,261,75 425,852 - 27,825,746
6 8 9
2
Investment properties
Productive living assets
Others
-
32,673,52 1,645,65 45,856,48
Sub-total of the above 50,894,511 2,261,75 425,852 27,825,746
6 8 9
2
Financial liabilities 166,649 -129,583 31,962 1,923,605 99,876 2,553 1,895,310
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)
116,463,458 114,201,515 1.98%
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
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7.4 Financial investments
7.4.1 Securities investments
√Applicable □N/A
Unit: RMB’000
Gain or
Cumula
loss from
Openin tive fair
Type change Purcha Gain or Fund
Code of Abbreviat Initial Measur g value Sold in Closing
of in fair sed in loss in Accounting ing
securitie ion of investm ement carryin change the carrying
secur value the the title sour
s securities ent cost method g recorde period amount
ities during period period ce
amount d in
the
equity
period
Financial
Over Fair Own
assets
seas XIAOMI- - -
1810 769,97 value 927,15 71,252 586,342 fund
listed W 412,068 412,068 held for
2 method 8 s
stock
trading
Financial
Over Fair Own
assets
seas SoundHo
SOUN 157,20 value -25,883 -2,965 80,737 -25,883 51,889 fund
listed und AI held for
3 method s
stock
trading
Financial
Dom Fair Own
estica assets
- -
lly 688165 EFORT 178,53 value 392,31 - - 274,120 fund
118,192 118,192 held for
listed 4 method 2 s
stock trading
Financial Rais
Dom Fair
estica assets ed
lly 688159 Neoway 31,600 value - -31,208 - 60,308 - -31,208 29,100
held for fund
listed method
stock trading s
Other non-
Dom Fair Own
estica current
- 235,25 -
lly 688322 Orbbec 300,00 value 134,670 fund
100,585 5 100,585 financial
listed 0 method s
stock assets
Financial Rais
Dom Fair
estica assets ed
- -
lly 688162 JEE 88,180 value - - 317,77 - 153,353
164,426 164,426 held for fund
listed method 9
stock trading s
Other non- Rais
Dom Fair
estica Real- current ed
lly 301135 40,000 value - -28,466 90,567 - -28,466 62,101
Design financial fund
listed method
stock assets s
Other non- Rais
Dom Fair
estica current ed
lly 688097 BOZHON 55,000 value - -54,997 144,74 - -54,997 89,746
financial fund
listed method 3
stock assets s
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The 2022 Annual Report of Midea Group Co., Ltd.
Other non- Rais
Dom Fair
Highpow
estica current ed
er
lly 001283 20,000 value - -3,436 41,466 - -3,436 38,030
Technolo financial fund
listed method
gy
stock assets s
1,640,4 - 1,319,4 970,85 1,419,35 - -
Total -939,261 68,287 - -939,261
89 70 5 1
7.4.2 Derivatives investments
√Applicable □N/A
A. Derivatives investments for hedging purposes in the Reporting Period
√Applicable □N/A
Unit: RMB'000
Gain or loss Closing
from Cumulative fair amount as a
Initial Purchas Sold in
change in value change Closing percentage of
Type of derivative investmen ed in the the
fair value recorded in amount the Company’s
t amount period period
during the equity closing net
period assets
Futures contracts 71,790 0 -22,714 - - 85,017 0.06%
Forward contracts 902,875 -602,152 -313,854 350,012 6,072 352,895 0.25%
Cross-currency
interest rate -305,423 732,939 4,276,688 2.99%
swaps
Total 974,665 -907,575 396,371 350,012 6,072 4,714,600 3.30%
Explanation of significant changes in
accounting policies and specific financial
accounting principles in respect of the No change
Company's hedges for the period as
compared to the prior period
Actual loss from derivatives investments during the Reporting Period
Actual gain/loss in the period
was RMB-2,289.381 million.
The Company's major risks during the Reporting Period included
foreign exchange risk exposures and raw material price risks. Foreign
exchange risks included foreign currency-denominated asset and
liability exposures arising from overseas sales, raw material purchases,
Results of hedges financing and other operations. And raw material price risks included
exposures to fluctuations in spot trading market prices for bulk material
purchases.These uncertainties arising from currency fluctuations were
effectively hedged against by buying derivative contracts of the same
amount and maturity but in opposite directions.
Source of derivatives investment funds All from the Company’s own funds
For the sake of eliminating the cost risk of the Company's bulk
purchases of raw materials as a result of significant fluctuations in raw
material prices, the Company not only carried out futures business for
Risk analysis of positions held in derivatives
some of the bulk materials, but also made use of bank financial
during the Reporting Period and explanation
instruments and promoted forex funds business, with the purpose of
of control measures (Including but not limited
avoiding the risks of exchange and interest rate fluctuation, realizing the
to market risk, liquidity risk, credit risk,
preservation and appreciation of forex assets, reducing forex liabilities,
operational risk, legal risk, etc.)
as well as achieving locked-in costs. The Company has performed
sufficient evaluation and control against derivatives investment and
position risks, details of which are described as follows:
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1. Legal risk: The Company's futures business and forex funds
businesses shall be conducted in compliance with laws and regulations,
with clearly covenanted responsibility and obligation relationship
between the Company and the agencies.
Control measures: The Company has designated relevant responsible
departments to enhance learning of laws and 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 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.
The Company carried out recognition and measurement according to
“Section VII Recognition of Fair Value” in the Accounting Standard No.
22 for Business Enterprises—Recognition and Measurement of
Financial Instruments.
Changes in market prices or fair value of Changes in the fair value of derivatives were recognized at RMB-
derivative products during the Reporting 511.204 million during the Reporting Period.
Period, specific methods used and relevant 1. The fair value of futures contracts was determined on the basis of
assumption and parameter settings shall be publicly quoted prices in the futures market.
disclosed for analysis of fair value of 2. The fair value of foreign contracts was determined based on banks’
derivatives quoted prices for foreign exchange products.
3. The main parameter assumptions used in the analysis of the fair
value of cross-currency interest rate swaps included interest rate paid,
interest rate received, frequency of interest received, frequency of
interest paid, USD interest rate curve, EUR interest rate curve,
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USD/EUR exchange rate curve, etc.
Litigation involved (if applicable) N/A
Disclosure date of the announcement about
the board’s consent for the derivative 30 April 2022
investment (if any)
Disclosure date of the announcement about
the general meeting’s consent for the 21 May 2022
derivative investment (if any)
The Company's independent directors are of the view that the futures
hedging business is an effective instrument for the Company to
eliminate price volatility and implement risk prevention measures
through enhanced internal control, thereby improving the operation and
Special opinions expressed by independent management of the Company; the Company's foreign exchange risk
directors concerning the Company's management capability can be further improved through the forex funds
derivatives investment and risk control business, so as to maintain and increase the value of foreign exchange
assets and the abovementioned investment in derivatives can help the
Company to fully bring out its competitive advantages. Therefore, it is
practicable for the Company to carry out derivatives investment
business, and the risks are controllable.
B. Derivatives investments for speculative purposes in the Reporting Period
□ Applicable √ N/A
No such cases in the Reporting Period.
7.5 Use of funds raised
□ Applicable √ N/A
No such cases in the Reporting Period.
8. Sale of Major Assets and Equity Interests
8.1 Sale of major assets
□Applicable √N/A
No such cases in the Reporting Period.
8.2 Sale of major equity interests
□ Applicable √ N/A
9. Analysis of Major Subsidiaries
√Applicable □N/A
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Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Total Net Operating Operating
Net profit
Company Business Registered assets (in assets (in revenue profit (in
Company name (in RMB
type scope capital RMB RMB (in RMB RMB
million)
million) million) million) million)
Guangdong Midea Manufacturing
USD158.58
Kitchen Appliances Subsidiary of home 21,442 10,139 16,218 2,283 2,021
million
Manufacturing Co., Ltd. appliances
Foshan Shunde Midea
Manufacturing
Electrical Heating USD42
Subsidiary of home 18,125 9,810 7,372 1,095 1,001
Appliances million
appliances
Manufacturing Co., Ltd.
Wuhu Midea Kitchen & Manufacturing
RMB60
Bath Appliances Mfg. Subsidiary of water 15,048 1,661 13,425 1,580 1,379
million
Co., Ltd. heaters
Manufacturing
Wuxi Little Swan RMB732,48
Subsidiary of laundry 22,260 6,651 22,043 2,102 1,927
Electric Co., Ltd. 7,764
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 Midea Capital Co., Ltd. and its subsidiaries (inclusive of
structured entities), WuHan TTium Motor Technology Co., Ltd. and its subsidiaries, as well as KONG
Smart Environment (Xi'an) Co., Ltd. (formerly known as “Shaanxi Construction Investment Group Co.,
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
As of the end of the Reporting Period, one structured entity was included in the Group’s consolidated
financial statements, which is a private-equity fund controlled by the Group. As a manager and
investor of the structured entity, the Group has relevant management power in and variable returns
from the entity, and has the ability to exercise its management power to impact the returns.
11. Outlook for the Future Development of the Company
Development strategies of the Company
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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 business growth under the guidance of the
strategic focus. Midea are built to grow on the back of advanced governance mechanism, future-proof
values, and managerial mindset growth. Midea will continuously improve the governance mechanism
by empowering responsibilities, rights and obligations, clarify decentralization and authorization,
constantly refine the agent mechanism, optimize the incentive and constraint system, encourage
entrepreneurship and boost organizational vitality, and establish a flat and agile organization and
optimization process. It will also adhere to the values of long-termism and altruism, truly put
employees, users, customers and partners at the center of all things, and improve the EHS
governance and ESG rating. Additionally, the Management will keep reflecting on and challenging
themselves, endeavoring to achieve all-round growth both spiritually and intellectually. Meanwhile,
Midea will continue to improve the talent structure, build diverse teams that are inclusive and
collaborative, further strengthen diversity, openness and inclusiveness, and create a simple,
straightforward, flat and equal environment. In the meantime, it will constantly improve consistency
management across the Group, so as to achieve consistent operations, corporate culture and values
and philosophies, which will ensure the sustained and steady development of the Company. There
are no shortcuts for the development and operation of a company. Looking back at 2022, the
Company has further reinforced and adhered to basic principles in the face of risks, setbacks, and
changes, returned to the basics and remained practical and reasonable. Not distracted from the long-
term goals, the Company prioritised cash flows, product capabilities, and technology accumulation.
Adhering to the principles of simplicity and efficiency, it has clarified its positioning, avoided impulsive
decisions, removed the ego from decision-making process, and eliminated formalism. In the face of
future changes, only by remaining cautiously open-minded, staying alert of potential challenges, and
making adequate preparations can the goals be achieved. Despite the continuous increase in
uncertainty, technology-driven transformation remains the main theme of the current era. Midea will
adhere to the core strategic focus with “Technology Leadership” as the core, remain committed in the
coordinated development of ToC and ToB businesses, and fire up the "Second Growth Engine". It will
strive to boost the strength of its products and core technologies in the ToC business while improving
profitability to provide strategic support for the transformation of the ToB business. The Company is
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The 2022 Annual Report of Midea Group Co., Ltd.
constantly consolidating and improving its globalisation capabilities, striving to transform from a
Chinese business to an international one. Midea will also extend its advantages in efficiency to
innovation, products, and technologies.
Key operation points in 2023:
In 2023, based on the core strategic focus with “Technology Leadership” as the core, Midea will
adhere to the annual business principle of "Stabilize Profit & Drive Growth". "Stabilize Profit" entails
maintaining a steady profit level based on the recovery of the previous year's profitability, while "Drive
Growth" demands fully embracing entrepreneurship and proactively driving growth. It is essential to
step out of the comfort zone, confront risks and uncertainties, as well as seek out new paths, new
growth drivers, and new methodologies. Growth can be achieved by continuously expanding into new
markets, product categories, mechanisms, and growth areas. The Smart Home Business Group aims
to achieve high-quality growth, ensure stable and sustainable profitability and cash flow, and tackle
challenges and issues in the development of non-advantaged categories, emerging categories, and
premium brands through innovative transformation. The Company is committed to firing up the
"Second Growth Engine", focusing on core ToB businesses such as Robotics & Automation, Building
Technologies, and New Energy, while fully harnessing entrepreneurship. It will concentrate on R&D
investment intensity and system construction, benchmark against world-class enterprises, establish
and refine the "Three Generations" R&D system, actively expand overseas business, and achieve
“Global Impact” through continuous innovation to address development challenges. Also, it will
emphasize goal orientation, problem orientation, and result orientation, promote organisational
innovation and mechanism restructuring, establish an agile organisation, effectively support Midea's
strategic transformation. Measures will be taken to ensure the alignment of responsibility, authority,
and benefits through further decentralisation, fully invigorate organisational and personnel vitality,
enhance incentives for core personnel, encourage refined operations to bolster efficiency advantages,
and continuously improve core operating indicators such as per capita efficiency and cash cycle.
Entrepreneurship is the core competitiveness of an enterprise, necessitating continuous innovation in
corporate governance and incentive mechanisms to fully stimulate the entrepreneurship and establish
and reinforce Midea's entrepreneurial groups that are willing to take responsibility, admit mistakes, be
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diligent in learning, and skilful in thinking through mechanism reform. Key tasks for 2023 include:
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, carry
out the task of technology innovation, product innovation, technological innovation, business model
innovation, and process innovation, as well as build a mechanism that can support “Technology
Leadership”. 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 innovation mechanism assurance of the three-tier technical committee and the four-tier R&D
system, Midea will enhance the "Three Generations" system and pool together its R&D strength. It
will continue to promote localized R&D in overseas operations, increase investment in localized R&D,
and leverage the advantages of localized R&D to better serve the local markets. Also, efforts will be
made to continuously drive core technology breakthroughs in green development, energy saving,
health, intelligent transformation, robotics & automation, etc. by adopting a joint innovation model, in
pursuit of a stronger presence in the technology world. It will actively respond to China’s dual-carbon
strategy and carry on with its "Green Strategy", 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 green standards in a deep manner to obtain the national green
product certification of all categories of products. To promote the rapid application of scientific
innovation through standardization, it will implement the "3+1" strategy for standardization, drive
technological standardization for innovations in green development, energy saving, intelligent
technologies, as well as healthy, comfortable and convenient technologies, etc., 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, 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, it will continuously build the scientist
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The 2022 Annual Report of Midea Group Co., Ltd.
system, attract global research talent, vigorously introduce high-end talent, and constantly refine the
R&D network. Based on regional technology advantages, it will continue to improve the "2+4+N" R&D
network, increase the comprehensive strength of overseas R&D centers, and build an innovation
mechanism for the “Technology Leadership” strategy, so as to maintain technology leadership in a
comprehensive manner.
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 appliances
and upgrading of the major appliance business must be accelerated, in addition to the promotion of
products catering to new consumption trends. Midea will plan for, establish and refine business
middle platforms, especially data and technology middle platforms. In the meantime, it will maintain
overall consistency by sticking to “One Midea, One System, One Standard”. In face of common
problems such as fluctuations in exchange rates and prices of bulk raw materials, as well as sourcing
management, Midea will firmly promote its internal coordination and sharing mechanism and keep
perfecting the relevant solutions. It will also maintain effective investments, control non-operating
expenses, increase labor productivity, improve human resource allocation efficiency, promote lean
management and provide fresh impetus for continual growth through relentless innovation.
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
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of efforts to connect with users' preferences. In terms of channel reform, the Company will deepen
marketing changes and simplify delivery rules with a focus on terminal retail, and set up a
professional team in the regional headquarters and operation center in China with a focus on retail
capability and user operation. While organizing organizational reform, the Company will continuously
strengthen the principle of "One Midea, One System and One Standard", give full play to collaborative
advantages, and do well in result-oriented process control to achieve constant improvement of
operating efficiency. Midea, based on digital systems and tools, is investing in dedicated resources to
ensure the successful implementation of four core projects, namely "Grid-based Layout and High-
quality Store Establishment", "Store Classification and Grading Online with Layered Resource
Matching", "Product Assortment Upgrade", and "Full-Link Retail Operations". The Company aims to
develop user operation capabilities and data analysis decision-making capabilities for the retail
platform, supporting retail transformation. In the online channels, Midea is promoting the construction
of a customer ecosystem, focusing on cultivating all-category and multi-category customer shops,
optimizing supply chain models, and strengthening the capabilities of a shared inventory system, and
drop-shipping services. This will satisfy the needs of customers and users while improving turnover
efficiency, accelerating the scale expansion of premium brands and the enhancement of content live-
streaming marketing capabilities. In terms of product marketing, the Company will strengthen
branding and product suite-based operation to provide users with home appliance package solutions.
Furthermore, the Company will continue to, centering around product structure upgrade, promote the
implementation of intelligent scenes and the construction of entire-house smart decoration centre,
build retail outlets for immersive experience of Midea Smart Home, and cultivate the core capability of
providing entire-house smart solutions. Centred around the theme of "sensory technology", Midea is
launching a series of product experience and targeted marketing activities. In terms of user operation
and service, the Company will continue to, centering around the principle of "Create Value for Users"
and the orientation of user experience, improve the iteration of product design and experience of
purchase services, optimise the rights and interests of members, and accelerate the construction of
private domain traffic platform. The Company will continue to optimise service process reconstruction,
enhance user participation in closed-loop confirmation rates, and strengthen users' perception of the
service process. Midea will upgrade service standards and technical process standards, striving to
make Midea's services an industry benchmark, continuously enhancing the full-category service
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capabilities, pre-decoration service capabilities, and entire-house smart scene-oriented service
capabilities of suite-based service outlets, and improving the user experience of delivery, installation,
and packaged services. Midea is also promoting the construction of a directly operated service
system, strengthening the cultivation of diversified skill certification, and other service reform projects,
enhancing the comprehensive capabilities of service engineers. Furthermore, Midea is advancing
green recycling, proactive services, and intelligent customer service construction, providing users with
a one-stop service experience.
d. On the overseas market, Midea will centre on horizontal and vertical capability expansion in 2023.
On the horizontal dimension, it will concentrate on "Insight to Product," "Marketing to Order," "Order to
Payment," and "Problem to Solution." On the vertical dimension, it will focus on capability frameworks,
process construction, organisational mechanisms, and digital support to create a global business
capability landscape and management support system that integrates OEM and OBM. In terms of
products, based on the "Three Generations" cornerstone, it will strengthen the value synergy between
the market front-end and R&D backend, emphasise overseas R&D localisation, continuously optimise
product structure, build overseas user experience centres with a focus on intelligent scene
experiences, comprehensively promote the entire-house smart scene system and smart retail
upgrades, and construct a product competition system with high added value. In terms of
manufacturing, it will continue to advance the construction and production of manufacturing bases in
Brazil, Egypt, and Mexico, promote capacity planning in key markets such as Europe and ASEAN,
and strengthen the "Local Supply" layout. In terms of user services, it is committed to building a
stable global spare parts supply and a comprehensive global service system. It will complete the
construction of the global spare parts centre’s main warehouses in China and Thailand, achieve full
coverage of Midea's Global Call Centre, pilot social media access in some markets, comprehensively
upgrade the global engineering technology platform, and enhance service channel capabilities in key
countries. In terms of digital construction, it will continue to drive business efficiency improvement
through special process change teams, and advance the value chain data online to achieve the full
value chain order information visualisation. In terms of organisational capabilities, it will achieve a
unified talent management system for its own brand businesses, establish an organisational
capability model, build specialised talent pools and training plans, shift organisational focus forward,
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The 2022 Annual Report of Midea Group Co., Ltd.
carry out the localisation of global business talents, and gradually construct a global organisational
team. In terms of brand building, it will continuously deepen global brand building and marketing
capability improvement. On one hand, it will insist on brand investment in strategic markets to
maximise commercial sponsorship effects. On the other hand, it will strengthen front-end retail
marketing infrastructure construction, continuously promote digital system construction, and support
user growth through digital marketing.
In 2023, TLSC will focus on the basics of business, calmly and flexibly respond to market
uncertainties and challenges, and continue to strengthen close cooperation with key customers. It will
enhance market awareness and response speed, actively respond to various market risks, and rely
on endogenous capabilities to drive growth. It will improve product strength and synergy efficiency,
ensuring stable profitability through optimizing price strategies, improving product structure and
channel systems. At the same time, by deepening the collaboration with the Group and related
product divisions, it will further promote product quality improvement, optimise product development
processes, ensure the progress of new product launches and product supply, enhance user
experience value, fulfil global Toshiba brand development goals, and fully promote the global own
brand strategy.
e. In 2023, Midea will continue to implement its double premium brands strategy, further
strengthening the dual-engine power of COLMO and Toshiba brands. The COLMO brand will keep
focusing on higher-end entire-house intelligence, catering to the deep needs of elite users, leveraging
the influence of the "Smart Villa Expert" in villa entire-house intelligence, promoting comprehensive
high-end smart living solutions, and leading the entire-house intelligence industry into the era of deep
control. Targeting the segmented high-end market, the Toshiba brand will continue to deploy multiple
categories such as refrigerators, laundry appliances, small domestic appliances, and kitchen
appliances, further expanding scenarios in entire-house water usage, heating, and kitchen.
Meanwhile, it will strengthen brand consistency, promote multi-category suite-based products to
provide a refined living experience, upgrade brand image and build brand mindset, and deeply focus
on layer marketing to strive for a dual breakthrough in customer base and scale. In 2023, WAHIN will
continue to optimise product and service experience, offering a multi-category product layout to
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provide consumers with intelligent and comfortable consumption experiences. It will maintain its focus
on young user groups, continuously targeting young groups through school-enterprise cooperation,
and explore diversified cross-border modes during Youth Day, summer graduation season, and job-
hunting season. By creating new shopping scenarios in e-commerce channels with content-driven
"virtual stores" and increasing coverage of pioneer youth user groups, WAHIN aims to drive sales
growth through branding.
f. Midea will continue to focus on driving the transformation of its core business and digital
empowerment, establishing an online operating system, and building a unified "business, system, and
data" system. By optimizing the top-level architecture, Midea will continuously strengthen the
construction of its underlying digital capabilities. In the R&D stage, Midea will support the
development of the "Three Generations" R&D system, fostering product innovation and market
insights through three generations of data. In the manufacturing and supply chain stages, Midea will
promote the comprehensive implementation of integrated supply chain transformation, continuously
improving planning accuracy, enhancing overseas order delivery efficiency, advancing visualisation
and intelligent management of multi-dimensional order fulfilment information, popularizing dark
injection melding factories and electronic benchmark factories, and achieving visualised management
of carbon emissions during the manufacturing process to boost green manufacturing capabilities. In
the domestic sales stage, Midea will concentrate on promoting end-to-end retail capability upgrades,
increasing supply-side efficiency, ensuring consistency in e-commerce business, and constructing a
platform digital transformation capability. It will also establish entire-house smart experience stores. In
the export stage, Midea will enhance after-sales spare parts supply chain delivery efficiency and
optimise spare parts warehouse layout, empowering the construction of global call centres with AI
intelligent tools, improving after-sales service efficiency, increasing overseas sales efficiency with
digital tools, and achieving transparency and automation of overseas sales orders throughout the
entire chain. In the field of information security, Midea will persistently improve its in-depth security
defence and security operation systems. By adopting the "Yundi" collaborative defence paradigm,
Midea will enhance its security operation capabilities, continuously promoting the integration and
iterative upgrading of basic services through a cloud-native platform, and deeply building a one-stop
data platform capability to achieve service-oriented databases and big data capabilities, improving
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The 2022 Annual Report of Midea Group Co., Ltd.
resource utilisation and service efficiency. In the field of big data, Midea will expand the scale and
intensity of digital talent cultivation, encouraging the digital upgrading of enterprises, focusing on
constructing overseas national data maps, and promoting the comprehensive development of its own
brands through the integration of large and small overseas data. It will also explore and expand data
applications to empower the growth of ToB businesses. In the field of AI, Midea will continue to
concentrate on edge intelligence, natural conversation, autonomous navigation and mapping, and
robot autonomous learning to help upgrade the intelligence of its entire product line, comprehensively
promoting the efficient use of AI platforms, and empowering smart homes, intelligent customer service,
smart buildings, intelligent manufacturing, smart healthcare, and smart finance. In the smart home
field, Midea will focus on key technologies such as intelligent perception, reliable communication, and
autonomous decision-making in future entire-house intelligent solutions. It will develop deeply
intelligent products and provide users with higher quality, more convenient intelligent scenarios, and
personalised services.
g. Midea aims to drive new growth in its core ToB business, continuously expand business
boundaries, and accelerate growth by rapidly deploying and entering new markets. In 2023, in the
field of core components for consumer appliances, Midea will continue to enhance digitalisation and
data operations, increase investment in R&D resources, and make continuous breakthroughs in new
products, technologies, and applications, providing customers with eco-friendly, efficient, and
intelligent products and technology solutions. The Company will bolster its global supply chain
capabilities, promote mass production in its factories in India, expand production in its Thailand base,
and accelerate the development of the Foshan Xingtan Park, aiming to establish an Industry 4.0
smart manufacturing demonstration base. Midea will create an overseas professional service platform,
offering one-stop services for small and medium-sized customers and specialised services for large
customers, achieving breakthroughs with overseas large customers and increasing the global market
share of its products. Midea will strengthen its competitiveness in the home appliance chip sector,
develop new product categories such as new energy vehicle water pump motor chips, energy storage
application chips, and sensorless FOC low-power IPM chips, and increase sales scale through
enhanced internal cooperation and external customer breakthroughs. In the field of new energy
vehicle components, Midea will leverage its innovative advantages, achieve comprehensive
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improvements in customer base, products, and manufacturing capabilities, transition from project
acquisition to mass production operations, cover more mainstream customers, and enhance
competitiveness in the three major systems - thermal management, electric drive systems, and
chassis execution. Midea will increase the market coverage of thermal management products and
explore more component technology areas such as flat-line motors, gradually implementing the
"parts-components-systems" development path. In the field of industrial automation, Midea will further
consolidate its technological expertise in motion control, adapt to market conditions and competitive
strategies, utilise its technological advantages, carry out differentiated research and development,
and provide new products and comprehensive system solutions targeting specific needs in key sub-
markets such as lithium batteries, photovoltaics, semiconductors, robotics, and laser processing.
Midea will rapidly transform its marketing model, expand new channel resources, stabilise top
customers, seize market opportunities, and broaden market coverage. The company will enhance its
flexible manufacturing capabilities, improve product delivery efficiency, further refine its end-to-end
quality management system, and establish a laboratory with testing capabilities. In the new energy
sector, Midea will develop integrated, efficient, and safe home energy storage systems tailored for
residential applications and establish dual-channel distribution in new energy and home appliances.
The company will set up an overseas channel network, fully leverage Midea's home appliance
strengths, and collaborate with related divisions of the group to develop comprehensive home energy
management solutions. Midea will complete internal demonstration projects for microgrids, actively
explore external markets, and extend its reach to the back-end by forming an "EPC + preliminary
digitalisation + operation and maintenance" model, while also expanding to the front-end to tap into
electricity trading and photovoltaic design service markets.
h. Media will accelerate project collaboration between KUKA's China team and overseas teams, fully
leveraging the advantages of global R&D synergy and Chinese manufacturing capabilities, in order to
enhance KUKA's global operational efficiency. 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
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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.
Risks Faced by the Company and Countermeasures:
a. Risk of macro economy fluctuation
The market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,
among other products, can be easily affected by the economic situation and macro control. If the
global economy encounters a heavy hit and consumer demand slows down in growth, the growth of
the industries in which the Company operates, may slow down accordingly, and as a result, this may
affect the product sales of Midea Group.
b. Risks in the fluctuation of production factors
The raw materials required by Midea Group to manufacture its consumer appliances and core
components primarily include different grades of copper, steel, plastics and aluminum. At present, the
household appliance manufacturing sector belongs to a labor intensive industry. If the price of raw
materials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,
electricity, and land) caused by a change to the macroeconomic environment and policy change, or
the cost reduction resulted from lean production and improved efficiency, as well as the sale prices of
end products cannot offset the total effects of cost fluctuations, the Company’s business will be
influenced to some degree.
c. Risk in global asset allocation and overseas market expansion
Internationalization and global operations is a long-term strategic goal of the Company. The Company
has built joint-venture manufacturing bases in many countries around the world. Progress has been
made day by day regarding the Company’s overseas operations and new business expansion.
However, its efforts in global resource integration may not be able to produce expected synergies;
and in overseas market expansion, there are still unpredictable risks such as local political and
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The 2022 Annual Report of Midea Group Co., Ltd.
economic situations, significant changes in law and regulation systems, and sharp increases in
production costs.
d. Risk in foreign exchange losses caused by exchange rate fluctuation
As Midea carries on with its overseas expansion plan, its overseas sales have accounted for more
than 40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative
effects on the overseas operations of the Company, but could also lead to exchange losses and
increase its finance costs.
e. Market risks brought by trade frictions and tariff barriers
Due to the rise of anti-globalization and trade protectionism, China will see more uncertainties in
export in 2023. The trade barriers and frictions of some major markets will affect the export business
in the short run, as well as marketing planning and investment in the medium and long run. Political
and compliance risks are rising in international trade. These can mainly be seen on compulsory
safety certificates, international standards and requirements, and product quality and management
systems certification, energy-saving requirements, the call for increasingly strict environmental
protection requirements, as well as with rigorous requirements for recycling household appliances
waste. Trade frictions caused by anti- dumping measures implemented by some countries and
regions aggravate the burden in costs and expenses for household appliance enterprises, and have
brought about new challenges to market planning and business expansion for enterprises.
In face of the complicated and changeable environment and risks at home and abroad, Midea will
strictly follow the Company Law, the Securities Law, the CSRC regulations and other applicable rules,
keep improving its governance structure for better compliance, and reinforce its internal control
system so as to effectively prevent and control various risks and ensure its sustained, steady and
healthy development.
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12. Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. in the Reporting Period
√Applicable □N/A
Way of Type of Index to main inquiry
Date Place Visitor Discussions
visit visitor information
Alliancebernstein, 1. After acquiring WINONE Elevator, how is the
Eurizon Capital, business integration? 2. Nowadays, people of
Log Sheet of Investor
Marshall Wace, generation Z pursue a low-sugar and low-calorie
Relations Activities for
20 January Midea Group Millennium Partners, lifestyle, so does the Company make any related
By phone Institution 20 January 2022
2022 HQ Oaktree Capital arrangements? 3. Has the Company established the
disclosed on
Management, Software Engineering Institute recently? 4. What about
www.cninfo.com.cn
Southeastern Asset the Company’s progress in air conditioning and
Management, etc. refrigeration technologies?
Oriental Alpha Fund,
Citic-prudential Fund, 1. The Electromechanical Business Group was
Invesco Great Wall changed into the Industrial Technology Business
Log Sheet of Investor
Fund Management, Group. Why did the Company do so and what is its
Relations Activities for
21 February Midea Group China Securities, future plan? 2. How much does the Company invest in
By phone Institution 21 February 2022
2022 HQ Sunshine Asset its research staff? 3. How does the Company deal with
disclosed on
Management the uncertainty of sea freight? 4. What new contents
www.cninfo.com.cn
Corporation Limited, were put forward at the conference of the Building
Harvest Fund, E Fund, Technologies Division at the beginning of the year?
etc.
E Fund, Springs
Capital, Morgan
Stanley Huaxin Fund,
1. What is Midea’s progress in new energy? 2. Log Sheet of Investor
First State Cinda Fund,
Recently Midea’s subsidiary WDM has launched the Relations Activities for
Midea Group Minsheng Royal Asset
17 March 2022 By phone Institution world’s first helium-free MRI equipment, so what 17 March 2022
HQ Management, China
advantages does it have? 3. Has the Company issued disclosed on
Fund Management
green bonds? 4. What is Midea’s progress in chips? www.cninfo.com.cn
Co.,Ltd., Southwest
Securities, Bosera
Funds, etc.
Changjiang Securities, 1. Since 2021, exports have been affected by many
GF Asset Management, factors, so will Midea change the USD35 billion target
Everbright Securities, for 2025? What’s your opinions for overseas business?
Log Sheet of Investor
BOCOM Schroders, 2. In terms of the coordinated development of ToC and
Midea Group Relations Activities for
6 May 2022 By phone Institution CMB International, ToB businesses, so does Midea have targeted ways for
HQ 6 May 2022 disclosed
Temasek, Orient management? Is there discrepancy of resource
on www.cninfo.com.cn
Securities, China allocation? 3. Under the pressure of the whole industry,
Merchants Securities, what did Midea do to improve the profit margin of
Orient Securities Asset products? 4. There are so many participants in new
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The 2022 Annual Report of Midea Group Co., Ltd.
Management Co. LTD, energy vehicle parts business, so how do you think of
etc. development opportunities? What advantages does
Midea have and what is the future outlook of the
Company? 5. In the first quarter of 2022, what is the
driving force of gross margin improvement in domestic
and foreign sales? 6. How do you think about future
outlooks of robots business? What competitive edges
does Midea have? 7. The Company turns to business
reduction and focus, and what industry changes make
it do so? How do you think of the ceiling of customer-
end (C-end)? 8. Can it be understood that the next
three years of Midea is an input period, and the output
period is after 2023 or 2024? 9. What is a reasonable
level of profit in three years? Does a relatively high-
quality development mean reducing capital expense
and increasing dividends? 10. Is it challenging to make
the gross profit margin of B2B equal to that of B2C?
etc.
1. Goodwill experienced drop in the 2021 annual report,
so why is that and would it be offset from the current
profit? 2. Can you introduce the five business segments
of the Group? 3. How will Midea position the
companies (TTium Motor, WINONE Elevator and
Hiconics) it acquired in the past year on its business
map? 4. Nowadays, the costs of raw materials are still
Log Sheet of Investor
high, so how does the situation affect the gross profit
Relations Activities for
Online Institution margin of Midea? How to deal with related adverse
https://m.jhbsh the 2021 Annual
13 May 2022 communic and Investors effects? 5. What’s the date of record? 6. What is the
ow.com/ Results Presentation
ation individual business plan of overseas business? 7. How is Midea’s
disclosed on
development of electric cleaning appliances? 8. What is
www.cninfo.com.cn
the impact of a global shortage of core components
such as microchips? 9. Will export orders be affected
when overseas competitors’ production capacity
recovers in the future? 10. How will Midea’s own
brands develop in new markets such as Europe, US,
and other developed countries in the future? What are
the differences? etc.
3W Fund Management 1. How is the development of COLOMO, the premium
Limited, FIL Investment brand of the Company, in 2021? 2. How is the
Log Sheet of Investor
Management (Hong Company’s dividend and buyback policy? 3. What
Relations Activities for
Midea Group Kong) Limited, Green major risks the Company will face in the future
13 June 2022 By phone Institution 13 June 2022
HQ Court Capital, JF Asset development? 4. Media says the management
disclosed on
Management Limited, mentioned the industry might encounter cold winter in
www.cninfo.com.cn
Point72 Associates II the a few years,
LLC, etc. so why did they say so and out of what background did
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The 2022 Annual Report of Midea Group Co., Ltd.
they say so? 5. What do you think of the competitive
landscape and market performance of residential air
conditioners?
Hotland Innovation 1. How is the domestic channel reform of Midea? 2.
Asset Management, What are the Company’s priorities when it continuously
Minsheng Royal Asset expands its diversified ToB business? 3. Can you Log Sheet of Investor
Midea Group Management, Taikang introduce the development of intelligent household Relations Activities for
7 July 2022 By phone Institution
HQ Asset, Tianfeng appliances? 4. What do you think of the overall size 7 July 2022 disclosed
Securities, Chang Xin and development prospect of Midea Building on www.cninfo.com.cn
Asset Management, Technologies? 5. How do you think of the development
Pengyang AMC, etc. prospect of medical business?
Morgan Stanley Huaxin
Log Sheet of Investor
Fund, New China Fund, 1. What is Midea’s progress in medical sector? 2. What
Relations Activities for
Midea Group New Thinking, China are the arrangements of Annto Logistics for intelligent
28 July 2022 By phone Institution 28 July 2022
HQ Merchants Securities, logistics? 3. Can you introduce the “Midea Digital 2025”
disclosed on
Pengyang AMC, strategy?
www.cninfo.com.cn
BlackRock, etc.
Alliancebernstein LP,
1. What is the latest development of overseas Log Sheet of Investor
Arohi AM
business? 2. How is the performance of the Toshiba Relations Activities for
13 September Midea Group Balyasny AM, BC
By phone Institution brand in the first half of the year? 3. How is the 13 September 2022
2022 HQ Investment
performance of COLMO, the high-end household disclosed on
Management Corp,
appliance? 4. What is Midea’s progress in new energy? www.cninfo.com.cn
Coatue Mgmt, etc.
1. How is the production and sales volume of
automobiles parts and its profitability? 2. Until now, how
many shares have been repurchased? 3. How are
Midea’s business-end (B-end) and customer-end (C-
end)? 4. Midea’s stock price continues to be low, so
how do you guarantee the benefits of small investors?
You have been making the industrial input, but how
long will it take to bring benefits? Do you think it is too
hasty to do so? 5. Europe is trapped in an energy Log Sheet of Investor
https://rs.p5w. Online crisis, the residential energy storage market has Relations Activities for
22 September
net/html/13491 communic Institution Investors exploded, and micro inverter business directly benefits 22 September 2022
2022
5.shtml ation from it. Clou Electronics is no worse than Deye Shares disclosed on
in terms of technologies, so it is suggested that the www.cninfo.com.cn
Company make more efforts to expand household
energy storage and micro inverters, provide financial
support, and make the energy storage business of Clou
Electronics better and better. 6. In the face of the so-
called three-year “cold winter”, has the Group taken
any measures to prevent it? 7. What is the
development prospect of Indian plants? Why don’t you
build plants in South Asia?
6 December Midea Group By phone Institution M&G Investment 1. What is Midea’s new progress in the air conditioner Log Sheet of Investor
120
The 2022 Annual Report of Midea Group Co., Ltd.
2022 HQ Management, GIC export business in the second half of the year? 2. What Relations Activities for
Private Limited, is Midea’s input in heat pump export? 3. What is the 6 December 2022
Wellington MGT CO latest progress in channels? disclosed on
LLP, Polymer Capital www.cninfo.com.cn
Management (HK)
Limited, Fenghe Fund
Management PTE LTD,
etc.
Bosera Funds, Harvest
Fund, BOCOM Log Sheet of Investor
1. What are the highlights of the Company’s technology
Schroders, HuaAn Relations Activities for
22 December Midea Group month? 2. How is the recent cooperation between
By phone Institution Fund, AEGON- 22 December 2022
2022 HQ Midea and its partners? 3. Can you introduce Midea’s
INDUSTRIAL Fund, disclosed on
progress since it launched Midea Medical?
Tianhong Asset www.cninfo.com.cn
Management, etc.
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The 2022 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 five special committees under the Board, namely the Strategy Committee, the
Audit Committee, the Nomination Committee, the Remuneration and Appraisal Committee, as well as
the ESG Committee. They were designed to provide consultation and advice to the Board and
validate the professionalization and efficiency of discussions and decision-making. The Company has
established clear rules of procedure for its shareholders' meeting, board of directors, Supervisory
Committee and special committees under the board, as well as the Work Rules for Company
Secretary. It has also established a set of standard documents including Information Disclosure
Management System, Funds Raising Management System, Connected Transaction Management
System, Wealth Management Entrustment Management System, Insider Registration System,
External Guaranty Decision-making System, Foreign Investment Management System, and
Management System for Finance Flow with Connected Parties, Internal Auditing System. The
shareholders' meeting, the Board of Directors, the Supervisory Committee and operations
management departments have clear authority and responsibility. Each performs its own functions
and maintains its stability effectively. Their scientific decision-making and coordinated operations
have laid a firm foundation for the sustained, healthy and steady development of the Company.
The Company has also launched core management team shareholding plans and equity incentive
plans for core research, quality control, technical, production and management staff, which helps to
develop a sound shareholding structure for the future growth of the Company.
In 2022, the Company won the following honors:
No. 245 of “Fortune Global 500”; No. 35 of the “BrandZ 2021 Top 100 Most Valuable Chinese
Brands” jointly released by WPP and Kantar Millward Brown; No. 186 of the “2022 Brand Finance
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The 2022 Annual Report of Midea Group Co., Ltd.
Global 500”; and the Top 500 New Economy Enterprises of China unveiled by the China Association
for Public Companies.
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 2022 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 and Extraordinary General Meetings of Shareholders Convened during
the Reporting Period
4.1 General meetings of shareholders convened during the Reporting Period
Investor
Meeting Type participation Convened date Disclosure date Disclosure index
ratio
First Extraordinary
Announcement No.
General Meeting
Extraordinary 59.0587% 14 January 2022 15 January 2022 2022-002, disclosed on
of Shareholders of
www.cninfo.com.cn
2022
Second
Extraordinary Announcement No.
General Meeting Extraordinary 58.1929% 11 March 2022 12 March 2022 2022-012, disclosed on
of Shareholders of www.cninfo.com.cn
2022
2021 Annual Announcement No.
General Meeting Annual 58.3112% 20 May 2022 21 May 2022 2022-035, disclosed on
of Shareholders www.cninfo.com.cn
Third
Extraordinary Announcement No.
General Meeting Extraordinary 57.6136% 24 June 2022 25 June 2022 2022-068, disclosed on
of Shareholders of www.cninfo.com.cn
2022
Fourth
Extraordinary Announcement No.
General Meeting Extraordinary 57.6464% 19 August 2022 20 August 2022 2022-083, disclosed on
of Shareholders of www.cninfo.com.cn
2022
Fifth Extraordinary Extraordinary 59.1660% 16 September 2022 17 September Announcement No.
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The 2022 Annual Report of Midea Group Co., Ltd.
General Meeting 2022 2022-093, disclosed on
of Shareholders of www.cninfo.com.cn
2022
4.2 Extraordinary general meetings of shareholders convened at the request of preference
shareholders with resumed voting rights
□Applicable √N/A
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The 2022 Annual Report of Midea Group Co., Ltd.
5. Directors, Supervisors and Senior Management
5.1 General information
Shares Shares
Shares held Shares held
Starting Ending increased decreased Other
Incumbent/ at the year- at the
Name Office title Gender Age date of date of in the in the increase/decrease Reason for share changes
Former begin period-end
tenure tenure period period (share)
(share) (share)
(share) (share)
Chairman of
Fang
the Board and Incumbent Male 55 2012/8/25 2024/9/16 116,990,492 116,990,492
Hongbo
CEO
He
Director Incumbent Male 55 2012/8/25 2024/9/16 0 0
Jianfeng
Gu Director and
Incumbent Male 59 2014/4/21 2024/9/16 0 0
Yanmin Vice President
Wang Director and
Incumbent Male 46 2021/9/17 2024/9/16 0 0
Jianguo Vice President
Yu Gang Director Incumbent Male 63 2018/9/26 2024/9/16 0 0
Xue Independent
Incumbent Male 58 2018/9/26 2024/9/16 179,914 179,914
Yunkui Director
Guan Independent
Incumbent Male 45 2018/9/26 2024/9/16 0 0
Qingyou Director
Independent
Han Jian Incumbent Female 50 2018/9/26 2024/9/16 0 0
Director
Chairman of
Dong the
Incumbent Male 37 2020/10/16 2024/9/16 0 0
Wentao Supervisory
Committee
Zhao Jun Supervisor Incumbent Male 47 2014/4/21 2024/9/16 0 0
Liang Employee
Incumbent Female 39 2017/3/30 2024/9/16 0 0
Huiming Supervisor
Zhang
Vice President Incumbent Male 49 2018/4/23 2024/9/16 516,575 516,575
Xiaoyi
Hu
Vice President Incumbent Male 65 2014/8/18 2024/9/16 400,000 400,000
Ziqiang
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The 2022 Annual Report of Midea Group Co., Ltd.
Wang 80,000 restricted shares
Vice President Incumbent Male 55 2014/8/18 2024/9/16 340,000 80,000 420,000
Jinliang were granted
80,000 restricted shares
Li Guolin Vice President Incumbent Male 46 2020/7/3 2024/9/16 400,700 80,000 480,700
were granted
Fu
Vice President Incumbent Male 54 2021/9/17 2024/9/16 200,000 200,000
Yongjun
Guan
Vice President Incumbent Male 43 2021/9/17 2024/9/16 535,000 535,000
Jinwei
Vice
President, 2022/12/1
Zhong
CFO and Incumbent Female 41 2022/2/22 2024/9/16 276,152 276,152
Zheng
Director of 2019/3/22
Finance
Zhao Chief People 80,000 restricted shares
Incumbent Female 40 2022/2/22 2024/9/16 400,000 80,000 480,000
Wenxin Officer were granted
Bai Lin Vice President Incumbent Male 42 2022/5/30 2024/9/16 95,079 95,079
Chief
Wei
Technology Incumbent Male 60 2022/8/29 2024/9/16 0 0
Chang
Officer
Jiang Board 80,000 restricted shares
Incumbent Male 49 2013/10/30 2024/9/16 438,600 80,000 518,600
Peng Secretary were granted
Yin Director and
Former Male 54 2016/12/16 2022/12/30 2,109,655 2,109,655
Bitong Vice President
Cai
CFO Former Male 41 2021/4/19 2022/1/29 0 0
Weiding
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The 2022 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
Cai Weiding Chief Financial Officer Former 2022-1-29 Personal reason
Zhong Zheng Chief Financial Officer Appointed 2022-2-22 -
Zhao Wenxin Chief People Officer Appointed 2022-2-22 -
Bai Lin Vice President Appointed 2022-5-30 -
Wei Chang Chief Technology Officer Appointed 2022-8-29 -
Zhong Zheng Vice President Appointed 2022-12-01 -
Yin Bitong Director and Vice Former 2022-12-30 Personal reason
President
5.2 Brief biographies
Professional backgrounds, main work experience and current responsibilities in the Company of the
incumbent directors, supervisors and senior management
Mr. Fang Hongbo, male, holder of a Master's degree, is the Chairman of the Board and CEO of
Midea Group. He joined Midea in 1992 and previously served as the General Manager of Midea Air-
Conditioning Division, CEO of Midea Refrigeration Electric Appliances Group, Chairman of the Board
and CEO of GD Midea Holding Co., Ltd., etc.
Mr. He Jianfeng, male, holder of a Bachelor's degree, is a Director of Midea Group. He is also the
Chairman of the Board and President of Infore Group Co., Ltd.
Mr. Gu Yanmin, male, holder of a Doctoral degree, joined Midea in 2000 and has functioned as the
Head of Planning & Investment, Head of Overseas Strategy & Development, Vice President and
Head of Overseas Business Development of Midea Air-Conditioning & Refrigeration Group, Head of
Overseas Strategy of Midea Group. Currently he is a Director and Vice President of Midea Group, the
President of the Robotics & Automation Division, as well as the Chairman of the Supervisory
Committee of KUKA.
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The 2022 Annual Report of Midea Group Co., Ltd.
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, the President of the Smart Home Business Group, and the President of
Midea International Business, in addition to being in charge of the TLSC Division, 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 a co-founder and a Co-Chairman of the Board of Directors of 111, Inc.
Mr. Xue Yunkui, male, is a holder of a Doctoral degree given by the Southwest University and a
holder of a Post-Doctoral degree given by the Shanghai University of Finance and Economics. He
used to be the associate dean and a doctoral supervisor at the School of Accountancy of Shanghai
University of Finance and Economics, a Founding Vice President of Shanghai National Accounting
Institute and Cheung Kong Graduate School of Business, the Secretary-General of China Association
of Accounting Professors, a Vice Chairman of the Steering Committee of the National Accounting
Institute under the Ministry of Finance, etc. He is now an accounting professor of Cheung Kong
Graduate School of Business, and an Independent Director of Midea Group.
Mr. Guan Qingyou, male, obtained a PhD degree in economics from Chinese Academy of Social
Sciences ("CASS") and Post-doctoral degree from Tsinghua University. He previously worked as
Program Director at the Institute for Contemporary China Studies, Tsinghua University, Division Chief
of the main office of China National Offshore Oil Corporation, Vice President of Minsheng Securities
Co., Ltd., and Head of Minsheng Securities Research Institute. Other positions currently held by him
include Dean of Reality Institute of Advanced Finance, professor at School of Economics, Hainan
University, 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
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Co., Ltd., Beijing Yingpu Technology Co., Ltd., Hangzhou Hikvision DIGITAL Technology Co., Ltd.,
Shaanxi International Trust Co., Ltd., and Ucap Cloud Information Technology Co., Ltd., and member
of the Fiscal Reform and Development Think Tank under the Ministry of Finance, Academic
Committee of China Center for Urban Development under the National Development and Reform
Commission, and Expert Advisory Committee on Industrial Economic Operation under the Ministry of
Industry and Information Technology ("MIIT").
Ms. Han Jian, female, holder of a Doctoral degree given by the Cornell University, is a professor of
management in China Europe International Business School, a specialist of the World Economic
Forum, as well as an Independent Director of Midea Group.
Mr. Dong Wentao, male, a Master's degree graduate, joined Midea in 2016. 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.
Mr. Zhang Xiaoyi, male, is a holder of a Master’s degree. Joining Midea Group in 2010, he used to
serve as the head of the overseas process IT system, the head of the supply chain system, and the IT
Director of Midea Group, etc. He is now a Vice President and the CDO of Midea Group.
Mr. Hu Ziqiang, male, holder of a Doctoral degree, joined Midea in 2012, and has formerly worked
for GE and Samsung and as a Vice GM in Wuxi Little Swan Co., Ltd. At present he is a Vice
President of Midea Group, in addition to being the Chairman of the Board of Beijing Wandong Medical
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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.
Mr. Bai Lin, male, holder of a Bachelor’s degree, joined Midea in 2002. He once served as the Asia
Pacific General Manager of the Refrigeration Group, the General Manager of the overseas marketing
company of the Refrigerator Division, the General Manager of the domestic marketing company of
the Refrigerator Division, and the President of the Refrigerator Division. And he is now a Vice
President and the China President of Midea Group.
Ms. Zhong Zheng, female, holder of a Master’s degree, joined Midea in 2002. She once was the
Director of Finance of the Financial Center and the Component Division, as well as the Audit Director
of Midea Group, etc. She is now a Vice President as well as the CFO and Director of Finance of
Midea Group.
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Mr. Wei Chang, male, holder of a Doctoral degree, joined Midea in 2022. He used to be the Technical
Director for Water Treatment and Polymers at the Global R&D Centre and the Greater China General
Manager for Water Treatment Products at General Electric. He also served as the Director of the
National Institute of Clean and Low-Carbon Energy of CHN Energy from 2014 to 2022. Currently, he
is the Chief Technology Officer of Midea Group.
Ms. Zhao Wenxin, female, holder of a Master’s degree, joined Midea in 2004. She used to be a
Deputy General Manager and the Overseas Marketing General Manager of the Residential Air
Conditioner Division in Midea Group, a Vice President of Midea International, etc. Currently, she is the
Chief People Officer and Director of Human Resources of Midea Group.
Mr. Jiang Peng, male, holder of a Master’s degree, joined Midea in 2007 and used to be the
Representative for Securities Affairs and Board Secretary for GD Midea Holding Co., Ltd. He is now
the Board Secretary and Director of Investor Relations of Midea Group.
Posts held in shareholding entities
√Applicable □N/A
Beginning Allowance from
Ending date of
Name Shareholding entity Position date of office the shareholding
office term
term entity
He Jianfeng Midea Holding Co., Ltd. President 2016-01 - No
Zhao Jun Midea Holding Co., Ltd. Executive President 2020-03 - Yes
Note N/A
Posts held in other entities
√Applicable □N/A
Beginning date Ending date of Allowance from
Name Other entity Position
of office term office term the entity
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. 2022-08 2025-08 Yes
Director
Xue Yunkui Zhuhai Wanda Commercial Independent
2021-03 2024-03 Yes
Management Group Co., Ltd. Director
Bank of Shanghai Co., Ltd. Independent 2021-01 2024-01 Yes
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The 2022 Annual Report of Midea Group Co., Ltd.
Director
Independent
Hinova Pharmaceuticals Inc. 2020-09 2023-09 Yes
Director
Beijing Rushi Research Information Chairman of the
2017-12 - Yes
Consulting Service Co., Ltd. Board
Independent
Shaanxi International Trust Co., Ltd. 2022-07 2025-07 Yes
Director
Independent
Guan Qingyou Nanhua Futures Co., Ltd. Director
2019-02 2025-02 Yes
Shandong Hi-Speed Road&Bridge Independent
2020-06 2022-03 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 55 Incumbent 11,301.4
and CEO
He Jianfeng Director Male 55 Incumbent 0 Yes
Director and Vice
Gu Yanmin Male 59 Incumbent 7,683.7
President
Director and Vice
Wang Jianguo Male 46 Incumbent 6,194.8
President
Yu Gang Director Male 63 Incumbent 450
Xue Yunkui Independent Director Male 58 Incumbent 450
Guan Qingyou Independent Director Male 45 Incumbent 450
Han Jian Independent Director Female 50 Incumbent 450
Chairman of the
Dong Wentao Male 37 Incumbent 750.7
Supervisory Committee
Zhao Jun Supervisor Male 47 Incumbent 0 Yes
Liang Huiming Employee Supervisor Female 39 Incumbent 294.6
Zhang Xiaoyi Vice President Male 49 Incumbent 6,916.3
Hu Ziqiang Vice President Male 65 Incumbent 3,224.7
Wang Jinliang Vice President Male 55 Incumbent 4,583.2
Li Guolin Vice President Male 46 Incumbent 4,789.2
Fu Yongjun Vice President Male 54 Incumbent 8,690.8
Guan Jinwei Vice President Male 43 Incumbent 9,074.6
Vice President, CFO and
Zhong Zheng Female 41 Incumbent 7,271.4
Director of Finance
Zhao Wenxin Chief People Officer Female 40 Incumbent 4,702.4
Bai Lin Vice President Male 42 Incumbent 8,278.6
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The 2022 Annual Report of Midea Group Co., Ltd.
Wei Chang Chief Technology Officer Male 60 Incumbent 2,472.3
Jiang Peng Board Secretary Male 49 Incumbent 2,521.1
Director and Vice
Yin Bitong Male 54 Former 9,571.8
President
Cai Weiding CFO Male 41 Former 987.7
Total -- -- -- -- 101,109.3 --
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
Fifth Meeting of the Fourth Board of Directors
(Announcement No. 2022-005), which has been
The Fifth Meeting of the
22 February 2022 23 February 2022 disclosed on http://www.cninfo.com.cn, China
Fourth Board of Directors
Securities Journal, Securities Times, and
Shanghai Securities News dated 23 February
2022
See the Announcement on Resolutions of the
Sixth Meeting of the Fourth Board of Directors
The Sixth Meeting of the (Announcement No. 2022-008), which has been
10 March 2022 11 March 2022
Fourth Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and
Shanghai Securities News dated 11 March 2022
See the Announcement on Resolutions of the
Seventh Meeting of the Fourth Board of Directors
The Seventh Meeting of
(Announcement No. 2022-018), which has been
the Fourth Board of 28 April 2022 30 April 2022
disclosed on http://www.cninfo.com.cn, China
Directors
Securities Journal, Securities Times, and
Shanghai Securities News dated 30 April 2022
See the Announcement on Resolutions of the
Eighth Meeting of the Fourth Board of Directors
The Eighth Meeting of the (Announcement No. 2022-039), which has been
30 May 2022 31 May 2022
Fourth Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and
Shanghai Securities News dated 31 May 2022
See the Announcement on Resolutions of the
Ninth Meeting of the Fourth Board of Directors
The Ninth Meeting of the (Announcement No. 2022-041), which has been
8 June 2022 9 June 2022
Fourth Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and
Shanghai Securities News dated 9 June 2022
See the Announcement on Resolutions of the
10th Meeting of the Fourth Board of Directors
The 10th Meeting of the (Announcement No. 2022-078), which has been
22 July 2022 23 July 2022
Fourth Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and
Shanghai Securities News dated 23 July 2022
See the Announcement on Resolutions of the
11th Meeting of the Fourth Board of Directors
The 11th Meeting of the (Announcement No. 2022-085), which has been
29 August 2022 31 August 2022
Fourth Board of Directors disclosed on http://www.cninfo.com.cn, China
Securities Journal, Securities Times, and
Shanghai Securities News dated 31 August 2022
The Interim Report for the Third Quarter 2022
The 12th Meeting of the
28 October 2022 - was approved with nine affirmative votes, 0
Fourth Board of Directors
negative notes and 0 abstentions.
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The 2022 Annual Report of Midea Group Co., Ltd.
See the Announcement on Resolutions of the
13th Meeting of the Fourth Board of Directors
(Announcement No. 2022-102), which has been
The 13th Meeting of the
1 December 2022 2 December 2022 disclosed on http://www.cninfo.com.cn, China
Fourth Board of Directors
Securities Journal, Securities Times, and
Shanghai Securities News dated 2 December
2022
See the Announcement on Resolutions of the
14th Meeting of the Fourth Board of Directors
(Announcement No. 2022-103), which has been
The 14th Meeting of the
16 December 2022 17 December 2022 disclosed on http://www.cninfo.com.cn, China
Fourth Board of Directors
Securities Journal, Securities Times, and
Shanghai Securities News dated 17 December
2022
6.2 Attendance of directors in Board meetings and meetings of shareholders
Attendance of directors in Board meetings and meetings of shareholders
Presence Absence
Presence at Presence at
due at Board Presence at Absence from Board Presence at
Board Board
meetings in Board from 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 10 1 9 0 0 No 4
He Jianfeng 10 1 9 0 0 No 0
Yin Bitong 10 1 9 0 0 No 0
Gu Yanmin 10 1 9 0 0 No 1
Wang Jianguo 10 1 9 0 0 No 1
Yu Gang 10 1 9 0 0 No 0
Xue Yunkui 10 1 9 0 0 No 0
Guan Qingyou 10 1 9 0 0 No 0
Han Jian 10 1 9 0 0 No 0
6.3 Objections from directors on related issues of the Company
Were there any objections on related issues of the Company from directors
□Yes √No
No such cases in the Reporting Period.
6.4 Other information about the activities of directors
Were there any suggestions from directors adopted by the Company
√Yes □No
During the Reporting Period, in line with the Company Law, the Securities Law, the Rules for Stock
Listing of Shenzhen Stock Exchange, and other relevant laws and regulations, as well as the Articles
of Association, and the Rules of Procedure of the Board of Directors, directors of the Company
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actively paid attention to the Company's production, operation, financial position, and the effects
resulting from the changes in the economic status on the Company, vetted miscellaneous information
reports provided by the Company in a timely manner, and voiced opinions and exercised their power
at the Board of Directors. In addition, they supervised and checked the information disclosure of the
Company and fulfilled the duties of directors faithfully and conscientiously. Based on the Company's
reality, they put forward relevant opinions and suggestions about corporate governance and operating
decisions, as well as supervised and promoted the execution and implementation of the resolutions of
the Board of Directors to ensure scientific, timely, and efficient decision-making and safeguard the
legitimate rights and interests of the Company and all shareholders.
7. Activities of Special Committees under the Board of Directors during the
Reporting Period
Number Substantial
of Convened opinion and Other
Committee Members Topics
meetings date recommen information
convened dations
The following proposals were approved:
The 2021 Annual Report and Its
2022-4-28 Summary, The Interim Report for the - -
Xue Yunkui,
First Quarter 2022, and The Proposal on
Guan
Audit Re-appointment of CPA Firm.
Qingyou, Han 3
Committee
Jian, and Yu The Semi-Annual Report 2022 and Its
2022-8-29 - -
Gang Summary was approved.
The Interim Report for the Third Quarter
2022-10-28 - -
2022 was approved.
The following proposals were approved:
The Proposal on Appointment of CFO,
2022-2-22 - -
and The Proposal on Appointment of
Guan Chief People Officer.
Qingyou, Yu
Nomination The following proposals were approved:
Gang, Xue 3
Committee The Proposal on Appointment of Vice
Yunkui, and 2022-5-30 - -
President, and The Proposal on
Han Jian
Establishment of the ESG Committee.
The Proposal on Appointment of Vice
2022-12-1 - -
President was approved.
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The 2022 Annual Report of Midea Group Co., Ltd.
The following proposals were approved:
The Remuneration Payment Standards
for Directors, Supervisors and Senior
Management for 2021, The Proposal on
the Ninth Stock Option Incentive
Scheme (Draft) and Its Summary, The
Proposal on the 2022 Restricted Share
Incentive Scheme (Draft) and Its
Summary, The Eighth Core Management
2022-4-28 and Global Partner Stock Ownership - -
Scheme of Midea Group Co., Ltd. (Draft)
and Its Summary, The Fifth Core
Management and Business Partner
Stock Ownership Scheme of Midea
Group Co., Ltd. (Draft) and Its Summary,
and The Proposal for the Retirement of
Unexercised Reserved Stock Options
under the Fifth Stock Option Incentive
Scheme upon Expiry.
The following proposals were approved:
The Proposal on Matters Related to the
Stock Option Exercise for the Third
Exercise Period for the First Grant under
the Fifth Stock Option Incentive Scheme,
Han Jian, Yu The Proposal on Matters Related to the
Remuneration Gang, Xue Stock Option Exercise for the Second
and Appraisal Yunkui, and 3 Exercise Period for Reserved Stock
Committee Guan Options of the Fifth Stock Option
Qingyou Incentive Scheme, The Proposal on
Matters Related to the Stock Option
Exercise for the Second Exercise Period
of the Sixth Stock Option Incentive
Scheme, The Proposal on Matters
Related to the Stock Option Exercise for
the Second Exercise Period of the
Seventh Stock Option Incentive Scheme,
2022-6-8 - -
The Proposal on the Satisfaction of
Unlocking Conditions for the Third
Unlocking Period for the First Grant
under the 2018 Restricted Share
Incentive Scheme, The Proposal on the
Satisfaction of Unlocking Conditions for
the Second Unlocking Period for
Reserved Restricted Shares under the
2018 Restricted Share Incentive
Scheme, The Proposal on the
Satisfaction of Unlocking Conditions for
the Second Unlocking Period of the 2019
Restricted Share Incentive Scheme, and
The Proposal on the Satisfaction of
Unlocking Conditions for the Second
Unlocking Period of the 2020 Restricted
Share Incentive Scheme.
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The 2022 Annual Report of Midea Group Co., Ltd.
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 Scheme, The
Proposal on the Repurchase and
2022-12-16 Retirement of Certain Incentive Shares - -
under the 2020 Restricted Share
Incentive Scheme, The Proposal on the
Repurchase and Retirement of Certain
Incentive Shares under the 2021
Restricted Share Incentive Scheme, and
The Proposal on the Repurchase and
Retirement of Certain Incentive Shares
under the 2022 Restricted Share
Incentive Scheme.
Fang
Hongbo, Gu
Strategy Yanmin, Yu The Shareholder Return Plan for 2022-
1 2022-4-28 - -
Committee Gang, and 2024 was approved.
Guan
Qingyou
Li Guolin,
Zhong Zheng,
ESG
Zhao Wenxin, 0 - - - -
Committee
Jiang Peng,
and Zhi Shuai
8. Activities of the Supervisory Committee
Were there any risks to the Company identified by the Supervisory Committee when performing its
duties during the Reporting Period
□Yes √No
The Supervisory Committee of the Company had no objection to the matters of supervision during the
Reporting Period.
9. Employees
9.1 Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 1,199
Number of in-service employees of main subsidiaries 165,044
Total number of in-service employees 166,243
Total number of paid employees in the period 166,243
Number of retirees to whom the Company or its main
1,897
subsidiaries need to pay retirement pension
Functions
Function Number of employees
Production 132,036
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The 2022 Annual Report of Midea Group Co., Ltd.
Sales 9,093
Technical 20,657
Financial 2,098
Administrative 2,359
Total 166,243
Educational backgrounds
Educational background Number of employees
Master’s and doctoral degrees 6,528
Bachelor’s degree 28,974
Others 130,741
Total 166,243
9.2 Remuneration policy
Remunerations for employees are paid on time according to the remuneration system of the
Company. The Company decides the regular salaries of the employees according to the position’s
value and evaluation performances and decides the variable salary according to the Company's and
employee’s performance. The remuneration distribution shows more consideration for strategic talent
and ensures the market competitiveness in the salary of core talent. The Company shall make
dynamic adjustments to the staff remuneration policy according to regional differences, number of
employees, staff turnover, environment changes in the industry and paying ability of the Company.
9.3 Employee training
Focused on building the “Employee Growth Platform + Strategy Facilitation Platform + Knowledge
Management Platform”, Midea Academy consists of the Leadership Empowerment Center, the
Professionalism Empowerment Center, the Globalization Empowerment Center, and the Newcomer
Empowerment Center, in addition to a professional online learning platform—M-Learning, which
motivates employees to learn on their own through special learning courses and practical learning
functions. Meanwhile, Midea is building an offline three-tier empowerment system, linking the Group-
business units-departments, to comprehensively develop the job knowledge and skills required by
employees at each stage, taking into account personal development and corporate needs, and
supporting the learning and growth of all Midea employees.
In Midea, new employees will receive orientation and job-specific skill training or tutoring, while in-
service ones will be given a full range of learning and development programmes in leadership,
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The 2022 Annual Report of Midea Group Co., Ltd.
professionalism and general skills. Additionally, irregular trainings inside or outside the Company offer
better opportunities for employees to improve their professional and general skills.
The leadership programme, in particular, is focused on building a multi-tier talent 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. To embody and
promote "Employees First" in the behaviour of the management, Midea provides internal resources to
help the management improve their sensitivity to "people" and diversity and inclusiveness, offers new
management tools to support the accumulation and sharing of managerial experience, and builds a
culture in which the senior management personnel tend to cultivate and inspire employees.
The attendances at internal training sessions were 1,114,608 in 2022, of which 108,766 were
management personnel, 317,680 R&D and marketing personnel and 761,010 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. 33 talent training
programs were carried out.
b. To facilitate the implementation of the “Global Impact” strategy, seven global talent development
programmes were launched in 2022, covering a total of 708 trainees.
c. Building a professionalism promotion system. In 2022, 46,054 professionalism improvement
courses were given, and the professionalism system courses for key personnel covered a total of
857,197 trainees for 1,959,657 man-hours.
d. Providing channels for general skill improvement. 926 such courses such as the Career
Development Center were given, covering a total of 197,550 trainees for 484,615 man-hours.
e. A total of 1,004 external training courses were introduced to broaden the horizons of employees,
covering a total of 90,716 trainees for 1,128,513 man-hours.
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The 2022 Annual Report of Midea Group Co., Ltd.
f. In order to help new graduates develop themselves fast and foster a new power for the Company,
205 relevant courses 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 9,434 new
graduates were trained for a total of 31,912 man-hours.
g. Facilitating organizational learning. With the addition of 1,619 new internal trainers, annual
teaching time reached 9,775 hours in total. And a total of 3,280 courses were designed in the year.
172,873 employees visited M-Learning for a total of 1,051,611 times in 2022, with the total learning
time reaching 490,718 hours.
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 2022-2024, which specifies
the decision-making process for dividend standards, dividend ratios and profit distribution policies,
ensures a continual and consistent profit distribution policy from the mechanism perspective, and fully
protects the legitimate rights and interests of minority investors. In addition, the Company carried out
share repurchases through centralized price bidding in 2022. 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
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The 2022 Annual Report of Midea Group Co., Ltd.
Complete decision-making process and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Minority shareholders are able to fully express their opinion and
Yes
desire and their legitimate rights and interests are fully protected
In case of adjusting or altering the cash dividend policy, the
conditions and process involved are in compliance with No adjustment was made to the cash dividend policy.
applicable regulations and transparent
The Company made a profit in the Reporting Period and the profit distributable to shareholders of the
Company (without subsidiaries) was positive, but it did not put forward a preliminary plan for cash
dividend distribution
□Applicable √N/A
Preliminary plan for profit distribution and converting capital surplus into share capital for the
Reporting Period
√ Applicable □ N/A
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax
25
included)
Additional shares converted from capital surplus
0
for every 10 shares (share)
Total shares as the basis for the preliminary plan
6,875,060,728
for profit distribution (share)
Cash dividends (RMB) (tax inclusive) 17,187,651,820
Cash dividends in other forms (such as share
2,636,704,772
repurchase) (RMB)
Total cash dividends (inclusive of those in other
19,824,356,592
forms) (RMB) (tax inclusive)
Distributable profits (RMB) 27,719,633,000
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 (2023) No. 10017 issued by PricewaterhouseCoopers Zhong Tian
LLP, the parent company realized a net profit of RMB12,530,265,000 for 2022. Pursuant to the relevant provisions
under the Articles of Association, it provided 10% as statutory surplus reserve, namely RMB1,253,027,000. Plus
undistributed profits at the beginning of the year of RMB28,094,420,000 and minus the profit distributed in the year of
RMB11,652,025,000, the actual distributable profit would be RMB27,719,633,000.
11. Implementation of any Equity Incentive Scheme, Employee Stock Ownership
Scheme or Other Incentive Measures for Employees
√Applicable □N/A
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The 2022 Annual Report of Midea Group Co., Ltd.
11.1 Equity incentive schemes
Overview of the Fifth Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Reserved Stock Options under the Fifth Stock
Option Incentive Scheme upon Expiry was approved at the Seventh Meeting of the Fourth Board of
Directors. As such, 58,000 stock options of five awardees that had been unexercised upon expiry
were retired.
b. The Proposal for the Retirement of Unexercised Stock Options in the First Grant under the Fifth
Stock Option Incentive Scheme upon Expiry was approved at the Ninth Meeting of the Fourth Board
of Directors. As such, 30,270 stock options of five awardees that had been unexercised upon expiry
were retired.
c. At the above-mentioned meeting, the Proposal for the Retirement of Unexercised Reserved Stock
Options under the Fifth Stock Option Incentive Scheme upon Expiry was approved. As such, 260,000
stock options of 18 awardees that had been unexercised upon expiry were retired.
d. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. According to the arrangements in the 2021 Annual
Profit Distribution, the exercise price for the first grant under the Fifth Stock Option Incentive Scheme
was revised from RMB51.88 to RMB50.21 per share, and the exercise price for the reserved stock
options under the Fifth Stock Option Incentive Scheme was revised from RMB42.71 to RMB41.04 per
share.
e. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. It was agreed to adjust the awardee list and their exercisable stock options for the first
grant under the Fifth Stock Option Incentive Scheme due to the resignation, substandard business
unit performance, substandard individual performance, reassignment, violation of the Company’s
“Red Lines”, or other factors of some awardees. Upon the adjustments, the number of locked-up
stock options granted to them in the first grant under the Fifth Stock Option Incentive Scheme was
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The 2022 Annual Report of Midea Group Co., Ltd.
reduced from 20,380,000 to 17,447,750.
f. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Third Exercise Period for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. A total of 926 awardees who are eligible for the Fifth Stock Option Incentive Scheme have
been allowed to exercise 8,237,750 stock options in the third exercise period (ended 6 May 2023).
g. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Reserved Stock Options under the Fifth Stock Option Incentive
Scheme was approved. It was agreed to adjust the awardee list and their exercisable stock options
for the reserved stock options under the Fifth Stock Option Incentive Scheme due to the resignation
of some awardees. Upon the adjustments, the number of locked-up reserved stock options granted to
them under the Fifth Stock Option Incentive Scheme was reduced from 3,270,000 to 2,835,000.
h. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Second Exercise Period for the Reserved Stock Options under the Fifth Stock Option Incentive
Scheme was approved. A total of 69 awardees who are eligible for the reserved stock options under
the Fifth Stock Option Incentive Scheme have been allowed to exercise 945,000 stock options in the
second exercise period (ended 10 March 2023).
During the Reporting Period, 5,298,269 shares were exercised with respect to the first grant under
the Fifth Stock Option Incentive Scheme.
During the Reporting Period, 541,300 shares were exercised with respect to the reserved stock
options under the Fifth Stock Option Incentive Scheme.
Overview of the Sixth Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options under the Sixth Stock Option
Incentive Scheme upon Expiry was approved at the Ninth Meeting of the Fourth Board of Directors.
As such, 25,100 stock options of four awardees that had been unexercised upon expiry were retired.
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The 2022 Annual Report of Midea Group Co., Ltd.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. According to the arrangements in the 2021 Annual
Profit Distribution, the exercise price for the Sixth Stock Option Incentive Scheme was revised from
RMB49.71 to RMB48.04 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Sixth Stock Option Incentive Scheme was approved. It was agreed
to adjust the awardee list and their exercisable stock options under the Sixth Stock Option Incentive
Scheme due to the resignation, substandard business unit performance, substandard individual
performance, reassignment, violation of the Company’s “Red Lines” or other factors of some
awardees. Upon the adjustments, the number of locked-up stock options granted to them under the
Sixth Stock Option Incentive Scheme was reduced from 30,255,000 to 26,982,250.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Second Exercise Period for the Sixth Stock Option Incentive Scheme was approved. A total of
905 awardees who are eligible for the Sixth Stock Option Incentive Scheme have been allowed to
exercise 8,412,250 stock options in the second exercise period (ended 29 May 2023).
During the Reporting Period, 5,476,736 shares were exercised under the Sixth Stock Option Incentive
Scheme.
Overview of the Seventh Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options under the Seventh Stock Option
Incentive Scheme upon Expiry was approved at the Ninth Meeting of the Fourth Board of Directors.
As such, 103,990 stock options of 12 awardees that had been unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the
Stock Option Incentive Scheme was approved. According to the arrangements of the 2021 Annual
Profit Distribution, the exercise price for the Seventh Stock Option Incentive Scheme was revised
from RMB48.86 to RMB47.19 per share.
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The 2022 Annual Report of Midea Group Co., Ltd.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Seventh Stock Option Incentive Scheme was approved. It was
agreed to adjust the awardee list and their exercisable stock options under the Seventh Stock Option
Incentive Scheme due to the resignation, substandard business unit performance, substandard
individual performance, reassignment, violation of the Company’s “Red Lines” or other factors of
some awardees. Upon the adjustments, the number of locked-up stock options granted to them under
the Seventh Stock Option Incentive Scheme was reduced from 49,440,000 to 44,200,200.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for
the Second Exercise Period for the Seventh Stock Option Incentive Scheme was approved. A total of
1,237 awardees who are eligible for the Seventh Stock Option Incentive Scheme have been allowed
to exercise 15,490,200 stock options in the second exercise period (ended 4 June 2023).
During the Reporting Period, 7,137,992 shares were exercised under the Seventh Stock Option
Incentive Scheme.
Overview of the Eighth Stock Option Incentive Scheme
a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes
was approved at the Ninth Meeting of the Fourth Board of Directors. According to the arrangements in
the 2021 Annual Profit Distribution, the exercise price for the Eighth Stock Option Incentive Scheme
was revised from RMB81.41 to RMB79.74 per share.
Overview of the Ninth Stock Option Incentive Scheme
a. The Proposal on the Ninth Stock Option Incentive Scheme (Draft) of Midea Group Co., Ltd. and its
Abstract was approved at the Seventh Meeting of the Fourth Board of Directors and the 2021 Annual
General Meeting of Shareholders, and the awardee list for the Ninth Stock Option Incentive Scheme
(Draft) was reviewed at the Fourth Meeting of the Fourth Supervisory Committee.
b. The Proposal for the Adjustments to the Exercise Price, Awardee List and Granted Number for the
Ninth Stock Option Incentive Scheme was approved at the Ninth Meeting of the Fourth Board of
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The 2022 Annual Report of Midea Group Co., Ltd.
Directors. According to the arrangements in the 2021 Annual Profit Distribution, the exercise price for
the Ninth Stock Option Incentive Scheme was revised from RMB56.28 to RMB54.61 per share. And it
was agreed to adjust the awardee list and their stock options under the Ninth Stock Option Incentive
Scheme due to the resignation of some awardees. Upon the adjustments, the number of awardees
and the total stock options under the Ninth Stock Option Incentive Scheme were reduced from 2,849
to 2,815, and from 109,074,000 to 107,791,000, respectively.
c. On 8 June 2022, the Company granted 107,693,000 stock options to 2,813 awardees with the
exercise price being RMB54.61 per share.
Overview of the 2018 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018
Restricted Share Incentive Scheme was approved at the Third Meeting of the Fourth Board of
Directors and the First Extraordinary General Meeting of Shareholders of 2022 on 14 January 2022.
As such, it was agreed to repurchase and retire 386,250 restricted shares that had been granted to
13 awardees but were still in lockup, for the reasons of their resignation or being reassigned. The
retirement of the said restricted shares was completed on 20 April 2022.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the Ninth Meeting of the Fourth Board of Directors. According to the 2021
Annual Profit Distribution Plan, the repurchase prices for the first grant under the 2018 Restricted
Share Incentive Scheme was revised from RMB23.11 to RMB21.44 per share, and the repurchase
price for the reserved restricted shares under the 2018 Restricted Share Incentive Scheme from
RMB19.13 to RMB17.46 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2018 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 767,551 restricted shares that had been granted to 54 awardees but
were still in lockup, for the reasons of their resignation, being reassigned, violation of the Company’s
“Red Lines” or other factors. The retirement was completed on 24 October 2022.
148
The 2022 Annual Report of Midea Group Co., Ltd.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the First Grant under the 2018 Restricted Share Incentive Scheme was
approved. A total of 189 awardees were eligible for this unlocking, with 2,791,699 restricted shares
(0.0399% of the Company’s total existing share capital) unlocked for public trading on 28 June 2022,
of which 25,000 shares, 25,000 shares, 20,000 shares, and 25,000 shares were unlocked for senior
management Guan Jinwei, Zhang Xiaoyi, Zhong Zheng, and Hu Ziqiang, respectively.
e. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the Reserved Restricted Shares under the 2018 Restricted Share Incentive
Scheme was approved. A total of 21 awardees were eligible for this unlocking, with 377,083 restricted
shares (0.0054% of the Company’s total existing share capital) unlocked for public trading on 22 June
2022, of which 25,000 shares were unlocked for senior management Zhao Wenxin.
f. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 218,958 restricted shares that had been
granted to 14 awardees but were still in lockup, for the reasons of their resignation, being reassigned,
violation of the Company’s “Red Lines” or other factors.
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 Third Meeting of the Fourth Board of
Directors and the First Extraordinary General Meeting of Shareholders of 2022 on 14 January 2022.
As such, it was agreed to repurchase and retire 771,042 restricted shares that had been granted to
18 awardees but were still in lockup, for the reasons of their resignation or being reassigned. The
retirement of the said restricted shares was completed on 20 April 2022.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the Ninth Meeting of the Fourth Board of Directors. According to the 2021
Annual Profit Distribution Plan, the repurchase price for the granted restricted shares under the 2019
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The 2022 Annual Report of Midea Group Co., Ltd.
Restricted Share Incentive Scheme was revised from RMB22.63 to RMB20.96 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2019 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 1,348,916 restricted shares that had been granted to 81 awardees
but were still in lockup, for the reasons of their resignation, being reassigned, substandard individual
or business unit performance, violation of the Company’s “Red Lines” or other factors. The retirement
was completed on 24 October 2022.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the 2019 Restricted Share Incentive Scheme was approved. A total of 334
awardees were eligible for this unlocking, with 5,247,500 restricted shares (0.0750% of the
Company’s total existing share capital) unlocked for public trading on 11 July 2022, of which 25,000
shares, 30,000 shares and 25,000 shares were unlocked for senior management Zhao Wenxin,
Wang Jinliang and Guan Jinwei, respectively.
e. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 431,250 restricted shares that had been
granted to 14 awardees but were still in lockup, for the reasons of their resignation, being reassigned
or other factors.
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 Third Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 1,314,501 restricted shares that had been
granted to 30 awardees but were still in lockup, for the reasons of their resignation, being reassigned,
violation of the Company’s “Red Lines” or other factors. The retirement of the said restricted shares
was completed on 20 April 2022.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
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The 2022 Annual Report of Midea Group Co., Ltd.
Schemes was approved at the Ninth Meeting of the Fourth Board of Directors. As the 2021 Annual
Profit Distribution Plan had been carried out, the repurchase price for the restricted shares granted
under the 2020 Restricted Share Incentive Scheme was revised from RMB22.85 to RMB21.18 per
share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2020 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 1,914,495 restricted shares that had been granted to 154 awardees
but were still in lockup, for the reasons of their resignation, being reassigned, violation of the
Company’s Red Lines or other factors. The retirement was completed on 24 October 2022.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the 2020 Restricted Share Incentive Scheme was approved. A total of 443
awardees were eligible for this unlocking, with 7,899,587 restricted shares (0.1129% of the
Company’s total existing share capital) unlocked for public trading on 19 July 2022, of which 36,000
shares, 30,000 shares and 36,000 shares were unlocked for senior management Zhao Wenxin, Li
Guolin and Wang Jinliang, respectively.
e. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 753,209 restricted shares that had been
granted to 25 awardees but were still in lockup, for the reasons of their resignation, being reassigned,
violation of the Company’s “Red Lines” or other factors.
Overview of the 2021 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021
Restricted Share Incentive Scheme was approved at the Third Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 290,000 restricted shares that had been
granted to 7 awardees but were still in lockup, for the reasons of their resignation, being reassigned,
violation of the Company’s “Red Lines” or other factors. The retirement of the said restricted shares
151
The 2022 Annual Report of Midea Group Co., Ltd.
was completed on 20 April 2022.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the Ninth Meeting of the Fourth Board of Directors. According to the 2021
Annual Profit Distribution Plan, the repurchase price for the 2021 Restricted Share Incentive Scheme
was revised from RMB39.92 to RMB38.25 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain
Incentive Shares under the 2021 Restricted Share Incentive Scheme was approved. As such, it was
agreed to repurchase and retire 1,100,000 restricted shares that had been granted to 21 awardees
but were still in lockup, for the reasons of their resignation, being reassigned, violation of the
Company’s “Red Lines” or other factors. The retirement was completed on 24 October 2022.
d. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 824,500 restricted shares that had been
granted to 18 awardees but were still in lockup, for the reasons of their resignation, being reassigned
or other factors.
Overview of the 2022 Restricted Share Incentive Scheme
a. The 2022 Restricted Share Incentive Scheme (Draft) and its Abstract was approved at the Seventh
Meeting of the Fourth Board of Directors. And the awardee list for the 2022 Restricted Share
Incentive Scheme (Draft) was reviewed at the Fourth Meeting of the Fourth Supervisory Committee.
b. The Proposal for the Adjustments to the Grant Price, Awardee List and Granted Number for the
2022 Restricted Share Incentive Scheme was approved at the Ninth Meeting of the Fourth Board of
Directors. According to the 2021 Annual Profit Distribution Plan, the repurchase price for the 2022
Restricted Share Incentive Scheme was revised from RMB28.14 to RMB26.47 per share. And it was
agreed that the number of awardees and total restricted shares under the 2022 Restricted Share
Incentive Scheme was revised from 199 to 197 awardees, and from 12,630,000 to 12,450,000 shares,
respectively.
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The 2022 Annual Report of Midea Group Co., Ltd.
c. On 13 July 2022, the Company granted 12,152,500 restricted shares to 191 awardees with the
grant price being RMB26.47 per share, of which senior management Wang Jinliang, Li Guolin, Jiang
Peng and Zhao Wenxin were granted 80,000 shares each.
d. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2022
Restricted Share Incentive Scheme was approved at the 14th Meeting of the Fourth Board of
Directors. As such, it was agreed to repurchase and retire 270,000 restricted shares that had been
granted to 10 awardees but were still in lockup, for the reasons of their resignation, being reassigned
or other factors.
Equity incentives for directors and senior management
√Applicable □N/A
Unit: share
Restricted
Restricted Restricted
shares held at Unlocked Grant price of
shares shares held at
the beginning shares in the the restricted
Name Office title granted in the the end of the
of the Reporting shares
Reporting Reporting
Reporting Period (RMB/share)
Period Period
Period
Zhang Xiaoyi Vice President 50,000 25,000 25,000
Hu Ziqiang Vice President 50,000 25,000 25,000
Wang Jinliang Vice President 286,000 66,000 80,000 26.47 300,000
Li Guolin Vice President 180,000 30,000 80,000 26.47 230,000
Guan Jinwei Vice President 125,000 50,000 75,000
Vice
President,
Zhong Zheng CFO and 40,000 20,000 20,000
Director of
Finance
Board
Jiang Peng 80,000 80,000 26.47 160,000
Secretary
Chief People
Zhao Wenxin 326,000 86,000 80,000 26.47 320,000
Officer
Total -- 1,137,000 302,000 320,000 -- 1,155,000
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The 2022 Annual Report of Midea Group Co., Ltd.
1. A total of 2,791,699 shares were allowed for public trading in the Third Unlocking
Period for the First Grant of the 2018 Restricted Share Incentive Scheme on 28 June
2022, of which senior management Guan Jinwei, Zhang Xiaoyi, Zhong Zheng and Hu
Ziqiang unlocked 25,000 shares, 25,000 shares, 20,000 shares and 25,000 shares,
respectively.
2. A total of 377,083 shares were allowed for public trading in the Second Unlocking
Period for the Reserved Restricted Shares of the 2018 Restricted Share Incentive
Scheme on 22 June 2022, of which senior management Zhao Wenxin unlocked
25,000 shares.
3. A total of 5,247,500 shares were allowed for public trading in the Second Unlocking
Remark (if any)
Period of the 2019 Restricted Share Incentive Scheme on 11 July 2022, of which
senior management Zhao Wenxin, Wang Jinliang and Guan Jinwei unlocked 25,000
shares, 30,000 shares and 25,000 shares, respectively.
4. A total of 7,899,587 shares were allowed for public trading in the Second Unlocking
Period of the 2020 Restricted Share Incentive Scheme on 19 July 2022, of which
senior management Zhao Wenxin, Li Guolin and Wang Jinliang unlocked 36,000
shares, 30,000 shares and 36,000 shares, respectively.
5. A total of 12,152,500 shares were granted under the 2022 Restricted Share
Incentive Scheme on 8 June 2022, of which senior management Wang Jinliang, Li
Guolin, Jiang Peng and Zhao Wenxin were granted 80,000 shares each.
Appraisal mechanism and incentives for senior management
With respect to remunerations for directors and supervisors, the Remuneration and Appraisal
Committee under the Board of Directors formulates the relevant plan, which is submitted to the Board
of Directors for approval and then to the meeting of shareholders for final approval. As for
remunerations for senior management, the Remuneration and Appraisal Committee formulates the
relevant plan, which is submitted to the Board of Directors for final approval.
11.2 Employee stock ownership schemes
√Applicable □N/A
Outstanding employee stock ownership schemes during the Reporting Period
As a percentage
Scope of Number of
Total shares held Change of the Company’s Funding source
employees employees
total share capital
Employees under
the Fourth Global
Special fund for the
Partner Stock 20 3,318,540 N/A 0.0474%
scheme
Ownership
Scheme
Employees under
Special fund for the
the First Business
scheme and part of the
Partner Stock 50 1,779,300 N/A 0.0254%
performance bonuses for
Ownership
senior management
Scheme
Employees under
the Fifth Global
Special fund for the
Partner Stock 16 3,732,075 N/A 0.0533%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Second
scheme and part of the
Business Partner 45 1,867,845 N/A 0.0267%
performance bonuses for
Stock Ownership
senior management
Scheme
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The 2022 Annual Report of Midea Group Co., Ltd.
Employees under
the Sixth Global
Special fund for the
Partner Stock 17 3,537,663 N/A 0.0506%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Third Business
scheme and part of the
Partner Stock 46 1,873,559 N/A 0.0268%
performance bonuses for
Ownership
senior management
Scheme
Employees under
the Seventh Global
Special fund for the
Partner Stock 15 2,436,518 N/A 0.0348%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Fourth
scheme and part of the
Business Partner 44 1,985,611 N/A 0.0284%
performance bonuses for
Stock Ownership
senior management
Scheme
Employees under
the Eighth Global
Special fund for the
Partner Stock 15 3,770,433 N/A 0.0539%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Fifth Business
scheme and part of the
Partner Stock 55 2,826,759 N/A 0.0404%
performance bonuses for
Ownership
senior management
Scheme
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
Chairman of the Board
Fang Hongbo
and CEO
Director and Vice
Gu Yanmin
President
Director and Vice
Wang Jianguo
President
Zhang Xiaoyi Vice President
Hu Ziqiang Vice President
Wang Jinliang Vice President
5,277,672 7,328,039 0.1047%
Li Guolin Vice President
Fu Yongjun Vice President
Guan Jinwei Vice President
Bai Lin Vice President
Vice President, CFO
Zhong Zheng and Director of
Finance
Zhao Wenxin Chief People Officer
Jiang Peng Board Secretary
Change of asset management organizations during the Reporting Period
□Applicable √N/A
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The 2022 Annual Report of Midea Group Co., Ltd.
Equity changes incurred by disposal of shares by holders, etc. during the Reporting Period
□Applicable √N/A
Exercise of shareholder rights during the Reporting Period
During the Reporting Period, holders under employee stock ownership schemes exercised the
shareholder rights to receive the cash dividends for 2021. 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 RMB198.02 million
for 2022, which was included in the relevant expense items and capital surplus.
Termination of employee stock ownership schemes during the Reporting Period
□Applicable √N/A
11.3 Other incentive measures for employees
□Applicable √N/A
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The 2022 Annual Report of Midea Group Co., Ltd.
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
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 29 April 2023
For details, please refer to the 2022 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
Nature standard identification standards for internal control identification standards for internal control
defects” under Section III of The 2022 defects” under Section III of The 2022
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
157
The 2022 Annual Report of Midea Group Co., Ltd.
disclosed on www.cninfo.com.cn dated 29 disclosed on www.cninfo.com.cn dated 29
April 2023. April 2023.
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 2022 defects” under Section III of The 2022
Self-Evaluation Report on Internal Control Self-Evaluation Report on Internal Control
disclosed on www.cninfo.com.cn dated 29 disclosed on www.cninfo.com.cn dated 29
April 2023. April 2023.
Number of serious financial-
0
report-related defects
Number of serious non-financial-
0
report-related defects
Number of important financial-
0
report-related defects
Number of important non-
0
financial-report-related defects
14.2 Auditor’s report on internal control
√Applicable □N/A
Opinion paragraph in the auditor’s report on internal control
The internal control auditor holds the view that on 31 December 2022, 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 29 April 2023
control
Index to the disclosed full text of
For details, please refer to the 2022 Auditor’s Report on Internal Control, which has
the auditor’s report on internal
been disclosed on www.cninfo.com.cn
control
Type of the auditor’s opinion Standard & unqualified
Serious non-financial-report-
No
related defects
Whether any modified opinions are expressed by the accounting firm in its auditor’s report on the
Company’s internal control
□ Yes √ No
Whether the auditor’s report on the Company’s internal control issued by the accounting firm is
consistent with the self-evaluation report of the Board
√ Yes □ No
15. Remediation of Problems Identified by Self-inspection in the Special Action on
the Governance of Listed Companies
In accordance with the requirements of regulatory authorities, the Company launched a special self-
inspection of the governance of listed companies that would last four months on 17 December 2020,
which would review the corporate governance comprehensively from seven perspectives, namely the
158
The 2022 Annual Report of Midea Group Co., Ltd.
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.
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.
159
The 2022 Annual Report of Midea Group Co., Ltd.
Section V Environmental and Social Responsibility
1. Major Environmental Issues
Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities
√ Yes □ No
Policies and industry standards for environmental protection
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.
Industry standards for discharges and discharges of pollutants in production and operation activities
Name of Numb
the er of Approve
Concentration Total
Compan Major disch Distribution of discharge Pollutant discharge d total Excess
Discharge method of the discharge
y or pollutants arge outlets standards discharg discharge
discharge (ton)
subsidiar outlet e (ton)
y s
Foshan COD 34 mg/L 0.00018 0.228 No
Shunde SS Discharge after being treated by The southern side of 2# 122.5 mg/L Discharge Limits of Water 0.00048 / No
Midea BOD5 wastewater treatment system and 1 plant in the Washing and 115.2 mg/L Pollutants (DB44/26-2001) 0.0012 / No
Washing Petroleum reaching the standard Sterilizing Appliances Park 0.06 mg/L of Guangdong Province 0.00045 / No
Applianc Ammonia- 0.8205mg/L 0.00036 0.0576 No
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The 2022 Annual Report of Midea Group Co., Ltd.
es nitrogen
Manufact Benzene 0.025 mg/m 0.0028 / No
uring Toluene and
Co., Ltd. 0.54 mg/m 0.035 / No
xylene Emission Standard of
(the
The southern side of 2# Volatile Organic
Washing High altitude discharge after being
1 plant in the Washing and Compounds for Furniture
and treated by waste gas treatment station
Sterilizing Appliances Park Manufacturing (DB44/814-
Sterilizin VOCS 4.48 mg/m 0.57 / No
2010)
g
Applianc
es Park)
COD 112 mg/L 42.9 70.898 No
Ammonia-
1.11 mg/ L 1.05 2.496 No
nitrogen
Discharge after being treated by Integrated Wastewater
BOD5 Western gate of the Wuhu 34.1mg/ L 10.26 / No
wastewater treatment system and 1 Discharge Standard
Petroleum plant 1.43mg/ L 0.43 / No
reaching the standard (GB8978-1996)
Total
2.16 mg/m 0.52 / No
phosphorus
Wuhu Fluoride 5.25 mg/m 1.02 / No
Midea Soot 19.91 mg/m 7.64 / No
Kitchen Sulfur Emission Standard of Air
& Bath <3mg/m 1.6 / No
dioxide 15m high altitude discharge Pollutants for Boiler
Applianc Nitrogen (GB13271-2014)
es Mfg. 18.2mg/m 7.9 / No
oxide
Co., Ltd. Particles 71.15mg/m Integrated Emission 203 / No
45 Plants at each workshop Standards for Atmospheric
Xylene <0.01mg/m 0.002 / No
Pollutants (GB16297-1996)
High altitude discharge after being Emission Control Standard
treated by waste gas treatment station for Industrial Enterprises
VOCs 5.22mg/m Volatile Organic 9.3 / No
Compounds (DB13-2322-
2016)
COD 47.24mg/ L 6.447
Hefei Ammonia-
5.885 mg/ L 0.350
Midea nitrogen Implementation of the
Heating BOD5 39.72mg/ L takeover standards of the 2.3184
& Total Discharge after being treated by Western Hefei Group
The eastern side of 1#
Ventilatin nitrogen (by wastewater treatment system and 1 35.40mg/ L wastewater treatment plant 1.246 / No
plant
g N) reaching the standard and Integrated Wastewater
Equipme Total Discharge Standard
nt Co., phosphorus 0.897mg/ L (GB8978-1996) Level 3 0.0531
Ltd. (by P)
Anionic 1.04mg/ L 0.06095
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The 2022 Annual Report of Midea Group Co., Ltd.
surfactant
Suspended
54.83mg/ L 3.1398
matters
Petroleum 0.44mg/ L 0.02733
pH value 8.02 /
1 set at the northeastern
side of 3# plant and 1 at
RTO equipment 2 2.6mg/m 0.33017
the southwestern side of
4# plant
NMHC Water spray + activated carbon 2 sets at 1# plant and 1 Integrated Emission / No
3 3.27 mg/m 0.320
equipment set at 2# plant Standards for Atmospheric
3 at 1# plant, 2 at 2# plant, Pollutants GB16297-1996
Two-stage activated carbon equipment 9 1 at 3# plant, 2 at 4# plant 6.4275mg/m Level 2 1.2727
and 1 cyclopentane
2 at 1# plant, 3 at 2# plant,
Particles Filter cartridge dust collector 8 2 at 3# plant and 1 at 4# 0.81 mg/m 1.156 / No
plant
The eastern side of Implementation of the
COD wastewater treatment 42mg/L takeover standards of the 7.855 58.150 No
station Western Hefei Group
Discharge after being treated by
1 wastewater treatment plant
wastewater treatment station The eastern side of
Ammonia- and Integrated Wastewater
wastewater treatment 1.36 mg/L 0.91 / No
Hefei nitrogen Discharge Standard
station
Midea (GB8978-1996) Level 3
Laundry 15m high altitude discharge after being
Applianc Particles treated by cyclone + filter cartridge 2 1 at 2# plant, 1 at 6# plant ＜20 mg/m 0.28 / No
e Co., dust collector
Ltd. Particles 15m high altitude discharge after being ＜20 mg/m 1.57 / No
(monitor treated by water spraying + dedusting+ 1 1 at 3# plant
NMHC UV photolysis + activated carbon 1.52 mg/m Table 5 of the Emission 0.24 / No
ed by the
Standards of Industrial
municipa 15m high altitude discharge after being
NMHC 3 1 at 2# plant 1.91mg/m Pollutants in the Synthetic 0.27 / No
l treated by waste gas treatment station
Resin Industry (GB 31572-
governm 15m high altitude discharge after being
NMHC 6 6 at 6# plant 0.89 mg/m 2015): Special Emission 0.35 / No
ent) treated by waste gas treatment station
Limit Requirements
15m high altitude discharge after being
NMHC 2 1 at 1# plant, 1 at 5# plant 1.52mg/m 0.23 / No
treated by low-temperature plasma
15m high altitude discharge after being
NMHC treated by photocatalyst and activated 2 2 at 3# plant 2.34 mg/m 0.45 / No
carbon
GD COD 110 mg/L The Discharge Standard of 2.03 9.59 No
Midea Ammonia- Discharge after being treated by The southeastern side of Water Pollutants for
1 15 mg/L 0.12 / No
Air- nitrogen wastewater treatment station 4# plant Electroplating (DB441597-
Conditio SS 100 mg/L 2015) Chart 2 PRD 1.13 / No
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The 2022 Annual Report of Midea Group Co., Ltd.
ning Petroleum 8 mg/L standard 0.085 / No
Equipme COD 85 mg/L 5.4 9.59 No
nt Co., SS 58.5 mg/L The Discharge Limits of 3.65 / No
Ltd. Discharge after being treated by The eastern side of 2#
Ammonia- 1 Water Pollutants (DB44/26-
wastewater treatment station plan 2.52 mg/L 0.169 / No
nitrogen 2001)
Petroleum 5.02 mg/L 0.33 / No
Emission Standard of
Volatile Organic
15m high altitude discharge after being
VOCs Compounds for Furniture
treated by spray tower + activated 3 4# plant 21.23mg/m 0.74 No
(dusting) Manufacturing (DB44/814-
carbon
2010) the second time
period
Emission Standard of
VOCs 15m high altitude discharge after being
Volatile Organic
(Screen treated by environmental protection 4 1#, 5#, 9#, 11# plants 1.92 mg/m 0.66 No
Compounds for Printing
Printing) equipment 14
Industry (DB44/815-2010)
Emission Standard of
15m high altitude discharge after being
VOCs Volatile Organic
treated by environmental protection 2 10# plants 25.21mg/m 6.24 No
(electronic) Compounds for Printing
equipment
Industry (DB44/815-2010)
NMHC
15m high altitude discharge after being Emission Limits of Air
(evaporator
treated by environmental protection 5 2#, 5# plants 25 mg/m Pollutants (DB44/27- 2001) 4.39 No
&
equipment the second time period
condenser)
COD 98mg/L 6.709 7.5 No
SS 46mg/L Integrated Wastewater 2.85 / No
BOD Discharge after being treated by The northern side of the 85.2mg/L Discharge Standard 3.85 / No
1
Ammonia- wastewater treatment station park (GB8978-1996) chart 4
10.2mg/L 0.651 0.675 No
nitrogen Level 3
Wuhu Petroleum 1.01mg/L / / No
Maty Air- Integrated Emission
Conditio Particles 5 2# plant 10mg/m Standards for Atmospheric 8.43 / No
ning Pollutants (GB16297-1996)
Equipme Emission Control Standard
nt Co., 15m high altitude discharge after being for Industrial Enterprises
Ltd VOCs treated by environmental protection 8 2#, 3# plants 10.4mg/m Volatile Organic 0.066 / No
equipment Compounds (DB13-2322-
2016)
NOx 3 3# plant 7.7mg/m Integrated Emission 2.041 2.209 No
Standards for Atmospheric
SO2 3 3# plant 1.5mg/m 0.61 / No
Pollutants (GB16297-1996)
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The 2022 Annual Report of Midea Group Co., Ltd.
COD 34mg/L 15.27 16.28 No
Suspended
6mg/L 2.93 / No
matters Discharge Standard of
Petroleum 0.56mg/L Water Pollutants for 0.604 / No
Total Near the wastewater Electroplating DB 44/1597-
Discharge after being treated by 0.22mg/L 0.23 / No
phosphorus 1 treatment station in the 2015
Total zinc wastewater treatment station ND 0.031 / No
north side of the plant
pH value 7.9mg/L 3.07 / No
Total
1.3mg/L 1.05 / No
nitrogen
Ammonia- The discharge limits of
0.737mg/L 0.194 2.034 No
nitrogen water pollutants in
Fluoride 0.44mg/L Guangdong DB44/26-2001 0.106 / No
Guangdo Emission Limits of Air
ng Pollutants（DB44/27-
Meizhi 15m high altitude discharge after being 2001）/
Precision Particles treated by environmental protection 7 Roof of the plant 17.04mg/m Emission Standard of Air 27.602 / No
- equipment Pollutants for Industrial Kiln
Manufact and Furnace（GB 9078-
uring
1996）
Co., Ltd
15m high altitude discharge after being
SO2 treated by environmental protection 4 Roof of the plant 1.5mg/m 0.305 0.436 No
Emission Standard of Air
equipment
Pollutants for Boiler
15m high altitude discharge after being
（DB44/765-2019）
NOx treated by environmental protection 4 Roof of the plant 6.16mg/m 1.914 2.039 No
equipment
15m high altitude discharge after being
VOCs treated by environmental protection 10 Roof of the plant 3.6516mg/m 3.977 4.553 No
Emission Standard of
equipment
Volatile Organic
15m high altitude discharge after being
Compounds for Surface
Benzene treated by environmental protection Roof of the plant 0.0299mg/m 0.0144 / No
Coating of Automobile
equipment Manufacturing Industry
2
Total 15m high altitude discharge after being
（DB44/816-2010）
toluene and treated by environmental protection Roof of the plant 0.317mg/m 0.168609 / No
xylene equipment
Guangdo COD 36mg/L The Discharge Standard of 5.895 6.046 No
ng Water Pollutants for
Near the wastewater
Meizhi Suspended Discharge after being treated by Electroplating of
1 treatment station in the 9.3mg/L 1.528 / No
Compres matters wastewater treatment station Guangdong Province DB-
north side of the plant
sor Petroleum 0.81mg/L 441597-2015, before 1 0.134 / No
Limited Total 0.44mg/L September 2012 0.072 / No
164
The 2022 Annual Report of Midea Group Co., Ltd.
phosphorus
Total zinc 0.0525mg/L 0.028 / No
pH value 7.25mg/L / / No
Total
4.49mg/L 0.737 / No
nitrogen
Ammonia-
2.309mg/L 0.378 0.756 No
nitrogen
Fluoride 0.341mg/L 0.056 / No
Total nickel ND 0.008 0.024 No
Emission Limits of Air
Pollutants（DB44/27-
Over-15m high altitude discharge after 2001）/
Roof of main plant and
Particles being treated by environmental 17 17.17mg/m Emission Standard of Air 7.078 8.705 No
metal plate workshop
protection equipment Pollutants for Industrial Kiln
and Furnace（GB 9078-
1996）
Over-15m high altitude discharge after
Roof of main plant and
SO2 being treated by environmental 11 0.75mg/m 0.484 0.799 No
metal plate workshop Emission Standard of Air
protection equipment
Pollutants for Boiler
Over-15m high altitude discharge after
Roof of main plant and （DB44/765-2019）
NOx being treated by environmental 11 4.45mg/m 4.64 7.814 No
metal plate workshop
protection equipment
Over-15m high altitude discharge after
Roof of main plant and
Benzene being treated by environmental 2 0.117mg/m 0.053 / No
metal plate workshop Emission Standard of
protection equipment
Volatile Organic
Total Over-15m high altitude discharge after Compounds for Surface
Roof of main plant and
toluene and being treated by environmental 2 0.617mg/m 0.282 / No
metal plate workshop Coating of Automobile
xylene protection equipment
Manufacturing Industry
Over-15m high altitude discharge after
Roof of main plant and （DB44/816-2010）
VOCs being treated by environmental 7 2.63mg/m 3.069 5.718 No
metal plate workshop
protection equipment
CODcr 52.5 mg/L Discharge Standard of 4.397 15.304 No
Discharge after being treated by Waste water treatment
Foshan Petroleum 0.17 mg/L Water Pollutants for 0.013 / No
wastewater treatment system and 2 stations 1 and 2 of 3#
Shunde Ammonia- Electroplating (DB44/1597-
reaching the standard plant 0.53 mg/L 0.466 1.913 No
Midea nitrogen 2015)
Electrical Total Waste gas sprayers 1 and Table 1 of the Emission
Heating toluene and High altitude discharge after being 0.36311
2 at 3# plant, outlets 1, 2 Standard of Volatile 2.850 / No
Applianc treated by waste gas treatment station mg/m
xylene and 3 for waste gas from Organic Compounds for
es wave-soldering, painting Furniture Manufacturing
Manufact 7
and drying at 6# plant, (DB44/814-2010):
uring High altitude discharge after being
VOCs outlets 1 and 2 for waste 3.5992mg/m Discharge Limits for VOCs 10.652 22.72 No
Co., Ltd. treated by waste gas treatment station
gas from reflow soldering through Exhaust Funnel/for
at 6# plant Time Period II
165
The 2022 Annual Report of Midea Group Co., Ltd.
Outlet of injection molding Table 4 of the Emission
waste gas in the south Standards of Industrial
High altitude discharge after being side of 1# plant, outlet of Pollutants in the Synthetic
NMHC 2 0.4038 mg/m 0.156 / No
treated by waste gas treatment station injection molding waste Resin Industry (GB 31572-
gas in the south side of 9# 2015): Emission Limits of
plant Air Pollutants
Outlets 1 and 2 of sanding
Table 2 of the Emission
waste gas at 3# plant,
Particles Pulse bag dust collecting 4 0.4231mg/m Limits of Air Pollutants 0.158 / No
outlets 1 and 2 of polishing
(DB44/27-2001): Emission
waste gas at 3# plant
Limits of Industrial Waste
Sulfur Oxidation wire roof of 3#
High altitude discharge after being 4.75 mg/m Gas (Time Period 2), Level 0.095 3.8231 No
dioxide 2 plant
treated by waste gas treatment station 2
Oxynitride Drying furnace of 3# plant 3..31 mg/m 0.881 13.132 No
Emission Standard of
Cooking Discharge after being treated by waste South and north section
2 0.29 mg/m Cooking Fume (Trial) (GB 0.110 / No
fume gas treatment station canteens
18483-2001)
CODcr 28mg/L 2.589 4.8 No
Discharge Standard of
Petroleum Discharge after being treated by 0.06mg/L 0.00486 / No
Water Pollutants for
SS wastewater treatment system and 1 Sewage treatment station 18.5mg/L 1.2250 / No
Electroplating (DB44/1597-
Ammonia- reaching the standard
0.7885mg/L 2015) 0.375 0.96 No
nitrogen
High altitude discharge after being
Benzene 0.01 mg/m 0.000514 / No
treated by waste gas treatment station
Table 1 of the Emission
High altitude discharge after being
Toluene 0.09 mg/m Standard of Volatile 0.00502 / No
treated by waste gas treatment station
Organic Compounds for
High altitude discharge after being
Xylene Spraying waste gas outlet 1.08 mg/m Furniture Manufacturing 0.0154 / No
Guangdo treated by waste gas treatment station 1
at 1# plant (DB44/814-2010):
ng Midea Total
High altitude discharge after being Discharge Limits for VOCs
Consum toluene and 1.17 mg/m 0.0204 / No
treated by waste gas treatment station through Exhaust Funnel/for
er xylene
Time Period II
Electric High altitude discharge after being
Manufact VOCs 4.45 mg/m 0.1764 0.61 No
treated by waste gas treatment station
uring Injection molding waste Table 4 of the Emission
Co., Ltd. gas outlet in the southern Standards of Industrial
High altitude discharge after being side of 2# plant, injection Pollutants in the Synthetic
NMHC 2 0.5575 mg/m 0.10199 0.104 No
treated by waste gas treatment station molding waste gas outlet Resin Industry (GB 31572-
in the northern side of 2# 2015): Emission Limits of
plant Air Pollutants
Sanding waste gas outlet Table 2 of the Emission
of 1# plant Limits of Air Pollutants
Particles Pulse bag dust collecting 7 0.45 mg/m 0.0636 / No
Polishing waste gas outlet (DB44/27-2001): Emission
of 1# plant Limits of Industrial Waste
Sulfur High altitude discharge after being Gas (Time Period 2), Level
1 Drying furnace of 1# plant <3 mg/m 0.02325 0.028 No
dioxide treated by waste gas treatment station 2
166
The 2022 Annual Report of Midea Group Co., Ltd.
Emission Standard of Air
High altitude discharge after being
Oxynitride <3 mg/m Pollutants for Boiler 0.0938 0.131 No
treated by waste gas treatment station
（DB44/765-2019）
Emission Standard of
Cooking Discharge after being treated by waste
1 Canteen of 1# plant 0.575 mg/m Cooking Fume (GB 18483- 0.01425 / No
fume gas treatment station
2001)
Implementation of the
COD 16 mg/L takeover standards of the 6.80 / No
The western side of the
Discharge after being treated by Western Hefei Group
comprehensive
wastewater treatment system and 1 wastewater treatment plant
wastewater treatment
Ammonia- reaching the standard and Integrated Wastewater
station 0.207 mg/L 0.12 / No
nitrogen Discharge Standard
(GB8978-1996) Level 3
No. 1 workshop welding
soot discharge outlet for 7.0mg/m
Integrated Emission
waste gas
Standards for Atmospheric
No. 3 workshop discharge
Pollutants (GB16297-1996)
outlet for the welding 5.2 mg/m
waste gas
Waste gas outlet of 1#
heat-treating furnace at 7.1 mg/m Emission Standard of Air
No. 2 workshop Pollutants for Industrial Kiln
Waste gas outlet of 2# and Furnace (GB9078-
Anhui
heat-treating furnace at 6.4 mg/m 1996)
Meizhi
No. 2 workshop
Compres
Integrated Emission
sor Co., Waste gas outlet for die
7.5 mg/m Standards for Atmospheric
Ltd. casting at No. 2 workshop
Pollutants (GB16297-1996)
Collected by gas trap hood+15m high
Particles 13 Waste gas outlet for die Integrated Emission 10.61 65.45 No
exhaust cylinder 4.6 mg/m
casting at No. 4 workshop Standards for Atmospheric
Waste gas outlet of 1# Pollutants (GB16297-1996)
heat-treating furnace at 6.6 mg/m Emission Standard of Air
No. 4 workshop Pollutants for Industrial Kiln
and Furnace (GB9078-
1996)
Waste gas outlet of 2#
Emission Standard of Air
heat-treating furnace at 5.2 mg/m
Pollutants for Industrial Kiln
No. 4 workshop
and Furnace (GB9078-
1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 7.3 mg/m Standards for Atmospheric
at No. 1 workshop Pollutants (GB16297-1996)
Waste gas outlet for Integrated Emission
6.4 mg/m
electrophoresis and drying Standards for Atmospheric
167
The 2022 Annual Report of Midea Group Co., Ltd.
at No. 3 workshop Pollutants (GB16297-1996)
Emission Standard of Air
Waste gas outlet of 1#-3# Pollutants for Boiler
4.7 mg/m
furnaces
（GB13271-2014）
Emission Standard of Air
Waste gas outlet of 1#-3# Pollutants for Boiler
<3 mg/m
furnaces
（GB13271-2014）
Outlet of 1# heat-treating
111 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
Sulfur Collected by gas trap hood+15m high 66 mg/m
9 furnace at No. 2 workshop 39.66 112.2 No
dioxide exhaust cylinder Waste gas outlet for die Air Pollutant Emission
8 mg/m Standards (GB16297-
casting at No. 2 workshop
Outlet of 1# heat-treating 1996) Standard Level 2
90 mg/m
furnace at No. 4 workshop
Outlet of 2# heat-treating
32 mg/m
furnace at No. 4 workshop
Waste gas outlet for die
9 mg/m
casting at No. 4 workshop
Emission Standard of Air
Waste gas outlet of 1#-3# Pollutants for Boiler
25 mg/m
furnaces
（GB13271-2014）
Outlet of 1# heat-treating
29 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
18 mg/m
furnace at No. 2 workshop
Collected by gas trap hood+15m high
Oxynitride 9 Waste gas outlet for die 12.77 33.24 No
exhaust cylinder 18 mg/m Air Pollutant Emission
casting at No. 2 workshop
Standards (GB16297-
Outlet of 1# heat-treating
6 mg/m 1996) Standard Level 2
furnace at No. 4 workshop
Outlet of 2# heat-treating
<3 mg/m
furnace at No. 4 workshop
Waste gas outlet for die
5mg/m
casting at No. 4 workshop
Waste gas outlet of the
drying furnace at No. 1 1.64 mg/m
workshop Emission Control Standard
Collected by gas trap hood+15m high
for Industrial Enterprises
exhaust cylinder Waste gas outlet of 1#
VOCs 4 Volatile Organic 1.94 21.6 No
Direct-fired waste gas incinerator+15m drying furnace at No. 3 25.0 mg/m
Compounds (DB12/ 524-
high exhaust cylinder workshop
2020)
Die casting at No. 2
0.66 mg/m
workshop
168
The 2022 Annual Report of Midea Group Co., Ltd.
Die casting at No. 4
0.86 mg/m
workshop
Emission Standard of
Volatile Organic
Waste gas outlet around Compounds for Furniture
Benzene Zeolite drum + RTO 1 0 mg/m 0.00 / No
plant C Manufacturing (DB44/814-
2010) the second time
period
Guangdo
Emission Standard of
ng
Volatile Organic
Welling Total
Waste gas outlet around Compounds for Furniture
Motor toluene and Zeolite drum + RTO 1 0.255 mg/m 1.32 / No
plant C Manufacturing (DB44/814-
Manufact xylene
2010) the second time
uring
period
Co., Ltd.
Emission Standard of
Volatile Organic
Waste gas outlet around Compounds for Furniture
Total VOCs Zeolite drum + RTO 1 3.17mg/m 1.74 17.09 No
plant C Manufacturing (DB44/814-
2010) the second time
period
COD Discharge to the municipal sewage The eastern side of 38 mg/L The Discharge Limits of 9.50 22.77 No
Ammonia- system after being treated by 1 wastewater treatment Water Pollutants in
0.439 mg/L 0.077 4.554 No
nitrogen wastewater treatment system station in Malong base Guangdong DB-44/26-
Particles 0.52 mg/m 2001 1.376 / No
Sulfur Emission Standard of
7 mg/m Volatile Organic 0.763 1.055 No
dioxide
Oxynitride 9 mg/m Compounds for Furniture 4.21 10.314 No
Guangdo
Benzene 20m high altitude discharge after being ND Manufacturing (DB44/814- 0.079 / No
ng Midea
Total treated by waste gas treatment 26 outlets at A1 plant, 47 2010)/Emission Standard
Kitchen
toluene and equipment and reaching the standard outlets at A2 plant, 21 0.45 mg/m of Volatile Organic 3.42 / No
Applianc
xylene outlets at B2 plant, 9 Compounds for Surface
es
VOCs outlets at C2 plant, 2 6.07 mg/m Coating of Automobile 17.8 35.051 No
Manufact 112
NMHC outlets at C3 plant, 1 outlet 3.99 mg/m Manufacturing Industry 0.28 / No
uring
Co., Ltd. Styrene at wastewater treatment 3.847mg/m (DB44/816-2010)/Emission 0.931 / No
station and 6 outlets at Standards of Industrial
canteen Pollutants in the Synthetic
15m high altitude discharge after being Resin Industry (GB 31572-
Fume treated by oil fume purification facility 0.05 mg/m 2015)/Guangdong 0.0322 / No
and reaching the standard Province Emission Limits
of Air Pollutants (DB44/27-
2001)/Emission Standard
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The 2022 Annual Report of Midea Group Co., Ltd.
of Volatile Organic
Compounds for Printing
Industry (DB44/815-
2010)/Emission Standard
of Cooking Fume (on Trial)
(GB18483-2001)
Collected by gas trap hood + dust Integrated Emission
Exhaust funnels 1-3 for
Particles collector + activated carbon +15m high 3 20 mg/m Standards for Atmospheric 3.029 / No
mold injection
exhaust cylinder Pollutants (GB16297-1996)
Emission Standard of Air
Collected by gas trap hood+15m high Die casting waste gas Pollutants for Industrial Kiln
VOCs 1 0.91 mg/m 4.6152 / No
exhaust cylinder outlet and Furnace (GB9078-
Welling 1996)
(Wuhu) Hebei Province Standard
Motor Adsorption and desorption catalytic DB13/2322-2016 The
Exhaust funnels for dip
Manufact VOCs combustion treatment equipment + 1 0.98mg/m Concentration Limits at 2.064 / No
coating
uring 15m high exhaust cylinder Emission Reference Point
Co., Ltd. for Coating Operations
COD 40mg/m 1.8144 / No
Ammonia- Integrated Wastewater
Discharge after being treated by 20 mg/m 0.5184 / No
nitrogen Discharge Standard
wastewater treatment system and 1 General wastewater outlet
BOD 7.4 mg/m (GB8978-1996) chart 4 1.2926 / No
reaching the standard
SS 9 mg/m Level 3 0.4686 / No
Petroleum 0.45 mg/m 0.1201 / No
COD 116.4mg/L 87.8 / No
Ammonia- Integrated Wastewater
Discharge after being treated by The south side of Building 16.1mg/L 12.1 / No
nitrogen Discharge Standard
wastewater treatment system and 1 6 for night shift at the north
BOD 41.1mg/L (GB8978-1996) chart 4 31.0 / No
reaching the standard side of the plant area
SS 15.6mg/L Level 3 11.7 / No
Petroleum 0.58 mg/L 0.44 / No
Anhui Welding waste gas outlet Requirements in Table 1 of
11.6 mg/m
Meizhi 1# Integrated Emission
Collected by gas trap hood +21m high
Precision Standards of Air Pollutants
exhaust cylinder Welding waste gas outlet
Manufact 9.4 mg/m of Shanghai (DB31/933-
2#
uring 2015)
Co., Ltd. Heat-treating furnace 1# 12.4mg/m
Particles 10 Heat-treating furnace 2# 13.8 mg/m 13.04 / No
Integrated emission
Heat-treating furnace 3# 15.0 mg/m
Collected by gas trap hood +21m high standards for atmospheric
Heat-treating furnace 13.2mg/m
exhaust cylinder pollutants GB16297-1996,
Drying waste gas outlet 1# 5.6mg/m
chart 2, Level 2
Drying waste gas outlet 2# 8.1mg/m
Drying waste gas outlet 3# 8.5 mg/m
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Drying waste gas outlet 4# 9.4mg/m
Heat-treating furnace 1# 3.8 mg/m
Heat-treating furnace 2# 3.6 mg/m
Heat-treating furnace 3# 3.4mg/m
Heat-treating furnace 2.9 mg/m
Sulfur Collected by gas trap hood +21m high
8 2.31 / No
dioxide exhaust cylinder Drying waste gas outlet 1# 3.0mg/m
Emission limit standards
for other industrial furnaces
Drying waste gas outlet 2# 2.6 mg/m
and kilns in the
Comprehensive Control
Drying waste gas outlet 3# 3.6mg/m Plan for Air Pollution of
Industrial Furnaces
Drying waste gas outlet 4# 3.1 mg/m (H.D.Q.[2019] NO.56)
Heat-treating furnace 1# 11.8mg/m
Heat-treating furnace 2# 4.6mg/m
Heat-treating furnace 3# 1.5 mg/m
Collected by gas trap hood +21m high Heat-treating furnace 11.25 mg/m
Oxynitride 8 4.07 / No
exhaust cylinder Drying waste gas outlet 1# 10.6 mg/m
Drying waste gas outlet 2# 1.5 mg/m
Drying waste gas outlet 3# 7 mg/m
Drying waste gas outlet 4# 5.8 mg/m
Direct-fired waste gas incinerator+21m Drying waste gas outlet 1# 8.1 mg/m NMHC emissions meet the
2
high exhaust cylinder Drying waste gas outlet 2# 12.3mg/m relevant standard limit
Drying waste gas outlet 3# 11.5 mg/m requirements in Table 1 of
VOCs Adsorption and desorption catalytic Shanghai Integrated 6.88 / No
combustion +21m high exhaust 2 Emission Standards for
Drying waste gas outlet 4# 11.1 mg/m Atmospheric Pollutants
cylinder
(DB31/933-2015)
Emission Standard of
Gas trap hood + dry filtering + UV +
During the screen printing Volatile Organic
activated carbon + 15m high altitude 2 2.28 mg/m 0.888 / No
process Compounds for Printing
GD discharge
Industry (DB44/815-2010)
Midea
Dry filtering + direct combustion of Outlet for waste gas from Emission Standards for
Environ VOCs
natural gas +15m high altitude 2 dip coating, drying and 26.02mg/m Odor Pollutants GB14554- 2.651 3.42 No
ment
discharge hardening 93
Applianc
Gas trap hood + dry filtering + UV + Emission Limits of Air
es Mfg. During the manual welding
activated carbon + 15m high altitude 1 4.33mg/m Pollutants (DB44/27-2001): 0.121 / No
Co.,Ltd. process
discharge Time Period 2, Level 2
Gas trap hood + dry filtering + UV + Exhaust funnel for waste Emission Standards of
NMHC 6 3.45 mg/m 5.354 / No
activated carbon + 15m high altitude gas from the baking and Industrial Pollutants in the
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The 2022 Annual Report of Midea Group Co., Ltd.
discharge injection molding Synthetic Resin Industry
processes （BG 31572-2015）
Emission Standards of
Gas trap hood + dry filtering + UV +
Metal plate dusting waste Industrial Pollutants in the
activated carbon + 15m high altitude 3 4.62 mg/m 1.699 / No
gas exhaust cylinder Synthetic Resin Industry
discharge
（BG 31572-2015）
Gas trap hood + water spraying + dry Emission Limits of Air
Particles filtering + UV + activated carbon + 15m 1 Dusting waste gas 1.53mg/m Pollutants (DB44/27-2001): 0.201 / No
high altitude discharge Time Period 2, Level 2
Emission Standard of
Cooking Fume hood + electrostatic range hood Cooking fume outlet at
7 0.47 mg/m Cooking Fume GB18483- 0.116 / No
fume + 15m high altitude discharge canteen
2001
Suspended
6.67 mg/L 0.211
matters
COD 19.12 mg/L 0.558 / No
Animal and
vegetable 0.19 mg/L Discharge Standard of 0.016 / No
oil Oil separation and slagging -
Domestic wastewater Pollutants for Municipal
hydrolysis and acidification - contact 1
Ammonia- treatment station Wastewater Treatment
oxidation - MRB
nitrogen 0.093 mg/L Plant GB18918-2002 0.9121 / No
（NH3- N)
pH value 7.16 mg/L / / No
Five-day
7.05mg/L 0.223 / No
BOD
Total zinc 0.0079 mg/L 0.01064 / No
COD 8.49 mg/L 0.655 / No
Suspended
5 mg/L 0.408 / No
matters
pH value 7.67 mg/L / / No
Total
phosphorus 0.01 mg/L Discharge Standard of 0.4121 / No
Coagulation and sedimentation +
（by P ) Domestic wastewater Water Pollutants for
hydrolysis and acidification + aeration 1
treatment station Electroplating DB 44/1597-
Ammonia- + biological tank + MBR + water reuse
2015
nitrogen 0.28mg/L 0.0207 1.724 No
（NH3-N)
Petroleum 0.03 mg/L 0.00245 / No
Total
0.13 mg/L 0.0106 / No
aluminum
Total iron 0.051mg/L 0.00416 / No
Wuxi 123.899
COD 176.75 mg/L 83.87 No
Little Integrated Wastewater 4
Discharge to municipal sewage Exit at the middle gate of
Swan SS 1 59 mg/L Discharge Standard 33.31 87.2473 No
network the plant
Electric Animal and （GB8978-1996）
1.54mg/L 2.27 10.7034 No
Co., Ltd. vegetable
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The 2022 Annual Report of Midea Group Co., Ltd.
oil
Total
1.8mg/L 0.75 1.0701 No
phosphorus
Total
25.13mg/L 9.14 11.2612 No
nitrogen
Ammonia-
20.1mg/L 6.38 6.6906 No
nitrogen
Particles 1.65mg/m Integrated Emission 0.3814 2.0696 No
VOCS 12.11mg/m Standards for Atmospheric 0.9011 1.2218 No
Sulfur Pollutants（GB16297-
Activated carbon + 20m high altitude 22.5mg/m 0.42 0.624 No
dioxide 1. Injection molding 1996）/
discharge
workshop of Building Tianjin Emission Control
Water spraying + UV + activated
C Standard for Industrial
carbon + Filter cartridge dust collector
2. Buildings A and D Enterprises Volatile
+15m high altitude discharge
3. Painting workshop Organic Compounds
Grade 2 activated carbon+15m high 11
4. Injection molding DB12/524-2014/
altitude discharge
workshop of Building Emission Standards of
Oxynitride Dry Filtering + electrostatic degreasing C 30.5mg/m Industrial Pollutants in the 0.4879 3.38 No
+ 15m high altitude discharge
5. Crushing workshop Synthetic Resin Industry
Pulse dust collecting +15m high
of Building C （GB31572-2015）
altitude discharge
/Emission Standard of Air
Pollutants for Boiler
（GB13271-2014）
Integrated Emission
Particles 2.4 mg/m Standards for Atmospheric 0.1565 2.697 No
Huaian 5# waste gas outlet:
Pollutants (GB16297-1996)
Welling 5#: Grade 3 filtering + honeycomb outside the inductor dip
Integrated Emission
Motor zeolite + CO coating room
NMHC 2 4.6mg/m Standards for Atmospheric 0.8038 1.3853 No
Manufact 8#: Grade 3 filtering + Grade 2 8# waste gas outlet:
Pollutants (GB16297-1996)
uring activated carbon outside the reactor dip
Emission Standards for
Co., Ltd. coating room
Styrene ND Odor Pollutants (GB14554- 0.002 0.032 No
93)
pH value 7.2 mg/L 7.2 / No
Midea COD 108 mg/L 7.07 19.60 No
Group Ammonia-
Wuhan 0.638 mg/L 0.0105 1.764 No
nitrogen Discharge after being treated by West Gate 2 of 4# plant on Integrated Wastewater
Refrigera Suspended
wastewater treatment station and 1 the west side of plant 27 mg/L Discharge Standard 1.464 / No
tion matters reaching the standard areas GB8978-1996
Equipme
nt Petroleum 4.05 mg/L 0.1515 / No
Co.,Ltd. Total
0.39 mg/L 0.0059 / No
phosphorus
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The 2022 Annual Report of Midea Group Co., Ltd.
Fluoride 7.08 mg/L 0.145 / No
Total zinc 0.25 mg/L 0.0467 / No
BOD5 22.6 mg/L 1.618 / No
Particles 21 9.8 mg/m 3.64 6.09 No
Sulfur 1# plant, 3# plant, 4#
16 4 mg/m 0.94 1.56 No
dioxide plant, 5# plant
Oxynitride 16 12 mg/m Integrated Emission 3.57 5.9 No
Discharge after being treated by
Tin and its 5.92*10-4 Standards for Atmospheric
environmental protection equipment 3 0.00041 / No
compounds mg/m Pollutants (GB16297-1996)
3# plant
Acrylonitrile 3 0 mg/m 0 / No
Styrene 3 0.098 mg/m 0.0554 / No
VOCs 10 1# plant 18.5 mg/m 2.708 / No
NMHC 9 1#, 2# plants 5.72 mg/m 1) NMHC: Implementation 5.6 / No
Particles 7 1#, 2#, 3# plants 1.98 mg/m of the emission 1.29 / No
Oxynitride 7 1#, 2#, 3# plants 7.67 mg/m concentration limits on 4.75 0.42 No
Sulfur organic chemicals in Table
7 1#, 2#, 3# plants < 3 mg/m 1 of Emission Control 1.77 3.241 No
dioxide
Standard for Industrial
Enterprises Volatile
Organic Compounds
(DB13/2322-2016)
2) Sulfur dioxide/nitrogen
15m high altitude discharge after being oxides/particles:
treated by environmental protection Implementation of the new
Handan equipment furnace standards in Table
Midea Tin and its 1 and Table 2 of Emission
4 2# plant <3*10-6mg/m Standard of Air Pollutants 1.5*10-6 / No
Air- compounds
Conditio for Industrial Kiln and
ning Furnace (DB13/1640-2012)
Equipme 3) Tin and its compounds:
nt Implementation of the
Co.,Ltd. requirements of Level 2 in
the Integrated Emission
Standards for Atmospheric
Pollutants (GB16297-1996)
COD 1 43.67 mg/L Requirements for inflow 0.7559 8.97 No
Ammonia- water quality of wastewater
1 4.33mg/L 0.075 0.7 No
nitrogen treatment plant in Handan
pH Discharge after being treated by 1 7.34 Economic and / / No
North side of the power
Suspended wastewater treatment system and Technological
1 house 9mg/L 0.1558 / No
matters reaching the standard Development Zone
Petroleum 1 0.44mg/L Integrated Wastewater 0.0076 / No
Discharge Standard
Fluoride 1 1.04 mg/L 0.018 / No
(GB8978-1996) chart 4
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The 2022 Annual Report of Midea Group Co., Ltd.
Level 3
COD 4 mg/L 0.084 0.09462 No
SS 4 mg/L 0.084 0.09462 No
Animal and
0.00141
vegetable 0.06mg/L 0.00126 No
Integrated Wastewater 9
oils Discharged to the municipal sewage Exit at the southeast gate
1 Discharge Standard
Total network of the plant 0.00023
0.01mg/L (GB8978-1996) 0.00021 No
phosphorus 7
Total 0.00118
Wuxi 0.05mg/L 0.00105 No
nitrogen 5
Filin
Electroni Ammonia 0.025mg/L 0.000525
0.00059
No
nitrogen 2
cs Co.,
Ltd. Particles 0 mg/m Integrated Emission 0 0.2879 No
Standards for Atmospheric
Fabric bag + activated carbon Pollutants (GB16297-
treatment + 20m high altitude 1996) for particles and
discharge 1 and 2 at Building A chemical compounds, and
4
VOCS 3 and 4 at Building B 20 mg/m Tianjin Emission Control 3.25 3.57 No
Activated carbon treatment + 33m high Standard for Industrial
altitude discharge Enterprises Volatile
Organic Compounds
(DB12/524-2014) for VOCs
pH value 7.7 mg/L / / No
COD 293 mg/L 3.736 76.63 No
SS 9 mg/L 0.712 / No
Chongqi NH3-N 20.5 mg/L 0.2614 5.32 No
ng Midea Petroleum 0.24 mg/L Integrated Wastewater 0.005 / No
Air- Treatment by waste water treatment Discharge Standard
Conditio Fluoride station and reaching the standard
1 West gate 11.5 mg/L
(GB8978-1996) chart 4
0.13 / No
ning BOD5 121 mg/L Level 3 1.4 / No
Equipme
nt Co., LAS 0.105 mg/L 0.002 / No
Ltd. Total zinc 0.03 mg/L 0.0008 / No
Animal and
vegetable 0.43 mg/L 0.004 / No
oil
Particles After treatment by environmental 11 East, west, south and 9.9 mg/m Integrated Emission 15.06 / No
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The 2022 Annual Report of Midea Group Co., Ltd.
SO2 protection and treatment facilities and north corners of the plant 5 mg/m Standards for Atmospheric 1.595 / No
reaching the standard, 25m high Pollutants DB 50/418-2016
NOX altitude discharge 14 mg/m Table 1 Central Downtown 3.942 / No
Tin and its
0.27 mg/m 0.342 / No
compounds
NMHC 2.5 mg/m 5.66 / No
PH 7.97 mg/L / / No
Suspended
13.5mg/L 1.659 / No
matters
COD 160.25mg/L 19.696 / No
Ammonia-
nitrogen 6.01mg/L 0.739 / No
（NH3-N）
Integrated Wastewater
Animal and Discharge to municipal wastewater
General sewage discharge Discharge Standard
vegetable treatment plant after being treated by 1 1.2mg/L 0.148 / No
exit of plant areas (GB8978-1996) Chart 4
oil the wastewater treatment system
Level 3
Petroleum 0.46mg/L 0.057 / No
Five-day
63.6mg/L 7.817 / No
BOD
Anionic
0.25mg/L 0.031 / No
surfactant
Chongqi
Phosphate 0.09mg/L 0.011 / No
ng Midea
Fluoride 2.96mg/L 0.364 / No
General
Refrigera Particles 12.464mg/m Integrated Emission 3.702 / No
tion Toluene High altitude discharge after being 2 sets for paint waste gas 0.224mg/m Standards for Atmospheric 0.055 / No
4
Equipme Xylene treated by waste gas treatment station of 1# and 4# plants each 0.044mg/m Pollutants DB 50/418-2016 0.013 / No
nt Co., NMHC 2.401mg/m Table 1 Central Downtown 0.662 / No
Ltd. 5 sets for 1# plant and 4 Integrated Emission
Filter cartridge dust collector 9
sets for 4# plant Standards for Atmospheric
Particles 12.6 mg/m 3.285 / No
Brazing waste gas outlets Pollutants DB 50/418-2016
Direct discharge 2
for 2# and 4# plants Table 1 Central Downtown
Sulfuric Integrated Emission
Acid pickling waste gas 0.772 mg/m 0.0083 / No
acid mist Standards for Atmospheric
Lye spray tower 2 outlets for 1# and 4#
Hydrogen Pollutants DB 50/418-2016
plants 6.086 mg/m 0.0690 / No
Chloride Table 1 Central Downtown
Particles 15.925 mg/m Integrated Emission 0.134 / No
Sulfur Standards for Atmospheric
7.75 mg/m 0.066 / No
dioxide Pollutants DB 50/418-2016
Oxynitride Volatile oil drying waste 28.75 mg/m Table 1 Central Downtown 0.234 / No
1 set of RTO 2
gas outlet Emission Standard of Air
Pollutants for Industrial Kiln
NMHC 4.38 mg/m and Furnace DB 50/659- 0.052 / No
2016 Table 1/2
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The 2022 Annual Report of Midea Group Co., Ltd.
COD 15mg/L 6.85 9.53 No
Ammonia-
0.3mg/L 2.8 / No
nitrogen
BOD After deep treatment by industrial 2.8mg/L 15 / No
Takeover standards of the
SS waste water treatment station, 5mg/L 8.21 / No
1 Freezer waste water outlet Western Group wastewater
Petroleum discharge to municipal sewage / 2.05 / No
treatment plant
Phosphate network with domestic sewage 0.08mg/L 1.02 / No
Total zinc 0.35mg/L 0.65 / No
Fluoride 1.3mg/L 1.52 / No
pH 7.1 mg/L / / No
Screen printing waster gas Emission Standards of
NMHC 1 6.1mg/m Industrial Pollutants in the 0.32 / No
outlet
Synthetic Resin Industry
After photo-catalytic oxidation + （GB31572-2015）
activated carbon, 15m high altitude
5# plastic uptake/foaming Integrated Emission
NMHC discharge 1 2.4mg/m Standards for Atmospheric 0.16 / No
waster gas outlet
Pollutants（DB31/933-
Hefei 2015）
branch
After filter cartridge dust collector + Integrated Emission
of Hefei Welding waste gas outlets
Particles activated carbon, 15m high altitude 2 12mg/m Standards for Atmospheric 0.38 / No
Hualing of 7# and 8# plants
discharge
Co., Ltd. Pollutants（DB31/933-
After filter cartridge dust collector, 15m
Particles 1 Crushing waste gas outlet 9.8mg/m 2015） 0.35 / No
high altitude discharge
Emission Standards of
Industrial Pollutants in the
NMHC 34mg/m Synthetic Resin Industry 1.86 / No
After Grade 2 activated carbon, 15m Foaming waste gas outlets （GB31572-2015）
2
high altitude discharge of 7# and 8# plants
Odor Emission Standards for
concentrati 549mg/m Odor Pollutants / / No
on （GB14554-93）Table 1
After Grade 2 activated carbon, 15m 7# plastic uptake waster Integrated Emission
1 7.3mg/m 0.75 / No
high altitude discharge gas outlet Standards for Atmospheric
After dry filtering + photo-catalytic Pollutants（DB31/933-
8# plastic uptake waster
oxidation + activated carbon, 15m high 1 11mg/m 2015） 0.96 / No
NMHC gas outlet
altitude discharge Emission Standards of
After spray tower + demister + photo- Industrial Pollutants in the
catalytic oxidation + activated carbon, 1 Spraying waste gas outlet 7.1mg/m Synthetic Resin Industry 0.56 / No
15m high altitude discharge （GB31572-2015）
Guangzh Waste
ou mineral oil, treatment entrusted to third-party
N/A N/A N/A N/A 164.636 185.523 No
Hualing waste oil- qualified enterprise
Refrigera containing
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The 2022 Annual Report of Midea Group Co., Ltd.
ting liquid,
Equipme waste
nt packaging,
Co.,ltd. waste
activated
carbon,
waste lead
battery,
waste filter
cotton,
waste
circuit
board, etc
Treatment of pollutants
During the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no major
environmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,
supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste
during the production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary,
which is in compliance with the relevant requirements of the environment administrations.
Environment self-monitoring plans
All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, which include: 1)
Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis. Major
discharge points are equipped with an online pollution discharge monitoring system for stationary pollution sources to produce and upload real-time
data to Midea Environmental Protection Online Monitoring Platform; 2) Waste water pollution source monitoring: Samples are fetched at intake and
outlet ports of waste water treatment stations to monitor changes of pollution source of waste water and up-to-standard emission of waste water after
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The 2022 Annual Report of Midea Group Co., Ltd.
being treated at the waste water treatment stations. Monitoring items include CODcr, SS and petroleum, etc. The data is uploaded to the
governmental monitoring authority online and the government authority conducts real-time monitoring; 3) Noise monitoring: Noise monitoring points
are set at noise sensitive points and on the border of factories. Noise is monitored once in spring and summer respectively and at daytime and at
nighttime respectively each time; 4) Solid waste pollution source monitoring: Hazardous waste produced from the subsidiaries is handed over to the
units with qualifications for treatment, monitoring systems are established, and related management forms and accounts are set up.
Contingency plans for environmental accidents
All subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms for
environmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents
has been enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote a
comprehensive, coordinated and sustainable development of the society.
According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,
commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.
Spending on environmental management and protection and payment of environmental protection tax
The Company played an active role in environmental management and protection during the Reporting Period, with total spending of approximately
RMB256.39 million in this respect for the year.
Measures taken to reduce carbon emissions during the Reporting Period and the results
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The 2022 Annual Report of Midea Group Co., Ltd.
√ Applicable □ N/A
a. The Group's manufacturing plants combined have an installed capacity of 187MW of distributed PV, with 87MW under construction. Approximately
210 million kWh of PV power was generated in 2022, reducing carbon emissions by about 168,000 tons of CO2.
b. All manufacturing plants kept improving their energy management systems and carried out work related to ISO 50001 (GB23331) certification. As
of December 2022, 35 plants have been certified. The certification of the energy management systems has greatly improved the energy
management level of these plants. By carrying out energy saving diagnosis, these plants are able to enhance leakage identification and the closed-
loop management.
c. Greater efforts have been made in the research and development of green and low-carbon technologies, as well as the implementation of the
related projects. Energy saving and emission reduction projects are promoted from eight major scenarios such as injection moulding, sheet metal,
electronics, compressed air, central air conditioning, optical storage, labs, and energy management platform. As confirmed by the relevant plants’
financial departments, the energy saving and emission reduction projects produced an income of over RMB100 million.
Administrative penalties received during the Reporting Period due to environmental issues
□Applicable √N/A
Other environment-related information that should be made public
None
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The 2022 Annual Report of Midea Group Co., Ltd.
Other environment-related information
None
2. Corporate Social Responsibility (CSR)
The Company has voluntarily disclosed its CSR activities. Attaching great importance to protecting the legal rights and interests of its shareholders,
employees, consumers and business partners, as well as the government, the community and other stakeholders, the Company sticks to harmonious
common growth with them, honors its commitments, abides by law and moral principles, and continue to contribute to the sustainable development of
the society and the environment. For further information, see the Company’s ESG Report 2022 released on www.cninfo.com.cn.
3. Efforts in Poverty Alleviation and Rural Revitalization
3.1 Support for rural revitalization
In 2022, Midea Group actively responded to the call for rural revitalization and implemented the East China and West China coordination policy by
donating RMB10 million to Qiandongnan Prefecture in Guizhou Province, which was used to help the students and teachers in the region for better
educational development.
Besides the existing support projects, Midea Group continued its efforts in this regard and spent a total of over RMB2 million to help revitalise the
countryside and consolidate the results of poverty alleviation. In particular, RMB550,000 was used for the renovation of a farming and cultural tourism
demonstration base in Sansui County, Qiandongnan Prefecture, Guizhou Province, as well as for the renovation of a bridge in Xuedong Town,
helping to improve the efficiency of the local agricultural production and facilitate the local people.
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The 2022 Annual Report of Midea Group Co., Ltd.
3.2 Support for educational development
Midea has been donating RMB100,000 to the Dandelion School (specialized school for the children of rural migrant workers) in Beijing for three
consecutive years from 2021 to 2023. The donated money would be used to improve education in the school and the living conditions of the students
and teachers of the school, support teacher cultivation plans, fund and cultivate volunteers for the school, etc. With the support from Midea and
various caring individuals and organisations, the school officially opened in 2006 and 92 students graduated in the class of 2022, all of whom chose
to continue their education. 61 of them went on to high school and the rest 31 to vocational high school. This has helped solve the problem of
education for the children of migrant workers.
3.3 Subsequent plans
In 2023, Midea will focus on rural revitalisation, helping to do a good job in the economic development of the rural areas while collaborating with local
governments to fully explore the local ecological, social and cultural values based on local conditions, mobilising local farmers to actively participate
in rural reform and accelerating the modernisation of agriculture and rural areas.
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The 2022 Annual Report of Midea Group Co., Ltd.
Section VI Significant Events
1. Performance of Undertakings
1.1 Undertakings of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other
commitment makers fulfilled in the Reporting Period or ongoing at the period-end
√ Applicable □ N/A
Underta Type of
Undertaki Undertaking
king undertaki Details of undertaking Term Particulars on the performance
ng date
giver ng
1. Midea Holding and He Xiangjian have undertaken as
follows: He Xiangjian, Midea Holding and their controlled
Controll enterprises will remain independent from Midea Group in
ing respect of personnel, finance, assets, business and institutions,
Maintena
shareho in accordance with relevant laws and regulations and
nce of 28 March 1. There has been no violation of this
lder and regulatory documents. They will faithfully fulfill the above Long-standing
independ 2013 undertaking.
actual undertaking, and assume the corresponding legal liability. If
ence
controll they fail to fulfill their obligations and responsibilities conferred
Undertaki er by the undertaking, they will bear the corresponding legal
ng made liabilities according to relevant laws, rules, regulations and
in offering regulatory documents.
document
s or 2. In order to avoid possible competition within the industry
sharehold between Midea Group and Midea Holding and its controlled
ing enterprises as well as He Xiangjian, his immediate family and
alternatio his controlled companies, Midea Holding and He Xiangjian
Controll
n
ing Avoiding have undertaken as follows:
document
shareho competiti (1) None of the entities or individuals mentioned above is or will
s 28 March 2. There has been no violation of this
lder and on within be engaged in the same or similar business as the existing Long-standing
2013 undertaking.
actual the main business of Midea Group and its controlled companies.
controll industry They are not or will not be engaged or participate in such
er 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
183
The 2022 Annual Report of Midea Group Co., Ltd.
business on the basis of the existing ones to those where the
above mentioned related entities or individuals are already
performing such production and operations, as long as He
Xiangjian is still the actual controller of Midea Group, and
Midea Holding the controlling shareholder, they will agree on
solving the problem of competition within the industry arising
therefrom within a reasonable period;
(3) If Midea Group and its controlled companies expand their
business scope on the basis of the existing ones to those
where the above mentioned related subjects have not gone
into production or operation, as long as He Xiangjian is still the
actual controller of Midea Group, and Midea Holding the
controlling shareholder, they would undertake as not to engage
in competitive business to the new ones of Midea Group and
its controlled companies;
(4) In accordance with effective laws, regulations or other
regulatory documents of People's Republic of China, as long
as Midea Holding is identified as the controlling shareholder of
Midea Group, and He Xiangjian the actual controller, they will
not change or terminate this undertaking.
(5) Midea Holding and He Xiangjian shall faithfully fulfill the
above undertaking, and assume the corresponding legal
responsibilities. If they fail to fulfill their obligations and
responsibilities conferred by the undertaking, they would bear
the corresponding legal responsibilities according to relevant
laws, rules, regulations and regulatory documents.
3. In order to regulate matters of related transactions that may
occur in the future between Midea Group and Midea Holding
and its controlled companies as well as He Xiangjian, his
immediate family and his controlled companies, Midea Holding
Controll and He Xiangjian have undertaken as follows:
ing Regulatio
shareho n of (1) They will regulate any related transactions with Midea
Group and its controlled companies using their utmost efforts 28 March 3. There has been no violation of this
lder and related Long-standing
to reduce them. For unavoidable related transactions with 2013 undertaking.
actual transactio
controll ns Midea Group and its controlled companies, including but not
er limited to commodity trading, providing services to each other
or as agent, they will sign legal normative agreements with
Midea Group, and go through approval procedures in
accordance with related laws, regulations, rules, other
regulatory documents, and relevant provisions of the Articles of
Association of Midea Group. They guarantee to offer fair prices
184
The 2022 Annual Report of Midea Group Co., Ltd.
for related transactions, and fulfill the information disclosure
obligations in respect of the related transactions according to
related laws, regulations, rules, other regulatory documents,
and relevant provisions of the Articles of Association of Midea
Group. They also guarantee not to illegally transfer the funds or
profits from Midea Group, or damage the interests of its
shareholders at their advantages during the related
transactions.
(2) They shall fulfill the obligation of withdrawing from voting
that involves the above mentioned related transactions at the
general meeting of Midea Group;
(3) The related subject mentioned above shall not require
Midea Group to offer more favorable conditions than those to
any independent third party in any fair market transactions.
(4) In accordance with effective laws, regulations or other
regulatory documents of People's Republic of China, as long
as Midea Holding is identified as the controlling shareholder of
Midea Group, and He Xiangjian the actual controller, they shall
not change or terminate this undertaking.
(5) Midea Holding and He Xiangjian will faithfully fulfill the
above undertaking and assume the corresponding legal
liabilities. If they fail to fulfill their obligations and
responsibilities conferred by the undertaking, they will bear the
corresponding legal responsibilities according to relevant laws,
rules, regulations and regulatory documents.
4. On 4 January 2001, the Midea Trade Union Committee
signed the "Equity Transfer Contract" with five people, namely
On Midea He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning
Trade and Liang Jieyin, where it transferred all its limited equity of
Controll Union Midea Group (22. 85%) respectively to those five people.
ing Committe According to the confirmation letter issued by members of the
4. So far, this shareholding transfer has not
shareho e Midea Trade Union Committee at that time, the equity transfer
28 March brought about any loss caused by any dispute
lder and transferri price was determined after mutual discussion on the basis of Long-standing
2013 or potential disputes. There has been no
actual ng its their true opinions, therefore there was no dispute or potential
violation of this undertaking.
controll limited dispute.
er equity of
Midea On 28 June 2013, Foshan Shunde Beijiao General Union,
Group 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
185
The 2022 Annual Report of Midea Group Co., Ltd.
Trade Union Committee is entitled to dispose any property of
the committee, and such property disposal does not need any
agreement from all staff committee members.
Midea Holding and He Xiangjian, respectively the controlling
shareholder and actual controller of Midea Group Co., Ltd.
have undertaken as follows: For any loss to Midea Group
caused by any dispute or potential dispute arising from the
matters of equity transfer mentioned above, they are willing to
assume full liability for such loss.
Issues
about
Payment 5. Midea Holding and He Xiangjian have undertaken to be
of the liable for (1) paying such expenses and related expenses on
Staff time based on the requirements of relevant state departments
Controll
Social if Midea Group is required to be liable for the payment of staff
ing 5. So far, the payment of the staff social
Insurance social insurance, housing provident fund and the payment
shareho insurance and the housing provident fund has
and the required by relevant state authorities prior to this merger, (2) 28 March
lder and Long-standing not brought about any controversy or potential
Housing paying corresponding compensation for all direct and indirect 2013
actual disputes. There has been no violation of this
Provident losses incurred by Midea Group and its subsidiaries due to this
controll undertaking.
Fund merger, (3) indemnifying and holding harmless Midea Group
er
involved and its subsidiaries in time from such expenses when Midea
in Midea Group and its subsidiaries are required to pay them in
Group's advance.
Overall
Listing
6. Undertakings on issues about asset alteration, asset flaw
and house leasing of Midea Group and its subsidiaries
Issues
about Midea Holding and He Xiangjian have undertaken as follows:
asset (1) Midea Holding will do its utmost to assist and urge Midea
Controll alteration, Group (including its subsidiaries) to complete renaming 6. So far, the issues about asset alteration,
ing asset procedures of related assets, such as land, housing, asset flaw and house leasing of Midea Group
shareho flaw and trademarks, patents and stock rights, declared in the related 28 March and its subsidiaries have not brought about
lder and house files of this merger. Midea Holding will be liable for all 2013 Long-standing any controversy or potential disputes. There
actual leasing of compensations of losses caused by issues about renaming has been no violation of this undertaking. And
controll Midea procedures of related assets mentioned above to Midea Group. Midea Holding shall honor this undertaking
er Group before its expiration.
and its (2) Midea Holding shall do its utmost to assist Midea Group
subsidiari (including its subsidiaries) to apply for ownership certificates of
es land and housing or property declared in related files of this
merger.
(3) Midea Holding shall assist Midea Group (including its
186
The 2022 Annual Report of Midea Group Co., Ltd.
subsidiaries) to re-apply for corresponding construction
procedures and apply for their ownership certificates for
houses without complete procedures, as happened in the past,
to apply for the ownership certificate. If the competent
authorities requires Midea Group to dismantle buildings that
cannot acquire the re-application for real estate registration
procedures, Midea Holding shall do its utmost to provide
assistance and be liable for any related expenses used in
dismantling such buildings by Midea Group (including its
subsidiaries).
(4) Under any circumstances that Midea Group suffers from
losses incurred from no longer using these properties or
presently using the land or house above due to failing to obtain
or collect in time the ownership certificates of the land or house
above or any losses caused by any other reasons, Midea
Holding shall compensate any loss for these reasons in time
and in full. Midea Holding shall compensate the actual loss
Midea Group suffers from any circumstances above resulting in
penalties subjected to from competent authorities or through
claims from any other third party.
(5) Based on issues of defective house leasing declared in
related files of this merger, Midea Holding shall provide
sufficient compensations for all economic losses incurred by
Midea Group (including its subsidiaries) where the leasehold
relations above become invalid or other disputes occur, which
are caused by rights claims from a third party or by means of
an administrative authority exercising a right and therefore
results in any economic losses due to eviction from rental
houses, or any penalties subjected to by competent
government departments or any recourse from related parties.
(6) Based on the issues of defective land leasing declared in
related files of this merger, when leasehold relations become
invalid caused by defects of land leasing or when other
disputes occur, resulting in any economic losses to Midea
Group (including its subsidiaries) or through any penalties
administered by competent government departments. Likewise
if the lessor cannot compensate for losses caused by such
defective leasing, Midea Holding shall compensate Midea
Group for losses caused by such defective land leasing.
Midea Holding has further undertaken that where a violation of
guarantees and undertakings referred to previously occurs or
such guarantees and undertakings are not consistent with the
reality and Midea Group has suffered any loss therefrom,
187
The 2022 Annual Report of Midea Group Co., Ltd.
Midea Holding shall compensate in cash or make up for Midea
Group’s loss upon Midea Group’s notice in writing within 30
days when the loss occurs and the loss amount is definite.
Whether
the
undertaki
Yes
ng is
fulfilled
on time
Specific
reasons
for failing
to fulfill
any
N/A
undertaki
ng and
plan for
the next
step
1.2 Where any earnings forecast was made for any of the Company’s assets or projects and the Reporting Period is still within the forecast
period, the Company shall explain whether the performance of the asset or project reaches the earnings forecast and why
□Applicable √N/A
188
2. Occupation of the Company’s Capital by the Controlling Shareholder or Its
Related Parties for Non-Operating Purposes
□Applicable √N/A
No such cases in the Reporting Period.
3. Illegal Provision of Guarantees for External Parties
□ Applicable √ N/A
No such cases in the Reporting Period.
4. Explanation of the Board of Directors Regarding the Last "Non-standard Audit
Opinion"
□ Applicable √ N/A
5. Explanation of the Board of Directors, the Supervisory Committee and
Independent Directors (If Any) Regarding the "Non-standard Audit Opinion" for the
Reporting Period
□Applicable √N/A
6. Changes in Accounting Policies and Accounting Estimates as Compared to the
Financial Report for the Prior Year, as well as Correction of Material Accounting
Errors
□Applicable √N/A
7. Reason for Changes in Scope of the Consolidated Financial Statements as
Compared to the Financial Report for the Prior Year
√ Applicable □ N/A
The detailed information of major subsidiaries included in the consolidation scope in the current period
is set out in Notes 5 and 6. Entities newly included in the consolidation scope in the current period
through acquisition mainly include Midea Capital Co., Ltd. and its subsidiaries (inclusive of structured
entities), WuHan TTium Motor Technology Co., Ltd. and its subsidiaries, as well as KONG Smart
Environment (Xi'an) Co., Ltd. (formerly known as “Shaanxi Construction Investment Group Co., 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).
189
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
Eight years
domestic CPA firm
Names of the certified public accountants from the
Yao Wenping and Wu Fangfang
domestic CPA firm
Consecutive years of the audit service provided by the
Three years and two years respectively
certified public accountants from the domestic CPA firm
Whether the CPA firm was changed in the current period
□Yes √No
Engagement of any CPA firm for internal control audit, financial advisor or sponsor
√ Applicable □ N/A
During the year, the Company engaged PricewaterhouseCoopers Zhong Tian LLP as the auditor of the
Company's internal control for the year 2022.
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
190
14. Significant Related Transactions
14.1 Continuing related transactions
√Applicable □N/A
Proporti
on in Obtaina
the ble
total Approv market Index
Transac
Related Type of Content amount ed Mode price to the
Pricing Transa tion Over Disclos
transac Relatio the s of the s of transac of for the disclo
principl ction amount approv ure
tion n transac transac transac tion line settlem transac sed
e price (RMB’0 ed line date
party tion tion tion of (RMB’0 ent tion of inform
00)
the 00) the ation
same same
kind kind
(%)
Controll
ed by
Orinko family
Advanc membe www.
Procure Payme
ed r of Procure Market 1,399,6 1,900,0 30 April cninfo
ment of - 0.57% No nt after -
Plastics Compa ment price 75 00 2022 .com.
goods delivery
Co., ny’s cn
Ltd. actual
controll
er
Controll
Midea ed by
www.
Real Compa Payme
Sale of Market 576,43 30 April cninfo
Estate ny’s Sale - 225,887 0.07% No nt after -
goods price 0 2022 .com.
Holding actual delivery
cn
Limited controll
er
Details of any sales return of a
Zero
large amount
Give the actual situation in the
Reporting Period (if any) where a
The line for continuing related transactions between the Company and the related
forecast had been made for the
parties and their subsidiaries did not exceed the total amount of continuing related
total amounts of continuing
transactions estimated by the Company by type.
related-party transactions by type
to occur in the current period
Reason for any significant
difference between the
N/A
transaction price and the market
reference price (if applicable)
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.
191
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
No related parties made deposits in, received loans or credit from or was involved in any other finance
business with any finance company controlled by the Company.
14.7 Other significant related transactions
□Applicable √N/A
No such cases in the Reporting Period.
15. Significant Contracts and Their Execution
15.1 Trusteeship, contracting and leasing
15.1.1 Trusteeship
□Applicable √N/A
No such cases in the Reporting Period.
15.1.2 Contracting
□Applicable √N/A
No such cases in the Reporting Period.
15.1.3 Leasing
□Applicable √N/A
No such cases in the Reporting Period.
15.2 Major guarantees
√Applicable □N/A
192
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
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
2022/4/3 8,000,00 One
Midea Group Finance Co., Ltd. - Joint liability No No
0 0 year
GD Midea Air-Conditioning Equipment 2022/4/3 15,430,0 6,665,03 One
2022-1-1 Joint liability No No
Co., Ltd. 0 00 0 year
Guangzhou Hualing Refrigerating 2022/4/3 1,350,00 One
2022-1-4 122,310 Joint liability No No
Equipment Co., Ltd. 0 0 year
Foshan Midea Carrier Air-Conditioning 2022/4/3 One
360,000 2022-2-23 2,760 Joint liability No No
Equipment Co., Ltd. 0 year
GD Midea Group Wuhu Air-Conditioning 2022/4/3 2,800,00 One
- Joint liability No No
Equipment Co., Ltd. 0 0 year
Wuhu Maty Air-Conditioning Equipment 2022/4/3 One
380,000 2022-1-1 36,240 Joint liability No No
Co., Ltd. 0 year
Guangdong Midea Precision Molding 2022/4/3 One
10,000 - Joint liability No No
Technology Co., Ltd. 0 year
Midea Group Wuhan Refrigeration 2022/4/3 One
550,000 - Joint liability No No
Equipment Co., Ltd. 0 year
Hainan Midea United Materials Supply 2022/4/3 One
10,000 - Joint liability No No
Co. Ltd. 0 year
Handan Midea Air-Conditioning 2022/4/3 One
100,000 - Joint liability No No
Equipment Co., Ltd. 0 year
Chongqing Midea Air-Conditioning 2022/4/3 1,200,00 One
- Joint liability No No
Equipment Co., Ltd. 0 0 year
2022/4/3 One
Midea Group (Shanghai) Co., Ltd. 1,000 - Joint liability No No
0 year
Midea Group Wuhan Heating & 2022/4/3 One
258,000 - Joint liability No No
Ventilating Equipment Co., Ltd. 0 year
2022/4/3 One
Meizhisheng Technology Co., Ltd. 1,000 - Joint liability No No
0 year
Guangdong Midea Kitchen Appliances 2022/4/3 7,032,00 1,727,50 One
2022-1-1 Joint liability No No
Manufacturing Co., Ltd. 0 0 0 year
Guangdong Witol Vacuum Electronic 2022/4/3 100,000 2022-1-5 280 Joint liability One No No
193
Manufacture Co., Ltd 0 year
Wuhu Midea Kitchen Appliances 2022/4/3 2,520,00 1,000,00 One
2022-1-18 Joint liability No No
Manufacturing Co., Ltd. 0 0 0 year
Jiangsu Midea Cleaning Appliances Co., 2022/4/3 One
640,000 2022-1-1 9,430 Joint liability No No
Ltd 0 year
2022/4/3 One
Maytech Technology Co., LTD. 75,000 - Joint liability No No
0 year
Hainan Meizhi Canghai E-commerce 2022/4/3 One
22,000 - Joint liability No No
Service Co., Ltd. 0 year
Hainan Meizhi Hangjian Electric 2022/4/3 One
22,000 - Joint liability No No
Appliance Co., Ltd. 0 year
2022/4/3 One
Eureka Technology Co., Ltd. 22,000 - Joint liability No No
0 year
GD Midea Heating & Ventilating 2022/4/3 One
3,110,000 2022-1-1 166,270 Joint liability No No
Equipment Co., Ltd. 0 year
Guangdong Midea-SIIX Electronics Co., 2022/4/3 One
10,000 2022-3-9 130 Joint liability No No
Ltd. 0 year
Hefei Midea Heating & Ventilating 2022/4/3 One
40,000 - Joint liability No No
Equipment Co., Ltd. 0 year
2022/4/3 One
Hefei Midea-SIIX Electronics Co., Ltd. 5,000 - Joint liability No No
0 year
Chongqing Midea General Refrigeration 2022/4/3 One
30,000 2022-1-1 9,170 Joint liability No No
Equipment Co., Ltd. 0 year
Meitong Energy Technology (Chongqing) 2022/4/3 One
80,000 - Joint liability No No
Co., Ltd. 0 year
Guangdong MeiKong Intelligent Building 2022/4/3 One
60,000 - Joint liability No No
Co., Ltd. 0 year
Shanghai M-BMS Intelligent Construction 2022/4/3 One
40,000 - Joint liability No No
Co., Ltd. 0 year
2022/4/3 One
Winone Elevator Company Limited 410,000 2022-1-1 65,610 Joint liability No No
0 year
2022/4/3 One
Guangdong Lingmei Technology Co., Ltd. 60,000 - Joint liability No No
0 year
Hubei Midea Building Technology Co., 2022/4/3 One
10,000 - Joint liability No No
Ltd. 0 year
2022/4/3 One
Guangdong Meizhi Compressor Limited 290,000 2022-1-1 37,870 Joint liability No No
0 year
Guangdong Meizhi Precision- 2022/4/3 One
55,000 - Joint liability No No
Manufacturing Co., Ltd 0 year
Guangdong Welling Motor Manufacturing 2022/4/3 One
250,000 2022-1-1 22,890 Joint liability No No
Co., Ltd. 0 year
Foshan Welling Washer Motor 2022/4/3 One
310,000 2022-1-1 18,490 Joint liability No No
Manufacturing Co., Ltd. 0 year
Guangdong Midea Environmental 2022/4/3 One
20,000 - Joint liability No No
Technologies Co., Ltd. 0 year
Huaian Welling Motor Manufacturing Co., 2022/4/3 One
10,000 - Joint liability No No
Ltd. 0 year
Guangdong Midea Intelligent 2022/4/3 One
20,000 - Joint liability No No
Technologies Co., Ltd. 0 year
2022/4/3 4,000,00 One
Zhejiang Meizhi Compressor Co., Ltd. 2022-3-31 602,000 Joint liability No No
0 0 year
2022/4/3 One
Anhui Meizhi Compressor Co., Ltd. 40,000 2022-1-1 7,660 Joint liability No No
0 year
Anhui Meizhi Precision Manufacturing 2022/4/3 One
60,000 2022-1-24 310 Joint liability No No
Co., Ltd. 0 year
194
Welling (Wuhu) Motor Manufacturing Co., 2022/4/3 One
10,000 2022-1-17 800 Joint liability No No
Ltd. 0 year
2022/4/3 1,865,00 One
Wuhu Welling Motor Sales Co., Ltd. - Joint liability No No
0 0 year
2022/4/3 One
Anhui Welling Auto Parts Co. , Ltd. 130,000 2022-5-9 - Joint liability No No
0 year
2022/4/3 One
Dorna Technology Co., Ltd. 55,000 - Joint liability No No
0 year
Guangdong Midea Electromechanical 2022/4/3 One
60,000 - Joint liability No No
Technology Co., Ltd. 0 year
MiSiliconn SemiConductor Technologies 2022/4/3 One
67,000 - Joint liability No No
Co., Ltd. 0 year
Guangdong Jiya Precision Machinery 2022/4/3 One
60,000 - Joint liability No No
Technology Co., Ltd. 0 year
2022/4/3 One
Anqing Welling Auto Parts Co., Ltd. 50,000 - Joint liability No No
0 year
Servotronix Motion Technology 2022/4/3 One
30,000 - Joint liability No No
Development (Shenzhen) Ltd. 0 year
Ningbo Midea United Materials Supply 2022/4/3 2,000,00 One
2022-1-12 40,990 Joint liability No No
Co. Ltd. 0 0 year
Guangzhou Kaizhao Commercial and 2022/4/3 One
60,000 - Joint liability No No
Trading Co., Ltd 0 year
Guangdong Midea Consumer Electric 2022/4/3 One
185,000 2022-1-1 2,630 Joint liability No No
Manufacturing Co., Ltd. 0 year
Foshan Shunde Midea Electrical Heating 2022/4/3 1,665,00 One
2022-1-1 192,320 Joint liability No No
Appliances Manufacturing Co., Ltd. 0 0 year
GD Midea Environment Appliances Mfg. 2022/4/3 1,400,00 One
2022-1-1 11,700 Joint liability No No
Co.,Ltd. 0 0 year
Guangdong Midea Cuchen Company 2022/4/3 One
6,000 - Joint liability No No
Ltd. 0 year
GD Midea Caffitaly Coffee Machine 2022/4/3 One
10,000 - Joint liability No No
Manufacturing Co., Ltd. 0 year
Wuhu Midea Life Appliances Mfg Co., 2022/4/3 2,200,00 One
2022-6-6 810,000 Joint liability No No
Ltd. 0 0 year
Foshan Shunde Midea Washing 2022/4/3 2,750,00 One
2022-1-1 244,760 Joint liability No No
Appliances Manufacturing Co., Ltd. 0 0 year
Guangdong Midea Kitchen & Bath 2022/4/3 One
400,000 - Joint liability No No
Appliances Manufacturing Co., Ltd. 0 year
Foshan Shunde Midea Water Dispenser 2022/4/3 One
855,000 2022-1-1 14,910 Joint liability No No
Manufacturing Company Limited 0 year
Foshan Midea Chungho Water 2022/4/3 One
230,000 2022-1-20 12,970 Joint liability No No
Purification Equipment. Co., Ltd. 0 year
Wuhu Midea Kitchen & Bath Appliances 2022/4/3 2,600,00 One
2022-1-1 4,520 Joint liability No No
Mfg. Co., Ltd. 0 0 year
2022/4/3 3,395,00 1,135,29 One
Wuxi Little Swan Electric Co., Ltd. 2022-1-1 Joint liability No No
0 0 0 year
2022/4/3 2,880,00 One
Hefei Midea Laundry Appliance Co., Ltd. 2022-1-1 12,440 Joint liability No No
0 0 year
2022/4/3 One
Wuxi Filin Electronics Co., Ltd. 100,000 - Joint liability No No
0 year
2022/4/3 One
Hubei Midea Laundry Appliance Co., Ltd. 100,000 - Joint liability No No
0 year
Hainan Midea Refrigerator & Washer 2022/4/3 One
50,000 - Joint liability No No
Sales Co., Ltd. 0 year
Hefei Hualing Co., Ltd. 2022/4/3 700,000 2022-1-1 99,790 Joint liability One No No
195
0 year
2022/4/3 One
Hubei Midea Refrigerator Co., Ltd. 260,000 - Joint liability No No
0 year
2022/4/3 3,000,00 One
Hefei Midea Refrigerator Co., Ltd. - Joint liability No No
0 0 year
Guangzhou Midea Hualing Refrigerator C 2022/4/3 One
700,000 2022-1-6 9,880 Joint liability No No
o., Ltd. 0 year
Toshiba Home Appliances Manufacturing 2022/4/3 One
100,000 2022-3-10 - Joint liability No No
(Nanhai) Co., Ltd 0 year
Little Swan (Jing Zhou) Sanjin Electronic 2022/4/3 One
10,000 - Joint liability No No
Appliances Limited 0 year
2022/4/3 One
Midea Group E-Commerce Co., Ltd. 100,000 - Joint liability No No
0 year
Guangdong Midea Smart Link 2022/4/3 One
91,200 2022-1-1 4,130 Joint liability No No
Technologies Co., Ltd. 0 year
2022/4/3 One
Reis Robotics (Kunshan) Co., Ltd. 70,000 2022-1-1 1,880 Joint liability No No
0 year
2022/4/3 One
KUKA Systems (China) CO., Ltd. 500,000 2022-1-1 56,670 Joint liability No No
0 year
KUKA Robotics Manufacturing China 2022/4/3 One
50,000 2022-1-19 22,700 Joint liability No No
Co.,Ltd 0 year
2022/4/3 One
KUKA Robotics Guangdong Co., Ltd 150,000 2022-2-24 61,140 Joint liability No No
0 year
2022/4/3 One
KUKA Robotics (Shanghai) Co.,Ltd. 450,000 2022-1-1 32,790 Joint liability No No
0 year
2022/4/3 One
Shanghai Swisslog Healthcare Co., Ltd. 10,000 - Joint liability No No
0 year
Guangdong Swisslog Technology Co., 2022/4/3 One
50,000 2022-2-23 550 Joint liability No No
Ltd. 0 year
2022/4/3 One
Shanghai Swisslog Technology Co., Ltd. 230,000 2022-1-1 48,140 Joint liability No No
0 year
2022/4/3 One
Swisslog (Shanghai) Co., Ltd. 80,000 - Joint liability No No
0 year
2022/4/3 One
Meicloud Technology Co., Ltd. 40,000 - Joint liability No No
0 year
2022/4/3 One
Foshan Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
0 year
Guangdong Yueyun Industrial Internet 2022/4/3 One
10,000 - Joint liability No No
Innovative Technology Co., Ltd. 0 year
2022/4/3 One
Wuhan Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
0 year
2022/4/3 One
Suzhou Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
0 year
Midea International Corporation 2022/4/3 12,330,0 9,867,72 One
2022-1-1 Joint liability No No
Company Limited 0 00 0 year
Midea Investment Development 2021/12/ 8,053,68 3,020,13 One
2022-2-24 Joint liability No No
Company Limited 27 0 0 year
Midea International Trading Company 2022/4/3 One
650,000 2022-1-5 4,230 Joint liability No No
Limited 0 year
2022/4/3 One
Welling International Hong Kong Ltd 310,000 - Joint liability No No
0 year
Midea Electric Trading (Singapore) 2022/4/3 3,000,00 One
2022-3-15 367,200 Joint liability No No
Co.,Pte. Ltd. 0 0 year
2022/4/3 One
Orient Household Appliances Ltd. 33,500 - Joint liability No No
0 year
196
Midea Consumer Electric (Vietnam) Co., 2022/4/3 One
6,700 - Joint liability No No
Ltd. 0 year
2022/4/3 One
Concepcion Midea Inc. 6,700 2022-1-1 - Joint liability No No
0 year
2022/4/3 One
Midea Italia S.R.L. 120,000 - Joint liability No No
0 year
2022/4/3 One
Midea Mexico, S. DE R.L. DE C.V. 100,000 - Joint liability No No
0 year
Midea Electric Trading (Thailand) Co., 2022/4/3 One
13,400 - Joint liability No No
Ltd. 0 year
2022/4/3 One
Midea America Corp. 150,000 2022-1-1 64,350 Joint liability No No
0 year
2022/4/3 One
PT. Midea Planet Indonesia 247,000 - Joint liability No No
0 year
2022/4/3 One
Midea Europe GmbH 400,000 - Joint liability No No
0 year
2022/4/3 One
Midea America (Canada) Corp. 102,900 2022-1-1 - Joint liability No No
0 year
2022/4/3 One
Midea Consumer Appliances DMCC 175,000 - Joint liability No No
0 year
2022/4/3 One
Midea Middle East 70,000 - Joint liability No No
0 year
2022/4/3 One
Meco Innovations Technology, LLC 80,000 - Joint liability No No
0 year
Toshiba Lifestyle Products & Services 2022/4/3 2,055,39 One
2022-1-1 8,250 Joint liability No No
Corporation 0 0 year
2022/4/3 52,260,0 28,856,4 One
Midea Electric Netherlands (I) B.V. 2022-1-1 Joint liability No No
0 00 00 year
2022/4/3 1,000,00 One
Midea Electrics Netherlands B.V. - Joint liability No No
0 0 year
2022/4/3 One
Clivet S.p.A. 90,000 2022-1-1 76,150 Joint liability No No
0 year
2022/4/3 One
Servotronix Motion Control Ltd. 940 - Joint liability No No
0 year
2022/4/3 One
Midea Austria GmbH 5,000 - Joint liability No No
0 year
Midea (Egypt) Kitchen & water heater 2022/4/3 One
70,000 - Joint liability No No
appliances Co. ,Ltd 0 year
Total actual guarantee
Total guarantee line for subsidiaries approved amount for subsidiaries
160,967,410 57,807,670
during the Reporting Period (B1) during the Reporting
Period (B2)
Total actual guarantee
Total approved guarantee line for subsidiaries at the balance for subsidiaries
160,967,410 55,579,380
end of the Reporting Period (B3) at the end of the
Reporting Period (B4)
Guarantees between 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
2022/2/2 2,803,36 1,177,41 One
Guangdong Midea Electric Co., Ltd. 2022-4-26 Joint liability No No
3 0 0 year
197
2022/4/3 1,450,00 One
Wuhu Midea Annto Logistics Co., Ltd. 2022-1-1 296,340 Joint liability No No
0 0 year
2022/4/3 One
Ningbo Annto Logistics Co., Ltd. 950,000 - Joint liability No No
0 year
Hainan Annto Zhilian Supply Chain 2022/4/3 One
100,000 - Joint liability No No
Management Co., Ltd. 0 year
Total actual guarantee
Total line for guarantees between subsidiaries amount between
5,303,360 1,596,480
approved during the Reporting Period (C1) subsidiaries during the
Reporting Period (C2)
Total actual guarantee
Total approved line for guarantees between balance between
5,303,360 1,473,750
subsidiaries at the end of the Reporting Period (C3) subsidiaries at the end of
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
166,270,770 59,404,150
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
166,270,770 57,053,130
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets
39.92%
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
52,602,990
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) 52,602,990
Joint responsibilities possibly borne for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if
N/A
any)
15.3 Entrusted cash management
15.3.1 Entrusted asset management
□ Applicable √ N/A
No such cases in the Reporting Period.
15.3.2 Entrusted loans
□ Applicable √ N/A
No such cases in the Reporting Period.
15.4 Other significant contracts
□ Applicable √ N/A
No such cases in the Reporting Period.
198
16. Other Significant Events
□ Applicable √ N/A
There were no other significant events in the Reporting Period that require disclosure.
17. Significant Events of Subsidiaries
□ Applicable √ N/A
199
Section VII Changes in Shares and Information about
Shareholders
1. Changes in Shares
1.1 Changes in shares
Unit: share
Increase/decrease in the Reporting Period
Before After
(+/-)
Percen Percen
Shares tage New issue Others Subtotal Shares tage
(%) (%)
1. Restricted shares 156,538,881 2.24 -12,923,865 -12,923,865 143,615,016 2.05
1.1 Shares held by the
state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic 153,773,081 2.20 -12,641,607 -12,641,607 141,131,474 2.02
investors
Among which: Shares
held by domestic 2,363,601 0.03 0 2,363,601 0.03
corporations
Shares held by
151,409,480 2.17 -12,641,607 -12,641,607 138,767,873 1.98
domestic individuals
1.4 Shares held by
2,765,800 0.04 -282,258 -282,258 2,483,542 0.04
foreign investors
Among which: Shares
held by foreign
corporations
Shares held by
2,765,800 0.04 -282,258 -282,258 2,483,542 0.04
foreign individuals
2. Non-restricted shares 6,830,024,963 97.76 18,601,987 5,031,110 23,633,097 6,853,658,060 97.95
2.1 RMB common
6,830,024,963 97.76 18,601,987 5,031,110 23,633,097 6,853,658,060 97.95
shares
2.2 Domestically listed
foreign shares
2.3 Overseas listed
foreign shares
2.4 Other
3. Total shares 6,986,563,844 100.00 18,601,987 -7,892,755 10,709,232 6,997,273,076 100.00
Reasons for the changes in shares
√Applicable □N/A
200
a. The 377,083 restricted shares of a total of 21 eligible awardees for the second unlocking period of
the reserved restricted shares under the 2018 Restricted Share Incentive Scheme were unlocked on 22
June 2022.
b. The 2,791,699 restricted shares of a total of 189 eligible awardees for the third unlocking period of
the first grant under the 2018 Restricted Share Incentive Scheme were unlocked on 28 June 2022,
including 182,250 restricted shares of foreign employees.
c. The 5,247,500 restricted shares of a total of 334 eligible awardees (inclusive of 144,750 such shares
of foreign awardees) for the second unlocking period of the 2019 Restricted Share Incentive Scheme
were unlocked on 11 July 2022.
d. The 7,899,587 restricted shares of a total of 443 eligible awardees (inclusive of 345,750 such shares
of foreign awardees) for the second unlocking period of the 2020 Restricted Share Incentive Scheme
were unlocked on 19 July 2022.
e. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 20 April 2022, the Company repurchased and retired 248,333 shares of
nine awardees with respect to the first grant under the 2018 Restricted Share Incentive Scheme,
137,917 shares of four awardees with respect to the reserved restricted shares under the 2018
Restricted Share Incentive Scheme, 771,042 shares of 18 awardees under the 2019 Restricted Share
Incentive Scheme, 1,314,501 shares of 30 awardees under the 2020 Restricted Share Incentive
Scheme, and 290,000 shares of seven awardees under the 2021 Restricted Share Incentive Scheme,
totaling 2,761,793 restricted shares.
f. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 24 October 2022, the Company repurchased and retired 700,051 shares
of 52 awardees with respect to the first grant under the 2018 Restricted Share Incentive Scheme,
67,500 shares of two awardees with respect to the reserved restricted shares under the 2018
Restricted Share Incentive Scheme, 1,348,916 shares of 81 awardees under the 2019 Restricted Share
Incentive Scheme, 1,914,495 shares of 154 awardees under the 2020 Restricted Share Incentive
Scheme, and 1,100,000 shares of 21 awardees under the 2021 Restricted Share Incentive Scheme,
totaling 5,130,962 restricted shares.
g. In the Reporting Period, the awardees of stock options chose to exercise 18,601,987 shares, which
have been registered into the Company’s share capital.
h. In the Reporting Period, locked-up shares held by senior management decreased by 867,741 shares.
Approval of share changes
□ Applicable √ N/A
201
Transfer of share ownership
□ Applicable √ N/A
Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and the last Reporting
Period
□Applicable √N/A
Other contents that the Company considers necessary or is required by the securities regulatory
authorities to disclose
□Applicable √N/A
1.2 Changes in restricted shares
√ Applicable □ N/A
Unit: share
Opening Unlocked in Increased in Closing
Name of Repurchased
restricted current current restricted Reason for change Date of unlocking
shareholder and retired
shares period period shares
Awardees of the
first grant of 2018 Locked up
Restricted Share 6,687,750 2,791,699 0 948,384 2,947,667 according to the 28 June 2022
Incentive Scheme
Scheme
Awardees of
reserved
Locked up
restricted shares
1,297,500 377,083 0 205,417 715,000 according to the 22 June 2022
under 2018
Scheme
Restricted Share
Incentive Scheme
Awardees of 2019 Locked up
Restricted Share 18,668,625 5,247,500 0 2,119,958 11,301,167 according to the 11 July 2022
Incentive Scheme Scheme
Awardees of 2020 Locked up
Restricted Share 25,672,500 7,899,587 0 3,228,996 14,543,917 according to the 19 July 2022
Incentive Scheme Scheme
Awardees of 2021 Locked up
Restricted Share 9,940,000 0 0 1,390,000 8,550,000 according to the -
Incentive Scheme Scheme
Awardees of 2022 Locked up
Restricted Share 0 0 12,152,500 0 12,152,500 according to the -
Incentive Scheme Scheme
Locked up for
Zhu Fengtao 780,300 780,300 0 0 0 senior -
management
Locked up for
Xiao Mingguang 353,750 353,750 0 0 0 senior -
management
Locked up for
Zhang Xiaoyi 337,431 0 25,000 0 362,431 senior -
management
Jiang Peng 268,950 20,000 0 0 248,950 Locked up for -
202
senior
management
Locked up for
Hu Ziqiang 250,000 0 25,000 0 275,000 senior -
management
Locked up for
Guan Jinwei 276,250 0 50,000 0 326,250 senior -
management
Locked up for
Bai Lin 0 0 71,309 0 71,309 senior -
management
Locked up for
Zhong Zheng 167,114 0 20,000 0 187,114 senior -
management
Locked up for
Zhao Weinxin 0 0 60,000 0 60,000 senior -
management
Locked up for
Wang Jinliang 0 0 35,000 0 35,000 senior -
management
Total 64,700,170 17,469,919 12,438,809 7,892,755 51,776,305 -- --
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
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 the
shareholders at the period- 404,913 prior month-end before the disclosure date of 404,380
end the annual report
5% or greater common shareholders or top 10 common shareholders
Increase/dec Shares in pledge or
Shareh Number of Number of
Nature of Total common rease during frozen
Name of olding restricted non-restricted
shareholde shares held at the
shareholder percent common common Stat
r the period-end Reporting Shares
age (%) shares held shares held us
Period
203
Domestic
In
Midea Holding non-state-
31.00% 2,169,178,713 - 0 2,169,178,713 pled 100,000,000
Co., Ltd. owned
ge
corporation
Hong Kong
Securities
Foreign
Clearing 20.48% 1,432,714,576 182,898,645 0 1,432,714,576
corporation
Company
Limited
Domestic
China Securities
non-state-
Finance Co., 2.83% 198,145,134 - 0 198,145,134
owned
Ltd.
corporation
Domestic
Fang Hongbo 1.67% 116,990,492 - 87,742,869 29,247,623
individual
Central Huijin
State-
Asset
owned 1.26% 88,260,460 - 0 88,260,460
Management
corporation
Ltd.
Domestic
Huang Jian 1.23% 86,140,000 - 0 86,140,000
individual
Canada Pension
Plan Investment
Foreign
Board－ own 0.88% 61,913,903 - 0 61,913,903
corporation
funds (stock
exchange)
Foreign
Li Jianwei 0.66% 46,264,545 - 0 46,264,545
individual
Domestic
Yuan Liqun 0.56% 39,214,919 -418,678 0 39,214,919
individual
Merrill Lynch Foreign
0.56% 39,213,698 658,821 0 39,213,698
International corporation
Strategic investors or general
corporations becoming top-
N/A
ten common shareholders
due to placing of new shares
Related-parties or acting-in-
concert parties among the N/A
shareholders above
Explain if any of the
shareholders above was
involved in entrusting/being N/A
entrusted with voting rights or
waiving voting rights
Special account for 146,638,028 shares (or 2.10% of the Company’s total share capital) were held in the
repurchased shares among special account for repurchased shares of Midea Group Co., Ltd. at the end of the
the top 10 shareholders Reporting Period.
Top 10 non-restricted common shareholders
Number of non-restricted common shares held at Type of shares
Name of shareholder
the period-end Type Shares
Midea Holding Co., Ltd. 2,169,178,713 RMB common stock 2,169,178,713
Hong Kong Securities
1,432,714,576 RMB common stock 1,432,714,576
Clearing Company Limited
204
China Securities Finance
198,145,134 RMB common stock 198,145,134
Co., Ltd.
Central Huijin Asset
88,260,460 RMB common stock 88,260,460
Management Ltd.
Huang Jian 86,140,000 RMB common stock 86,140,000
Canada Pension Plan
Investment Board－ own 61,913,903 RMB common stock 61,913,903
funds (stock exchange)
Li Jianwei 46,264,545 RMB common stock 46,264,545
Yuan Liqun 39,214,919 RMB common stock 39,214,919
Merrill Lynch International 39,213,698 RMB common stock 39,213,698
Huang Xiaoxiang 37,835,332 RMB common stock 37,835,332
Related-parties or acting-in-
concert parties among the
top ten non-restricted
common shareholders and
N/A
between the top ten non-
restricted common
shareholders and the top ten
common shareholders
The Company’s shareholder Yuan Liqun holds 560,000 shares in the Company through
her common securities account and 38,654,919 shares in the Company through her
Explanation on the top 10 account of collateral securities for margin trading, representing a total holding of
common shareholders 39,214,919 shares in the Company.
participating in securities
margin trading The Company’s shareholder Huang Xiaoxiang holds 29,435,332 shares in the Company
through his common securities account and 8,400,000 shares in the Company through
his account of collateral securities for margin trading, representing a total holding of
37,835,332 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
3.2 Controlling shareholder
Nature of the controlling shareholder: Controlled by individual
Type of the controlling shareholder: Corporation
Legal
Date of
Name of controlling representativ
establishm Organization code Main business scope
shareholder e / company
ent
principal
Manufacture and commerce investment;
domestic commerce and materials supply
and marketing industry (excluding state-
designated monopoly); CP software and
hardware development; industrial product
5 August
Midea Holding Co., Ltd. He Xiangjian 914406067429989733 design; information technology consulting
2002
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
controlling shareholder
shares in other listed companies at home or abroad.
in other controlled or
205
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), Hiconics (300048.SZ), WDM (600055.SH), Midea Real
companies controlled in the last Estate (3990.HK), KUKA (KU2.DE) (delisted in 2022), Little Swan (A: 000418.SZ; B:
10 years 200418) (delisted in 2019), and Welling Holding (00382.HK) (delisted in 2018)
Change of the actual controller during the Reporting Period
□Applicable √N/A
Ownership and control relations between the actual controller and the Company
He Xiangjian
94.55%
0.46%
Midea Holding Co., Ltd.
31.00%
Midea Group Co., Ltd.
The actual controller controls the Company via trust or other ways of asset management
□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
206
3.6 Limits on the Company’s shares held by its controlling shareholder, actual controller,
reorganizer and other commitment subjects
□Applicable √N/A
4. Share Repurchases during the Reporting Period
Progress of any share repurchase
√ Applicable □ N/A
Shares
repurchase
d as a
Number of As a percentage
Number of
Disclosure shares to percentage of the total
Amount to Repurchase shares
date of the be of the total Purpose target
be used period repurchase
scheme repurchase share number of
d
d capital the equity
incentive
scheme (if
any)
No more
No more
than
than
71,428,571
1.0208%
shares and For use in
and no less
no less than No more equity
than
35,714,285 than RMB5 incentive
0.5104%
shares billion and 2022.03.10- and/or
2022.03.12 based on 48,558,888 -
based on no less than 2023.03.10 employee
the
the RMB2.5 stock
repurchase
repurchase billion ownership
price ceiling
price ceiling schemes
of
of
RMB70/sha
RMB70/sha
re
re
Progress of any repurchased share reduction through centralized price bidding
□ Applicable √ N/A
207
Section VIII Preference Shares
□ Applicable √ N/A
No such cases in the Reporting Period.
208
Section IX Bonds
√ Applicable □ N/A
1. Enterprise Bonds
□ Applicable √ N/A
No such cases in the Reporting Period.
2. Corporate Bonds
√ Applicable □ N/A
2.1 General information on corporate bonds
Way of
principal
Outstandi
Bond Bond Date of Interest repaymen Place of
Abbr. Value date Maturity ng
name code issuance rate t and trading
balance
interest
payment
Midea Interest
Investmen payable
t on a half-
Developm year
MIDEAZ The Stock
ent ISIN basis, with
2.88% 2022-02- 2022-02- 2027-02- USD450 Exchange
Company XS243213 2.88% the
02/24/202 16 24 24 million of Hong
Limited 0453 principal
7 Kong
2.88% repayable
Secured in full
Notes upon
2027 maturity
Investor eligibility arrangements (if
N/A
any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue bonds
□ Applicable √ N/A
2.2 Triggering and execution of issuer or investor option clauses and investor protection
clauses
□ Applicable √ N/A
209
2.3 Intermediary agencies
Accountant
Intermediary
Bond name Office address writing Contact person Tel.
agency
signatures
55/F, Cheung
Kong Centre, 2
Bank of America
Queen’s Road - Lin Yin +852 3508 7994
Securities
Central, Hong
Kong
15/F, Two
International
Standard
Finance Centre, - Chen Junda +852 3983 0769
Chartered Bank
Central, Hong
Kong
30/F, Two Pacific
Crédit Agricole
Place, 88
Corporate and - Fang Lei +852 2826 7396
Queensway,
Investment Bank
Hong Kong
22/F, Bank of
China Tower, 4
Bank of China - He Fan +65 6412 9815
Battery Road,
Singapore
28/F, China
Construction
China
Bank Building, 3
Midea Construction - Huang Hai +852 3918 6312
Connaught Road
Investment Bank (Asia)
Central, Hong
Development Kong
Company
Limited 2.88% 10/F, The Center,
Development
Secured Notes 99 Queen’s
Bank of - Lin Huixin +852 3668 9137
2027 Road Central,
Singapore
Hong Kong
Industrial and 28/F, ICBC
Commercial Tower, 3 Garden
- Chen Jiaqi +852 3510 3522
Bank of China Road, Central,
(Asia) Hong Kong
11/F, Alexandra
House, Chater
Linklaters LLP - Liu Kecheng +852 2901 5257
Road, Hong
Kong
27/F, Beijing
Kerry Center
North Tower, 1
+86 10 5769
Fangda Partners Guanghua Road, - Jiang Xueyan
5627
Chaoyang
District, Beijing,
China
27/F, Jardine
House, 1
Clifford Chance
Connaught - Wang Yanlin +852 2826 2457
LLP
Place, Central,
Hong Kong
210
34/F, Office
Building No. 3,
Jingtian & Huamao Center, +86 10 5809
- Ling Tezhi
Gongcheng LLP 77 Jianguo 1279
Road, Chaoyang
District, Beijing
11/F, Central
Tower, 28
OBC Law Firm Queen’s Road - Huang Ying +852 3656 6073
Central, Hong
Kong
19/F, Man Yee
Building, 68 Des
Guo Shu／Wang
Fitch Ratings Voeux Road - +852 2263 9608
Sai
Central, Hong
Kong
3/F and 4/F,
S&P Global Three Exchange
Shen Xi／Xie
Ratings Hong Square, 8 +852 2263 9992
-
Connaught Manqi
Kong Limited
Place, Central,
Hong Kong
Change of the agencies in the table above during the Reporting Period
□ Yes √ No
2.4 Use of raised funds
In compliance
Rectification
Status of the with the
for any
special purpose, use
Total amount Amount irregularity (if
Bond name Amount used account for plan and other
raised unused any) in the
raised funds information
use of raised
(if any) stated in the
funds
prospectus
The raised
Midea
funds account
Investment
has been
Development
USD450 USD450 established to No
Company 0 Yes
million million ensure the irregularities
Limited 2.88%
funds will be
Secured
used as
Notes 2027
stated.
Use of raised funds in construction projects
□ Applicable √ N/A
Indicate whether the raised funds were re-purposed during the Reporting Period
□ Applicable √ N/A
2.5 Changes in credit ratings in the Reporting Period
□ Applicable √ N/A
211
2.6 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of debt
instrument holders
□ Applicable √ N/A
3. Debt Instruments as a Non-financial Enterprise
√ Applicable □ N/A
3.1 General information on debt instruments as a non-financial enterprise
Unit: RMB
Way of
principal
Name of Code of
Date of Outstandin Interest repayment Place of
debt Abbr. debt Value date Maturity
issuance g balance rate and trading
instrument instrument
interest
payment
Super-
short-term
Principal
Commerci
From 27 and
al Papers
22 Midea April 2022 29 April 26 October interest Inter-bank
of Midea 012281718 0 2.2300%
SCP001 to 28 April 2022 2022 repayable market
Group Co.,
2022 in full upon
Ltd.
maturity
(Tranche
1, 2022)
Investor eligibility arrangements (if
N/A
any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue 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
Accountant
Name of debt Intermediary
Office address writing Contact person Tel.
instrument agency
signatures
Super-short-term Industrial and
55 Fuxingmennei
Commercial Commercial
Street, Xicheng / Dai Ying 010-66109649
Papers of Midea Bank of China
District, Beijing
Group Co., Ltd. Limited
(Tranche 1, Industrial Bank 15 Industrial / Zhao Xinle 010-89926570
212
2022) Co., Ltd. Bank Plaza, 20
Chaoyangmen
Street North,
Chaoyang
District, Beijing
F408, Yuanyang
Plaza, 158
Beijing Jiayuan
Fuxingmennei / Liu Xing 010-66413377
Law Firm
Street, Xicheng
District, Beijing
Room 06, 40/F,
Tower 5, East
S&P Credit
Third Ring
Rating (China) / Ren Yingxue 010-65166037
Middle Road,
Co., Ltd.
Chaoyang
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
Status of the with the
for any
special purpose, use
Name of debt Total amount Amount irregularity (if
Amount used account for plan and other
instrument raised unused any) in the
raised funds information
use of raised
(if any) stated in the
funds
prospectus
Super-short- The raised
term funds account
Commercial has been
Papers of established to No
RMB4 billion RMB4 billion 0 Yes
Midea Group ensure the irregularities
Co., Ltd. funds will be
(Tranche 1, used as
2022) stated.
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
213
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 2022 31 December 2021 Change
Current ratio 126.54% 111.67% 14.87%
Debt/asset ratio 64.05% 65.25% -1.20%
Quick ratio 98.38% 86.92% 11.46%
2022 2021 Change
Net profit before non-
28,801,052 26,257,754 9.69%
recurring gains and losses
EBITDA/debt ratio 46.38% 46.70% -0.32%
Interest cover (times) 20.09 25.84 -22.25%
Cash-to-interest cover
23.06 28.35 -18.66%
(times)
EBITDA-to-interest cover
23.65 30.39 -22.18%
(times)
Loan repayment ratio (%) 100.00% 100.00% 0.00%
Interest payment ratio (%) 100.00% 100.00% 0.00%
214
Section X Financial Report
1. Auditor’s report
Type of the auditor’s opinion Unqualified opinion
Signing date of the auditor’s report 27 April 2023
Name of the auditor PricewaterhouseCoopers Zhong Tian LLP
No. of the auditor’s report PwC ZT Shen Zi (2023) No. 10017
Names of certified public accountants Yao Wenping and Wu Fangfang
PwC ZT Shen Zi (2023) 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 2022;
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 2022, 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
1
PwC ZT Shen Zi (2023) 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 address
consumer appliances this key audit matter:
Refer to Note 2(25)(a) of accounting policy of 1. Interviewed management to understand the
“Revenue - sales of goods” and Note 4(49) necessary details of sales processes of all
“Operating revenue and cost of sales” to the distribution channels and evaluate the internal
financial statements. control of processes relating to the revenue from
sales of HVAC and consumer appliances designed by
The Group recognises relevant revenue at the management and tested the operating effectiveness
amount of the consideration which the Group of key controls;
is expected to receive when the customer
obtains control over relevant goods or 2. Reviewed household appliance sales contract
services. In 2022, the Group’s consolidated template entered into by and between the Group and
operating revenue was approximately RMB the clients from all distribution channels, and
343,917,531,000 and the revenue from HVAC analysed and evaluated the appropriateness of the
and consumer appliances was approximately Group’s accounting policies on the revenue from
RMB 275,919,323,000. sales of HVAC and consumer appliances based on
our interview with management, understanding of
We identified this as a key audit matter due to the Group’s business operation and audit
the large size of both domestic and overseas experience;
customer base and high volume of sales
through various distribution channels, the 3. Performed fluctuation analysis of monthly sales and
amount of revenue recognised from HVAC gross margin by product;
and consumer appliances is material to the
financial statements, completing the 4. Reviewed the consistency between book records of
necessary audit procedures required our product sales revenue and supporting documents
focuses and substantial audit resources. relevant to revenue recognition on a sample basis,
including sales contracts, orders, rebate agreement,
sales invoices, shipping orders, acknowledgement of
goods receipts signed by customers, 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 revenue
recognition of HVAC and consumer appliances were
supported by the available evidence.
-2-
PwC ZT Shen Zi (2023) 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 2022, the carrying amount subjectivity, changes and susceptibility to
of goodwill of the Group amounted to management’s bias and fraud;
approximately RMB 28,548,653,000,
including goodwill of RMB 21,122,932,000 2. Evaluated and tested the operating effectiveness of
and RMB 2,437,914,000 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-in- reasonableness;
use calculations (whichever is the higher). The
assessment result indicated that the 5. Evaluated the key assumptions used in the
recoverable amount of the cash generating impairment assessment, including 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 considering
value and therefore no impairment was the Company’s historical operating performance,
recorded. The recoverable amount of cash future operation plan and market developments;
generating unit and cash generating units was
determined based on value-in-use using cash 6. Tested the mathematical accuracy of the calculation
flow projections. The key assumptions used in process of the impairment assessment;
the goodwill impairment assessment included
estimated revenue growth rate, EBITDA 7. Evaluated the appropriateness of the goodwill
margin, perpetual annual growth rate and impairment assessment model and discount rate by
discount rate. involving our internal valuation experts.
We identified this as a key audit matter due to Based on the work performed, the management’s
the significance of the goodwill balance judgements as adopted in the goodwill impairment
arising from the business acquisition of KUKA assessment of KUKA Group and TLSC were supported
Group and TLSC, and the significant by the available evidence.
accounting estimates and judgements in key
assumptions used in the impairment
assessment.
-3-
PwC ZT Shen Zi (2023) 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 2022 annual report of the Group other than the financial statements and
our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management of the Group is responsible for the preparation and fair presentation of these financial
statements in accordance with the CASs, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing these financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
-4-
PwC ZT Shen Zi (2023) No. 10017
(Page 5 of 6)
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether these financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an
audit conducted in accordance with CSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in these financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, (including the disclosures), structure and content of the financial
statements, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
-5-
PwC ZT Shen Zi (2023) 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
27 April 2023 Signing CPA
—————————
Wu Fangfang
-6-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
31 December 31 December 31 December 31 December
ASSETS Note 2022 2021 2022 2021
Consolidated Consolidated Company Company
Current assets
Cash at bank and on hand 4(1) 55,270,099 71,875,556 28,492,401 48,153,997
Financial assets held for
trading 4(2) 3,284,593 5,879,202 274,120 3,442,317
Derivative financial assets 665,484 545,865 - 157,501
Notes receivable 4(3) 4,758,129 4,784,914 - -
Accounts receivable 4(4) 28,237,973 24,636,440 - -
Receivables financing 4(6) 13,526,540 10,273,552 - -
Advances to suppliers 4(7) 4,367,211 4,352,807 34,724 106,838
Contract assets 4(8) 4,498,956 3,823,476 - -
Loans and advances 4(9) 14,138,756 20,656,600 - -
Other receivables 4(5), 18(1) 2,211,177 3,104,065 26,175,101 31,447,849
Inventories 4(10) 46,044,897 45,924,439 - -
Current portion of non-
current assets 4(11) 37,553,078 19,851,577 33,168,421 19,095,262
Other current assets 4(12) 46,542,378 33,156,012 33,476,601 11,713,182
Total current assets 261,099,271 248,864,505 121,621,368 114,116,946
Non-current assets
Other debt investments 4(13) 11,094,259 7,893,935 7,215,301 6,034,563
Long-term receivables 4(14) 614,598 871,356 - -
Loans and advances 4(9) 693,294 851,927 - -
Long-term equity investments 4(15), 18(2) 5,188,817 3,796,705 73,103,569 66,805,691
Investments in other equity
instruments 41,359 45,747 - -
Other non-current financial
assets 4(16) 10,625,244 5,912,873 347,698 537,214
Investment properties 809,936 859,195 386,435 428,460
Fixed assets 4(17) 26,082,992 22,852,848 1,223,553 661,692
Construction in progress 4(18) 3,843,777 2,690,930 504,757 800,243
Right-of-use assets 4(19) 2,339,878 2,297,354 8,040 2,585
Intangible assets 4(20) 16,908,915 17,173,072 653,320 669,158
Goodwill 4(21) 28,548,653 27,874,752 - -
Long-term prepaid expenses 4(22) 1,579,899 1,394,240 85,109 79,799
Deferred tax assets 4(23) 10,244,296 8,192,309 327,251 289,964
Other non-current assets 4(24) 42,840,079 36,374,356 35,423,939 33,023,304
Total non-current assets 161,455,996 139,081,599 119,278,972 109,332,673
TOTAL ASSETS 422,555,267 387,946,104 240,900,340 223,449,619
-1-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 31 DECEMBER 2022
(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 2022 2021 2022 2021
Consolidated Consolidated Company Company
Current liabilities
Short-term borrowings 4(27) 5,169,480 5,381,623 - -
Borrowings from the Central
Bank - 178,878 - -
Customer deposits and
deposits from banks and
other financial institutions 77,469 78,180 - -
Financial liabilities held for
trading 4(28) 1,580,771 - - -
Derivative financial liabilities 234,606 157,602 - -
Notes payable 4(29) 25,572,421 32,752,007 - -
Accounts payable 4(30) 64,233,225 65,983,559 - -
Contract liabilities 4(31) 27,960,038 23,916,595 - -
Employee benefits payable 4(32) 7,152,217 7,535,168 173,824 420,536
Taxes payable 4(33) 4,955,335 5,404,267 718,181 1,184,813
Other payables 4(34) 4,322,025 4,288,104 159,953,351 151,450,555
Current portion of non-
current liabilities 4(35) 7,240,626 28,947,540 5,896,701 92,647
Other current liabilities 4(36) 57,843,528 48,227,953 77,066 35,932
Total current liabilities 206,341,741 222,851,476 166,819,123 153,184,483
Non-current liabilities
Long-term borrowings 4(37) 50,685,948 19,734,020 15,619,900 12,509,900
Debentures payable 4(38) 3,163,616 - - -
Lease liabilities 4(39) 1,507,480 1,533,552 2,350 -
Provisions 394,977 310,571 - -
Deferred income 4(40) 1,721,092 1,228,459 152,548 154,015
Long-term employee benefits
payable 4(41) 1,488,456 1,825,016 - -
Deferred tax liabilities 4(23) 4,647,673 4,950,245 - 17,028
Other non-current liabilities 4(42) 680,482 687,689 - -
Total non-current liabilities 64,289,724 30,269,552 15,774,798 12,680,943
Total liabilities 270,631,465 253,121,028 182,593,921 165,865,426
Shareholders’ equity
Share capital 4(43) 6,997,273 6,986,564 6,997,273 6,986,564
Capital surplus 4(45) 19,693,139 20,516,930 27,826,208 27,105,153
Less: Treasury stock 4(44) (14,933,944) (14,044,550) (14,933,944) (14,044,550)
Other comprehensive income 4(46) 108,289 (1,758,948) (5,679) (7,295)
General risk reserve 671,999 719,922 - -
Special reserve 16,350 15,542 - -
Surplus reserve 4(47) 10,702,928 9,449,901 10,702,928 9,449,901
Undistributed profits 4(48) 119,679,202 102,982,763 27,719,633 28,094,420
Total equity attributable to
shareholders of the
Company 142,935,236 124,868,124 58,306,419 57,584,193
Minority interests 8,988,566 9,956,952 - -
Total shareholders’ equity 151,923,802 134,825,076 58,306,419 57,584,193
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 422,555,267 387,946,104 240,900,340 223,449,619
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-2-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2022 2021 2022 2021
Consolidated Consolidated Company Company
Total revenue 345,708,706 343,360,825 1,385,528 1,865,278
4(49),
Including: Operating revenue 18(3) 343,917,531 341,233,208 1,385,528 1,865,278
Interest income 4(50) 1,790,454 2,127,043 - -
Fee and commission
income 721 574 - -
Less: Cost of sales 4(49) (260,538,701) (264,525,999) (42,071) (58,510)
Interest costs 4(50) (49,461) (87,066) - -
Fee and commission
expenses (7,681) (13,015) - -
Taxes and surcharges 4(51) (1,565,884) (1,609,384) (32,814) (48,126)
Selling and distribution
expenses 4(52) (28,716,121) (28,647,344) - -
General and administrative
expenses 4(53) (11,582,664) (10,266,283) (1,125,438) (684,794)
Research and development
expenses 4(54) (12,618,506) (12,014,907) - -
Financial income 4(55) 3,387,491 4,386,111 2,204,154 2,107,914
Including: Interest expenses 1,830,915 1,357,564 2,645,223 2,257,440
Interest income 5,837,713 5,181,658 4,859,955 4,397,266
Add: Other income 4(61) 1,896,113 1,307,504 26,642 280,318
4(59),
Investment income 18(4) 208,054 2,365,773 10,917,956 12,462,103
Including: Investment income
from associates 608,278 560,679 260,651 265,491
Losses on changes in fair
value 4(58) (251,171) (166,406) (512,502) (203,057)
(Losses on)/Reversal of credit
impairment 4(57) (513,686) (383,451) 9,884 (127,693)
Asset impairment losses 4(56) (533,363) (483,420) - -
(Losses)/Gains on disposal of
assets 4(60) (59,854) 58,257 (276) (272)
Operating profit 34,763,272 33,281,195 12,831,063 15,593,161
Add: Non-operating income 395,406 624,744 34,465 31,358
Less: Non-operating expenses (202,747) (188,395) (10,490) (48,783)
Total profit 34,955,931 33,717,544 12,855,038 15,575,736
Less: Income tax expenses 4(62) (5,145,700) (4,702,168) (324,773) (740,348)
Net profit 29,810,231 29,015,376 12,530,265 14,835,388
(1) Classified by continuity of
operations
Net profit from continuing
operations 29,810,231 29,015,376 12,530,265 14,835,388
Net profit from discontinued
operations - - - -
(2) Classified by ownership of the
equity
Attributable to shareholders of
the Company 29,553,507 28,573,650 12,530,265 14,835,388
Minority interests 256,724 441,726 - -
-3-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT'D)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Note 2022 2021 2022 2021
Consolidated Consolidated Company Company
Other comprehensive income, net of
tax 1,892,922 (237,306) 1,616 8,714
Other comprehensive income
attributable to shareholders of the
Company, net of tax 1,865,886 (207,079) 1,616 8,714
(1) Other comprehensive income
items which will not be
reclassified subsequently to
profit or loss 207,457 (6,748) - -
1) Changes arising from
remeasurement of
defined benefit plan 208,349 (7,172) - -
2) Changes in fair value of
investments in other
equity instruments (892) 424 - -
(2) Other comprehensive income
items which will be
reclassified subsequently to
profit or loss 1,658,429 (200,331) 1,616 8,714
1) Other comprehensive
income that will be
transferred subsequently
to profit or loss under the
equity method 17,391 (3,032) 1,616 8,714
2) Cash flow hedging reserve 395,617 (6,997) - -
3) Differences on translation
of foreign currency
financial statements 1,175,539 (190,302) - -
4) Others 69,882 - - -
Other comprehensive income
attributable to minority
shareholders, net of tax 27,036 (30,227) - -
Total comprehensive income 31,703,153 28,778,070 12,531,881 14,844,102
Attributable to shareholders of the
Company 31,419,393 28,366,571 12,531,881 14,844,102
Minority interests 283,760 411,499 - -
Earnings per share
Basic earnings per share (in RMB
Yuan) 4(63) 4.34 4.17 Not applicable Not applicable
Diluted earnings per share (in RMB
Yuan) 4(63) 4.33 4.14 Not applicable Not applicable
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-4-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2022 2021 2022 2021
Item Note Consolidated Consolidated Company Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of
services 316,997,825 310,489,824 - -
Net decrease in loans and advances 6,660,035 - - -
Net decrease in deposits with the Central Bank 91,309 1,287,927 - -
Net increase in borrowings from the Central Bank - 178,878 - -
Cash received from interest, fee and commission 1,788,062 1,889,716 - -
Refund of taxes and surcharges 10,934,799 9,968,330 - -
Cash received relating to other operating activities 4(64)(a) 7,295,957 6,600,822 18,834,797 31,451,132
Sub-total of cash inflows 343,767,987 330,415,497 18,834,797 31,451,132
Cash paid for goods and services (221,345,706) (209,216,044) - -
Net increase in loans and advances - (4,062,432) - -
Net decrease in customer deposits and deposits from
banks and other financial institutions (711) (9,355) - -
Net decrease in borrowings from the Central Bank (178,878) - - -
Cash paid for interest, fee and commission (57,141) (101,110) - -
Cash paid to and on behalf of employees (35,674,963) (32,095,846) (549,897) (32,879)
Payments of taxes and surcharges (17,387,253) (15,613,276) (379,098) (453,861)
Cash paid relating to other operating activities 4(64)(b) (34,465,507) (34,225,730) (2,959,364) (3,996,431)
Sub-total of cash outflows (309,110,159) (295,323,793) (3,888,359) (4,483,171)
Net cash flows from operating activities 4(64)(c) 34,657,828 35,091,704 14,946,438 26,967,961
2. Cash flows (used in)/from investing activities
Cash received from disposal of investments 98,564,716 121,628,148 58,600,000 59,767,847
Cash received from returns on investments 3,800,095 5,648,277 13,491,657 14,887,506
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 239,226 336,186 53 86
Net cash received from disposal of subsidiaries and
other business units 14,829 188,490 422,024 8,326
Cash received relating to other investing activities 335,082 - - -
Sub-total of cash inflows 102,953,948 127,801,101 72,513,734 74,663,765
Cash paid to acquire fixed assets, intangible assets and
other long-term assets (7,352,115) (6,825,357) (518,305) (752,937)
Cash paid to acquire investments (108,149,195) (105,347,246) (73,645,090) (68,932,311)
Net cash paid to acquire subsidiaries and other
business units (962,148) (2,028,912) - -
Sub-total of cash outflows (116,463,458) (114,201,515) (74,163,395) (69,685,248)
Net cash flows (used in)/from investing activities (13,509,510) 13,599,586 (1,649,661) 4,978,517
3. Cash flows used in financing activities
Cash received from capital contributions 1,348,283 1,550,951 1,321,468 1,487,792
Including: Cash received from capital contributions by
minority shareholders of subsidiaries 26,815 63,159 - -
Cash received from borrowings 46,476,320 16,033,803 9,000,000 6,800,000
Cash received from issuance of debentures 2,845,196 - - -
Cash received from issuance of short-term financing
bonds 3,999,500 2,999,629 3,999,500 2,999,629
Cash received relating to other financing activities 70,163 560,838 - -
Sub-total of cash inflows 54,739,462 21,145,221 14,320,968 11,287,421
Cash repayments of borrowings (40,920,787) (18,225,351) (90,000) (4,799,414)
Cash payments for redemption of short-term financing
bonds (4,000,000) (6,000,000) (4,000,000) (6,000,000)
Cash payments for interest expenses and distribution of
dividends or profits (13,740,037) (12,894,125) (14,753,066) (13,261,677)
Including: Cash payments for dividends or profit to
minority shareholders of subsidiaries (279,216) (426,947) - -
Cash payments relating to other financing activities 4(64)(d) (6,933,519) (15,230,284) (2,827,492) (13,810,829)
Sub-total of cash outflows (65,594,343) (52,349,760) (21,670,558) (37,871,920)
Net cash flows used in financing activities (10,854,881) (31,204,539) (7,349,590) (26,584,499)
4. Effect of foreign exchange rate changes on cash
and cash equivalents 288,492 (485,220) - -
5. Net increase in cash and cash equivalents 4(64)(c) 10,581,929 17,001,531 5,947,187 5,361,979
Add: Cash and cash equivalents at the beginning of the
year 40,550,039 23,548,508 21,957,042 16,595,063
6. Cash and cash equivalents at the end of the year 4(64)(e) 51,131,968 40,550,039 27,904,229 21,957,042
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-5-
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Attributable to shareholders of the Company
Less: Other Total
Capital Treasury comprehensive General risk Special Surplus Undistributed Minority shareholders’
Share capital surplus stock income reserve reserve reserve profits interests equity
(Note 4(43)) (Note 4(45)) (Note 4(44)) (Note 4(46)) (Note 4(47)) (Note 4(48))
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
-6-
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Item Attributable to shareholders of the Company
Other Total
Less: Treasury comprehensive General risk Surplus Undistributed Minority shareholders’
Share capital Capital surplus stock income reserve Special reserve reserve profits interests equity
(Note 4(43)) (Note 4(45)) (Note 4(44)) (Note 4(46)) (Note 4(47)) (Note 4(48))
Balance at 1 January 2022 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Movements for the year ended 31
December 2022
Total comprehensive income
Net profit - - - - - - - 29,553,507 256,724 29,810,231
Other comprehensive income,
net of tax - - - 1,865,886 - - - - 27,036 1,892,922
Total comprehensive income - - - 1,865,886 - - - 29,553,507 283,760 31,703,153
Capital contribution and withdrawal
by shareholders
Ordinary shares invested by
shareholders 18,602 1,123,649 - - - - - - 26,815 1,169,066
Business combinations - - - - - - - - 89,520 89,520
Share-based payment included
in shareholders’ equity - 765,914 - - - - - - 45,583 811,497
Others (7,893) (1,209,146) (889,394) - - - - - (1,131,616) (3,238,049)
Profit distribution
Reversal of general risk reserve - - - - (47,923) - - 47,923 - -
Appropriation to surplus reserve - - - - - - 1,253,027 (1,253,027) - -
Profit distribution to shareholders - - - - - - - (11,652,025) (291,638) (11,943,663)
Special reserve
Appropriation in the current
period - - - - - 3,313 - - 828 4,141
Use in the current period - - - - - (2,505) - - (626) (3,131)
Others - (1,504,208) - 1,351 - - - 61 8,988 (1,493,808)
Balance at 31 December 2022 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-7-
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Less: Treasury comprehensive Undistributed shareholders’
Item Share capital Capital surplus stock income Surplus 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
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MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Other Total
Less: Treasury comprehensive Undistributed shareholders’
Item Share capital Capital surplus stock income Surplus reserve profits equity
Balance at 1 January 2022 6,986,564 27,105,153 (14,044,550) (7,295) 9,449,901 28,094,420 57,584,193
Movements for the year ended 31 December
2022
Total comprehensive income
Net profit - - - - - 12,530,265 12,530,265
Other comprehensive income, net of tax - - - 1,616 - - 1,616
Total comprehensive income - - - 1,616 - 12,530,265 12,531,881
Capital contribution and withdrawal by shareholders
Ordinary shares invested by shareholders 18,602 1,123,649 - - - - 1,142,251
Share-based payment included in shareholders’
equity - 789,849 - - - - 789,849
Others (7,893) (1,209,146) (889,394) - - - (2,106,433)
Profit distribution
Appropriation to surplus reserve - - - - 1,253,027 (1,253,027) -
Profit distribution to shareholders - - - - - (11,652,025) (11,652,025)
Others - 16,703 - - - - 16,703
Balance at 31 December 2022 6,997,273 27,826,208 (14,933,944) (5,679) 10,702,928 27,719,633 58,306,419
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
-9-
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, the Company’s share capital was RMB 6,997,273,076, and the
total number of shares in issue was 6,997,273,076, of which 143,615,016 shares were
restricted tradable A shares and 6,853,658,060 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 Note 5 and Note 6. Subsidiaries newly included in the consolidation
scope via acquisition in the current year mainly include Midea Capital Corporation Limited.
and its subsidiaries (including structured entities), Wuhan TTium Motor Technology Co., Ltd.
and its subsidiaries and KONG Intelligent Environment (Xi'an) Co., LTD (formerly known as
Shaanxi Construction Investment Co., 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 27 April 2023.
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).
- 10 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for
Business Enterprises - Basic Standard, and the specific accounting standards and other
relevant regulations issued by the Ministry of Finance on 15 February 2006 and in
subsequent periods (hereinafter collectively referred to as the “Accounting Standards for
Business Enterprises” or “CASs”) and the disclosure requirements in the Preparation
Convention of Information Disclosure by Companies Offering Securities to the Public No. 15
- General Rules on Financial Reporting issued by the China Securities Regulatory
Commission (“CSRC”).
The financial statements are prepared on a going concern basis.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2022 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 2022 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.
(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.
- 11 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
(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.
(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.
- 12 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial
statements of the subsidiaries are adjusted in accordance with the accounting policies and
the accounting period of the Company. For subsidiaries acquired from business
combinations involving enterprises not under common control, the individual financial
statements of the subsidiaries are adjusted based on the fair value of the identifiable net
assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of subsidiaries’ shareholders’ equity and the
portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not
attributable to the Company are recognised as minority interests, net profit attributed to
minority interests and total comprehensive income attributed to minority interests and
presented separately in the consolidated financial statements under shareholders’ equity,
net profit and total comprehensive income respectively. Where the loss for the current period
attributable to the minority shareholders of the subsidiaries exceeds the share of the minority
interests in the opening balance of owners’ equity, the excess is deducted against minority
interests. Unrealised profits and losses resulting from the sales of assets by the Company
to its subsidiaries are fully eliminated against net profit attributable to shareholders of the
parent company. Unrealised profits and losses resulting from the sales of assets by a
subsidiary to the Company are eliminated and allocated between net profit attributable to
shareholders of the parent company and net profit attributable to minority interests in
accordance with the allocation proportion of the parent company in the subsidiary.
Unrealised profits and losses resulting from the sales of assets by one subsidiary to another
are eliminated and allocated between net profit attributable to shareholders of the parent
company and net profit attributable to minority interests in accordance with the allocation
proportion of the parent company in the subsidiary.
If the accounting treatment of a transaction is inconsistent in the financial statements at the
Group level and at the Company or its subsidiary level, adjustment will be made from the
perspective of the Group.
(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.
- 13 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 Group’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets, financial assets are classified as: (1)
financial assets at amortised cost; (2) financial assets at fair value through other
comprehensive income; (3) financial assets at fair value through profit or loss.
The financial assets are measured at fair value at initial recognition. Related transaction
costs that are attributable to the acquisition of the financial assets are included in the initially
recognised amounts, except for the financial assets at fair value through profit or loss, the
related transaction costs of which are recognised directly in profit or loss for the current
period. Accounts receivable or notes receivable arising from sales of products or rendering
of services (excluding or without regard to significant financing components) are initially
recognised at the consideration that is entitled to be charged by the Group as expected.
- 14 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
- 15 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
- 16 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
At the inception of the hedge, the Group has completed relevant hedge documents,
including the relationship between hedged items and hedging instruments, and risk
management objectives and strategies corresponding to various hedging transactions. At
the inception of the hedge and in subsequent periods, the Group continuously records
whether the hedge is effectively evaluated, that is, whether the hedging instruments can
largely offset the changes in the fair value or cash flows of hedged items.
The effective portion of changes in fair value on hedging instruments is recognised in other
comprehensive income as cash flow hedging reserve, while the gains or losses related to
the ineffective portion of the hedge are recognised in profit or loss for the current period.
Where the hedge is a forecast transaction which subsequently results in the recognition of
a non-financial asset or liability, the amount originally recognised in other comprehensive
income is transferred and included in the initially recognised amount of the asset or liability.
For cash flow hedge beyond the foregoing scope, the amount originally recognised in other
comprehensive income is transferred and included in profit or loss for the current period
during the same time in which the profit or loss is influenced by the hedged expected cash
flow. However, if all or part of net loss recognised directly in other comprehensive income
will not be recovered in future accounting periods, the amount not expected to be recovered
should be transferred to profit or loss for the current period. When the Group revokes the
designation of a hedge, a hedging instrument expires or is sold, terminated or exercised, or
the hedge no longer meets the criteria for hedge accounting, the Group will discontinue the
hedge accounting treatments prospectively. Where the Group discontinues the hedge
accounting treatment for cash flow hedging, for hedged future cash flows that will still
happen, the accumulated gains or losses that have been recognised in other comprehensive
income are retained and subject to accounting treatment under the subsequent treatment
method of aforesaid cash flow hedging reserve; for hedged future cash flows that the
forecast transaction will never happen, the accumulated gains or losses that have been
recognised in other comprehensive income are transferred immediately and included in
profit or loss for the current period.
(ii) Impairment
Loss provision for financial assets at amortised cost, investments in debt instruments at fair
value through other comprehensive income, as well as contract assets and lease
receivables is recognised on the basis of ECL.
Giving consideration to reasonable and supportable information on past events, current
conditions, forecasts of future economic conditions that is available without undue cost or
effort at the balance sheet date, and weighted by the risk of default, the Group recognises
the ECL as the probability-weighted amount of the present value of the difference between
the cash flows receivable from the contract and the cash flows expected to collect.
- 17 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
For notes receivable, accounts receivable, receivables financing, lease receivables and
contract assets arising from sales of goods and rendering of services in the ordinary course
of operating activities, the Group recognises the lifetime ECL provision regardless of
whether there exists a significant financing component. Since contract assets are mainly
related to work on the stage of completion without invoice, essentially, their credit risk
characteristics are similar to the accounts receivable for the same kind of contracts.
Therefore, the ECL rate of the contract assets is an approximation to that of accounts
receivable.
Except for the above notes receivable, accounts receivable, receivables financing, lease
receivables and contract assets, at each balance sheet date, the ECL of financial
instruments at different stages are measured respectively. 12-month ECL provision is
recognised for financial instruments in Stage 1 that have not had a significant increase in
credit risk since initial recognition; lifetime ECL provision is recognised for financial
instruments in Stage 2 that have had a significant increase in credit risk yet without credit
impairment since initial recognition; and lifetime ECL provision is recognised for financial
instruments in Stage 3 that have had credit impairment since initial recognition.
For the financial instruments with lower credit risk on the balance sheet date, the Group
assumes there is no significant increase in credit risk since initial recognition. The Group
treats them as financial instruments in Stage 1 and recognises a 12-month ECL.
For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest
income by applying the effective interest rate to the book balance (before deduction of the
impairment provision). For the financial instruments in Stage 3, the interest income is
calculated by applying the effective interest rate to the amortised cost (after deduction of the
impairment provision from the book balance).
In case the ECL of an individually assessed financial asset cannot be evaluated with
reasonable cost, the Group divides the receivables and contract assets into certain
groupings based on credit risk characteristics, then pursuant to which, calculates the ECL.
Basis and provision method for determining groupings are as follows:
Grouping of notes receivable 1 Bank acceptance notes grouping
Grouping of notes receivable 2 Trade acceptance notes grouping
Grouping of accounts receivable 1 Overseas business grouping
Grouping of accounts receivable 2 Domestic business grouping
Grouping of contract assets 1 Overseas business grouping
Grouping of contract assets 2 Domestic business grouping
Grouping of other receivables 1 Security deposit and guarantee receivables
grouping
Grouping of other receivables 2 Receivables from related parties grouping
Grouping of other receivables 3 Other receivables grouping
Grouping of long-term receivables Finance lease receivables grouping
Grouping of loans and advances Loans business grouping
- 18 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
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, 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.
(iii) Derecognition of financial assets
A financial asset is derecognised when: (1) the contractual rights to the cash flows from the
financial asset expire, (2) the financial asset has been transferred and the Group transfers
substantially all the risks and rewards of ownership of the financial asset to the transferee,
or (3) the financial asset has been transferred and the Group has not retained control of the
financial asset, although the Group neither transfers nor retains substantially all the risks
and rewards of ownership of the financial asset.
When a financial asset is derecognised, the difference between the carrying amount and
the sum of the consideration received and the cumulative changes in fair value that are
previously recognised directly in other comprehensive income is recognised in profit or loss
for the current period, except for those as investments in other equity instruments, the
difference aforementioned is recognised in retained earnings instead.
- 19 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(b) Financial liabilities
Financial liabilities are classified as financial liabilities at amortised cost and financial
liabilities at fair value through profit or loss at initial recognition.
Financial liabilities of the Group mainly comprise financial liabilities at amortised cost,
including notes payable, accounts payable, other payables, borrowings, debentures payable
and short-term financing bonds payable in other current liabilities, customer deposits and
deposits from banks and other financial institutions, borrowings from the Central Bank, and
long-term payables. Such financial liabilities are initially recognised at fair value, net of
transaction costs incurred, and subsequently measured using the effective interest 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.
(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.
- 20 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
Inventories are initially measured at cost. The cost of inventories comprises purchase cost,
processing cost and other expenditures to bring the inventories to current site and condition.
On the balance sheet date, inventories are measured at the lower of cost and net realisable
value.
Net realisable value is determined based on the estimated selling price in the ordinary
course of business, less the estimated costs to completion and estimated contract fulfilment
costs and costs necessary to make the sale and related taxes.
Provision for decline in the value of inventories is determined at the excess amount of the
cost as calculated based on the classification of inventories over their net realisable value,
and are recognised in profit or loss for the current period.
(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.
An associate is an investee that the Group has significant influence on their financial and
operating policies.
Investments in subsidiaries are presented in the Company’s financial statements using the
cost method, and are adjusted to the equity method when preparing the consolidated
financial statements. Investments in joint ventures and associates are accounted for using
the equity method.
- 21 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
For long-term equity investments acquired through a business combination involving
enterprises under common control, the investment cost shall be the absorbing party’s share
of the carrying amount of owners’ equity of the party being absorbed at the combination
date; for long-term equity investment acquired through a business combination involving
enterprises not under common control, the investment cost shall be the combination cost.
For business combinations achieved by stages involving enterprises not under common
control, the initial investment cost accounted for using the cost method is the sum of carrying
amount of previously-held equity investment and additional investment cost. For previously-
held equity investments accounted for using the equity method, the accounting treatment of
related other comprehensive income from disposal of the equity is carried out on a same
basis with the investee’s direct disposal of related assets or liabilities. Owners’ equity, which
is recognised due to changes in investee’s owners’ equity other than those arising from the
net profit or loss, other comprehensive income and profit distribution, is accordingly
transferred into profit or loss for the period in which the investment is disposed.
For the investments in previously-held equity without significant influence or common control
that previously recognised as financial assets at fair value through profit or loss, the
difference between the fair value and carrying amount is transferred to investment income
for the current period under cost method; for the investments previously recognised as
investments in equity instruments not held for trading at fair value through other
comprehensive income, the difference between the fair value and carrying amount and
accumulated changes in fair value previously recognised in other comprehensive income
are directly transferred to retained earnings.
For long-term equity investments acquired not through a business combination, the long-
term equity investments acquired by payment in cash, the initial investment cost shall be
the purchase price actually paid; for long-term equity investments acquired by issuing equity
securities, the initial investment cost shall be the fair value of the equity securities issued.
(b) Subsequent measurement and recognition methods of gains and losses
For long-term equity investments accounted for using the cost method, they are measured
at the initial investment costs, and cash dividends or profit distribution declared by the
investees are recognised as investment income in profit or loss for the current period.
For long-term equity investments accounted for using the equity method, where the initial
investment cost of a long-term equity investment exceeds the Group’s share of the fair value
of the investee’s identifiable net assets at the acquisition date, the long-term equity
investment is measured at the initial investment cost; where the initial investment cost is
less than the Group’s share of the fair value of the investee’s identifiable net assets at the
acquisition date, the difference is included in profit or loss and the cost of the long-term
equity investment is adjusted upwards accordingly.
- 22 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(b) Subsequent measurement and recognition methods of gains and losses (Cont’d)
For long-term equity investments accounted for using the equity method, the Group
recognises the investment income according to its share of net profit or loss of the investee.
The Group discontinues recognising its share of the net losses of an investee after the
carrying amount of the long-term equity investment together with any long-term interests
that in substance form part of the investor’s net investment in the investee are reduced to
zero. However, if the Group has obligations for additional losses and the criteria with respect
to recognition of provisions are satisfied, the Group continues recognising the investment
losses and the provisions at the amount it expects to undertake. The changes of the Group’s
share in investee’s owners’ equity other than those arising from the net profit or loss, other
comprehensive income and profit distribution are recognised in capital surplus with a
corresponding adjustment to the carrying amount of the long-term equity investment. The
carrying amount of the investment is reduced by the Group’s share of the profit distribution
or cash dividends declared by the investees. 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.
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.
- 23 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(12) Investment properties (Cont’d)
The Group adopts the cost model for subsequent measurement of investment properties.
Buildings and land use rights are depreciated or amortised to their estimated net residual
values over their estimated useful lives. The estimated useful lives, the estimated net
residual values that are expressed as a percentage of cost and the annual depreciation
(amortisation) rates of investment properties are as follows:
Estimated useful Estimated net Annual depreciation
lives residual values (amortisation) rates
Buildings 20 to 40 years 5% 2.38% to 4.75%
Land use rights 30 to 50 years - 2% to 3.33%
When an investment property is transferred to owner-occupied properties, it is reclassified
as 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.
The carrying amount of an investment property is reduced to the recoverable amount if the
recoverable amount is below the carrying amount.
(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.
- 24 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
(b) Depreciation method of 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.
(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)).
- 25 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(15) Borrowing costs
The borrowing costs that are directly attributable to 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 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.
(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,
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)).
- 26 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(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.
(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)).
- 27 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(17) 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.
(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 impairment loss are recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and the present value of the future cash flows expected to be derived
from the asset. Provision for asset impairment is determined and recognised on the
individual asset basis. If it is not possible to estimate the recoverable amount of an individual
asset, the recoverable amount of a group of assets to which the asset belongs is
determined. A group of assets is the smallest group of assets that is able to generate
independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually
for impairment, irrespective of whether there is any indication that it may be impaired. In
conducting the test, the carrying value of goodwill is allocated to the related asset group or
groups of asset groups which are expected to benefit from the synergies of the business
combination. If the result of the test indicates that the recoverable amount of an asset group
or a group of asset groups, including the allocated goodwill, is lower than its carrying
amount, the corresponding impairment loss is recognised. The impairment loss is first
deducted from the carrying amount of goodwill that is allocated to the asset group or group
of asset groups, and then deducted from the carrying amounts of other assets within the
asset group or group of asset groups in proportion to the carrying amounts of assets other
than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value
recovered in the subsequent periods.
(19) Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group
in exchange for service rendered by employees or for termination of employment
relationship, which include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits.
- 28 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(a) Short-term employee benefits
Short-term employee benefits include wages and salaries, bonus, allowances and
subsidies, staff welfare, premiums or contributions on medical insurance, work injury
insurance, maternity insurance, housing funds, union running costs and employee
education costs, short-term paid absences, etc. The short-term employee benefits actually
occurred are recognised as a liability in the accounting period in which the service is
rendered by the employees, with a corresponding charge to the profit or loss for the current
period or the cost of relevant assets. Non-monetary benefits are measured at fair value.
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under
which the Group pays fixed contributions into a separate fund and will have no obligation to
pay further contributions; and defined benefit plans are post-employment benefit plans other
than defined contribution plans. During the reporting period, the Group’s defined contribution
plans mainly include basic pensions and unemployment insurance, while the defined benefit
plans are Toshiba Lifestyle Products & Services Corporation (“TLSC”) and its subsidiaries
(“TLSC Group”) and KUKA Aktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA
Group”), 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 by the relevant local authorities. When employees retire, the relevant local
authorities are obliged to pay the basic pensions to them. The amounts based on the above
calculations are recognised as liabilities in the accounting period in which the service has
been rendered by the employees, with a corresponding charge to the profit or loss for the
current period or the cost of relevant assets.
Supplementary retirement benefits
The liability recognised in the balance sheet in respect of defined benefit pension plans is
the present value of the defined benefit obligations less the fair value of the plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method at the interest rate of treasury bonds with similar obligation term
and currency. The charges related to supplementary retirement benefits (including current
service costs, historical service costs and gains or losses on settlement) and net interest
are recognised in profit or loss for the current period or included in the cost of an asset, and
the changes arising from remeasurement in net liabilities or net assets of defined benefit
plans are recognised in other comprehensive income.
- 29 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
The Group provides compensation for terminating the employment relationship with
employees before the end of the employment contracts or as an offer to encourage
employees to accept voluntary redundancy before the end of the employment contracts.
The Group recognises a liability arising from compensation for termination of the
employment relationship with employees, with a corresponding charge to profit or loss for
the current period at the earlier of the following dates: 1) when the Group cannot unilaterally
withdraw an employment termination plan or a curtailment proposal; 2) when the Group
recognises costs or expenses related to a restructuring that involves the payment of
termination benefits.
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security
contributions to be paid to and for the employees who accept voluntary retirement before
the normal retirement date prescribed by the State, as approved by management. The
Group pays early retirement benefits to those early retired employees from the early
retirement date until the normal retirement date. The Group accounts for the early retirement
benefits in accordance with the treatment for termination benefits, in which the salaries and
social security contributions to be paid to and for the early retired employees from the off-
duty date to the normal retirement date are recognised as liabilities with a corresponding
charge to the profit or loss for the current period. The differences arising from the changes
in the respective actuarial assumptions of the early retirement benefits and the adjustments
of benefit standards are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date
are classified as current liabilities.
(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.
- 30 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(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.
(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.
- 31 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
(c) Basis for determining best estimate of tradable or exercisable equity instruments
As at each balance sheet date in the vesting period, the Group would make best estimate
in accordance with the newly acquired information such as changes in the number of
employees entitled with exercisable or tradable equity instruments, and amend the
estimated number of exercisable or tradable equity instruments. On the exercise or
desterilisation date, the final number of estimated exercisable or tradable equity instruments
is consistent with the actual number of exercisable or tradable equity instruments.
(24) Treasury stock
The Group’s treasury stock mainly comes from the repurchase of equity instruments and
the issuance of restricted shares, etc.
Consideration and transaction costs paid by the Group for repurchasing equity instruments
are deducted from owners’ equity and not recognised as financial assets. The
considerations paid by the Group for repurchasing equity instruments are presented as
treasury stock, and the related transaction costs are recognised in owners’ equity.
On the deregistration day of shares, relevant share capital and treasury stock are reversed
with the difference included in capital surplus (share premium) based on actual
deregistration results.
On the grant day of restricted shares, the Group recognises bank deposits when receiving
subscription from the employees and measures the repurchase obligation as liability. On the
day of release of restricted shares, relevant treasury stocks, liabilities and capital surplus
recognised in the vesting period are reversed based on the actual vesting results.
(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.
- 32 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
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 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.) and consumer
appliances (mainly comprise kitchen appliances, refrigerators, washing machines and
various small appliances, etc.), and robotics and automation system and sales of products
and materials to buyers.
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.
Revenue from overseas sales of HVAC and consumer appliances is recognised when the
products 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.
The rights to receive considerations for transferring goods to the customer (and such rights
depend on factors other than the passage of time) are recognised as contract assets. The
Group’s obligation to transfer products to customers for consideration received or receivable
is presented as contract liabilities.
- 33 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
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.
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.
- 34 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(c) Interest income (Cont’d)
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.
(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 refer to the government grants other than those 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 directly in profit or loss for the
current period.
The same kind of government grants are presented with the same method.
Those related to ordinary activities are recorded into operating profit while the other in non-
operating income and expenses.
- 35 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Government grants(Cont’d)
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.
(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) and whose initially recognised assets and liabilities
do not result in equal taxable temporary differences and deductible temporary differences.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at
the tax rates that are expected to apply to the period when the asset is realised or the liability
is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible
losses and tax credits to the extent that it is probable that taxable profit will be available in
the future against which the deductible temporary differences, deductible losses and tax
credits can be utilised.
Deferred tax liabilities are recognised for temporary differences arising from investments in
subsidiaries, associates and joint ventures, except where the Group is able to control the
timing of reversal of the temporary difference, and it is probable that the temporary difference
will not reverse in the foreseeable future. When it is probable that the temporary differences
arising from investments in subsidiaries, associates and joint ventures will be reversed in
the foreseeable future and that the taxable profit will be available in the future against which
the temporary differences can be utilised, the corresponding deferred tax assets are
recognised.
Deferred tax assets and deferred tax liabilities are offset when:
the deferred tax assets and deferred tax liabilities are related to the same tax payer
within the Group and the same taxation authority; and,
that tax payer within the Group has a legally enforceable right to offset current tax assets
against current tax liabilities.
(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.
- 36 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
The Group as the lessee
At the lease commencement date, the Group recognises the right-of-use asset and
measures the lease liability at the present value of the lease payments that are not paid at
that date. Lease payments include fixed payments, the exercise price of a purchase option
if the lessee is reasonably certain to exercise that option, and payments of penalties for
terminating the lease if the lessee exercises an option to terminate the lease. Variable lease
payments in proportion to sales are excluded from lease payments and recognised in profit
or loss as incurred. Lease liabilities that are due within one year (inclusive) as from the
balance sheet date are included in the current portion of non-current liabilities.
Right-of-use assets of the Group comprise leased buildings, machinery and equipment,
motor vehicles, etc. Right-of-use assets are measured initially at cost which comprises the
amount of the initial measurement of lease liabilities, any lease payments made at or before
the commencement date and any initial direct costs, less any lease incentives received. If
there is reasonable certainty that the Group will obtain ownership of the underlying asset by
the end of the lease term, the asset is depreciated over its remaining useful life; otherwise
the asset is depreciated over the shorter of the lease term and its remaining useful life. The
carrying amount of the right-of-use asset is reduced to the recoverable amount when the
recoverable amount is below the carrying amount.
For short-term leases with a term of 12 months or less and leases of an individual asset
(when new) of low value, the Group chooses to include the lease payments in the cost of
the underlying assets or in the profit or loss for the current period on a straight-line basis
over the lease term, instead of recognising right-of-use assets and lease liabilities.
The Group accounts for a lease modification as a separate lease if both: (1) the modification
increases the scope of the lease by adding the right to use one or more underlying assets;
(2) the consideration for the lease increases by an amount commensurate with the stand-
alone price for the increase in scope and any appropriate adjustments to that stand-alone
price to reflect the circumstances of the contract.
For a lease modification that is not accounted for as a separate lease, the Group
redetermines the lease term at the effective date of the lease modification, and remeasures
the lease liability by discounting the revised lease payments using a revised discount rate,
except the contract changes that may apply the practical expedient as specified by the
Ministry of Finance. For a lease modification which decreases the scope of the lease or
shortens the lease term, the Group correspondingly decreases the carrying amount of the
right-of-use asset, and recognises in profit or loss any gain or loss relating to the partial or
full termination of the lease. For other lease modifications which lead to the remeasurement
of lease liabilities, the Group correspondingly adjusts the carrying amount of the right-of-use
asset.
For the qualified rent concessions agreed on existing lease contracts, the Group applies the
practical expedient and records the undiscounted concessions in profit or loss when the
agreement is reached to discharge the original payment obligation with corresponding
adjustment of lease liabilities.
- 37 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
The Group as the lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. An operating lease is a lease other than a
finance lease.
(a) Operating leases
Where the Group leases out self-owned buildings, machinery and equipment, and motor
vehicles under operating leases, rental income therefrom is recognised on a straight-line
basis over the lease term. Variable rental that is linked to a certain percentage of sales is
recognised in rental income as incurred.
For the qualified rent concessions agreed on existing lease contracts, the Group applies the
practical expedient to account for the concessions as variable lease payments and record
the concessions in profit or loss during the waiving period.
Except the above contract changes that are accounted for by applying the practical
expedient, for a lease modification, the Group accounts for it as a new lease from the
effective date of the modification, and considers any lease payments received in advance
and receivable relating to the lease before modification as receivables of the new lease.
(b) Finance leases
At the commencement date, the Group recognises the lease payments receivable under a
finance lease and derecognises relevant assets. The lease payments receivable under a
finance lease are presented as long-term receivables; the lease payments receivable under
a finance lease due within one year (inclusive) as from the balance sheet date are included
in the current portion of non-current assets.
(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:
- 38 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 asset group or group of asset groups that contain the apportioned goodwill is
determined by the higher value between the present value of the future cash flows and the
net value that is calculated by the fair value less the disposal costs. Accounting estimate is
required for the calculation of the recoverable amount. The impairment testing is performed
by assessing the recoverable amount of the asset group or group of asset groups containing
the relevant goodwill, based on the present value of cash flows forecasts. Key assumptions
adopted in the impairment testing of goodwill included 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 asset groups or groups of asset
groups, 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 asset groups or groups of asset groups, 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.
(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.
- 39 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
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.
(31) Significant changes in accounting policies
The Ministry of Finance released the Circular on Issuing Interpretation No. 15 of Accounting
Standards for Business Enterprises (Interpretation No. 15) in 2021, and Q&A on
Implementation of Accounting Standards for Business Enterprises, Interpretation No. 16 of
Accounting Standards for Business Enterprises and Notice on Strictly Implementing the
Accounting Standards for Business Enterprises and Effectively Conducting the Work in
Relation to the 2022 Annual Reports of Enterprises (Cai Kuai [2022] No. 32) in 2022. The
financial statements for the year ended 31 December 2022 have been prepared by the
Group and the Company in accordance with the above circulars and Q&A, which have no
significant impacts on the financial statements of the Group and the Company.
3 Taxation
(1) Main tax category and rate
Category Tax base Tax rate
Enterprise income tax Levied based on taxable income Note (a)
Value-added tax (“VAT”) Taxable value-added amount (Tax payable is Note (b)
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.
- 40 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
in 2022 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. GR202244008573 22 December 2022 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. GR202244002733 19 December 2022 3 years
GD Midea Heating & Ventilating Equipment Co., Ltd. GR202144001270 20 December 2021 3 years
Hefei Midea Heating & Ventilating Equipment Co.,
Ltd. GR202234002343 18 October 2022 3 years
Anhui Meizhi Precision Manufacturing Co., Ltd. GR202134004969 18 September 2021 3 years
Guangzhou Midea Hualing Refrigerator Co., Ltd. GR202244004828 19 December 2022 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. GR202232018102 12 December 2022 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
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. GR202234002700 18 October 2022 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
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
- 41 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of 15%
in 2022 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
Certificate (Cont’d):
No. of the High-tech Term of
Name of taxpayer Enterprise Certificate Dates of issuance validity
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
Midea Group Wuhan HVAC Equipment Co., Ltd. GR202242004390 29 November 2022 3 years
Beijing Hiconics Eco-energy Frequency Conversion
Technology Co., Ltd. GR202011003365 21 October 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 Electric Co., Ltd. GR202032006759 2 December 2020 3 years
KUKA Robotics Manufacturing China Co., Ltd. GR202231004961 14 December 2022 3 years
KUKA Robotics Guangdong Co., Ltd. GR202044003841 9 December 2020 3 years
Reis Robotics (Kunshan) Co., Ltd. GR202132000238 3 November 2021 3 years
Midea Intelligent Lighting & Controls Technology Co.,
Ltd. GR202036000935 14 September 2020 3 years
Beijing Wandong Medical Technology Co., Ltd. GR202011009515 2 December 2020 3 years
Wanliyun Medical Information Technology (Beijing)
Co., Ltd. GR202211008024 30 December 2022 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
Meicloud Technology Co., Ltd. GR202144008715 20 December 2021 3 years
Wuhan TTium Motor Technology Co., Ltd. GR202242004712 29 November 2022 3 years
WDM Esaote（Suzhou）Medical Technology Co.,
Ltd.. GR202232006635 18 November 2022 3 years
Western-style Electric Products Company GR202244017262 22 December 2022 3 years
Hefei Hualing Co., Ltd. GR202134000541 18 September 2021 3 years
Guangdong Yueyun Industrial Internet Innovation
Technology Co., Ltd. GR202244006484 22 December 2022 3 years
Shenzhen Midea Payment Technology Co., Ltd. GR202244208053 19 December 2022 3 years
In addition, pursuant to the Announcement on Increasing the Pre-tax Deductions in Support
of Technological Innovation (Announcement [2022] No. 28) issued by the Ministry of
Finance, the State Taxation Administration and the Ministry of Science and Technology,
during the period from 1 October 2022 to 31 December 2022, the cost of newly purchased
equipment and appliances by high-tech enterprises can be fully deducted against taxable
profit in 2022, and entitled to additional pre-tax deduction at 100%.
- 42 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-2) According to the Notice of the Ministry of Finance, the State Taxation Administration on
Preferential Enterprise Income Tax Policies for Hainan Free-trade Port (Cai Shui [2020] No.
31), the Company’s certain subsidiary in Hainan is subject to enterprise income tax at a rate
of 15% from 1 January 2020 to 31 December 2024.
(a-3) Pursuant to the Notice on Extending the Preferential Enterprise Income Tax Policies for
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen,
enterprises that meet the notice requirements are subject to a reduced enterprise income
tax rate of 15%. Therefore, Midea Commercial Factoring Co., Ltd., a subsidiary of the
Company, is subject to enterprise income tax at a rate of 15% from 1 January 2021 to 31
December 2025.
(a-4) According to the Announcement on Continuing the Enterprise Income Tax Policies for the
Development of Western China jointly issued by the Ministry of Finance, the State Taxation
Administration and the National Development and Reform Commission on 23 April 2020,
Chongqing Midea Air-Conditioning Equipment Co., Ltd., Chongqing Midea Commercial
Factoring Co., Ltd., Chongqing Annto Logistics Technology Co., Ltd. and Guiyang Annto
Logistics Technology Co., Ltd., subsidiaries of the Company, are subject to enterprise
income tax at a rate of 15% from 1 January 2021 to 31 December 2030.
(a-5) On 28 November 2017, 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 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) According to the Notice on Implementing the Inclusive Tax Deduction and Exemption
Policies for Micro and Small Enterprises (Cai Shui [2019] No. 13), the Announcement on
the Matters Concerning the Implementation of Preferential Income Tax Policies for the
Development of Small and Micro Enterprises and Individual Industrial and Commercial
Households (Announcement [2021], No. 12) and the Announcement on the Matters
Concerning the Implementation of Preferential Income Tax Policies for the Development of
Small and Micro Enterprises (Announcement [2022], No. 13) jointly issued by the Ministry
of Finance and the State Taxation Administration, for Shenzhen Midea Capital Corporation
Limited., Guangdong Ling Mei Technology Co. Ltd, Shanghai Annto Logistics Supply Chain
Technology Co., Ltd., Foshan Annto Logistics Technology Co., Ltd., Shenzhen Annto
Intelligent Technology Co., Ltd., Tianjin Annto Network Technology Co., Ltd.and Hangzhou
Long-termism Tech Co.,Ltd., subsidiaries of the Company and qualified as a small low-profit
enterprise, in 2022, EIT is based on a 20% rate applied to 12.5% of its taxable income
amount for the proportion of taxable income up to RMB 1 million, and a 20% rate applied to
25% of its taxable income amount for the proportion of taxable income between RMB 1
million and RMB 3 million.
- 43 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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-7) The Company's subsidiaries in Mainland China other than those mentioned in (a-1) to (a-6)
are subject to enterprise income tax at the rate of 25%.
(a-8) In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,
was awarded with the Certificate of Honour for Development and Expansion (No. 587) by
the Singapore Economic Development Board and is subject to the applicable preferential
income tax rate of 5.5% for 2022. Lifestyle Orchestra Co.Pte.Ltd. and Little Swan
International (Singapore) Co., Pte. LTD., the Company's subsidiaries, are subject to
enterprise income tax at the rate of 17%.
(a-9) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate
of 16.5%. Such subsidiaries include Midea International Trading Company Limited, Midea
International Corporation Company Limited, Midea Home Appliances Investments (Hong
Kong) Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited,
Midea Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling International
Hong Kong Ltd., Chairing Holding Limited, Main Power Electrical Factory Limited and Midea
Investment (Asia) Company Limited.
(a-10) 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-11) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise
income tax at the rate of 34%.
(a-12) Some subsidiaries of TLSC, the Company's subsidiary in Japan, are subject to Japan
enterprise income tax at the rate of 34.01%.
(a-13) 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-14) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise
income tax at the rate of 32%.
(a-15) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to
Israel enterprise income tax at the rate of 23%.
(a-16) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's
subsidiary in Egypt, is subject to Egypt enterprise income tax at the rate of 22.5%.
- 44 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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-17) Midea America Corp., the Company's subsidiary in the USA, is subject to the USA enterprise
income tax at the rate of 21%.
(a-18) Midea Consumer Electric (Vietnam) CO., LTD., the Company's subsidiary in Vietnam, is
subject to Vietnam enterprise income tax at the rate of 20%.
(a-19) Midea Refrigeration Equipment (Thailand) Co., Ltd., the Company's subsidiary in Thailand,
is exempt from enterprise income tax under the investment promotion policy of the Thailand
Board of Investment.
(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 relevant provisions of 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 and
the Announcement on the VAT Policy Relating to the Promotion of Relief and Development
of Difficulty-ridden Industries in the Service Sector (Announcement [2022] No. 11) issued by
the Ministry of Finance and the State Taxation Administration, certain subsidiaries of the
Company engaged in the production service sector are eligible for a 10% additional VAT
deduction based on deductible input VAT in the current year from 1 April 2019 to 31
December 2022.
(b-5) Pursuant to the Notice on Further Supporting and Promoting the Business Start-up and
Employment of Priority Groups (Cai Shui [2019] No. 22) issued by the Ministry of Finance,
the State Taxation Administration, the Ministry of Human Resources and Social Security and
the State Council Leading Group Office of Poverty Alleviation and Development and the
Announcement on Extending the Implementation Period of Certain Preferential Tax Policies
for Poverty Alleviation (Announcement [2021] No. 18 of the Ministry of Finance, the State
Taxation Administration, the Ministry of Human Resources and Social Security and the
National Rural Revitalisation Administration) issued by the Ministry of Finance, the State
Taxation Administration, the Ministry of Human Resources and Social Security and the
National Rural Revitalisation Administration, for certain subsidiaries of the Company that
employ the listed poverty-stricken people, since the month of signing the labour contracts of
more than 1 year and paying the social security contributions, their VAT, city maintenance
and construction tax, educational surcharge, local educational surcharge and enterprise
income tax will be deducted in sequence and based on quota in accordance with the actual
number of employees in 3 years, and the period of validity will be until 31 December 2025.
- 45 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Cash on hand 1,645 1,609
Cash at bank (a) 28,581,529 46,691,119
Other cash balances (b) 1,688,278 443,893
Statutory reserve with the Central
Bank (c) 328,409 419,718
Surplus reserve with the Central
Bank (d) 172,394 272,949
Deposits with banks and other
financial institutions (e) 24,287,610 23,351,878
Interest receivable 210,234 694,390
55,270,099 71,875,556
Including: Total amounts deposited
with banks overseas
(including Singapore,
Japan, Hong Kong,
China, Germany, Egypt,
the USA, etc.) 7,133,785 6,763,152
(a) As at 31 December 2022, cash at bank included fixed deposits with the term of over 3
months and due within 1 year, amounting to RMB 1,911,210,000 (31 December 2021: RMB
28,767,516,000).
(b) Other cash balances mainly include letter of bank acceptance notes, letters of guarantee
and letters of credit.
(c) Statutory reserve with the Central Bank represents the statutory reserve deposited in
People’s Bank of China by the financial enterprise in accordance with relevant regulations.
They are restricted cash and are not available for use in the Group’s daily operations.
(d) Surplus reserve with the Central Bank represents the excess over the required statutory
reserve paid by financial institutions in the Central Bank, and it is bank deposit that can be
readily drawn on demand.
(e) As at 31 December 2022, deposits with banks and other financial institutions included no
fixed deposits with the term of over 3 months (31 December 2021: RMB 1,000,000,000).
- 46 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Structural deposits (a) 1,606,608 4,285,607
Investments in equity instrument
held for trading (b) 1,264,595 1,319,470
Others 413,390 274,125
3,284,593 5,879,202
(a) Structural deposits were deposits with financial institutions due within 1 year, which were
measured at fair value through profit or loss.
(b) Investments in equity instrument held for trading referred to equity investments in listed
companies, which were measured at fair value through profit or loss.
(3) Notes receivable
31 December 2022 31 December 2021
Bank acceptance notes 4,705,290 4,689,898
Trade acceptance notes 114,595 126,640
Less: Provision for bad debts (a) (61,756) (31,624)
4,758,129 4,784,914
(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
2022, 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 2022, notes receivable endorsed or discounted but unmatured are as
follows:
Derecognised Not derecognised
Trade acceptance notes — 2,996
Bank acceptance notes (i) 20,360 2,615,039
20,360 2,618,035
- 47 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, notes receivable endorsed or discounted but unmatured are as
follows (Cont’d):
(i) For the year ended 31 December 2022 and 31 December 2021, certain bank acceptance
notes were discounted and endorsed and derecognised by some subsidiaries of the Group
for the purpose of daily treasury management, and the business model for managing the
notes receivable was aimed to both collect the contractual cash flows and sell such financial
assets, which thereby categorised the balance of these bank acceptance notes that satisfied
the above conditions as financial assets at fair value through other comprehensive income
and presented them as receivables financing (Note 4(6)). The remained bank acceptance
notes that not met the above conditions and business model were presented as notes
receivable.
(4) Accounts receivable
31 December 2022 31 December 2021
Accounts receivable 29,570,582 25,495,619
Less: Provision for bad debts (b) (1,332,609) (859,179)
28,237,973 24,636,440
(a) The ageing of accounts receivable is analysed as follows:
31 December 2022 31 December 2021
Within 1 year 28,142,167 24,566,401
1 to 2 years 1,099,842 617,355
2 to 3 years 140,153 144,300
3 to 5 years 101,202 134,460
Over 5 years 87,218 33,103
29,570,582 25,495,619
As at 31 December 2022 and 31 December 2021, the Group had no significant overdue
accounts receivable.
(b) Provision for bad debts
For accounts receivable, the Group recognises the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
As at 31 December 2022, accounts receivable for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
The debtor
encountered
financial
Domestic customers 1,061,199 52.13% (553,196) distress, etc.
Foreign customer 22,437 97.37% (21,847)
1,083,636 (575,043)
- 48 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2021, accounts receivable for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
Lifetime ECL Provision for
Book balance rate bad debts Reason
Domestic customers 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 2022, accounts receivable for which the related provision for bad debts
was provided on the grouping basis are analysed as follows:
31 December 2022
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 12,494,592 2.72% (340,084)
Overseas business grouping 15,992,354 2.61% (417,482)
28,486,946 (757,566)
As at 31 December 2021, accounts receivable for which the related provision for bad debts
was provided on the grouping basis are 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)
(c) The provision for bad debts in the current year amounted to RMB 680,932,000 (2021: RMB
173,575,000). The provision for bad debts reversed in the current year amounted to RMB
205,575,000 (2021: RMB 88,386,000). The provision for bad debts written off in the current
year amounted to RMB 55,411,000 (2021: RMB 92,215,000).
(d) As at 31 December 2022, the five largest accounts receivable aggregated by debtor are
summarised and analysed as follows:
Provision for % of total
Amount bad debts balance
Total amount of the five
largest accounts receivable 1,510,333 (207,163) 5.11%
- 49 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Other receivables 2,249,186 3,147,595
Less: Provision for bad debts (38,009) (43,530)
2,211,177 3,104,065
(a) Other receivables mainly include security deposit and guarantee, current accounts, petty
cash to staff and receivables related to share options.
The ageing of other receivables is analysed as follows:
31 December 2022 31 December 2021
Within 1 year 1,932,646 2,856,634
1 to 2 years 137,213 149,331
2 to 3 years 97,205 97,424
3 to 5 years 48,616 28,029
Over 5 years 33,506 16,177
2,249,186 3,147,595
(b) Provision for losses and changes in book balance statement
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 debts balance debts debts
31 December 2021 2,992,048 38,263 150,280 - 5,267 5,267 43,530
Transfer to Stage 3 (560) (56) - - 560 56 -
Net decrease in the
current year (814,523) (3,442) (82,321) - (1,565) (899) (4,341)
Including: Write-off in the
current year - - - - (1,565) (1,565) (1,565)
Derecognition - - - - - - -
Differences on translation
of foreign currency
financial statements - (1,018) - - - (162) (1,180)
31 December 2022 2,176,965 33,747 67,959 - 4,262 4,262 38,009
As at 31 December 2022 and 31 December 2021, the Group had no other receivables at
Stage 2.
- 50 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(b) Provision for losses and changes in book balance statement (Cont’d)
(i) As at 31 December 2022, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 67,959 0.00% - bad debt risks
Provision for
Book balance Lifetime ECL bad debts Reason
The debtor
encountered
financial
Stage 3 4,262 100.00% (4,262) distress, etc.
As at 31 December 2021, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 150,280 0.00% - bad debt risks
Provision for
Book balance Lifetime ECL bad debts Reason
The debtor
encountered
financial
Stage 3 5,267 100.00% (5,267) distress, etc.
(ii) As at 31 December 2022 and 31 December 2021, other receivables for which the related
provision for bad debts was provided on the grouping basis were all at Stage 1, which are
analysed as follows:
31 December 2022 31 December 2021
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 2,176,965 (33,747) 1.55% 2,992,048 (38,263) 1.28%
- 51 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 36,072,000 (2021: RMB
158,923,000). The provision for bad debts reversed in the current year amounted to RMB
38,848,000 (2021: RMB 43,460,000). The provision for bad debts written off in the current
year amounted to RMB 1,565,000 (2021: RMB 124,041,000).
(d) As at 31 December 2022, the five largest other receivables aggregated by debtor are
summarised and analysed as follows:
Provision for bad % of total
Amount debts balance
Total amount of the five
largest other receivables 122,691 (848) 5.45%
(e) As at 31 December 2022 and 31 December 2021, the Group had no significant government
grants recognised at amounts receivable.
(6) Receivables financing
31 December 2022 31 December 2021
Receivables financing 13,526,540 10,273,552
The Group’s receivables financing were mainly accounts receivable and bank acceptance
notes transferred, discounted and endorsed for the purpose of daily treasury management
and were qualified for derecognition.
As at 31 December 2022 and 31 December 2021, the Group measured provision for bad
debts based on the lifetime ECL and 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 2022, in addition to Note 4(3)(b), the Group’s bank acceptance notes
endorsed or discounted but not matured amounted to RMB 12,368,841,000 (31 December
2021: RMB 10,944,665,000), all of which were derecognised.
- 52 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Prepayments for raw materials and
others 4,367,211 4,352,807
(a) The ageing of advances to suppliers is analysed below:
31 December 2022 31 December 2021
% of total % of total
Amount balance Amount balance
Within 1 year 4,238,120 97.04% 4,241,867 97.45%
1 to 2 years 83,905 1.92% 74,391 1.71%
2 to 3 years 17,820 0.41% 18,798 0.43%
Over 3 years 27,366 0.63% 17,751 0.41%
4,367,211 100.00% 4,352,807 100.00%
As at 31 December 2022, advances to suppliers with ageing over 1 year with a carrying
amount of RMB 129,091,000 (31 December 2021: RMB 110,940,000) were mainly unsettled
prepayments for raw materials.
As at 31 December 2022, the five largest advances to suppliers aggregated by debtor are
summarised and analysed as follows:
Amount % of total balance
Total amount of the five largest
advances to suppliers 665,045 15.23%
(8) Contract assets
31 December 2022 31 December 2021
Contract assets 4,572,177 3,870,243
Less: Provision for impairment of
contract assets (73,221) (46,767)
Total 4,498,956 3,823,476
For contract assets, the Group measures the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
- 53 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, there were no contract assets for which the related provision for
bad debts was provided on an individual basis.
As at 31 December 2021, contract assets for which the related provision for bad debts was
provided on an individual basis are analysed as follows:
Lifetime ECL Provision for
Book balance rate impairment Reason
The debtor
encountered
Domestic business financial
grouping 11,444 26.70% (3,056) distress, etc.
As at 31 December 2022, contract assets for which the related provision for bad debts was
provided on the grouping basis are analysed as follows:
31 December 2022
Book balance Provision for bad debts
Amount Lifetime ECL rate Amount
Domestic business grouping 1,469,430 2.80% (41,155)
Overseas business grouping 3,102,747 1.03% (32,066)
4,572,177 (73,221)
As at 31 December 2021, contract assets for which the related provision for bad debts was
provided on the grouping basis are 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)
- 54 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Loans and advances measured at
amortised cost
Loans and advances to individuals 1,820,952 2,217,220
Loans and advances to
corporations 13,475,027 19,744,034
Including: Loans 11,138,739 12,790,285
Note discounting 2,336,288 6,953,749
15,295,979 21,961,254
Less: Provision for loan losses (463,929) (452,727)
14,832,050 21,508,527
As at 31 December 2022, loans and advances over 1 year amounted to RMB 693,294,000
(31 December 2021: RMB 851,927,000).
(b) By type of collateral held:
31 December 2022 31 December 2021
Unsecured loans 1,818,768 2,211,108
Guaranteed loans 598,437 587,936
Pledged loans 12,878,774 19,162,210
Total loans and advances 15,295,979 21,961,254
(c) The provision for bad debts in the current year amounted to RMB 25,814,000 (2021: RMB
144,691,000), no provision for bad debts was written off in the current year (2021: RMB
3,070,000) and the provision for bad debts reversed in the current year amounted to RMB
14,612,000 (2021: RMB 1,748,000) (Note 4(25)).
(d) As at 31 December 2022, the Group’s loans and advances for which the provision for bad
debts was provided on an individual basis amounted to RMB 2,202,392,000, and the
provision for bad debts amounted to RMB 97,565,000.
(e) As at 31 December 2022 and 31 December 2021, the Group included the most of loans and
advances in Stage 1 and measured provision for impairment based on the 12-month ECL.
- 55 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Provision Provision
for decline for decline
in the in the
Book value of Carrying Book value of Carrying
balance inventories amount balance inventories amount
Finished goods 34,753,459 (458,121) 34,295,338 33,636,462 (419,166) 33,217,296
Raw materials 8,675,143 (241,247) 8,433,896 9,592,914 (121,217) 9,471,697
Work in progress 2,519,241 - 2,519,241 2,406,866 - 2,406,866
Consigned processing
materials 427,838 - 427,838 596,531 - 596,531
Contract fulfilment
costs (i) 368,584 - 368,584 232,049 - 232,049
46,744,265 (699,368) 46,044,897 46,464,822 (540,383) 45,924,439
(i) The book balance of contract fulfilment costs mainly refers to transportation costs incurred
to fulfil sales contracts prior to the transferring of control over goods to customers.
(b) Analysis of provision for decline in the value of inventories is as follows:
Increase in Decrease in Differences
the current the current on translation
year year of foreign
currency
31 December Reversal or financial 31 December
2021 Provision write-off statements 2022
Finished goods 419,166 313,608 (282,102) 7,449 458,121
Raw materials 121,217 150,328 (35,997) 5,699 241,247
540,383 463,936 (318,099) 13,148 699,368
(c) Provision for decline in the value of inventories is as follows:
Reason for reversal or write-off of
Specific basis for determining net provision for decline in the value
realisable value of inventories
Stated at the lower of cost and
Finished goods net realisable value Sales
Stated at the lower of cost and
Raw materials net realisable value Requisition for production
- 56 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(11) Current portion of non-current assets
31 December 2022 31 December 2021
Other debt investments due within 1
year (Note 4(13)) 5,875,076 19,360,372
Long-term receivables due within 1
year (Note 4(14)) 553,591 491,205
Current portion of other non-current
assets (Note 4(24)) 31,124,411 -
37,553,078 19,851,577
(12) Other current assets
31 December 2022 31 December 2021
Fixed-income products (a) 38,748,850 23,696,825
Input VAT to be deducted 3,875,519 6,137,776
Prepaid expenses 856,455 828,675
Others (b) 3,061,554 2,492,736
46,542,378 33,156,012
(a) As at 31 December 2022, fixed-income products were monetary investment products
deposited in financial institutions with maturities of no more than 1 year at the time of
acquisition, which were subsequently measured at amortised cost.
(b) As at 31 December 2022, the Group's transferable certificate of deposit due within 1 year
since the time of acquisition amounted to approximately RMB 656,967,000 (31 December
2021: RMB 230,015,000), and were measured at fair value through other comprehensive
income.
(c) As at 31 December 2022, the Group considered that there was no significant increase in
credit risk of fixed-income products and 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 them, and did not expect that there
would be any significant losses from non-performance by these financial institutions.
(13) Other debt investments
31 December 2022 31 December 2021
Fair value through other
comprehensive income
- Transferable certificate of deposit 16,969,335 27,254,307
Less: Other debt investments due
within 1 year (Note 4(11)) (5,875,076) (19,360,372)
11,094,259 7,893,935
As at 31 December 2022, the cost of the Group’s transferable certificate of deposit
approximated its fair value.
As at 31 December 2022, the Group considered that there was no significant increase in
credit risk of transferable certificate of deposit since initial recognition, and made provision
for loss based on 12-month ECL. The Group considered that there was no significant credit
risk associated with transferable certificate of deposit, and did not expect that there would
be any significant losses from non-performance by these financial institutions.
- 57 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Long-term receivables 1,176,968 1,371,022
Less: Provision for bad debts (8,779) (8,461)
1,168,189 1,362,561
Less: Long-term receivables due
within 1 year (Note 4(11)) (553,591) (491,205)
614,598 871,356
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 2022 31 December 2021
Investments in associates (a) 5,188,817 3,796,705
Less: Provision for impairment of
long-term equity investments - -
5,188,817 3,796,705
(a) Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., Shenzhen Clou Electronics 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 2022 31 December 2021
Measured at fair value
- Equity of unlisted companies 6,348,556 5,912,873
Others (a) 4,276,688 -
10,625,244 5,912,873
(a) As at 31 December 2022, the main information of the Group’s unmatured cross-currency
interest rate swaps were set out in Note 4(37).
- 58 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
Machinery Electronic
Overseas and Motor equipment
Buildings land equipment vehicles and others Total
Cost
31 December 2021 20,108,658 1,330,856 22,182,072 758,743 5,497,346 49,877,675
Increase in the current year
Purchase 450,465 29,246 3,143,739 66,053 1,112,441 4,801,944
Transfer from construction in
progress 1,587,541 - 419,909 104 103,356 2,110,910
Increase by business
combinations - - 1,440 76 35 1,551
Others 35,198 - 3,990 - - 39,188
Decrease in the current year
Disposal and retirement (125,160) (215) (1,373,355) (50,821) (363,310) (1,912,861)
Others (19,543) - (699) - (1,051) (21,293)
Differences on translation of
foreign currency financial
statements 11,977 (24,610) (45,183) (262) 27,826 (30,252)
31 December 2022 22,049,136 1,335,277 24,331,913 773,893 6,376,643 54,866,862
Accumulated depreciation
31 December 2021 9,003,358 - 13,332,180 571,319 4,067,650 26,974,507
Increase in the current year
Provision 987,149 - 1,537,048 31,365 809,883 3,365,445
Others 17,262 - 554 - - 17,816
Decrease in the current year
Disposal and retirement (79,567) - (1,171,611) (48,556) (332,896) (1,632,630)
Others (8,920) - (155) - (793) (9,868)
Differences on translation of
foreign currency financial
statements 9,268 - (11,791) (1,410) 17,011 13,078
31 December 2022 9,928,550 - 13,686,225 552,718 4,560,855 28,728,348
Provision for impairment
31 December 2021 6,179 5,469 10,011 21,093 7,568 50,320
Increase in the current year
Provision 3,281 - 2,297 - - 5,578
Decrease in the current year
Disposal and retirement - - - (203) - (203)
Others - - (61) - (1) (62)
Differences on translation of
foreign currency financial
statements (35) (104) (9) 1 36 (111)
31 December 2022 9,425 5,365 12,238 20,891 7,603 55,522
Carrying amount
31 December 2022 12,111,161 1,329,912 10,633,450 200,284 1,808,185 26,082,992
31 December 2021 11,099,121 1,325,387 8,839,881 166,331 1,422,128 22,852,848
(a) In 2022, the depreciation of fixed assets amounted to RMB 3,365,445,000 (2021: RMB
3,230,049,000) and was included in the income statement in full amount.
(b) As at 31 December 2022, the Company was still in the course of obtaining the ownership
certificate for the fixed asset with a carrying amount of RMB 1,359,215,000 (31 December
2021: RMB 617,721,000).
- 59 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Provision for Carrying Provision for Carrying
Book balance impairment amount Book balance impairment amount
Shanghai Global Innovation Center Project 1,427,405 - 1,427,405 687,704 - 687,704
Midea Headquarters A08 Land Parcel
Project 357,612 - 357,612 234,165 - 234,165
Thailand Factories 347,207 - 347,207 213,005 - 213,005
Midea Xingtan Industrial Park Project 153,893 - 153,893 - - -
Welling Auto Parts Project 152,457 - 152,457 - - -
Midea Headquarters A04 Land Parcel
Project 147,143 - 147,143 565,884 - 565,884
Midea Digital Factory Project 142,595 - 142,595 - - -
Other projects 1,149,607 (34,142) 1,115,465 1,023,360 (33,188) 990,172
3,877,919 (34,142) 3,843,777 2,724,118 (33,188) 2,690,930
- 60 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress (Cont'd)
(a) Movements of significant projects of construction in progress
Differences on
translation of
Transfer to fixed foreign currency
31 December 2021 Increase in the assets in the financial 31 December 2022
Book balance current year current year Other decreases statements Book balance Source of funds
Shanghai Global Innovation
Center Project 687,704 739,701 - - - 1,427,405 Self-financing
Midea Headquarters A08 Land
Parcel Project 234,165 123,447 - - - 357,612 Self-financing
Thailand Factories 213,005 116,576 - - 17,626 347,207 Self-financing
Midea Xingtan Industrial Park
Project - 160,327 (6,434) - - 153,893 Self-financing
Welling Auto Parts Project - 152,457 - - - 152,457 Self-financing
Midea Headquarters A04 Land
Parcel Project 565,884 260,606 (679,347) - - 147,143 Self-financing
Borrowings/
Midea Digital Factory Project - 142,595 - - - 142,595 Self-financing
Other projects 1,023,360 1,598,641 (1,425,129) (24,623) (22,642) 1,149,607 Self-financing
2,724,118 3,294,350 (2,110,910) (24,623) (5,016) 3,877,919
(i) As at 31 December 2022, the cost of construction in progress matched the budget amount, and the projects were carried out on schedule.
- 61 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2021 2,852,417 241,510 111,501 3,205,428
Increase in the current year
New lease contracts 1,009,405 80,089 12,715 1,102,209
Lease modifications and
others 166,697 4,258 162 171,117
Decrease in the current year
Expiration of lease
contract (378,155) (26,082) (2,643) (406,880)
Lease modifications and
others (130,742) (7,311) (695) (138,748)
Differences on translation of
foreign currency financial
statements 22,775 (191) 767 23,351
31 December 2022 3,542,397 292,273 121,807 3,956,477
Accumulated depreciation
31 December 2021 751,536 136,409 20,129 908,074
Increase in the current year
Provision 1,071,925 84,020 17,640 1,173,585
Decrease in the current year
Expiration of lease
contract (378,155) (26,082) (2,643) (406,880)
Lease modifications and
others (55,716) (2,854) (127) (58,697)
Differences on translation of
foreign currency financial
statements 2,343 (1,797) (29) 517
31 December 2022 1,391,933 189,696 34,970 1,616,599
Carrying amount
31 December 2022 2,150,464 102,577 86,837 2,339,878
31 December 2021 2,100,881 105,101 91,372 2,297,354
- 62 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2021 7,158,510 3,199,777 4,769,814 2,295,651 5,576,295 23,000,047
Increase in the current
year
Purchases 502,925 5,066 6,999 30 276,782 791,802
Increase by business
combinations 5,017 - 2,122 - 52,682 59,821
Others 2,822 670 - - 7,711 11,203
Decrease in the current
year
Disposal (42,954) (7,463) - - (155,080) (205,497)
Others (1,965) - - - - (1,965)
Differences on translation
of foreign currency
financial statements (651) 34,324 115,719 (107,398) 83,609 125,603
31 December 2022 7,623,704 3,232,374 4,894,654 2,188,283 5,841,999 23,781,014
Accumulated amortisation
31 December 2021 1,138,198 921,857 160,901 342,000 3,087,655 5,650,611
Increase in the current
year
Provision 150,683 232,145 57,470 54,413 522,113 1,016,824
Others 534 - - - - 534
Decrease in the current
year
Disposal (10,939) (230) - - (138,755) (149,924)
Others (465) - - - - (465)
Differences on translation
of foreign currency
financial statements 238 18,816 1,514 (12,809) 118,971 126,730
31 December 2022 1,278,249 1,172,588 219,885 383,604 3,589,984 6,644,310
Provision for impairment
31 December 2021 - 108,010 - - 68,354 176,364
Increase in the current
year
Provision - - - - 48,593 48,593
Decrease in the current
year
Disposal - (5) - - (3) (8)
Differences on translation
of foreign currency
financial statements - (578) - - 3,418 2,840
31 December 2022 - 107,427 - - 120,362 227,789
Carrying amount
31 December 2022 6,345,455 1,952,359 4,674,769 1,804,679 2,131,653 16,908,915
31 December 2021 6,020,312 2,169,910 4,608,913 1,953,651 2,420,286 17,173,072
(a) In 2022, the amortisation of intangible assets amounted to RMB 1,016,824,000 (2021: RMB
1,212,553,000) and was included in the income statement in full amount.
(b) As at 31 December 2022, the Company was still in the course of obtaining the ownership
certificate for the intangible asset with a carrying amount of RMB 33,814,900 (31 December
2021: Nil).
- 63 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(21) Goodwill
The Group’s goodwill had been allocated to the relevant cash generating unit and cash
generating units at the acquisition date, without any change of goodwill allocation in 2022,
and the allocation is as follows:
31 December 2022 31 December 2021
Goodwill -
KUKA Group 21,122,932 20,544,697
TLSC Group 2,437,914 2,580,274
Little Swan 1,361,306 1,361,306
Others 4,149,906 3,893,186
29,072,058 28,379,463
Less: Provision for impairment (523,405) (504,711)
28,548,653 27,874,752
When making an impairment testing of goodwill, the Group compares the carrying amounts
of the relevant cash generating unit or cash generating units with their recoverable amounts.
If the recoverable amount is lower than the carrying amount, the difference shall be included
in profit or loss for the current period.
As at 31 December 2022, 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 0.18%-12.94%) and EBITDA margins (mainly 3.14%-13.86%) based
on past experience and forecast on future market development. The discount rates (mainly
10.74%-15.62%) used by management are the pre-tax rates that are able to reflect the risks
specific to the relevant cash generating unit or cash generating units. Management analyses
the recoverable amount of each cash generating unit or cash generating units based on
these assumptions and considers that no further provision for impairment is necessary for
the goodwill.
(22) Long-term prepaid expenses
Long-term prepaid expenses mainly include expenses prepaid for software and project
reconstruction.
- 64 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
(a) Deferred tax assets before offsetting
31 December 2022 31 December 2021
Deductible Deductible
temporary temporary
differences and differences and
deductible Deferred tax deductible Deferred tax
losses assets losses assets
Deductible losses 6,424,498 1,500,622 6,189,786 1,371,028
Provision for asset
impairment 3,562,556 753,511 2,891,362 596,763
Employee benefits
payable 931,503 190,398 1,214,088 285,263
Other current liabilities 35,502,379 6,534,476 29,984,331 5,531,170
Others 14,889,531 3,233,559 9,949,311 2,192,050
61,310,467 12,212,566 50,228,878 9,976,274
Including:
Expected to be
recovered within 1 year
(inclusive) 8,754,919 7,205,683
Expected to be
recovered after 1 year 3,457,647 2,770,591
12,212,566 9,976,274
(b) Deferred tax liabilities before offsetting
31 December 2022 31 December 2021
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Changes in fair value 1,043,209 236,440 3,159,648 349,208
Business combinations
involving enterprises
not under common
control 10,898,558 2,921,290 11,683,474 3,145,282
Others 16,872,927 3,458,213 14,441,530 3,239,720
28,814,694 6,615,943 29,284,652 6,734,210
Including:
Expected to be
recovered within 1 year
(inclusive) 1,221,941 1,268,054
Expected to be
recovered after 1 year 5,394,002 5,466,156
6,615,943 6,734,210
- 65 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Balance after offsetting Balance after offsetting
Deferred tax assets 10,244,296 8,192,309
Deferred tax liabilities 4,647,673 4,950,245
(24) Other non-current assets
31 December 2022 31 December 2021
Fixed-income products (a) 73,157,118 35,485,395
Others 807,372 888,961
Less: Fixed-income products due
within 1 year (Note 4(11)) (31,124,411) -
42,840,079 36,374,356
(a) As at 31 December 2022, fixed-income products were monetary investment products and
non-transferable certificates of deposit deposited in financial institutions with maturities of
more than 1 year at the time of acquisition, which were subsequently measured at amortised
cost.
- 66 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
foreign currency
financial
31 December Increase in the statements and 31 December
2021 current year Decrease in the current year others 2022
Charge-
Reversal off/Write-off
Provision for bad debts 1,395,521 803,834 (290,148) (56,976) 52,851 1,905,082
Less: Provision for bad debts of accounts
receivable 859,179 680,932 (205,575) (55,411) 53,484 1,332,609
Provision for losses of loans and advances 452,727 25,814 (14,612) - - 463,929
Provision for bad debts of notes receivable 31,624 60,343 (30,211) - - 61,756
Provision for bad debts of other
receivables 43,530 36,072 (38,848) (1,565) (1,180) 38,009
Provision for bad debts of long-term
receivables 8,461 673 (902) - 547 8,779
Provision for decline in the value of inventories 540,383 463,936 (15,345) (302,754) 13,148 699,368
Provision for impairment of long-term equity
investments - 6,179 - (6,179) - -
Provision for impairment of fixed assets 50,320 5,578 - (265) (111) 55,522
Provision for impairment of intangible assets 176,364 48,593 - (8) 2,840 227,789
Provision for impairment of contract assets 46,767 28,475 (4,053) - 2,032 73,221
Provision for impairment of investment properties 12,576 - - - - 12,576
Provision for impairment of construction in
progress 33,188 - - - 954 34,142
Provision for impairment of goodwill 504,711 - - - 18,694 523,405
2,759,830 1,356,595 (309,546) (366,182) 90,408 3,531,105
- 67 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, assets with use rights restricted are mainly as follows:
31 December 2022 31 December 2021
Cash at bank and on hand
Including: Cash at bank (Note 4(1)) 1,911,210 28,767,516
Other cash balances
(Note 4(1)) 1,688,278 443,893
Statutory reserve with the
Central Bank
(Note 4(1)) 328,409 419,718
Deposits with banks and
other financial
institutions (Note 4(1)) - 1,000,000
3,927,897 30,631,127
(27) Short-term borrowings
31 December 2022 31 December 2021
Unsecured borrowings 3,192,163 1,260,780
Guaranteed borrowings 1,399,219 1,982,534
Pledged borrowings 578,098 2,138,309
5,169,480 5,381,623
(a) As at 31 December 2022, the annual interest rate range of short-term borrowings was 1.40%
to 15.45% (31 December 2021: 0.41% to 9.75%).
(28) Financial liabilities held for trading
As at 31 December 2022, financial liabilities held for trading referred to the equities
attributable to third parties in the structured entities included in the consolidation scope, and
were measured at fair value through profit or loss.
(29) Notes payable
31 December 2022 31 December 2021
Bank acceptance notes 25,572,421 32,752,007
- 68 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(30) Accounts payable
31 December 2022 31 December 2021
Materials cost payable 59,880,772 61,527,747
Others 4,352,453 4,455,812
64,233,225 65,983,559
As at 31 December 2022, accounts payable with ageing over 1 year with a carrying amount
of RMB 1,168,348,000 (31 December 2021: RMB 1,271,088,000) were mainly unsettled
accounts payable for materials.
(31) Contract liabilities
31 December 2022 31 December 2021
Advances on sales and services 25,143,337 21,319,800
Advances for construction projects 2,816,701 2,596,795
27,960,038 23,916,595
More than 90% of contract liabilities included in the carrying amount as at 31 December
2021 were transferred to operating revenue in 2022.
(32) Employee benefits payable
31 December 2022 31 December 2021
Short-term employee benefits
payable (a) 7,041,973 7,430,595
Others 110,244 104,573
7,152,217 7,535,168
(a) Short-term employee benefits
31 December Increase in the Decrease in the 31 December
2021 current year current year 2022
Wages and salaries,
bonus, allowances and
subsidies 6,949,838 29,439,271 (29,849,186) 6,539,923
Staff welfare 299,396 1,628,361 (1,600,946) 326,811
Social security
contributions 67,268 1,861,492 (1,849,420) 79,340
Including: Medical
insurance 65,663 1,791,387 (1,778,887) 78,163
Work injury
insurance 664 45,636 (45,522) 778
Maternity
insurance 941 24,469 (25,011) 399
Housing funds 23,079 681,265 (678,657) 25,687
Labour union funds and
employee education
funds 22,246 142,044 (142,288) 22,002
Other short-term
employee benefits 68,768 727,918 (748,476) 48,210
7,430,595 34,480,351 (34,868,973) 7,041,973
- 69 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(33) Taxes payable
31 December 2022 31 December 2021
Enterprise income tax payable 2,813,522 2,972,040
Unpaid VAT 975,035 1,032,688
Others 1,166,778 1,399,539
4,955,335 5,404,267
(34) Other payables
31 December 2022 31 December 2021
Other payables 4,322,025 4,288,104
(a) Other payables are mainly restricted share repurchase obligation, deposit and security
deposit payable and reimbursed logistics expense.
(b) As at 31 December 2022, other payables with ageing over 1 year with a carrying amount of
RMB 1,538,928,000 (31 December 2021: RMB 1,288,937,000) were mainly those
recognised for performing equity incentive plan and deposit and security deposit payable,
which were unsettled since related projects were uncompleted.
(35) Current portion of non-current liabilities
31 December 2022 31 December 2021
Current portion of long-term
borrowings (Note 4(37)) 6,248,484 28,087,037
Current portion of lease liabilities
(Note 4(39)) 992,142 860,503
7,240,626 28,947,540
(36) Other current liabilities
31 December 2022 31 December 2021
Accrued sale rebates 40,041,953 31,307,753
Others 17,801,575 16,920,200
57,843,528 48,227,953
- 70 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(37) Long-term borrowings
31 December 2022 31 December 2021
Guaranteed borrowings (a) 35,063,239 6,903,645
Unsecured borrowings 21,860,438 14,269,908
Mortgage borrowings 9,411 26,635,207
Pledged borrowings 1,344 12,297
56,934,432 47,821,057
Less: Current portion of guaranteed
borrowings - (15,025)
Current portion of unsecured
borrowings (6,237,729) (1,439,224)
Current portion of mortgage
borrowings (9,411) (26,626,623)
Current portion of pledged
borrowings (1,344) (6,165)
50,685,948 19,734,020
(a) As at 31 December 2022, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings equivalent to RMB 2,011,606,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in April 2024; (ii)
guaranteed borrowings equivalent to RMB 4,415,556,000 guaranteed by the Company,
interest is calculated at a floating rate with interest paid every month, which will be due in
May 2024; (iii) guaranteed borrowings equivalent to RMB 1,165,874,000 guaranteed by the
Company, interest is calculated at a floating rate with interest paid every month, which will
be due in June 2025; (iv) After deducting the bank fee, guaranteed borrowings equivalent to
RMB 23,718,315,000 guaranteed by the Company, interest is calculated at a floating rate
with interest paid every quarter, which will be due in August 2025; and (v) guaranteed
borrowings equivalent to RMB 3,711,450,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in May 2025.
As at 31 December 2021, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings equivalent to RMB 1,956,539,000 guaranteed by the Company, with interest
paid every quarter, which will be due in April 2024; (ii) guaranteed borrowings equivalent to
RMB 3,849,126,000 guaranteed by the Company, with interest paid every month, which will
be due in May 2024; (iii) guaranteed borrowings equivalent to RMB 1,082,955,000
guaranteed by the Company, with interest paid every month, which will be due in June 2025.
- 71 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(37) Long-term borrowings (Cont’d)
(b) As at 31 December 2022, the annual interest rate range of long-term borrowings was 0.30%
to 5.99% (31 December 2021: 0.49% to 5.50%).
(c) In 2022, the Group purchased cross-currency interest rate swap to mitigate the cash flow
risk associated with the above-mentioned guaranteed borrowings ((a)(iv)) equivalent to USD
3,419,058,000 of principal. Under the swap, a nominal amount of USD 3,419,058,000 was
converted into EUR at an agreed exchange rate, and the USD floating rate (SOFR+0.55%
p.a.) was converted into the agreed EUR fixed rate. The agreed swap period was scheduled
to start in August 2022 and end in August 2025. The Group designated such borrowings as
the hedged item, and the change in the value of cross-currency interest rate swap (after
excluding the foreign currency basis spread) as the hedging instrument for cash flow hedge.
There was an economic relationship between the hedging instrument and the hedged item.
The cross-currency interest rate swap matched the currency, amount and other major terms
of financial liabilities denominated in USD.
In 2022, the Group included the effective part of the changes in fair value of the cross-
currency interest rate swap (after excluding the foreign exchange basis spread) in “Other
comprehensive income - cash flow hedges”, and transferred them from other
comprehensive income to financial expenses in the period in which the hedging relationship
affected profit or loss, in a bid to offset the effect of hedged item on profit or loss for the
current period. The changes in fair value of foreign currency basis spread were recorded in
“Other comprehensive income - others”, and the foreign currency basis spread was
transferred from other comprehensive income to financial expenses in the period in which
the hedging relationship affected profit or loss (Note 4(46)).
- 72 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(38) Debentures payable
Differences on
translation of
foreign currency
31 December Issued in the Issuance Interest accured Amortisation of Repayment in financial 31 December
2021 current year expenses on par value discount the current year statements 2022
Debentures
denominated in USD
(a) - 2,848,500 (3,304) 73,268 554 (41,910) 286,508 3,163,616
The information of debentures is as follows:
Par value Issuance date Maturity Issuance amount
Debentures denominated in USD (a) 2,848,500 16 February 2022 5 years 2,848,500
(a) Interest of the debentures is paid on a semi-annual basis and calculated by the simple interest method, and the interest rate is 2.88% annually. The
debenture is guaranteed by the Company.
- 73 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(39) Lease liabilities
31 December 2022 31 December 2021
Lease liabilities 2,499,622 2,394,055
Less: Current portion of non-current
liabilities (Note 4(35)) (992,142) (860,503)
1,507,480 1,533,552
(i) As at 31 December 2022, 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 151,531,000 (31 December 2021: RMB 151,561,000) which should be paid
within one year.
(40) Deferred income
31 December Increase in the Decrease in the 31 December
2021 current year current year 2022
Government grants 1,228,459 670,357 (177,724) 1,721,092
Decrease in
31 December Increase in the the current 31 December Asset related/
2021 current year year 2022 Income related
Government grants
related to industrial
upgrading 863,641 654,947 (123,706) 1,394,882 Asset related
Other government Asset related/
grants 364,818 15,410 (54,018) 326,210 Income related
1,228,459 670,357 (177,724) 1,721,092
(41) Long-term employee benefits payable
31 December 2022 31 December 2021
Supplementary retirement benefits
(a) 1,368,513 1,705,440
Others 119,943 119,576
1,488,456 1,825,016
(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 2022 31 December 2021
Defined benefit obligation 3,209,466 3,572,482
Less: Fair value of planned assets (1,840,953) (1,867,042)
Liabilities of defined benefit
obligation 1,368,513 1,705,440
- 74 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(41) Long-term employee benefits payable (Cont’d)
(a) Supplementary retirement benefits (Cont’d)
(ii) The actuarial assumptions used to determine the present value of defined benefit obligation
31 December 2022
Discount rate 0.02% - 9.25%
Inflation rate 1.07%
Salary growth rate 0.50% - 6.60%
Pension dynamics 1.00% - 3.55%
Early retirement rate 0.00% - 12.90%
Changes in cost of medical services 7.50%
(42) Other non-current liabilities
Other non-current liabilities are mainly equity purchase payables.
(43) Share capital
Movements in the current year
Share-based
payment
31 December incentive plan Additional Repurchases 31 December
2021 (a) Desterilisation issuance and write-offs Sub-total 2022
RMB-denominated
ordinary shares -
RMB-denominated
ordinary shares
subject to trading
restriction 156,539 12,153 (17,184) - (7,893) (12,924) 143,615
RMB-denominated
ordinary shares
not subject to
trading restriction 6,830,025 6,449 17,184 - - 23,633 6,853,658
6,986,564 18,602 - - (7,893) 10,709 6,997,273
Movements in the current year
Share-based
payment
31 December incentive plan Additional Repurchases 31 December
2020 (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
(a) In 2022, the share-based payment incentive plan increased the share capital by 18,602,000
shares (2021: 34,437,000 shares).
- 75 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(44) Treasury stock
31 December Increase in the Decrease in the 31 December
2021 current year current year 2022
Treasury stock used for share-based
payment incentive plan 14,044,550 2,637,021 (1,747,627) 14,933,944
31 December Increase in the Decrease in the 31 December
2020 current year current year 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
In 2022, the Group’s repurchased treasury stock amounted to approximately RMB
2,637,021,000, and the restricted shares and employee stock ownership plans granted in
2022 were approximately RMB 1,461,841,000. As at 31 December 2022, treasury stock
mainly comprised treasury stock of approximately RMB 10,837,824,000 used for share-
based payment incentive plan, as well as restricted shares and employee stock ownership
plans amounting to approximately RMB 4,096,120,000 that have not met unlock condition,
amounting to approximately RMB 14,933,944,000 in total (31 December 2021: RMB
14,044,550,000).
(45) Capital surplus
31 December Increase in the Decrease in the 31 December
2021 current year current year 2022
Share premium (a) 14,944,914 1,771,809 (1,209,146) 15,507,577
Share-based payment incentive plan
(b) 2,161,354 983,367 (865,613) 2,279,108
Others (c) 3,410,662 41,636 (1,545,844) 1,906,454
20,516,930 2,796,812 (3,620,603) 19,693,139
31 December Increase in the Decrease in the 31 December
2020 current year current year 2021
Share premium 18,185,028 1,938,616 (5,178,730) 14,944,914
Share-based payment incentive plan 1,414,842 1,516,039 (769,527) 2,161,354
Others 2,888,235 737,071 (214,644) 3,410,662
22,488,105 4,191,726 (6,162,901) 20,516,930
- 76 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(45) Capital surplus (Cont’d)
(a) The increase in share premium arose from the exercise of share options with the amount of
approximately RMB 1,123,649,000, the unlocking of restricted shares and employee stock
ownership plans with the amount of approximately RMB 648,160,000; the decrease in share
premium arose from the repurchase and cancellation of restricted shares with the amount
of approximately RMB 411,678,000, and the unlocking of restricted shares and employee
stock ownership plans with the amount of approximately RMB 797,468,000.
(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 983,367,000, while the decrease arose from the transfer
of approximately RMB 865,613,000 to share premium due to exercise of share-based
payment incentive plan.
(c) Others in capital surplus mainly included the Group’s acquisition of the minority
shareholders of Guangdong Meizhi Compressor Limited, Guangdong Meizhi Precision-
Manufacturing Co., Ltd., and KUKA, the non-public shares issued by Beijing Wandong
Medical Technology Co., Ltd., etc.
- 77 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(46) Other comprehensive income
Other comprehensive income in the income statement
Other comprehensive income in the balance sheet for the year ended 31 December 2022
Other Less:
comprehensive Reclassification
Attributable to income of other Attributable to Attributable to
the parent transferred to Amount arising comprehensive the parent minority
31 December company after retained 31 December before income income to profit Less: Income company after shareholders
2021 tax earnings 2022 tax or loss tax expenses tax after tax
Other comprehensive income items which will not be reclassified
to profit or loss
Changes arising from remeasurement of defined benefit plan 12,038 208,349 - 220,387 282,388 - (62,980) 208,349 11,059
Changes in fair value of investments in other equity
instruments (1,949) (892) 1,351 (1,490) (2,482) - 24 (892) (1,566)
Other comprehensive income items which will be reclassified to
profit or loss
Other comprehensive income that will be transferred
subsequently to profit or loss under the equity method (89,213) 17,391 - (71,822) 17,391 - - 17,391 -
Cash flow hedging reserve (Note 4(37)) 304,344 395,617 - 699,961 (627,935) 954,423 39,490 395,617 (29,639)
Differences on translation of foreign currency financial
statements (1,984,168) 1,175,539 - (808,629) 1,222,721 - - 1,175,539 47,182
Others (Note 4(37)) - 69,882 - 69,882 106,716 (36,834) - 69,882 -
(1,758,948) 1,865,886 1,351 108,289 998,799 917,589 (23,466) 1,865,886 27,036
Other comprehensive income in the income statement
Other comprehensive income in the balance sheet for the year ended 31 December 2021
Other Less:
comprehensive Reclassification
Attributable to income of other Attributable to Attributable to
the parent transferred to Amount arising comprehensive the parent minority
31 December company after retained 31 December before income income to profit Less: Income company after shareholders
2020 tax earnings 2021 tax or loss tax 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)
- 78 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(47) Surplus reserve
31 December Increase in the 31 December
2021 current year 2022
Statutory surplus reserve 9,449,901 1,253,027 10,702,928
31 December Increase in the 31 December
2020 current year 2021
Statutory surplus reserve 7,966,362 1,483,539 9,449,901
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 1,253,027,000 (2021: 10% of net profit, amounting to approximately
RMB 1,483,539,000) to the statutory surplus reserve in 2022.
(48) Undistributed profits
2022 2021
Undistributed profits at the beginning
of the year 102,982,763 87,074,453
Add: Net profit attributable to
shareholders of the parent
company for the current year 29,553,507 28,573,650
Comprehensive income carried
forward to retained earnings
(a) (1,351) 2,866
Others 1,412 -
Less: Ordinary share dividends
payable (b) (11,652,025) (11,052,729)
Reversal of/(Appropriation to)
general risk reserve (c) 47,923 (131,938)
Appropriation to statutory
surplus reserve (Note 4(47)) (1,253,027) (1,483,539)
Undistributed profits at the end
of the year 119,679,202 102,982,763
(a) In 2022, due to the Group’s strategic adjustment, certain investments in other equity
instruments were disposed. Accordingly, the amount of approximately RMB 1,351,000
(2021: RMB 2,866,000) accumulated in other comprehensive income was carried forward
to undistributed profits.
- 79 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(48) 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 27 May
2022, the Company distributed a cash dividend to the shareholders at RMB 1.70 per share,
amounting to approximately RMB 11,677,509,000 calculated by 6,869,123,038 issued
shares less those repurchased; 7,893,000 repurchased incentive shares in the restricted
shares incentive plan were written off (Note 4(43)), and cash dividend amounting to
approximately RMB 25,484,000 was cancelled. The actual cash dividend distributed in the
current year amounted to approximately RMB 11,652,025,000.
(c) General risk reserve
In 2022, 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 reversed
general risk reserve amounting to approximately RMB 47,923,000 (2021: provided general
risk reserve amounting to approximately RMB 131,938,000).
(49) Operating revenue and cost of sales
2022 2021
Revenue from main operations 316,464,774 308,297,360
Revenue from other operations 27,452,757 32,935,848
343,917,531 341,233,208
2022 2021
Cost of sales from main operations 237,007,098 235,092,045
Cost of sales from other operations 23,531,603 29,433,954
260,538,701 264,525,999
(a) Revenue and cost of sales from main operations
2022 2021
Revenue from Cost of sales Revenue from Cost of sales
main from main main from main
operations operations operations operations
HVAC 150,634,586 116,234,025 141,879,146 112,012,603
Consumer appliances 125,284,737 87,449,080 131,866,099 95,279,340
Robotics and
automation system 29,927,674 23,664,772 27,281,328 21,349,939
Others 10,617,777 9,659,221 7,270,787 6,450,163
316,464,774 237,007,098 308,297,360 235,092,045
In 2022, 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 (2021: over 80%).
- 80 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(49) Operating revenue and cost of sales (Cont’d)
(b) Revenue and cost of sales from other operations
2022 2021
Cost of sales Cost of sales
Revenue from from other Revenue from from other
other operations operations other operations operations
Revenue from sales of
materials 24,114,807 22,329,521 29,458,918 28,637,352
Others 3,337,950 1,202,082 3,476,930 796,602
27,452,757 23,531,603 32,935,848 29,433,954
In 2022, cost of sales from other operations was mainly material costs, which accounted for
over 80% of total cost of sales from other operations (2021: over 80%).
(c) In 2022, among the Group’s revenue from main operations, the amount recognised at a
point in time accounted for above 90% (2021: 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.
(50) Interest income and interest costs
The Group’s interest income and expenses arising from financial business are presented as
follows:
2022 2021
Interest income from loans and advances 1,614,497 1,818,709
Including: Interest income from loans and
advances to corporations and
individuals 1,565,168 1,710,237
Interest income from note
discounting 49,329 108,472
Interest income from deposits with banks,
other financial institutions and the
Central Bank 175,957 308,334
Interest income 1,790,454 2,127,043
Interest costs (49,461) (87,066)
1,740,993 2,039,977
(51) Taxes and surcharges
2022 2021
City maintenance and construction tax 543,225 593,476
Educational surcharge 406,480 438,826
Others 616,179 577,082
1,565,884 1,609,384
- 81 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(52) Selling and distribution expenses
2022 2021
Selling and distribution expenses 28,716,121 28,647,344
In 2022, 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 (2021: over 70%).
(53) General and administrative expenses
2022 2021
General and administrative expenses 11,582,664 10,266,283
In 2022, 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 (2021: over 80%).
(54) R&D expenses
2022 2021
R&D expenses 12,618,506 12,014,907
In 2022, R&D expenses were mainly employee benefits, depreciation and amortisation
expenses, technical development fee, trial products and material inputs expenses, which
accounted for over 90% of total R&D expenses (2021: over 90%).
In 2022, the cost of sales, selling and distribution expenses, general and administrative
expenses and R&D expenses in the income statement were mainly material costs and
employee benefits, which accounted for over 80% of total cost of sales, selling and
distribution expenses, general and administrative expenses and R&D expenses (2021: over
80%)
(55) Financial income
The Group's financial income, other than those arising from financial business (Note 4(50)),
are presented as follows:
2022 2021
Interest expenses (a) (1,830,915) (1,357,564)
Less: Interest income 5,837,713 5,181,658
Exchange gains or losses (507,081) 798,120
Others (112,226) (236,103)
3,387,491 4,386,111
(a) In 2022, interest costs on lease liabilities of the Group amounted to approximately RMB
111,773,000 (2021: RMB 104,903,000).
- 82 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(56) Asset impairment losses
2022 2021
Losses on decline in the value of
inventories (Note 4(10)) 448,591 447,348
Impairment losses on intangible assets
(Note 4(20)) 48,593 -
Impairment losses on contract assets 24,422 1,050
Impairment losses of long-term equity
investments 6,179 -
Impairment losses on fixed assets (Note
4(17)) 5,578 -
Impairment losses on construction in
progress - 35,022
533,363 483,420
(57) Credit impairment losses
2022 2021
Losses on bad debts of accounts
receivable (Note 4(4)) 475,357 85,189
(Reversal of)/Losses on bad debts of other
receivables (Note 4(5)) (2,776) 115,463
Losses on bad debts of notes receivable
(Note 4(3)) 30,132 31,277
Impairment losses on loans and advances
(Note 4(9)) 11,202 142,943
(Reversal of)/Losses on impairment of
long-term receivables (Note 4(14)) (229) 8,579
513,686 383,451
(58) Gains or losses on changes in fair value
2022 2021
Derivative financial instruments (815,922) (129,248)
Structural deposits 44,562 313,349
Investments in equity instruments 1,022,531 (17,695)
251,171 166,406
- 83 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(59) Investment income
2022 2021
Investment income from associates 608,278 560,679
Investment income from holding of financial
assets held for trading 167,002 635,828
Investment (losses)/income from disposal
of derivative financial assets and
liabilities (519,923) 510,932
Investment income from disposal of
financial assets held for trading - 150,075
Others (b) (47,303) 508,259
208,054 2,365,773
(a) There is no significant restriction on recovery of investment income of the Group.
(b) As disclosed in Note 4(3)(b), few of notes receivable were discounted and derecognised by
certain subsidiaries of the Group, with loss incurred included in investment income.
(60) (Losses)/Gains on disposal of assets
2022 2021
Gains on disposal of non-current assets 72,397 110,439
Losses on disposal of non-current assets (132,251) (52,182)
(59,854) 58,257
(61) Other income
Asset related/
2022 2021 Income related
Special subsidy 1,896,113 1,307,504 Income related
(62) Income tax expenses
2022 2021
Current income tax calculated based on tax
law and related regulations 7,500,259 5,959,551
Deferred income tax (2,354,559) (1,257,383)
5,145,700 4,702,168
- 84 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Income tax expenses (Cont’d)
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:
2022 2021
Total profit 34,955,931 33,717,544
Income tax calculated at tax rate of 25% 8,738,983 8,429,386
Effect of different tax rates applicable to
subsidiaries (2,302,968) (2,703,750)
Effect of income tax annual filing for prior
periods (45,762) 1,453
Income not subject to tax (544,607) (566,876)
Costs, expenses and losses not deductible
for tax purposes 486,777 476,697
Utilisation of previous temporary
differences or deductible losses for
which no deferred tax assets were
recognised in prior periods (106,106) (75,134)
Others (1,080,617) (859,608)
Income tax expenses 5,145,700 4,702,168
(63) 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 parent company by the weighted average number of
outstanding ordinary shares:
Unit 2022 2021
Consolidated net profit attributable to
ordinary shareholders of the parent
company RMB’000 29,553,507 28,573,650
Less: Dividends payable to restricted
shares RMB’000 (63,556) (82,152)
29,489,951 28,491,498
Weighted average number of
outstanding ordinary shares Thousand shares 6,790,926 6,837,497
Basic earnings per share RMB Yuan/share 4.34 4.17
Including:
- Basic earnings per share from
continuing operations: 4.34 4.17
- Basic earnings per share for
discontinued operations: - -
- 85 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Calculation of basic and diluted earnings per share (Cont’d)
(b) Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the diluted weighted average number of
outstanding ordinary shares:
Unit: 2022 2021
Consolidated net profit attributable to
ordinary shareholders of the parent
company RMB’000 29,553,248 28,573,650
Weighted average number of
outstanding ordinary shares Thousand shares 6,790,926 6,837,497
Weighted average number of ordinary
shares increased from share-based
payment Thousand shares 28,297 68,827
Weighted average number of diluted
outstanding ordinary shares Thousand shares 6,819,223 6,906,324
Diluted earnings per share RMB Yuan/share 4.33 4.14
(64) Notes to the cash flow statement
(a) Cash received relating to other operating activities
2022 2021
Other income 2,566,471 1,749,871
Revenue from other operations 3,190,182 3,373,578
Non-operating income 378,645 568,484
Financial income - interest income 765,716 323,155
Others 394,943 585,734
7,295,957 6,600,822
(b) Cash paid relating to other operating activities
2022 2021
Selling and distribution expenses
(excluding employee benefits and taxes
and surcharges) 22,884,362 22,917,401
General and administrative expenses and
R&D expenses (excluding employee
benefits and taxes and surcharges) 10,504,557 10,886,493
Others 1,076,588 421,836
34,465,507 34,225,730
- 86 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Notes to the cash flow statement (Cont’d)
(c) Supplementary information to the cash flow statement
Reconciliation of net profit to cash flows from operating activities is as follows:
2022 2021
Net profit 29,810,231 29,015,376
Add: Asset impairment losses 533,363 483,420
Credit impairment losses 513,686 383,451
Depreciation and amortisation 6,507,920 6,182,852
Losses/(Gains) on disposal of assets 59,854 (58,257)
Gains or losses on changes in fair
value 251,171 166,406
Financial income (3,226,913) (3,119,978)
Investment income (208,054) (2,365,773)
Increase in deferred tax assets (1,896,424) (779,754)
Decrease in deferred tax liabilities (424,557) (647,495)
Increase in inventories (423,933) (15,201,834)
Increase in operating receivables (19,423,895) (5,453,539)
Increase in operating payables 21,556,429 24,908,660
Share-based payments and others 1,028,950 1,578,169
Net cash flows from operating activities 34,657,828 35,091,704
Net increase/(decrease) in cash and cash
equivalents:
Cash and cash equivalents at the end of
the year 51,131,968 40,550,039
Less: Cash and cash equivalents at the
beginning of the year (40,550,039) (23,548,508)
Net increase in cash and cash equivalents 10,581,929 17,001,531
- 87 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(64) Notes to the cash flow statement (Cont’d)
(d) Cash payments relating to other financing activities
31 December 2022 31 December 2021
Acquisition of minority interests 2,773,676 457,798
Repurchase of outstanding shares 2,637,021 13,665,744
Others 1,522,822 1,106,742
6,933,519 15,230,284
(e) Composition of cash and cash equivalents
31 December 2022 31 December 2021
Cash on hand 1,645 1,609
Cash at bank that can be readily drawn on
demand 26,670,319 17,923,603
Deposits with the Central Bank that can be
readily drawn on demand 172,394 272,949
Deposits with banks and other financial
institutions that can be readily drawn on
demand 24,287,610 22,351,878
Cash and cash equivalents at the end of
the year 51,131,968 40,550,039
- 88 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(65) Monetary items denominated in foreign currencies
31 December 2022
Foreign currency
balance Exchange rate RMB balance
Cash at bank and on hand
USD 609,434 6.9646 4,244,463
JPY 16,255,134 0.0524 851,769
HKD 1,425,846 0.8933 1,273,708
EUR 193,599 7.4229 1,437,066
BRL 42,876 1.3348 57,231
VND 368,026,667 0.0003 110,408
Other currencies Not applicable Not applicable 1,871,026
Sub-total 9,845,671
Accounts receivable
USD 1,100,260 6.9646 7,662,872
JPY 11,525,763 0.0524 603,950
HKD 36,138 0.8933 32,282
EUR 474,305 7.4229 3,520,717
BRL 1,304,874 1.3348 1,741,746
VND 1,219,460,000 0.0003 365,838
Other currencies Not applicable Not applicable 2,718,768
Sub-total 16,646,173
Other receivables
USD 50,652 6.9646 352,771
JPY 1,510,344 0.0524 79,142
HKD 3,427 0.8933 3,061
EUR 28,835 7.4229 214,039
BRL 76,722 1.3348 102,409
Other currencies Not applicable Not applicable 270,417
Sub-total 1,021,839
Short-term borrowings
USD 84,705 6.9646 589,938
EUR 430,826 7.4229 3,197,982
BRL 176,101 1.3348 235,059
Other currencies Not applicable Not applicable 198,248
Sub-total 4,221,227
- 89 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(65) Monetary items denominated in foreign currencies (Cont’d)
31 December 2022
Foreign currency
balance Exchange rate RMB balance
Accounts payable
USD 296,297 6.9646 2,063,593
JPY 6,228,492 0.0524 326,373
HKD 15,264 0.8933 13,635
EUR 268,679 7.4229 1,994,377
BRL 341,988 1.3348 456,486
Other currencies Not applicable Not applicable 1,714,350
Sub-total 6,568,814
Other payables
USD 13,402 6.9646 93,341
JPY 8,671,927 0.0524 454,409
HKD 1,863 0.8933 1,664
EUR 1,049 7.4229 7,784
Other currencies Not applicable Not applicable 100,053
Sub-total 657,251
Current portion of non-
current liabilities
EUR 33,566 7.4229 249,157
USD 50,031 6.9646 348,445
Other currencies Not applicable Not applicable 116,437
Sub-total 714,039
Long-term borrowings
USD 3,405,553 6.9646 23,718,315
Other currencies Not applicable Not applicable 11,307,295
Sub-total 35,025,610
Debentures payable
USD 454,242 6.9646 3,163,616
Lease liabilities
EUR 91,819 7.4229 681,561
JPY 1,649,676 0.0524 86,443
Other currencies Not applicable Not applicable 74,986
Sub-total 842,990
- 90 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(65) Monetary items denominated in foreign currencies (Cont’d)
31 December 2021
Foreign currency
balance Exchange rate RMB 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
- 91 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(65) Monetary items denominated in foreign currencies (Cont’d)
31 December 2021
Foreign currency
balance Exchange rate RMB 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
Other currencies Not applicable Not applicable 6,905,912
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.
- 92 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 Midea Venture Capital Management Co., Ltd. and its subsidiaries
(including structured entities) in January 2022, Wuhan TTium Motor Technology Co., Ltd.
and its subsidiaries in April 2022 and KONG Intelligent Environment (Xi'an) Co., LTD
(formerly known as Shaanxi Construction Investment Co., Ltd.) in May 2022.
The acquisition has 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's wholly-owned subsidiary Anhui Welling Auto Parts Corporation Limited
established Anqing Welling Auto Parts Corporation Limited in January 2022, holding 100%
of the shares.
Annto Logistics Supply Chain Technology Co., Ltd. and Foshan Annto Logistics Technology
Co., Ltd., the Company's subsidiaries, established Tianjin Antu Supply Chain Management
Co., Ltd. in January 2022, 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 Guangdong Midea Smart Home Retail Co.,
Ltd. in January 2022, 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 Guangdong Midea Smart Home Technology
Co., Ltd. in January 2022, 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 Wuhu Yubian Intelligent Technology Co., Ltd.
in February 2022, holding 95% and 5% of the shares respectively.
Midea International Corporation Company Limited, a wholly-owned subsidiary of the
Company, established MC Innovation Center Co., Ltd. in February 2022, holding 100% of
the shares.
- 93 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes of consolidation scope due to other reasons (Cont’d)
(a) Increase of consolidation scope (Cont’d)
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home
Technology Co., Ltd., wholly-owned subsidiaries of the Company, established Wuhu Midea
Smart Home Co., Ltd., Haikou Midea Smart Home Appliances Sales Co., Ltd., Hangzhou
Midea Smart Home Co., Ltd., Foshan Midea Smart Home Co., Ltd., Lanzhou Midea Smart
Home Appliances Sales Co., Ltd., Tianjin Midea Smart Home Co., Ltd., Hefei Midea Smart
Home Co., Ltd., Changsha Midea Smart Home Co., Ltd., Guangzhou Midea Smart Home
Co., Ltd., Wuxi Midea Smart Home Co., Ltd., Kunming Midea Smart Home Co., Ltd., Ji’nan
Midea Smart Home Co., Ltd., Chengdu Midea Smart Home Co., Ltd., Nanyang Midea Smart
Home Co., Ltd., Xi’an Midea Smart Home Appliances Sales Co., Ltd., Beijing Midea Smart
Home Co., Ltd., Guizhou Midea Smart Home Co., Ltd., Linyi Midea Smart Home Appliances
Sales Co., Ltd., Nanning Midea Smart Home Appliances Sales Co., Ltd., Wuhan Midea
Smart Home Co., Ltd. and Xuzhou Midea Smart Home Co., Ltd. in March 2022, 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 Guizhou Midea Digi-Port Technology Co.,
Ltd. in April 2022, holding 95% and 5% of the shares respectively.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home
Technology Co., Ltd., wholly-owned subsidiaries of the Company, established Shijiazhuang
Midea Smart Home Co., Ltd., Nanjing Midea Smart Home Co., Ltd., Fuzhou Midea Smart
Home Co., Ltd., Nanchang Midea Smart Home Co., Ltd., Urumchi Midea Smart Home Co.,
Ltd., Chongqing Midea Smart Home Co., Ltd. and Ningbo Midea Smart Home Co., Ltd. in
April 2022, holding 95% and 5% of the shares respectively.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home
Technology Co., Ltd., wholly-owned subsidiaries of the Company, established Shenzhen
Midea Smart Home Appliances Sales Co., Ltd. and Changchun Midea Smart Home
Appliances Sales Co., Ltd. in May 2022, holding 95% and 5% of the shares respectively.
Midea Electrics Netherlands B.V., a wholly-owned subsidiary of the Company, established
Midea Electrics France in June 2022, holding 100% of the shares.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home
Technology Co., Ltd., wholly-owned subsidiaries of the Company, established Zhengzhou
Midea Smart Home Co., Ltd. and Taiyuan Midea Smart Home Co., Ltd. in June 2022, holding
95% and 5% of the shares respectively.
Kuka Deutschland GmbH, a subsidiary of the Company, established Kuka TR Robot
Teknolojileri Sanayi Ticaret Anonim Sirketi in June 2022, holding 100% of the shares.
- 94 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes of consolidation scope due to other reasons (Cont’d)
(a) Increase of consolidation scope (Cont’d)
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home
Technology Co., Ltd., wholly-owned subsidiaries of the Company, established Shanghai
Midea Smart Home Co., Ltd., Qingdao Midea Smart Home Co., Ltd. and Shenyang Midea
Smart Home Co., Ltd. in July 2022, holding 95% and 5% of the shares respectively.
Guangdong Midea Intelligent Technologies Co., Ltd., a wholly-owned subsidiary of the
Company, established Shanghai Gaochuang Jiedong Control Technology Co., Ltd. in July
2022, holding 100% of the shares.
Clivet, a wholly-owned subsidiary of the Company, established Clivet France SAS in
October 2022, holding 100% of the shares.
Visual Components Oy, a wholly-owned subsidiary of the Company, acquired Delfoi
Robotics OY in October 2022, holding 100% of the shares.
Wuxi Little Swan Electric Co., Ltd. and Foshan Midea Air-conditioning Industry Investment
Co., Ltd., the Company's wholly-owned subsidiaries, established Wuxi Meizhi Electric Co.,
Ltd. in November 2022, holding 95% and 5% of the shares respectively.
(b) Decrease of consolidation scope
Decrease of consolidation scope in the current year mainly includes deregistration and
disposal of subsidiaries. Details are as follows:
Disposal method of Disposal time-point
Name of entity the equity of the equity
Shanghai Guifu Information Technology Co.,
Ltd. Deregistration January 2022
Wuhan Hiconics Electric Drive Technology
Co., Ltd. Change of equity March 2022
Shenzhen Midea Financial Leasing Co., Ltd. Deregistration May 2022
Ningbo Lingmei Enterprise Management
Partnership (L.P.) Deregistration June 2022
Hong Kong Hiconics Co., Limited Deregistration August 2022
Guangzhou Wandong Medical Equipments
Co.,Ltd. Deregistration August 2022
Meminent Science and Technology Co., Ltd. Deregistration September 2022
Wuhu Jumei New Energy Co., Ltd. Deregistration November 2022
- 95 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
Business combinations involving
GD Midea Air-Conditioning Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture and sales of air conditioner 73% 7% enterprises not under common control
GD Midea Group Wuhu Air-Conditioning Business combinations involving
Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture and sales of air 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
Co., Ltd. Chongqing, PRC Chongqing, PRC Manufacture and sales of air 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. Co., Manufacture of small household Business combinations involving
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
Midea Group Finance Co., Ltd. Foshan, PRC Foshan, PRC Financial industry 95% 5% Establishment
Business combinations involving
Midea Microfinance Co., Ltd. Wuhu, PRC Wuhu, PRC Petty loan 5% 95% enterprises not under common control
British Virgin British Virgin
Mecca International (BVI) Limited 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 household appliances - 100% enterprises not under common control
- 96 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
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 - 100% 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 intelligent
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
British Virgin British Virgin
Midea Investment Development Company Limited Islands Islands Investment - 100% Establishment
Guangdong Midea Smart Technology Industry Business combinations involving
Investment Fund (LLP) (i) Foshan, PRC Foshan, PRC Investment - 29% enterprises not under common control
Midea America Corp. USA USA Sales of household appliances - 100% Establishment
Anhui Meizhi Precision Manufacturing Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioner 95% 5% Establishment
Hubei Midea Refrigerator Co., Ltd. Jingzhou, PRC Jingzhou, PRC Manufacture of refrigerator 97% 3% Establishment
Wuhu Midea Smart Kitchen Appliance Manufacture of small household
Manufacturing Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 95% 5% Establishment
Hubei Midea Laundry Appliance Co., Ltd. Jingzhou, PRC Jingzhou, PRC Manufacture of laundry appliance - 100% Establishment
Midea Refrigeration Equipment (Thailand) Co.,
Ltd. Thailand Thailand Manufacture of air conditioner - 100% Establishment
(i) Guangdong Midea Smart Technology Industry Investment Fund (LLP) is a structured entity managed and invested by the Group. The variable return
enjoyed by the Group through participating in the activities related to such entity has a significant impact, and the Group has the ability to use its
power over the entity to affect the amount of the entity's returns.
- 97 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont’d)
(2) Interests in associates
The Group’s associates have no significant influence on the Group and are summarised as
follows:
2022 2021
Aggregated carrying amount of
investments 5,188,817 3,796,705
Aggregate of the following items in
proportion
Net profit (i) 608,278 560,679
Other comprehensive income (i) 17,391 (3,032)
Total comprehensive income 625,669 557,647
(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.
7 Segment information
The reportable segments of the Group are the business units that provide different products
or services, or operate in different areas. Different businesses or areas require different
technologies and marketing strategies, the Group, therefore, separately manages the
production and operation of each reportable segment and evaluates their operating results
respectively, in order to make decisions about resources to be allocated to these segments
and to assess their performance.
The Group identified 4 reportable segments as follows:
- Heating & ventilation, as well as air-conditioner
- Consumer appliances
- Robotics and automation system
- Others
Inter-segment transfer prices are determined based on negotiation by both parties with
reference to selling prices for third parties.
The assets are allocated based on the operations of the segments and the physical locations
of the assets. The liabilities are allocated based on the operations of the segments.
Expenses indirectly attributable to the segments are allocated based on the proportion of
each segment’s revenue.
Operating expenses include cost of sales, interest costs, fee and commission expenses,
taxes and surcharges, selling and distribution expenses, general and administrative
expenses, R&D expenses and financial income.
- 98 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 is as follows:
Heating &
ventilation, as Robotics and Other
well as air- Consumer automation segments and
conditioner appliances system unallocated Elimination Total
Revenue from external customers 167,072,126 135,631,425 30,203,793 12,801,362 - 345,708,706
Inter-segment revenue 3,674,995 902,151 373,373 7,288,925 (12,239,444) -
Operating costs and expenses (155,057,892) (121,217,521) (30,107,864) (17,488,764) 12,180,514 (311,691,527)
Segment profit 15,689,229 15,316,055 469,302 2,601,523 (58,930) 34,017,179
Other profit or loss 938,752
Total profit 34,955,931
Total assets 173,419,099 160,854,058 41,186,669 203,093,817 (155,998,376) 422,555,267
Total liabilities 122,574,760 126,523,988 33,478,351 186,475,612 (198,421,246) 270,631,465
Long-term equity investments in
associates 396,327 113,029 39,183 4,640,278 - 5,188,817
Investment income/(losses) from
associates 254,487 (134) 1,220 352,705 - 608,278
Increase in non-current assets (excluding
long-term equity investments, financial
assets, goodwill and deferred tax
assets) 4,663,285 3,318,915 1,303,041 2,021,440 - 11,306,681
Asset impairment losses 107,496 191,771 221,592 12,504 - 533,363
(Reversal of)/Losses on credit impairment (26,109) 468,842 10,611 29,377 30,965 513,686
Depreciation of right-of-use assets 101,436 196,536 257,379 625,754 (7,520) 1,173,585
Depreciation and amortisation expenses 2,106,703 1,629,145 1,018,491 579,996 - 5,334,335
- 99 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2021 is as follows:
Heating &
ventilation, as Robotics and Other
well as air- Consumer automation segments and
conditioner appliances system unallocated Elimination Total
Revenue from external customers 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 costs and 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 expenses 2,075,059 1,441,245 1,161,783 592,307 - 5,270,394
- 100 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont’d)
(b) Geographical area information
The Group’s revenue from external customers domestically and in foreign countries or
geographical areas, and the total non-current assets other than long-term equity
investments, financial assets, goodwill and deferred tax assets located domestically and in
foreign countries or geographical areas (including Germany, Hong Kong of China,
Singapore, Japan, the USA, Italy and South America) are as follows:
Revenue from external customers 2022 2021
Domestic 203,063,764 205,706,997
In other countries/geographical areas 142,644,942 137,653,828
345,708,706 343,360,825
Total non-current assets 31 December 2022 31 December 2021
Domestic 34,458,577 31,293,535
In other countries/geographical areas 17,914,192 16,863,065
52,372,769 48,156,600
In 2022 and 2021, revenue from each individual customer is lower than 10% of the Group’s
total revenue.
9 Related parties and significant related party transactions
(1) Information of the parent company
(a) General information of the parent company
Place of Nature of
Name of the parent company Relationship registration 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 2022 and
31 December 2021
Midea Holding Co., Ltd. 330,000
- 101 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022 31 December 2021
Voting Voting
Shareholding (%) rights (%) Shareholding (%) rights (%)
Direct Indirect Direct Indirect
Midea Holding Co., Ltd. 31.00% - 31.00% 31.05% - 31.05%
(2) Information of the Company's subsidiaries
Please refer to Note 6(1) for the information of the Company’s material subsidiaries.
(3) Information of other related parties
Name of other related parties Relationship
Controlled by direct relatives of the
Orinko Advanced Plastics Co., Ltd. Company’s ultimate controlling shareholder
Guangdong Ruizhu Intelligent Technology Controlled by the Company’s ultimate
Co., Ltd. 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 are conducted in accordance with normal
commercial terms at agreed price by reference to the market price.
(a) Purchase of goods:
Content of related party
Related parties transactions 2022 2021
Orinko Advanced Plastics Co.,
Ltd. Purchase of goods 1,399,675 1,506,809
Foshan Micro Midea Filter Mfg.
Co., Ltd. Purchase of goods 330,330 358,641
Guangdong Wellkey Electrician
Material Co., Ltd. (i) Purchase of goods — 958,908
Anhui Wellkey Electrician
Material Co., Ltd. (i) Purchase of goods — 522,549
1,730,005 3,346,907
(i) As at 31 December 2022, Guangdong Wellkey Electrician Material Co., Ltd. and Anhui
Wellkey Electrician Material Co., Ltd. were not related parties of the Company due to
changes in equity relationship.
- 102 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 party
Related parties transactions 2022 2021
Guangdong Ruizhu Intelligent
Technology Co., Ltd. Sales of goods 197,787 202,625
(c) Investment income and interest income
2022 2021
Guangdong Shunde Rural Commercial
Bank Co., Ltd. 366,918 223,659
(d) Remuneration of key management
2022 2021
Remuneration of key management 101,109 83,530
(5) Balances with related parties
31 December 31 December
2022 2021
Cash at bank and on hand,
other current assets and Guangdong Shunde
current portion of non-current Rural Commercial
assets, etc. Bank Co., Ltd. 11,177,251 6,218,638
31 December 31 December
2022 2021
Orinko Advanced Plastics
Accounts payable Co., Ltd. 93,665 150,002
Foshan Micro Midea
Filter Mfg. Co., Ltd. 65,207 80,498
Guangdong Wellkey
Electrician Material
Co., Ltd. — 186,309
Anhui Wellkey Electrician
Material Co., Ltd. — 96,106
Guangdong Wellkey
Electrician Material
Notes payable Co., Ltd. — 54,613
- 103 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 ninth share option incentive plan (the “Ninth Share Option Incentive Plan”)
approved at the 2021 annual shareholders’ meeting in 2022, the Company actually granted
107,693,000 share options with exercise price of RMB 54.61 to 2,813 employees. Under
the circumstance that the Company meets expected performance, 30%, 30% and 40% of
the total share options granted will become effective after 2 years, 3 years and 4 years
respectively since 8 June 2022.
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% and 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
Ninth share option Eighth share option
Exercise price of options: RMB 54.61 RMB 81.41
Effective period of options: 5 years 5 years
Current price of underlying shares: RMB 52.99 RMB 77.73
Estimated fluctuation rate of share price: 35.70% 35.78%
Estimated dividend rate: 2.17% 2.42%
Risk-free interest rate within effective
period of options: 2.00% 2.34%
The fair value of the Ninth Share Option Incentive Plan calculated pursuant to the above
parameters is: RMB 1,334,978,000 (the Eighth Share Option Incentive Plan: RMB
1,457,678,000).
(b) Movements in share options during the year ended 31 December 2022
2022 2021
(Share in thousands) (Share in thousands)
Share options issued at the beginning of
the year 198,770 168,231
Share options granted during the year 107,693 82,260
Share options exercised during the year (18,602) (34,437)
Share options lapsed during the year (12,313) (17,284)
Share options issued at the end of the year 275,548 198,770
- 104 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont'd)
(1) Share option incentive plan (Cont'd)
(b) Movements in share options during the year ended 31 December 2022 (Cont'd)
As at 31 December 2022, 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 on 3 June 2026. The residual
contractual maturity date of the Ninth Share Option Incentive Plan is on 7 June 2027.
(2) Restricted share plan
(a) Pursuant to the restricted shares incentive plan for 2022 approved at the 2021 annual
shareholders’ meeting in 2022 (the "Restricted Shares Incentive Plan for 2022"), the
Company granted 12,152,500 restricted shares with exercise price of RMB 26.47 to 191
incentive recipients. Under the circumstance that the Company meets expected
performance, 30%, 30% and 40% of the total restricted shares granted will be unlocked after
2 years, 3 years and 4 years respectively since 8 June 2023. The listing date for the granted
restricted shares of this plan is 13 July 2022.
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
incentive recipients. Under the circumstance that the Company meets expected
performance, 30%, 30% and 40% of the total restricted shares granted will be unlocked after
2 years, 3 years and 4 years respectively since 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 ended 31 December 2022
2022 2021
(Share in thousands) (Share in thousands)
Restricted shares issued at the beginning
of the year 62,267 74,082
Restricted shares granted during the year 12,153 9,940
Restricted shares unlocked during the year (16,316) (15,882)
Restricted shares lapsed during the year (7,893) (5,873)
Restricted shares issued at the end of the
year 50,211 62,267
- 105 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont'd)
(3) Employee stock ownership plan
Pursuant to the eighth stock ownership plan of the Midea Global Partner Plan (the “Eighth
Global Partner Plan”) approved at the shareholders' meeting for the year ended 31
December 2021 held during the year 2022, the Company would purchase a total of
3,770,433 shares of Midea Group from the secondary market, with an average purchase
price of RMB 56.28 per share and the purchase fund was the special fund of approximately
RMB 212,200,000 accrued by the Company. The Company then entrusted China
International Capital Corporation Limited (“CICC”) to provide an asset management plan.
Pursuant to the fifth stock ownership plan of the Midea Business Partner Plan (the “Fifth
Business Partner Plan”) approved at the shareholders' meeting for the year ended 31
December 2021 held during the year 2022. The Company would purchase a total of
2,826,759 shares of Midea Group from the secondary market, with an average purchase
price of RMB 56.28 per share. The purchase fund was the special fund for the stock
ownership plan and part of performance bonus for management of approximately RMB
159,090,000 in total accrued by the Company. The Company then entrusted CICC to provide
an asset management 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 CICC to provide
an asset management plan.
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.
(4) The total expenses due to the above share-based payment incentive plan, which were
granted, recognised for the year ended 31 December 2022 were approximately RMB
1,028,950,000 (2021: RMB 1,578,070,000). As at 31 December 2022, the balance relating
to the share-based payment incentive plan and accrued from capital surplus was
approximately RMB 2,279,108,000 (31 December 2021: RMB 2,161,354,000).
- 106 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
11 Contingencies
As at 31 December 2022, the amount in tax disputes involving Brazilian subsidiary with 51%
interests held by the Company was about BRL 741 million (equivalent to RMB 990 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 are still at court. With reference to judgements of third-party attorneys,
management believes that the probability of losing lawsuits and making compensation is
small, and has 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 210 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 2022 31 December 2021
Buildings, machinery and equipment 5,145,982 5,990,809
13 Events after the balance sheet date
(1) Overview of profit distribution
On 27 April 2023, on the basis of the total shares 6,875,060,728 to be distributed (total
7,021,698,756 shares net of repurchased 146,638,028 shares) of the Company at the date
on which the financial statements were authorised for issue, the Board of Directors proposed
a distribution of cash dividends of RMB 17,187,651,820 at RMB 25 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.
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 2022 31 December 2021
Within 1 year 62,028 53,370
1 to 2 years 62,643 52,871
2 to 3 years 56,275 45,965
3 to 4 years 58,624 44,678
4 to 5 years 57,669 43,903
Over 5 years 471,342 501,571
768,581 742,358
- 107 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks
The Group is exposed to various financial risks in the ordinary course of business, mainly
including:
Market risk (mainly including foreign exchange risk, interest rate risk and other price
risk)
Credit risk
Liquidity risk
The following mainly relates to the above risk exposures and relevant causes, objectives,
policies and process of risk management, method of risk measurement, etc.
The objective of the Group's risk management is to seek balance between risk and income,
minimising the adverse impact of financial risks on the Group's financial performance.
Pursuant to the risk management objective, the Group has made risk management policies
to identify and analyse the risks it is exposed to and set appropriate risk resistant level and
design relevant internal control procedures to monitor the Group’s risk level. The Group
reviews regularly these risk management policies and relevant internal control systems to
adapt to changes in market condition or its operating activities.
(1) Market risk
(a) Foreign exchange risk
The Group mainly operates in China, Europe, the USA, Asia, South America and Africa for
the manufacturing, sales, investments and financing activities. Any foreign currency
denominated monetary assets and liabilities other than in RMB would subject the Group to
the risk arising from fluctuation of exchange rate.
The Group’s finance department has a professional team to manage the risk arising of
fluctuation of exchange rate, with approach of the natural hedge for settling currencies,
signing forward foreign exchange hedging contracts and controlling the scale of foreign
currency assets and liabilities, to minimise foreign exchange risk, and to reduce the impact
of exchange rate fluctuations on business performance.
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term
borrowings and debentures payable. Financial liabilities issued at floating rates expose the
Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the
Group to fair value interest rate risk. The Group determines the relative proportions of its
fixed rate and floating rate contracts depending on the prevailing market conditions. As at
31 December 2022, the Group’s long-term interest bearing borrowings at floating rate are
long-term borrowings.
The Group’s finance department at its headquarters continuously monitors the interest rate
position of the Group. Increases in interest rates will increase the cost of new borrowing and
the interest costs with respect to the Group’s outstanding floating rate borrowings, and
therefore could have a material adverse effect on the Group’s financial performance.
Management makes adjustments timely with reference to the latest market conditions and
may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.
- 108 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(1) Market risk (Cont’d)
(b) Interest rate risk (Cont’d)
As at 31 December 2022, 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 1,739,000 (31 December 2021: RMB 4,459,000).
(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 (excluding the hedging instruments mentioned in Note
4(16)) and investments in other equity instruments measured at fair value. As at 31
December 2022, 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 2022, if the Group’s expected price of above mentioned investments in
equity instruments had risen or fallen by 10% while other factors had been remained
constant, the Group would have an increase or decrease in profit before tax amounting to
approximately RMB 761,315,000 (31 December 2021: approximately RMB 723,234,000),
and an increase or decrease in other comprehensive income amounting to approximately
RMB 4,136,000 (31 December 2021: approximately RMB 4,574,700).
(2) Credit risk
Credit risk is managed on a grouping basis. Credit risk mainly arises from cash at bank and
on hand, deposits with the Central Bank, deposits with banks and other financial institutions,
notes receivable, accounts receivable, receivables financing, 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 banks.
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.
In addition, the amount and type of collateral required for loans and advances depend on
an assessment of the credit risk of the counterparty. The collaterals pledged for pledged
loans are mainly receivables and inventories. The Group monitors the market value of the
collaterals, requests additional collaterals according to relevant agreements and monitors
the market value of collaterals when reviewing the adequacy of provision for impairment. As
at 31 December 2022, the Group had no significant collateral or other credit enhancements
held as a result of the debtor's mortgage (31 December 2021: Nil).
- 109 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(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.
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 2022
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 5,239,105 - - - 5,239,105
Customer deposits and
deposits from banks and
other financial
institutions (including
interest) 77,523 - - - 77,523
Notes payable 25,572,421 - - - 25,572,421
Accounts payable 64,233,225 - - - 64,233,225
Other payables 4,322,025 - - - 4,322,025
Financial liabilities held for
trading 1,580,771 - - - 1,580,771
Derivative financial
liabilities 234,606 - - - 234,606
Other current liabilities 17,801,575 - - - 17,801,575
Current portion of non-
current liabilities
(including interest) 7,508,788 - - - 7,508,788
Long-term borrowings
(including interest) 593,936 12,730,569 36,356,095 - 49,680,600
Debentures payable
(including interest) 90,261 90,261 3,359,723 - 3,540,245
Lease liabilities (including
interest) - 659,201 778,483 312,797 1,750,481
Other non-current liabilities - - 680,482 - 680,482
127,254,236 13,480,031 41,174,783 312,797 182,221,847
- 110 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
15 Financial instruments and risks (Cont’d)
(3) Liquidity risk (Cont’d)
31 December 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 the
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
(i) As at the balance sheet date, the Group did not provide financial guarantees to external
parties or loan commitments to related parties.
16 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the
fair value hierarchy of the lowest level input that is significant to the entire fair value
measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
- 111 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
16 Fair value estimates (Cont'd)
(1) Assets and liabilities measured at fair value on a recurring basis
As at 31 December 2022, the financial assets and liabilities measured at fair value on a
recurring basis by the above three levels are analysed below:
Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,264,595 2,019,998 - 3,284,593
Derivative financial assets - 665,484 - 665,484
Receivables financing - 13,526,540 - 13,526,540
Other current assets - hedging
instruments and transferable
certificate of deposit - 743,934 - 743,934
Other debt investments
(including the current portion) - 16,969,335 - 16,969,335
Investments in other equity
instruments - - 41,359 41,359
Other non-current financial
assets - 4,276,688 6,348,556 10,625,244
Total assets 1,264,595 38,201,979 6,389,915 45,856,489
Financial liabilities measured at fair
value -
Financial liabilities held for
trading - - 1,580,771 1,580,771
Derivative financial liabilities - 234,606 - 234,606
Other current liabilities - hedging
instruments - 79,933 - 79,933
Total liabilities - 314,539 1,580,771 1,895,310
- 112 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 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 current liabilities - hedging
instruments - 9,047 - 9,047
Total liabilities - 166,649 - 166,649
The Group takes the date on which events causing the transfers between the levels take
place as the timing specific for recognising the transfers. There was no significant transfer
of fair value measurement level of the above financial instruments.
The fair value of financial instruments traded in an active market is determined at the quoted
market price; and the fair value of those not traded in an active market is determined by the
Group using valuation technique. The valuation models used mainly comprise discounted
cash flow model and market comparable corporate model. Inputs of valuation technique
mainly comprise risk-free interest rate, floating rate, foreign exchange rate, financial data of
target companies and market multiple of comparable companies.
- 113 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 assets and liabilities are analysed below:
Investments in other
equity instruments and
other non-current Financial liabilities held
financial assets for trading
1 January 2022 5,958,620 -
Increase 1,746,172 (1,766,953)
Decrease (190,586) 99,876
Transfer out of Level 3 (838,345) -
Total gains for the current period
Investment (losses)/income
recognised in the income
statement (409,005) 86,306
Gains recognised in other
comprehensive income 123,059 -
31 December 2022 6,389,915 (1,580,771)
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 into Level 3 28,666
Total gains for the 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
(a) The fair value of this part of other non-current financial assets, investments in other equity
instruments and financial liabilities held for trading is measured using discounted cash flows
approach and market comparable companies 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, market multiple of comparable companies and risk adjusted discount
rates.
Assets and liabilities subject to Level 2 fair value measurement are mainly receivables
financing, structural deposits, transferable certificate of deposit and cross-currency interest
rate swaps are evaluated by discounted cash flows approach, market approach and income
approach.
- 114 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 for which the fair value is disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly
include: cash at bank and on hand, 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
(excluding other debt investments due within one year mentioned in Note 4(11)), other
current assets (excluding those mentioned in Note 16(1)), notes payable, accounts payable,
contract liabilities, short-term borrowings, lease liabilities, long-term borrowings, debentures
payable, current portion of non-current liabilities, customer deposits and deposits from
banks and other financial institutions, other payables and other current liabilities.
Carrying amounts of the Group’s financial assets and financial liabilities measured at
amortised cost as at 31 December 2022 and 31 December 2021 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 2022 and 31 December 2021, the Group's gearing ratio is as follows:
31 December 2022 31 December 2021
Total liabilities 270,631,465 253,121,028
Total assets 422,555,267 387,946,104
Gearing ratio 64.05% 65.25%
18 Notes to the Company’s financial statements
(1) Other receivables
31 December 2022 31 December 2021
Other receivables 26,182,925 31,465,557
Less: Provision for bad debts (7,824) (17,708)
26,175,101 31,447,849
- 115 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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)
(a) Other receivables are analysed by ageing as follows:
31 December 2022 31 December 2021
Within 1 year 26,069,074 31,461,940
1 to 2 years 110,631 1,708
Over 2 years 3,220 1,909
26,182,925 31,465,557
(b) Provision for losses and changes in book balance statements
Stage 1 Stage 3
Lifetime ECL
12-month ECL (Grouping) 12-month ECL (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 2021 31,315,234 17,708 150,323 - - - 17,708
Transfer to Stage 3 in the
current year - - - - - - -
Net decrease in the current
year (5,200,268) (9,884) (82,364) - - - (9,884)
Including: Write-off in the
current year - - - - - - -
Derecognition - - - - - - -
31 December 2022 26,114,966 7,824 67,959 - - - 7,824
(i) As at 31 December 2022 and 31 December 2021, the Company had no other receivables
at Stage 2:
(c) Provision for bad debts
As at 31 December 2022 and 31 December 2021, other receivables of the Company at
Stage 1 are analysed as follows:
(i) As at 31 December 2022, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 67,959 0.00% - bad debt risks
As at 31 December 2021, other receivables for which the related provision for bad debts
was provided on an individual basis are analysed as follows:
12-month ECL Provision for
Book balance rate bad debts Reason
Relatively low
Stage 1 150,323 0.00% - bad debt risks
- 116 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 (Cont’d)
(ii) As at 31 December 2022 and 31 December 2021, other receivables for which the related
provision for bad debts was provided on a grouping basis were all at Stage 1, which are
analysed as follows:
31 December 2022 31 December 2021
Book Book
balance Provision for bad debts balance Provision for bad debts
Provision Provision
Amount Amount ratio Amount Amount ratio
Related parties and
security deposit/
guarantee payables
grouping 26,114,966 (7,824) 0.03% 31,315,234 (17,708) 0.06%
(d) As at 31 December 2022, the five largest other receivables aggregated by debtor are
analysed as follows:
% of total Provision for
Nature Balance Ageing balance bad debts
Company A Current accounts 21,331,391 Within 1 year 81.47% 6,399
Company B Current accounts 1,223,000 Within 1 year 4.67% 367
Company C Current accounts 1,206,130 Within 1 year 4.61% 362
Company D Current accounts 503,702 Within 1 year 1.92% 151
Company E Current accounts 458,672 Within 1 year 1.75% 138
24,722,895 94.42% 7,417
(2) Long-term equity investments
Long-term equity investments are classified as follows:
31 December 2022 31 December 2021
Subsidiaries (a) 69,705,046 64,376,850
Associates (b) 3,398,523 2,428,841
73,103,569 66,805,691
Less: Provision for impairment - -
73,103,569 66,805,691
- 117 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 for the current year
Cash dividends
attributable to the
Provision for parent company
31 December Increase in Decrease in Provision for 31 December impairment declared in the
2021 investment investment impairment Others 2022 Ending balance current year
Wuxi Little Swan Electric Co., Ltd. 20,266,584 - - - 47,039 20,313,623 - 1,205,831
Foshan Shunde Midea Household Appliances Industry Co.,
Ltd. 5,949,000 - - - 1,999 5,950,999 - -
Guangdong Midea Electric Co., Ltd. 5,000,000 - - - 1,072 5,001,072 - -
Beijing Wandong Medical Technology Co., Ltd. 2,297,093 2,051,910 - - - 4,349,003 - 31,958
Midea Group Finance Co., Ltd. 3,361,856 - - - 1,623 3,363,479 - -
Midea Innovation Investment Co., Ltd. 2,135,000 - - - - 2,135,000 - -
GD Midea Air-Conditioning Equipment Co., Ltd. 1,906,520 - - - 80,761 1,987,281 - -
Guangdong Midea Microwave Oven Manufacturing Co., Ltd. 1,880,041 - - - - 1,880,041 - -
Guangdong Midea Intelligent Technologies Co., Ltd. 1,059,451 800,000 - - 1,089 1,860,540 - -
Guangdong Meizhi Compressor Limited 289,972 1,104,610 - - 24,281 1,418,863 - -
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 1,171,449 - - - 30,412 1,201,861 - -
Hefei Midea Heating & Ventilating Equipment Co., Ltd. 1,080,049 - - - 3,371 1,083,420 - 1,455,842
Hainan Midea Building Technology Co., Ltd. 921,500 - - - - 921,500 - -
Midea Group (Shanghai) Co. Ltd. 912,585 - - - 7,842 920,427 - -
GD Midea Heating & Ventilating Equipment Co., Ltd. 850,748 - - - 48,687 899,435 - 1,075,099
Hubei Midea Refrigerator Co., Ltd. 874,840 - - - 10,298 885,138 - -
Anhui Meizhi Precision Manufacturing Co., Ltd. 831,698 - - - 3,114 834,812 - -
Wuhu Maty Air-Conditioning Equipment Co., Ltd. 772,668 - - - 4,088 776,756 - -
Guangdong Midea Building Technology Co., Ltd. 769,430 - - - - 769,430 - -
Wuhu Xinhe Technology Co., Ltd. 742,684 - - - - 742,684 - -
Guangdong Meizhi Precision-Manufacturing Co., Ltd. 77,435 536,453 - - 11,989 625,877 - -
Foshan Shunde Midea Washing Appliances Manufacturing
Co., Ltd. 567,730 - - - 27,315 595,045 - -
Hefei Midea Refrigerator Co., Ltd. 551,886 - - - 4,313 556,199 - -
Guangzhou Hualing Refrigerating Equipment Co., Ltd. 526,389 - - - 6,954 533,343 - -
Ningbo Midea United Materials Supply Co., Ltd. 501,044 - - - 2,376 503,420 - 920,621
Guangdong Midea Electromechanical Technology Co., Ltd. 500,000 - - - - 500,000 - -
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. 481,769 - - - - 481,769 - -
Guangzhou Midea Hualing Refrigerator Co., Ltd. 442,018 - - - 2,397 444,415 - -
GD Midea Environment Appliances Mfg. Co., Ltd. 409,734 - - - 7,648 417,382 - -
Anhui Meizhi Compressor Co., Ltd. 383,310 - - - 8,208 391,518 - -
Others 6,862,367 167,163 (155,346) - 486,530 7,360,714 - 5,589,773
64,376,850 4,660,136 (155,346) - 823,406 69,705,046 - 10,279,124
- 118 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for reference only]
18 Notes to the Company’s financial statements (Cont'd)
(2) Long-term equity investments (Cont’d)
(b) Associates
Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., Shenzhen Clou Electronics Co., Ltd. and Hefei Royalstar Motor
Co., Ltd. and other companies by the Company.
(3) Operating revenue
Operating revenue mainly comprises other operating revenue including the trademark
royalty income, rental income and management fee income, obtained by the Company from
the subsidiaries.
(4) Investment income
2022 2021
Income from long-term equity investments
under equity method 10,279,124 11,288,473
Investment income from associates 260,651 265,491
Investment income from holding of financial
assets held for trading 95,277 292,890
Others 282,904 615,249
10,917,956 12,462,103
There is no significant restriction on repatriation of the Company's investment income.
- 119 -
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
2022 2021
Gains or losses on disposal of non-current
assets (59,854) 77,527
Except for the effective hedging activities
related to the Group’s ordinary activities,
gains or losses on changes in fair value
arising from financial assets held for
trading, derivative financial assets,
financial liabilities held for trading,
derivative financial liabilities, other non-
current financial assets, and investment
income from disposal of financial assets
held for trading, derivative financial
assets, financial liabilities held for
trading, derivative financial liabilities,
other non-current financial assets (604,446) 995,824
Others (mainly including government
grants, reversal of provision for
impairment of receivables tested for
impairment on an individual basis,
compensation income, penalty income
and other non-operating income and
expenses) 1,777,103 2,352,849
1,112,803 3,426,200
Less: Effect of income tax (103,624) (668,578)
Effect of minority interests (after tax) (63,645) (113,058)
945,534 2,644,564
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 assets (%) per share per share
2022 2021 2022 2021 2022 2021
Net profit attributable to ordinary
shareholders of the Company 22.21% 24.09% 4.34 4.17 4.33 4.14
Net profit attributable to ordinary
shareholders of the Company, net
of non-recurring profit or loss 21.50% 21.86% 4.20 3.78 4.20 3.75
-1-
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
29 April 2023
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