Bem-vindo ao AVANÇOS! - Mideaimg.midea.com/global/about_midea/publications/201403/P... · Bem-vindo ao AVANÇOS! Join us in the first issue of the new year as we explore the Latin

www.midea.com Midea Advances Newsletter, January, 2013

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VOL 3, #1, January 2013, No. 25

Bem-vindo ao AVANÇOS!

Join us in the first issue of the new year as we explore the Latin American

market with the people of Midea Carrier ABC Joint Venture

(To our Spanish speaking friends in Argentina and Chile - don’t worry,

next month the cover will be yours ;)


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Midea

Advances Newsletter

Contents

NEWSLINE

Midea Air Conditioner Indus-

trial Design Stands Out Again PAGE 5

FEATURE

Midea CAC Holds Three

Seminars For New Digital

Scroll D4 Plus in Iraq and

Lebanon PAGE 3

Midea CAC’s 17th Global

Technical Training Session PAGE 4

Midea Advances Newsletter is published monthly

by the International Strategy Department of

Midea Group. We welcome all comments, sug-

gestions and contribution of articles, as well as

subscribing our newsletter. You can reach us at:

[email protected]

Midea Group

Add.: Midea HQ Building, No.6 Midea Ave, Bei-

jiao, Shunde, Foshan, Guangdong P.R.C. 528311

Tel: +86-757-2360 4714

Fax: 86-757-2660 5455

Web: www.midea.com

Publisher: International Strategy Dept.

Managing Editor:

Matthew Smith

Mandy Wang

Correspondents:

Himani Joshi

Amber Liu

Crystal Lun

Blinda Li

James Yu

Kenneth Zhang

Peck Zhao

ABC JV ABC JV PEOPLE

TECH SPOTLIGHT

Midea RAC R&D Sector 2013

Annual Meeting PAGE 5

Dealers from Iran Visit Midea

HQ PAGE 6

CMI celebrates Christmas

with Secret Santa PAGE 9

Little Swan Adjusts Product

Strategy PAGE 7

“Baby Warm Care” and

“Sterilization” Dryer Function

Concepts Win Golden Idea

Storm Competition PAGE 10

A Long Way From China PAGE

11-38

Midea SNAPSHOT

PAGE 39

Award Ceremony for Out-

standing Employees at RAC PAGE 6

RAC Voice Control Technol-

ogy Praised By Academic

Experts PAGE 8

Midea’s 3rd Annual Industrial

Design Contest Concludes PAGE 8


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NEWSLINE

By Peck Zhao

Midea CAC Holds Three Seminars For New

Digital Scroll D4 Plus in Iraq and Lebanon

D uring the crippling global economic crisis, Iraq and

Lebanon proved to be one of the most promising markets

for air conditioning products, thanks to their rapidly recover-

ing economies, coupled with the buoyant construction indus-

try during the last several years, resulting in increasing de-

mand for air conditioning systems.

Since the establishment of the new government in Iraq,

the country has seen strong growth in new property develop-

ment and hence commercial air-conditioning opportunities.

In February 2011, Citigroup included Iraq in a group of

countries which it described as 'Global Growth Generators',

which it predicted will enjoy significant economic growth in

the future.

A similar situation happened in Lebanon, which has the

densest population in its capital city of Beirut, where rapid

growth was realized after the civil war and occupation.

The three seminars took place late last year, in Erbil and

Sulaimaniyah in Iraq, and in Beirut, Lebanon, with the aim of

introducing ‗The New Generation of Digital Scroll VRF- D4

Plus‘ in collaboration with Midea‘s distributors in each of

these locations.

A total of 200 (80 in Iraq, and 120 in Lebanon) consult-

ants, contractors, construction developer, and building own-

ers attended the three events.

Sam Tao, General Sales Manager of West Asia intro-

duced Midea Group and the Midea Commercial Air Condi-

tioner Division, followed by an explanation about Midea

R&D investment, analysis of MDV products advancement,

and support on technical/marketing/service.

Peck Zhao, Marketing Manager of Midea CAC Overseas

Sales, made a presentation about the launch of the D4 Plus

Series Digital Scroll VRF, which adopts advanced technolo-

gies with the highly reliable and patented digital scroll com-

pressors and simplified electrical control. It comes in 5 mod-

els ranging from 8 to 16 HP, and up to 64HP in free combi-

nation. ―Due to such improvements as user-friendliness,

flexible designs, lower noise level, and easy transportation,

there has been a considerable interest and confidence in

VRF products among customers,‖ he said. The 4th genera-

tion network control system, named IMM (Intelligent Man-

ager of Midea) also attracted the full attention of the at-

tendees by its powerful management functions and web ac-

cess potential using laptop/tablet computer/smartphone via

both LAN and Internet.

This seminar supplies a professional stage for

Midea to present products and policy to the customers, but

also the great chance for market and product information

sharing. Midea gained very good feedback from the at-

tendees, came to an agreement that with our collaboration,

both customers & Midea will success, all of us can gain more

together.

Peck Zhao gives a presentation to seminar attendees


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NEWSLINE

Midea CAC’s 17th Global

Technical Training Session By Amber Liu

L ast month, Midea CAC held its 17th Global

Technical Training Session at Midea HQ. Around 120 engi-

neers from around the world were in attendance. CAC

holds these twice a year, since the very first session was

completed in 2004.

The meeting was broken down into two parts: The first

part spanned from Nov.1st to 2nd, focusing on the new

products from 2012 and differentiating features against our

main competitors. The popular VRF products, V4 Plus

family products like V4 Plus, V4 Plus R series (Heat recov-

ery type), V4 Plus W series (Water-cooled type), V4 Plus S

series (Super full-DC inverter type), D4 Plus and the IMM

4G network control system were all included. The first part

consisted of 41 attendees including project engineers, sales

managers and purchasing engineers, from Asia, Africa and

Latin America.

The second part ranged from Nov.5th to 7th, with

training focused on the installation and commissioning of

V4 Plus family products, the D4 Plus, the IMM 4G net-

work control systems and air-cooled modular chillers. After

the presentation of technical points in the meeting room,

the engineers were invited to the CAC product sample

room to do personally practice some key troubleshooting,

which helps them to transfer the learned theory to actual

practice, so as more deeply understand how to work with

these products. A total of 82 engineers from European,

Asia, Africa and Middle East attended this training, and

among these attendees, 80% of them were returning partici-

pants.

Besides the products training, attendees were given a

tour of Midea HQ reference projects, workshops in the

VRF factory, and R&D laboratories to give them a sense of

Midea‘s R&D and manufacturing strength.

CAC Global Technical Training sessions provide a

common platform for Midea distributor technicians and

engineers worldwide to better understand Midea CAC prod-

ucts, and to help to strengthen the relationship between

Midea and distributors. The 18th session is scheduled to be

held in April 2013. Midea CAC gladly welcomes any and all

distributors participate in the upcoming session.

Engineers and Sales Managers are given a thorough explanation about VRF installation at a reference project


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NEWSLINE

Midea RAC R&D Sector 2013 Annual Meeting

By Crystal Lun

T hrough the middle of January, the annual RAC

R&D meeting was held to discuss achievements of 2012 and

plans for the new year.

The President of Midea RAC, Wu Wenxin, stated in the

meeting that we have to master two key points: the im-

portance of obtaining the leading position in the industry

using our DC Inverter core technology, and secondly, to

strengthen the investment in basic technology research to

fulfill market demand. To close, Wu emphasized that we

should focus on original creativity while remaining open to

learning from market players.

Midea Air Conditioner Industrial Design

Stands Out Again

T his past month, the China Red Star Awards Cere-

mony, known as the Oscar awards of the industrial design

industry in China, was held in Beijing.

With its elegant design, creative ―cross fan‖ construc-

tion, linear air inlet and outlet mode, Midea‘s KF floor

standing series air conditioner obtained high praise from

judges at home and abroad, standing out from numerous

candidates and winning the coveted Red Star Award.

Naturally, this is not the first time Midea inverters have

won recognition for their top industrial designs. At the close

of 2011, Midea air conditioners won the IF Product Design

Award, which is an internationally recognized award and one

of the largest scale and most professional design awards

offered in the world. At that time as well, Midea‘s air condi-

tioner stood out from an amazing 4,322 candidates from

eight countries, and was selected as the year‘s example of top

design.

Now for 2012, Midea has again proven its excellence in

original design, against over 20,000 pieces of work in first

round from 29 countries, and then 5,348 candidates from 25

countries such as USA, Holland, Japan, UK, etc. with 17 top

global companies and 84 foreign companies in the final

round. The number of candidates pursuing the Red Star has

already exceeded those competing for the Red Dot Design

Award in Germany.


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Award for Excellent Value Chain from Oversea Sales Company

NEWSLINE

Award Ceremony for Outstanding

Employees at RAC By Crystal Lun

Award for Product Forces Enhancement Project

O ne of the first events of 2013 at Midea was

RAC‘s annual award ceremony for outstanding employees

during the 2012 year. The purpose is to recognize those

who bring inspiration in the form of work and excellent

teamwork, creating a positive and competitive environ-

ment.

The selection of outstanding employees began in

2008 and is now one of the most important incentives for

employees, who together contribute to the project of strate-

gic transformation.

The selection chooses an excellent team and outstand-

ing individuals. The awards include: Most Contributive Indi-

viduals in Operation, 10 Top Staff, 10 Top Workers, 10 Top

Production Teams, and Excellent Team in Value Chain and

etc, covering aspects from operation, basis management,

quality, manufacture, and R&D.

Dealers from Iran Visit Midea HQ

By Kenneth Zhang

D espite a difficult economic and political environ-

ment, Midea‘s exclusive agents from Badr Tech in Iran per-

formed well and helped Midea‘s brand to continue develop-

ing in the region. To enhance this relationship, 21 dealers

from Badr traveled to Midea HQ in Shunde by the compa-

ny‘s invitation for a 7 day visit. This event offered Iranian

dealers the opportunity to learn more about Midea, which

would strengthen their confidence to promote the Midea

brand in Iran.

Badr Tech dealers started with a visit to the Midea

Headquarters building, where they were given a tour of the

X-Pro Center Product Gallery and Historical Museum, after

which they traveled to the air conditioner and GMCC facto-

ry. Because of this visit, everyone from Badr Tech gained a

comprehensive understanding of Midea and its vision for the

white goods industry.


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Little Swan Adjusts Product Strategy

By Blinda Li

O ver the past 4 years, Little Swan has upgraded its

product structure and management, in addition to an in-

crease in investment in equipment, molds, totaling 12 billion

RMB. As of December 13th 2012, Little Swan had produced

1 million iAdd washing machines, a sign of Little Swan‘s

change in focus to energy-

efficient production.

Chai Xinjian, General

Manager of Little Swan,

said that the traditional

manufacturing industry

has moved on from an era

of high consumption of

land, manpower and capi-

tal, to a more value-added,

ecological chain.

―We are no longer

interested in pursuing high

volumes and low prices,

but producing profession-

al, high-end models," said

Chai Xinjian, ‗‘although

this year we gave up more

than 70 overseas custom-

ers, we suffered no real

decrease in sales, and prof-

it has increased, with our

successful entry to the

Japanese market.‖

In recent years, Europe and the United States have

imposed tight restrictions on manufacturers relating to prod-

uct efficiency. Indicators for product energy-efficiency and

water-consumption on Little Swan models have improved

significantly. Domestic manufacturing has moved forward

to production focused on energy efficiency in order to

maintain sustainable development.

iAdd washing machines automatically sense the

weight of laundry and ambient temperature and calculate

these against specific

laundry programs to

determine appropriate

amounts of detergent

and water. Consumers

simply add detergent

without worrying about

using an excessive

amount, as the machine

handles delivery of pre-

cise amounts automati-

cally.

Hu Ziqiang, Deputy

General Manager of

Little Swan, stated that

as early as 2008, iAdd

models were exported

to the United States; in

2010, it launched a na-

tional initiative to

launch a range of iAdd

products, and starting in

2011, with new break-

throughs in iAdd tech-

nology, Little Swan released a full range of iAdd products

in both front- and top-loading formats.

NEWSLINE


8

RAC Voice Control Technology Praised By

Academic Experts By Crystal Lun

NEWSLINE

Midea’s 3rd Annual Industrial Design Contest

Concludes By Min Chen

O n Christmas Day of 2012, a team of experts from

several high-ranking universities including Peking University,

South China University of Technology, Jiangnan University,

Jinan University, and the Chinese Academy of Sciences, met

to review the state of air conditioner voice control technolo-

gy in the industry. By the conclusion of the review, the team

of experts announced that a voice control project by Midea

was considered by them to be the leading technology world-

wide.

Midea‘s Voice and Long-distance Control Technology

(VLCT) was one of the core projects appraised following the

Eco Energy Project featuring the full-DC inverter in early

December.

It was introduced by the president of the Midea Central Re-

search Institute, Zhang Zhi, as an important achievement in

development for years by Midea RAC, featuring voice analy-

sis functionality, ultimately enabling air conditioners to be

controlled remotely simply by voice. Additionally, the tech-

nology allows for the air conditioner to be connected to the

Internet, allowing for service technicians to conduct fault

diagnosis and software upgrades remotely. Aside from voice

and internet control, the unit can be controlled via touch

screen instead of the remote control.

In recent years, Midea has dedicated itself to applying inter-

net connectivity to its next generation of household applianc-

es, and in the near future, a new range of air conditioners

belonging to the Vandelo series will be launched in China,

incorporating many of these features.

D uring this past December, the final round of

Midea‘s 3rd Annual Industrial Design Contest was carried

out in Beijiao. Students from each of Beijing University of

Post Telecommunication, Hunan University, Beijing Tech-

nology and Business University, The University of Electron-

ic Science and Technology of China of Zhongshan Insti-

tute, Zhengzhou University of Light Industry, among oth-

ers, were selected for the final round of competition for

awards as great as 50,000 RMB.

As one of the most famous industrial design contests

in China, with considerable influence and credibility, the

Midea Industrial Design Contest has become an important

event for university students who wish to enhance their pro-

spects in today‘s challenging and competitive job market.

Students from more than 300 colleges and universities

submitted entries from the outset, with a total of 2,689 en-

tries counted. To maintain the contest‘s high standards, the

Midea Design Committee invited famous experts from China

and overseas to participate as judges, including Dezhi Li, As-

sociate Dean of the School of Design, Hong Kong Polytech-

nic Unviersity; Huiming Tong, Dean of the School of De-

sign, Guangzhou Academy of Fine Art; and Matthijs Pot,

CEO of Netherland‘s CQ Design, along with assorted indus-

trial design experts from Midea.

After fierce competition, the ―Black Hole‖ range hoods de-

signed by Yu Xu, Yuan Zeng, Kai Ying and Chendong

Zheng from Beijing University of Post Telecommunication

was awarded the grand prize of 50,000 RMB, with other win-

ning entries including a range hood with adjustable fume

suction, a portable rice cooker, and a dining table with cook-

ing and tableware storage functions


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FEATURE

CMI celebrates Christmas with Secret Santa

By Himani Joshi

C arrier Midea India celebrated its first Christmas

last month in the new corporate office. Everyone was excit-

ed about the holiday season and curious about the kind of

celebration they would see this year. As it turns out, ‗Secret

Santa‘ paid a visit to CMI‘s offices! Secret Santa is a tradition

in which an employee is randomly assigned a colleague for

whom they buy a gift. The participation in this was volun-

tary, though everyone participated with great enthusiasm.

Names of employees are written on chits and participants

draw the name of a person for whom they would have to

buy a gift. This often requires people to try and find more

information about colleagues for whom that have to buy,

and facilitates interpersonal bonding within the organiza-

tion.

Santa Claus visited the office on the day of the party

and gave sweets to all employees. A small gathering was or-

ganized with music and games, with active participation

from all employees. Rounds of employees playing ‗pass the

parcel‘ brought back memories from childhood for everyone

there. This was followed by special treats and cake for the

employees.

The people of Carrier Midea India look pretty happy about Santa Claus dropping in on them!


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“Baby Warm Care” and “Sterilization”

Dryer Function Concepts Win

Golden Idea Storm Competition

TECH SPOTLIGHT

By Blinda Li

W ith the rise in people's living standards and their demand for life-enhancing products, dryer designers needed to

develop more innovative ideas to fulfill these needs. Based on considerable analysis of consumer demand, engineer Mei Rong

from the Dryer Development Department won first prize in the Golden Idea Storm competition organized by Little Swan,

with his concept designs for ―baby warm care‖ and ―sterilization‖. (Little Swan is Midea Group‘s premium brand for house-

hold appliances.)

“Baby Warm Care" - Dedicated function for infant clothing

During cold winters, infants need to be dressed immediately after showering. The ―Baby Warm Care" function ensures that

clothing stays warm until it is removed from the dryer, and it can be optimized according to different fabrics. For promotion-

al purposes, an appealing, eye-catching logo may be employed.

Sterilization – UV lamps to eliminate bacteria

There is now a growing sense of awareness regarding bacterial hazards, thus the introduction of a bacterial disinfection func-

tion in the newest dryers can provide a strong new selling point.

Replace ordinary lamp

with a UV one

Recommended logo


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ABC JVABC JV PEOPLE

A Long Way From China

By Matthew Smith & Mandy Wang

C arlos Renck

Chairman & CEO, Midea Carrier ABC JV

Email: [email protected]

Introduction:

Before stepping into his role as the Chairman and CEO of the new Midea Carrier Latin America joint venture, Carlos Renck

had been with Carrier for over 20 years, across several different functional areas such as commercial, manufacturing, engineer-

ing, operations and IT, in addition to having experience in Europe and other industries, which explains his suitability to run

this new and complicated business in South America.

ADV: Hello Carlos! It‘s good to see you again since we last met at the JV conference in July. Thank you for sitting down to

talk with me now, just after the one year anniversary of the ABC JV. You told me a lot about your working experience with

Carrier and working abroad.

How would you evaluate

those experiences? What do

you think were the most valu-

able things you gained from

that?

Carlos: Well the most valua-

ble thing gained from living in

another country is the process

of dealing with different cul-

tures. I think you come to

appreciate your own culture

more than before. You are in a

better position to distinguish

between cultural features and

general human nature.

ADV: Speaking of culture - I

feel this JV probably requires

the combination of the cul-

tures of Midea and Carrier. How do you think of the state of that integration right now?

Carlos: First a comment: we have integrated not just Carrier and Midea cultures, but also Brazilian culture. Until just two

months before the JV, Midea do Brazil was control by a Brazilian entrepreneur. So by being a Brazilian-controlled company,

Midea do Brazil was a Brazilian company following Brazilian culture. We have to integrate the three cultures. With Carrier, it

was American culture with a little bit of Brazilian culture; then with Midea do Brazil, it was Brazilian culture with a little bit of

Chinese culture. So creating and running this JV was and is complicated. There is no user manual, and you also cannot just take

a page out of someone else‘s book.

ADV: You are the Chairman and CEO of the ABC JV. The joint venture is like a newborn baby in many ways, I think. How


12

ABC JVABC JV PEOPLE

A Long Way From China (cont.)


was raising this baby over the past year? Did you encounter any difficulties or happiness as the proud parent?

Carlos: Well, the baby had a difficult first year. The first year is difficult for all babies, of course, and it was a complicated and

challenging time. When we started the JV, the market was experiencing a downturn and demand was falling. There were also

many players and importers offering products at very cheap prices. We had to fight fiercely to avoid losing market share. You

know this JV is the leader in the market here, and at that time, we were tracking by several other players. We had to start with

that negative situation, with a ‗headwind‘, as we say, like a plane flying against the wind. We have to find solutions for this kind

of situation. At the same time we are integrating the three cultures I mentioned before, which was really tough, too. We had a

very difficult first semester, but we worked hard to strengthen our position. In the second half, we had a better, more stable

market situation, and we were much better prepared for this market. The good news is that we realized a positive result for the

JV with our efforts.

ADV: When you say JV, do you mean the Brazil only, or Argentina and Chile included?

Carlos: The impact was much more significant in Brazil than it was in Argentina and Chile.

ADV: Because they are smaller markets compared to Brazil, right?

Carlos: It is not only because of that. There was no integration needed in Argentina and Chile because there is no previous

Midea company in those countries. So essentially we had an easier task in Argentina and Chile. Besides, the markets in Argenti-

na and Chile did not suffer the problems we had in Brazil. That‘s why my comment for integration in our market situation is

focused on Brazil. In addition, being the largest part of the JV of course, Brazil affects the JV significantly.

ADV: The ABC joint venture has gone through a very difficult year but ultimately achieved a very good outcome. What two

key words would you

use to describe this

JV over the past

year?

Carlos: For the past

year, I would say the

JV has been a diffi-

cult but promising

child. Let‘s talk about

why it‘s promising:

by combining these

two companies, we

have the opportunity

to develop a winning

situation. That is the

promising part. For

the difficult part, you

know children are

sometimes very ac-

tive, hard to control, and unwilling to accept the rules. Like I said we have three sets of unwritten rules that different people

are following, in terms of culture; certain people are following one set of rules which was the old Carrier way. Certain people

are following another set of rules which was the Brazilian company way and a group of people are following the new rule


13

ABC JVABC JV PEOPLE


which was the Midea way. In these three sets of rules, there are many things in common, but they have several points which

are different. This is where the complication enters. It is complicated, but we are overcoming that.

ADV: So now the JV has grown to be one year old now, and it has built up some strength in the market. Can you describe this

strength more specifically?

Carlos: Before the JV, the old Carrier company had the expertise, the talent, a strong connection with the market and a strong

distribution network. That was the strength of the old Carrier company. Midea brought in manufacturing capabilities, the tech-

nical capabilities and the desire to participate fully in an emerging market here, which is a market with significant potential. But

at the same time, the market is volatile and is not mature. In a mature market, we don‘t have big swings. In emerging markets

like Brazil, Argentina and Chile, you have big swings. Sometimes things go up very quickly, and sometimes things go down

very quickly as well. We have to be prepared to deal with that. So as I just mentioned, Carrier has the people, name, and distri-

bution network. Midea brought its manufacturing base, engineering, technical capability and desire to invest, to make more

money. One example being the facility in Manaus; we would not be able to have this facility without the JV.

ADV: Regarding sales figures, are you satisfied with how we performed against our competitors? Can you tell us more about

each market, Argentina, Brazil and Chile?

Carlos: Well, we all want more, right? Let me start with Chile. In Chile, we are working with the portfolio we have so far,

which is essentially air conditioning. I think the numbers are good. Because Chile is a very open market, we can import lots of

things without having to manufacture locally. So we have an aggressive plan to enlarge the portfolio with other products we

can bring in from China. With this approach, I expect we will move beyond what we have right now. For Argentina, it is in a

complicated situation. We are not doing all we can because we are playing a little bit defensively. As you may have followed

from the news, the market economic situation there is very complicated. The strategy has been to do the best with what we

have. We intend to continue this strategy until the situation there has improved. So in this way, the numbers we achieved, giv-

en the plan we defined for

ourselves, are good. In Bra-

zil, we gained significant mar-

ket share. We introduced a

number of products in Brazil

in 2012, some of which were

already part of the old Midea

do Brazil company. But there

we found a situation where

we could not increase the

volume, especially for small

appliances as much as we

would like to while we are

making money.

ADV: In Brazil, we are num-

ber one in market share. Do

you have any comments



14

ABC JVABC JV PEOPLE


about this? What efforts did our teams make in order to gain this ideal market position? Since we are the leader, we will be

everyone‘s target. Everyone wants to beat you and take your position. Are there any ideas about how to stay on top?

Carlos: Exactly. We are the leader. We need to be careful in order to stay that way. If we keep doing what we are supposed to

be doing, it will be fine. So, why do we have this much share of the market, you ask? It is the combination of things: we have

good brands. In the air conditioning market, we have everything from room air conditioning, portable air conditioning all the

way to big machines. And we have a good and balanced presence in all the channels. We participate in the big stores, special-

ties, retails, big internet company, etc. We are all over the place. Perhaps a third thing is we are seen to be a reliable company

in the market. One example - this summer was a very hot summer. We have our market estimates. If we take an order, we pre-

pare and produce the quantity necessary to

fulfill the orders. We don‘t take orders we can‘t

fulfill, as some of competitors have done. We

are very reliable to our customers. All three of

these points together explain how we are num-

ber one in the market.

ADV: Do you foresee any specific challenges

in the coming years? How do you expect to

overcome these?

Carlos: Well, we have two shareholders: Midea

and Carrier. Each have different expectations.

In this JV, we are trying to find our ground

between these expectations. Midea might be a

little bit aggressive, while Carrier might want to

be a little bit more conservative, grow volume

as we can, showing that we can make money

with that volume. There is our JV agreement

or constitution as you may call it, which we have

to follow. Because there are number things we

have to follow, we need to follow certain steps and to be more formal than we used to be. We need to have board meetings,

board resolutions and there are certain actions we cannot take unless we first get the board approval. For example, according

to the JV agreement, we are allowed to import and resell certain products which are listed in the JV agreement. If we want to

handle more than what‘s listed on the JV agreement, we need a board resolution. We cannot manufacture locally without a

board resolution. It is not a problem, but we just have to be carefully about certain items, and not disrespect the terms of the

JV agreement. So those are some challenges we have had and we will continue to have, but we will continue to manage.

ADV: As you just said, it can be complicated to please shareholders with different expectations. What is the strategy of the JV

to manage these expectations?

Carlos: We have two companies and both parties want to be active and we have to find ways to go over that. Our JV has to be

careful for the sake of its own performance. In many cases, we may find ourselves in certain situations where an approach

would be good in the eyes of one partner but not the other, but focusing too much on making each side happy can be distract-

ing, so being at the JV level, we should concentrate first and foremost on what‘s good for the JV. If it is good for the JV, we

should do it; if it is not good for the JV, we should not do it.

Brazilians sure know something about maintaining a good work-life balance



15

E dson Li

Vice President


Introduction:

Since joining Midea in 1998, Edson Li has held a number of different positions in the residential air conditioning division,

commercial air conditioning division, R&D center, overseas quality control, among others. In 2011, he moved to the Midea

International Division to help prepare for the Midea Carrier Joint Venture project. Edson came to Brazil to serve as the JV

Vice President in November 2011. Working in Brazil is a challenge for him - having limited sales experiences in his past posi-

tions, Edson has had to absorb new knowledge such as sales and marketing in his current position. This is, however, he says, a

great learning opportunity for him and he is more than happy to take up the challenges here.

ADV: You‘ve been working for

Midea in China for several years,

and suddenly you find yourself in

Brazil. How do you look back at

your time so far in Brazil?

Edson: It has been a highly valua-

ble and precious experience for

me. Working abroad in such a

different country will significantly

broaden your vision, the way you

think, the way you do business, the

way you look at things, and so on.

I have felt myself growing since

accepting this opportunity. I‘ve

had more learning opportunities

regarding the company manage-

ment, finance, marketing, sales,

etc. because I need to know all of

these when I make decisions at the company level. I believe the other Midea people here would agree about the value of being

here, what can be learned from it. We can actually jump out of the Midea system and learn many good things from Carrier, and

then make better-informed decisions for the JV. There are differences between Midea and Carrier in terms of management and

culture. We need to integrate the best of those differences. We need to force ourselves to grow.

ADV: As you just said, the management style and culture is different between these two parties. Have you come across any

conflicts through the course of your work?

Edson: I think culture can mean a variety of things. Company culture is just one aspect of overall culture; we have cultures of

different countries, different ways of thinking, and different languages. Regarding the company culture for Carrier, they are

very focused on risk management while pursuing profit. They have a very well-defined management system in place, while

ABC JVABC JV PEOPLE



mailto:[email protected]


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ABC JVABC JV PEOPLE


Midea, they are better at execution. Scale and profit are both important for Midea. If there are interesting opportunities in a

project which also carries some risk, Midea will still try to make some investment, while Carrier would likely be more reluctant

because of its risk control system.

ADV: How do Midea and Carrier evaluate such risks?

Edson: Carrier is very strict on the risk control. It is like an unwritten rule. There is a very strong relationship between the

investment and the asset depreciation. Midea has no such rule. Midea evaluates a project on its balance of investment return

and risk, and then comes up with a comprehensive evaluation to see whether an investment should still be made. We did some

investment in the JV according to Midea‘s method for evaluating risk and return. Those investments have had very significant

influences on the JV for 2012, and will for the coming years. Fortunately, these have been positive. For example, at our Ma-

naus factory, we are going to merge the old factory with the new one. This will save us a lot of redundancy in management and

improves production capacities to support our sales. This is one of the big investments we made for the JV.

ADV: How‘s our market share in Brazil right now?

Edson: Right now, we are having the largest market share in Brazil in residential air conditioners. We have an even higher

market share for commercial air conditioners.

ADV: What challenges remain for the JV?

Edson: We have a number of different challenges. For sales, managing multiple brands is one of our challenges. We have

three brands running in Brazil. We need to look at how to integrate different market channels, to position the right price and

to have the proper product positioning. We did some research on how to promote our brand. The second challenge for sales is

that we need to improve our

ability to operate multiple prod-

uct lines. Our people from the

previous Springer Carrier and

Midea do Brazil companies have

experience mainly in the sales of

air conditioning. The old

Springer Carrier was mainly

focused on the dealer channel.

But right now we want to enter

the retail channel to expand into

small domestic appliances. It is a

challenge for us to know how to

develop multiple brands and

enhance our ability to sell our

products in the retail channels.

For operations, the operations

department includes supply



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chain, production, quality and R&D. Our challenge for the future is that we need to improve our production efficiency. We

only have factories in Brazil and Argentina, but not Chile. According to the law, the salaries of our workers needed to be in-

creased according to the legal provisions or according to the inflation rate. In this case, our fixed costs are increasing every

year. How do we improve our efficiency to offset these rising costs and enhance our production efficiency to compete with our

competitors? In 2013, we set our goal to achieve more than 5% improvement in production efficiency. This number is calculat-

ed through a standard formula, so it is reasonable and scientific. In the past few years of this company, its production efficiency

actually declined. So our goal of a 5% improvement on that base is actually a big challenge. I attend meetings every week to

review our progress on this. In addition, the procurement cost in the supply chain is rising, which will have a negative impact.

We have taken some measures on

this. We have also developed some

projects aimed at lowering costs in

the supply chain, and technology to

offset future risks and increase our

revenue for next year.

ADV: What about for R&D, or oth-

ers?

Edson: For R&D, we should take

better advantage of Midea‘s R&D

platform in China. We need to figure

out how to shorten the time for

R&D and to improve the project

development process. Making full

use of Midea‘s R&D investment plat-

form is a way for us to make our

products more competitive. For hu-

man resources, we have a performance

oriented mechanism. We have increased the floating part in the performance evaluation to stimulate our sales people to work

for the benefit of the company.

ADV: Can you use two key words to describe the past year‘s development of the JV?

Edson: I would say they are Integration and Development.

ADV: Could you elaborate?

Edson: The first key word is Integration. It is the integration of the team, culture and our products, which have been very suc-

cessful over this first year. For the integration of the team, the people from old Springer Carrier, old Midea do Brazil, and the

Chinese team, integrate very well. For the external integration, we are gaining understanding and support from our sharehold-

ers, including Midea and Carrier. The internal integration makes us speak as a very strong, united team in the market, which

helps the JV development greatly. For the integration of culture, the company culture of both parties and the country cultures

The Midea Carrier sign at the Canoas office is displayed very prominently for all the see



18

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are different. They bring similarities and differences to the JV to make it a very diverse company. For the integration of prod-

ucts, Midea and Carrier products help a lot for the optimization of JV product offerings. It has great influence in the sales of

Midea brand products.

The second key word is Development… and actually Growth as well. For these two key words, we should put integration into

a very important position; in the meantime, we also need to have healthy development in terms of brands, ability of to sell,

and ability to make more profit. Our goal for 2013 is that our earnings grow 2.5 times compared to last year. We made this

business plan considering the sales of the last half year of 2012 and our prediction for 2013. Then we had a few internal dis-

cussions and financial analysis of this business plan. After our management team agreed on this, we reported to our board of

directors to get their approval.

ADV: Do you have any comments on the future development of the JV?

Edson: We need to expand our product line in the future. We still consider ourselves as a traditional air conditioning sales

company as of the end of 2012. But in the next three to five years, we want our JV to become a comprehensive, sustainable

home appliance company which is based in Brazil, and expand this business in Argentina and Chili, as well. We are launching

Midea-brand small appliances in Chili and Argentina, and we will put more effort to expand our small appliance business in

Brazil. Some products need to be localized to further meet our consumers‘ needs. We are going to make this JV a diversified

home appliances company.

We must also take full advantage

of our R&D platform in China.

Brazil is a country that pays great

attention to industrial design, and

Midea China has great industrial

design ability, so we can certainly

take advantage of that.

Regarding production, we need to

have more communication with

each division in Midea headquar-

ters and share information more

easily. Midea headquarters and our

JV should have more communica-

tion, for example, through the

exchange program that we have

right now - to have Midea China

people come and work in Brazil

and our JV people go to Midea

headquarters. Getting ready to fill up on Brazilian barbecue!



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ABC JVABC JV PEOPLE


M arcelo Piacenza

President, Midea Carrier Argentina


Introduction:

Marcelo has a fairly international background, having spent time between England and Italy before joining Carrier in Argenti-

na to manage the Southern Cone operations. His mission over the past year has been a difficult one - overseeing the begin-

nings of the JV and the launch of the Midea brand in a very complex business environment.

ADV: To start off with a simple question - how long have

you been with the company? Have you always been in Ar-

gentina?

Marcelo: I‘ve been here for about 7 years now. I haven‘t

always been in Argentina – before coming here, I was work-

ing in Europe for 5 years with Honeywell. Half of that time I

was based in London as their European Supply Chain Direc-

tor, and the other half was in Italy as Country Managing Di-

rector.

ADV: What was your feeling when you first heard the news

about the joint venture between Carrier and Midea?

Marcelo: I was enthusiastic, basically because Carrier has

been more focused on commercial products rather than resi-

dential products, and this news meant that this trend would

probably be changing. It was exciting because Argentina is

predominantly a residential market, and I felt we would really

benefit from this change. At the same time, great opportuni-

ties for expanding into the home appliances market were

visible from the outset due to Midea‘s leadership in this area.

ADV: The difference in company culture between Carrier

and Midea must have been apparent for everyone through

the first year since the forming of the joint venture. Do you

have any interesting experiences regarding this from the past

year?

Marcelo: During this first year, I would say, it was more

about ―finding‖ an entirely new common culture, using the best processes and know-how from each side, and I feel that we

are halfway to finding or building this common culture now. Our relationships with the Chinese teams at Midea have been

open, fluent and effective, and we have already received Midea support in many ways, especially in regards to the launching of

new product lines.



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ADV: What aspects of business do you face in Argentina that are unique to this country? Are there characteristics which make

business easier or more difficult than in Brazil or Chile?

Marcelo: Argentina has significant potential, due to this region‘s agricultural production capacity, technology sector, and

strong automotive industry. China‘s expanding economy driving an extraordinary demand in commodities, together with the

significant improvement in the Brazilian economy, are both positive key factors in Argentina macroeconomics. But, on the

other hand, it is a particularly difficult country to operate in because of strong government, in the form of a heavily regulated

economy with significant intervention by the government. Chile, however, is pretty the opposite: it‘s an open, deregulated and

stable economy, so therefore much easier to operate in, although it‘s a much smaller market than Argentina.

ADV: Although it has only been little over a year now, what do you feel Midea Carrier Argentina's greatest accomplishment

has been during this time?

Marcelo: Basically to achieve the objectives and financial targets for the year, and to finally launch the Midea brand in both

Argentina and Chile.

ADV: The introduction of the Midea brand in Argentina is the big news that came alongside the anniversary of the JV. This

must have required a lot of careful preparation, especially when considering the existence of the company's other brands in the

market, such as Carrier and particularly Surrey. What were the challenges with this?

Marcelo: Yes, we‘ve been very careful due to the fact that we already have very strong brands: Carrier, Toshiba, and Surrey,

our well-known local brand. These are the essence of the value of this company, so we don‘t want to hurt them. As Midea

brand is unknown in Argentina, we carefully designed the positioning of Midea brand in all dimensions of product lines, pric-

ing, target segments and image, and we concluded with the strategy that we recently launched the brand with. Another aspect

was deciding on the distribution channels, as the channels for our other brands are strongly developed and differentiated. We

finally settled on distributing Midea residential products through all our current channels - retail, dealers and Totaline - with the

right differentiation in each to avoid any unwanted overlap. We are pretty enthusiastic with this move, but cautiously so, and

are implementing a strict follow up process, particularly during the first year, in order to gauge this arrangement and be ready

to recalibrate it quickly, if needed.

ADV: What do you see for MC Argentina in the coming year, and beyond?

Marcelo: Despite the complexities of operating in Argentina, we see significant opportunities here that we need to seize before

our competitors, by taking evaluated risks and fighting out there, year over year, to improve our positioning and business re-

sults. Basically, we see these opportunities in appliances, which is a new and massive market for us, and our advantage in this

market comes from the uniqueness of Midea‘s capacity and technology. In terms of volume, the appliances market is three

times that of air conditioning in Argentina. Nevertheless, the air conditioning still holds rich opportunities for us as well, and

we should take the advantage of the excellent complementation of Carrier and Midea product lines in all segments of the mar-

ket. Also, we foresee a great opportunity and challenge in leveraging our factory in Tierra del Fuego, increasing its capacity and

the number of product lines there. Last, but certainly not least, I must mention our great competitive advantage: our mature,

professional and motivated team that is always hungry to accept new challenges.



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R oberto Casarejos

General Manager, Midea Carrier Chile


Introduction:

Before joining Carrier Chile more than 10 years ago, Roberto Casarejos enjoyed a career of diverse professional experiences

which undoubtedly helped him to get a handle on the remarkably complex market for air conditioning in Chile, where tradi-

tional industry thinking was proven ineffective. His new challenge is arguably even greater: to grow and evolve an air condition-

ing company into a comprehensive home appliances operation.

ADV: It‘s great to meet you, Roberto. Thank you so much for

taking the time to sit down with me today to talk about your

business here. You‘re currently the General Manager of Midea

Carrier Chile, but how long have you been with the company,

and what did you do before coming here?

Roberto: I came here in Sept. 2002, and in the beginning after

school, I worked for 10 years as a consulting engineer after

coming out of university, mainly related to economic areas, and

then I went to the far south of Chile where it is cold… well, not

as cold as in Canada. [laughing]

ADV: [laughing] Ah, that must have been close to MC Argen-

tina‘s factory, at Tierra del Fuego, the Land of Fire.

Roberto: Close. TDF is a big island, but I was in the continent,

at a place called Punta Arenas, or Sandy Point, where I was

working in a coal mine! OK, well, not -in- the mine, but I was

there in charge of finance and administration for the operation.

I was there for 4 years, after which I moved back north to the

more populated part of the country.

ADV: Back to civilization!

Roberto: [laughing] Right. I was then in a place called Temuco,

700km from Santiago, and I was the GM of a holding company,

mainly related to tourism, which had some hotels, a gambling

casino and a ski center in a live volcano, and it was a very in-

teresting experience. Then, for the next 4 years I was involved

in real estate development, also in Temuco. It was kind of

different because it was for a university, and they owned a big piece of land inside of the city, which we transformed into a real

Roberto is getting down to work in the new Midea Carrier Chile office in Santiago



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ABC JVABC JV PEOPLE


estate business, to generate money for the university. After that I came here, to Santiago. Actually, they were looking for some-

one with experience in general management, definitely Chilean, but not necessarily from the air conditioning industry – be-

cause you see, the previous managers were already from Carrier, but from other countries that were warm and humid, but

Chile is not warm and not humid, and so they didn‘t quite understand the market here. So that‘s the main difference that we

have with the rest of Latin America. In most of the markets where Carrier exists, 75-85% of their sales are from the residential

market. But in Chile, houses don‘t have air conditioning, because we don‘t need it. Right now, we‘re at the hottest point of the

year, and even this is not so hot at least during the night.

ADV: Yes, I noticed that - I haven‘t used the air conditioner in my hotel at all.

Roberto: Because you don‘t need it! It‘s probably just there for heating in the winter. Right now, even if you feel a bit hot, you

just have to open your window, and it‘s really quite comfortable! And we don‘t have mosquitoes or things like that, so you can

often just leave it open. So that‘s the thing. I mean, I can tell you that, if you are in charge here, coming from outside of Chile,

and you go to the retail guys to sell air conditioning, nobody there will buy from you.

ADV: They‘ll know immediately this person‘s not from Chile – ―This guy‘s not even from here!‖ So this is interesting – resi-

dential air conditioning is not strong here, and the market is already much smaller compared to Argentina and especially Brazil.

Nevertheless, Chile is renowned worldwide as an attractive place to do business in Latin America, for reasons like the reliable

and stable government and the relative absence of trade barriers and restrictions. So does this potentially make Chile a place of

confidence for foreign companies to establish a gateway or launching pad for business into other Latin American markets – in

a similar role that places like Hong Kong or Singapore hold in Asia?

Roberto: Well, when Carrier began here in 1996, actually, business wasn‘t that bad, because Chile was on the crest of the

wave, in terms of economic development. But then there was a little crisis in Asia, and everything here fell down. Not in the

general economy where it went down a little bit. But the air conditioning business went way down, and so by the time I got

here, we were up to 3

consecutive years of

losses. So they said,

OK, let‘s close it. The

market was very

small, and residential

air conditioners don‘t

sell here. So you may

ask, why did they

open it? Because,

before 1995, there

were some people

representing Carrier

here, and the last one

was a really interest-

ing guy – he sold the



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idea that we could be a platform for business in the rest of Latin America, like you just mentioned, and that‘s right, that is

right…except for air conditioning. Because, if you have a car company, and you want to introduce some models across Latin

America, it‘s risky to try that at first, because it‘s expensive, but in Chile, we have free trade agreements with so many countries

in the world, so you can bring anything here with zero

tariffs, and so it‘s a very open market, which means you

can spend just relatively little money and resources, and

see how the product works out in Chile first… and so,

that was the original idea, and it was a good one… except

for air conditioning, because air conditioning in Chile has

nothing to do with air conditioning in the rest of Latin

America… but now it could be used for testing different

models of appliances.

ADV: So what is the specific composition of your busi-

ness in Chile now?

Roberto: Well, before the JV, we had Carrier products

across the spectrum of our air conditioning business,

except for VRF, demand which was filled with our

Toshiba product. Now with the Midea brand, we can

offer an alternative for every category we already ad-

dressed, plus Midea‘s wide portfolio outside of air condi-

tioning now, too. We have been doing fairly well so far

with air conditioning; when I came here, we were selling

about $6-7 million per year, this is really low, but last

year, we sold $23 million, which it‘s not so bad… but

now as we look outside of air conditioning, there is much

opportunity to grow, and also to take advantage of

Chile‘s open trading environment as a safer place to test

the feasibility of launching new and different appliances

across Latin America.

ADV: What was your feeling when you first heard about

this JV happening?

Roberto: actually, at first we didn‘t know how it would

turn out. We knew Midea, because they produced the

residential Carrier products up to that point, but the

main thought was, well, this is a bigger portfolio which

is outside of our mindset as an air conditioning busi-

ness, but it really is a great way to get out of this limited air conditioning market that we have in Chile. We certainly have the

challenge of developing retail channels for this new portfolio, which we previously never needed for air conditioning. But to

The new home for the Midea Carrier Chile team is getting refit with a new air conditioning system - a matter these people know a lot about



24

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give a simple answer to your question, we are very happy about this JV today.

ADV: So I‘ve noticed that you‘ve moved into a new office here – why the change?

Roberto: Well, our old office was very interesting, as it was right beside the metro line, and everyone could see our office and

our sign. But we don‘t really address the general public, because our residential business is so limited, so this wasn‘t a real ad-

vantage for us, and we also needed more space for expansion, so that location also wasn‘t enough for us.

ADV: Back to the topic of the expansion into home appliances, can you tell me which ones you will use to lead the brand into

the market?

Roberto: Well, we‘re thinking about starting out with washing machines, tumble dryers, microwaves, and kettles for the launch

of our non-AC products.

ADV: And this is different from Brazil and Argentina… they don‘t roll out new products so simply. Argentina requires local

production and Brazil has the import tariffs, which also sort of drives local production.

Roberto: Yes, if you import to Brazil, the taxes can make you uncompetitive against locally produced products. So we have

more freedom to try new China-made products in our market.

ADV: Of course, you still have the cost of freight coming from China.

Roberto: Yes, but this is more than offset by the low cost of production in China, and so most things in Chile are not made

here. Even the old traditional brands in Chile are now made in China and imported here, and people don‘t even know it. Those

brands typically sell because it‘s what their parents bought.

ADV: When do you expect these new products to reach the market in Chile?

Roberto: We are aiming for the second half of this year. The first samples are coming to Chile from China at this time. We

have to bring them here for electrical certification. We will hold off on refrigerators until next year. The refrigerators were fine,

but we found that the laundry production facilities were offering products at an exceptional level of quality because of the high

level of line automation, and we felt that extra quality was needed for launching a brand.

ADV: Aside from the expansion into home appliances, does Midea provide anything new and interesting to your air condition-

ing business that you didn‘t have before?

Roberto: Actually, Midea is providing an interesting new category in air conditioning, called Precision Cooling. This is the type

of air conditioning product that provides cooling not for the comfort of people, but for the technical needs of special equip-

ment, like in data centers, where temperature and humidity control is very critical, as well as reliability for continuous, non-stop

operation.

ADV: Will you be offering this solution to the market in Chile soon?

Roberto: Yes, we would like to, although Midea is keeping it in China at the moment to iron out any wrinkles before taking it

abroad. I expect we may be able to offer this in the second half of this year.



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T oshio Murakami

GM of Brazil Distribution, Midea Carrier ABC JV


Introduction: After pursuing an economics degree in

university, Toshio took a sales job at Carrier because of

his passion for this work. Having joined Carrier in 1985,

Toshio might be the most experienced at Midea Carrier

ABC JV, with a very rich history in the company. During

the time that he worked for Carrier, he held no less than

19 positions, including Marketing Coordinator and Sales

Manager. Today, he is the General Manager of Brazil

Distribution.

ADV: Hello Toshio! It‘s nice to meet you… well, to see

you again, actually. Last July when you were in China, I

didn‘t have a chance to talk to you, but now we finally

have a chance to sit down and talk. [laughter] You men-

tioned having held 19 different positions before at Carri-

er. 19! So you must know the whole operation of the

company very well. I guess you probably moved a lot

between different cities, because I see that different de-

partments here in Brazil are located in entirely different

cities.

Toshio: [laughter] Exactly! You can say that! I did move

a few times over the past years. In our case, normally for

marketing and sales, people work locally. It is not normal

to move. For example the finance and engineering teams

move to other countries. But in my case, I work only in

the sales department in Brazil. We have five offices, of

which the most important is Sao Paulo. In terms of sales

potential, it is better to be located in Sao Paulo because

our main customers are here.

ADV: You recently had the one-year anniversary for

the JV this past November. How did you feel about

that? What were the greatest challenges for you over the past year?

Is it because of all the air conditioning behind him that Toshio looks so cool?



26

ABC JVABC JV PEOPLE


Toshio: Well, our team was happy because it is an important milestone for us. Before the JV, I told both Carrier and Midea

teams that one important thing in my opinion would be that we have a big change. The change is to create a new company,

a new animal. But we started with two different animals: Springer Carrier and Midea do Brazil, and we were going to create

a new animal. Springer Carrier was like an elephant because it is big and not growing so fast. On the other hand, we have

Midea do Brazil, a small company but with very rapid speed – maybe like a rabbit. Our challenge is to get the best of both

companies and create a new animal. I didn‘t know what this new animal would be back then, but after our efforts, I think

that we have become a lion… and actually, not a tiger. Why? Because the tiger works alone, but the lion works in a group.

This is the message I give to my team.

ADV: As you said, Midea and Carrier are two different animals containing differences. How do you think we can integrate

these two to make that lion?

Toshio: Well, when you look at Carrier, it is a company with years of history. It was created in in 1902. Carrier is a compa-

ny very focused on financial control and processes. When you look at Midea, it is a very young company, with young lead-

ers. They are moving fast and focusing on market position and increasing volume. Midea is very different when compared

to American companies. The American is more conservative, which sometimes is a good thing, such as with controls and

processes, for example. But on the

other hand, we have with Midea more

opportunities and innovations because

it is very fast in solving problems. It is

very different. We need to get the best

out of each company.

ADV: We still need to learn from each

other more, to exchange ideas, ex-

change management methods, strate-

gic and decision making skills, among

others.

Toshio: Sure. Midea right now is a big

company and it is improving. It needs

more processes and controls, which

are things that Carrier is good at. It

still needs to learn from Carrier. On

the other hand, Carrier can also learn

from Midea about its investment in

brands and new product development. Our JV is lucky and moving in a good direction because it combines the best from

each company.

ADV: You have been working for Carrier for a long time, but for the JV, it is only for one year. For the past year working



27

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in the JV, how do you evaluate its development in the

past year or in the future? Can you give one or two

words for that?

Toshio: When started the JV, I was worried in terms of

conflicts. It was complicated to create a new culture. But

the executives from Midea such as Coobie Zhang and

Andy Gu, and others from Midea, are very professional,

the same level as Carrier. People from both companies

are very professional. This fascinated a lot for the inte-

gration. Of course we see the differences. Midea has

younger people. It is part of the company. For example,

in Midea it is normal for a director to be 30 years old. In

Brazil or Japan, it is not normal at all.

ADV: Yes. The executive team is very young. Midea is a

very fast growing company. When it grows, it gives more

opportunities for young people to aspire to new heights.

Toshio: This is a good thing. In Carrier, people see the

same desire. If I need to offer a word for the coming

year, it would be ―OVERCOMING‖. Because this year

we had very difficult market conditions and cultural inte-

gration hurdles, we started with difficulty, but achieved a

good result in December, the best part of the year for us.

ADV: We know that in December, last month, the

Midea brand was launched in Argentina. What‘s your

strategy for the brand launching?

Toshio: We discuss a lot about the brand at this mo-

ment. My main job right now is to create the Midea

brand in Brazil. My work is not just to achieve short

term results, but long term, as well. For example, if

Midea‘s brand has a one million dollar value right now,

my plan for the long term is to make it worth one billion

dollars. I am very clear. We want Midea brand only for

high end products. My job is working in this direction, to

create value for the brand and put this product in high

point of sales. Like Rolex, they only sell in the good

The people of Midea Carrier in Sao Paulo are ready to talk



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channel. This is important. I want our brands to be known not as Chinese, nor as Brazilian, but simply as a world-class

brand. This is part of our strategy of this moment. Midea is Midea, Springer is Springer, and Carrier is Carrier. And we have

the opportunity to create value for our brands.

ADV: Midea is still a new brand for Brazilian people, but I like the idea of it being not just Chinese or Brazilian, but a

worldwide brand; to be an international brand that everyone knows.

Toshio: This is my goal. To create value for Midea is part of my job. My desire is for this company is to be one of most

important home appliance companies in Brazil. We can see this opportunity. The core requirement is to have the technolo-

gy, and we have that. I want our brand to be known around the world. Our products are not basic products; they boast high

innovation and technology, coupled with good design. I am very happy with the past year because we started with difficul-

ties but ended with good results by the end of the year.

ADV: Do you keep in contact with the Midea people in China a lot? How do all of you work with each other regarding im-

portant company decisions?

Toshio: Yes, I keep in contact with them a lot. Just last month, we had visitors from the headquarters to discuss our brands

for the future. We are certain that we are moving in the right direction, but we need time. For example, we need to disclose

more about our new technology, and better-designed products. In air conditioning, we are the leader in window, high wall

and commercial products, but we still need to work hard to maintain our position. We are number one in most of our prod-

uct categories and our intention is to become the leader in those where we are not, and we are in a good position to do this.

Paul Fang told us at the meeting in July that at this moment, we need to focus on our strongest products. After we build

stability in those, we can focus on other categories. Volume is important. But when we talk about the Midea brand in terms

of strategy, we need to create new products with good designs and inspiring innovations.

ADV: How do you show the new Midea brand to our customers? Midea might be totally new for many of them. How do

you build their confidence in our manufacturing, technology, and design abilities?

Toshio: I go to China sometime with customers. We have invited our customers to visit our company. When they see

Midea‘s headquarters and factories, they can understand Midea better—the identity of the company. The best strategy is to

have customers visit Midea in China to increase our relationship with them, and let them know that we have the ability to

provide them with very good products.

ADV: I think this can apply to the people in our JV too. We can have more exchange programs between United States, Bra-

zil and China - to have people from these offices working together side-by-side with each other for extended periods.

Toshio: Yes. To have better integration, we can expand the exchange programs not only for factory and finance teams, but

marketing and sales as well, to have more Chinese people to working here, and Brazilian people in China. This would be a

suggestion of mine as well, for one or two years each, perhaps.



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H enrique Mascarenhas

Marketing and After-Sales Director


Introduction:

Having joined the company in May, 2012, Henrique Mascarenhas is new blood for the JV, serving as the Marketing and After-

Sales Director. Before joining the JV, Henrique worked in the home appliance industry in different positions such as market-

ing, engineering, brand, product, and commercial management. Henrique says he joined Midea Carrier JV to come back to the

major appliance industry which he enjoys very much.

ADV: So you are back in the home appliances industry you know and enjoy - congratulations!

Henrique: Thank you. I already

know people in this business, and

it is a business that I personally

like, as well. The other important

reason that brought me here is the

challenge I was presented with.

ADV: Tell me more about this

challenge.

Henrique: It is that we need to

build the Midea brand in Brazil.

We need to build this brand for

Brazilian consumers, not only in

the HVAC industry, but also in

home appliances, where Midea

wants to expand into. While we

are doing this, we already have

other great brands, Carrier and

Springer, which we need to fortify

in the HVAC industry. We need

to figure out how to develop these three brands together to gain the best results for the JV.

ADV: You have been in the JV for just about 8 months, a relatively short time amount of time for you to familiarize yourself

with the company before charging ahead. What has this time been like for you?

Henrique: I have been actively working on developing a marketing framework for how to present the brand, both in the

short term and long term. All marketing decisions will affect the commercial side, the factory, after-sales, and really the entire

company as a whole. We need to make the best possible product for consumers. We need to know how to setup this frame-


mailto:[email protected]


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work so that our consumers will believe in us. If you are delivering the best products for customers and you reliably fulfill their

needs, they will be willing to pay for the products. We need to build the brand this way, to achieve the best results of the com-

pany.

ADV: What have we done so far to achieve these goals?

Henrique: We have setup the strategic and execution

frame work. We need to finalize concepts for the three

brands: Midea, Carrier and Springer. We are still in the

process of doing research. How we do? First we have to

understand our brand vision. For example, what is the

vision for Midea? Which type of consumer are we going

to reach with this brand? We need to consider their

social economic levels, habits, attitudes, and then we

need to define which market this brand is going to play

in. Should we play only in the HVAC segment? Which

major appliances are we going to place priority on? Af-

ter we know what the brand is going to be, we tell our

consumers whether we have best technology, or we‘re

delivering the most environmental product, etc.

ADV: This is all preliminary work, but what do we actu-

ally do in the daily life regarding all those concepts. Do

we have any specific execution plans?

Henrique: Yes, we have the execution plans but they

are still developing. Once the strategic overview for the

brand is finished, we will move onto the execution

phase. This is more hands-on. A brand is composed of

four components. The first component is the products.

Which products are we going to have? What about their

design? How are consumers going to feel when using

these products? We need to define the right products

and the right price to fulfill the consumers. The right

product is the one that fulfills the consumer most of all,

from its design, functionality and performance. Second-

ly, it is the trades, the proper market channels. This is

where our consumers see our products for the first

time. It can be the internet, online stores, stores in the

shopping malls, stores on the street. Then we need to

create proper shopping experiences for our customers when our brand promoters explain our products to the consumers. We

can have different product categories in the same place showing how we can set up your kitchen, the living room, or HVAC.

Henrique, standing aside one part of the future of the Midea brand



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ADV: So we consider the products, and then the market channels… what are the third and the fourth components?

Henrique: The third part is communication. How we are going to communicate with consumers outside of the point of sale?

This could be on television, in magazines, at events, on the internet in social media, and on billboards. We tell the consumers

that Midea, Carrier or Springer is here and we are here for you. This is called communication.

ADV: But how do you know who you should communicate with? I mean, how do you define our target customers?

Henrique: When we define our tar-

get customers, we not only consider

social economic classes, like high-

end, mid-range or low-end, but also

attitudes and behaviors. This is what

we have been doing with our con-

sumer research for the past year. You

focus your communication on cer-

tain behaviors and attitudes.

ADV: Are there any common as-

pects regarding the communication

between Midea in China and JV in

Brazil?

Henrique: We keep in contact with

people from Midea headquarters, but

most of the communication in Brazil

is also made locally because it is nec-

essary to localize the communication.

We need to raise awareness of the

brand Midea in Brazil. In order to do

so, we design advertisements to plant

the brand in the minds of Brazilian

consumers, under a positive light. Raising awareness is good, but not in a way that is negative; this is something that we need to

avoid. Localization is the way to stay consistent with our global guidelines while talking to the local market.

ADV: How do we design our advertisements? What advertisements do we show to the public in Brazil?

Henrique: Brazil is one of the ten largest markets in the world, so we need to spread the brand over a wide area, but commu-

nication in Brazil is very costly, which means we need to know where our money can be used most effectively. In 2012, we

advertised in major magazines, the internet and social media sites like Facebook and Google+. Last year we were very success-

ful in doing magazine advertisements in Brazil – creating positive awareness of Midea.

ADV: You‘ve mentioned three components so far. What about the last one?

Henrique: After communication, we have after-sales, which is the final component. After-sales concerns situations where cus-

tomers might have problems with our products, and in response, we aid them promptly with delightful service. If this compo-

A view of the Sao Paulo team, hard at work - they couldn’t be distracted, not even for a photo



32

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nent is skipped, you can have very nice products, a good shopping experience and effective communication, but you still ruin

your brand because of a broken product that is not supported properly by the company. If you can execute all of these compo-

nents well, you are enhancing your brand over time and consumers will come to you on their own. Customers will trust you for

delivering the best service, products, shopping experience, and your communication will reinforce that.

ADV: What do you think we should do to differentiate from our competitors?

Henrique: Right now we need to set up a product pipeline. We have a good, well-developed product pipeline for HVAC, but

we don‘t yet have pipelines for the other categories which are forthcoming. When you have the pipeline, you can deliver prod-

ucts every season. Innovation is also a key thing for us in order to differentiate our brands against our competitors. Differentia-

tion comes not only from technology, but also from the way the consumer uses our products and also the design.

ADV: Do any of our three brands ever suffer from sales cannibalization? For example, in residential AC, is there a chance that

Midea, Springer, and Carrier might compete against each other?

Henrique: This is a good point, and in 2011, Midea, Springer and Carrier were competitors. After the JV was formed over

2011 and 2012, we separated the sales channels to avoid overlap between each brand‘s offerings. In the future, we will have a ll

our brands very well defined in terms of where they compete, their target customers, and they will be complementary to each

other.

ADV: What do you see in the coming year for Midea Carrier ABC JV?

Henrique: We are confident that we are going to deliver the results we committed to last year in the annual review at Midea

headquarters. This is my expectation. We will learn from our mistakes as well as our successes, and then we can better under-

stand the way forward in 2013 and in the coming years.

ADV: We have three cultures coming together here, how do you feel about this?

Henrique: We have two companies together with new people and different cultures. People from Springer Carrier have a very

strong Carrier culture. People from Midea do Brazil are kind of Brazilian working culture. Now we have people from China

HQ that work here, like Edson Li, Lewis Fu, James Yu, etc. bringing in Midea culture. It is a real mix of cultures. The JV is

adjusting to find its own individual culture: not Midea, not Carrier, but a culture of its very own. I find it really very interesting.

ADV: How about the governance in the JV?

Henrique: In terms of governance, we have two shareholders. All the strategic points should be approved through this gov-

ernance. The governance is actually not Midea nor Carrier, but the JV s. The new culture will become consolidated and local-

ized, and it will also adopt some positive ideas from Mei Di [Chinese name for Midea]

ADV: [laughing] Very good pronunciation!

Henrique: Thank you. [laughing] We are making something good here, between Carrier and Midea, in a special Brazilian style,

using the best parts of each company. We need to respect each culture, but adapt them to our Brazilian environment.


app:ds:complementary


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ABC JVABC JV PEOPLE


G ermán Damiano

Commercial Director, Midea Carrier Argentina


Introduction:

Germán is a veteran of the company, having starting with Carrier right out of university. His work since the beginning of the

JV has been to carefully prepare the company for the launch of the Midea brand in Argentina, which nearly coincided with

the one year anniversary of the JV. He talks with ADVANCES about the challenges of introducing a new brand and new

products into a country like Argentina.

ADV: Hi Germán, it‘s great to meet you. I really appreciate you carving out some time to talk to me. So, how long have you

been with the company for?

Germán: Well I started to work for Carrier in 1996. In 2000, I left the company for a few years, and then in 2003, I came

back. So we can say I started to work for this company sixteen years ago, but I‘ve only been here for 13. At the time when I

started, I had just graduated uni-

versity as a mechanical engineer,

and so this company has been the

most important in my career.

ADV: Have you always been in

Argentina?

Germán: I have experience work-

ing in the US, when Carrier sent

me there in 1998 as part of a train-

ing program for engineers. I went

to Syracuse, New York for train-

ing, and afterwards I was working

in their Chicago office.

ADV: How did you like the US?

Germán: Well, interesting, of course different, and it‘s a very organized country, the people are a bit cooler with each other

than here in this part of the world; the relationships are totally different with Latin people. But it was a very good experience

to meet many different people from around the US, as it seemed like I was meeting people from all over the world, as the

diversity was so great. Ironically, for all its diversity, I also think it‘s a very closed country, in terms of their understanding of

other countries, especially those in Latin America, which seemed a bit strange to me, although this was 14 years ago, so may-

be things are different now. But again, it was a great experience, both for my career and my personal growth, and I was able

to improve my English while I was there, too. One more thing that was new for me during my time in the US was the weath-

er during February around Syracuse – very terrible.

ADV: It‘s funny you mention that connection between Syracuse and winter weather, because my car once broke down on

the highway 10km outside of Syracuse one night just before Christmas in December.



34

Sadly, no amount of wishing on my part was going to make this a reality

ABC JVABC JV PEOPLE


Germán: So it was not a good experience, then? [laughing]

ADV: That would be a dramatic understatement. [laughing] So back to you – what was your feeling when you first heard the

news about the joint venture between Midea and Carrier?

Germán: I was excited. You see, Carrier, well, this is, first, it was going to be a new experience to work for an Asian company,

a Chinese company. I had been working for Carrier for quite a while, and so I was already familiar with the American culture

of doing business, so to work for a Chinese company was exciting for me. Aside from that, it was also exciting because Carrier

isn‘t so focused in the residential business, and you can say that Argentina is a residential market, so we believed we would see

more support from Midea than Carrier for this segment of the business. We also knew that Midea had a greater reaction time

for adapting to the market than Carrier,

and also that Midea would give us a new

opportunity to enter the market with a

full selection of white goods. In my per-

sonal opinion, with this joint venture, we

will grow bigger and bigger from this

point on.

ADV: Would you say that the difference

in cultures between Carrier and Midea

has presented any challenges?

Germán: Well, actually, you have the

American part from Carrier, the Chinese

part from Midea, and our local office

culture, as well, so there are actually

three business cultures combining here.

There have not been so many big chang-

es, as we have already combined aspects

of local business culture with the Ameri-

can aspects from Carrier, and this culture

is not so different from our own, any-

way. For the past 6 months, we have enjoyed the presence of a Chinese colleague here, Fred Xia, who helps to keep us com-

municate with and understand the culture and expectations of our new Chinese shareholder better. In turn, he helps the peo-

ple in Midea headquarters to understand the unique properties of our market here, and I think both sides of this process have

moved along very comfortably so far.

ADV: It‘s really about striking the right balance then, isn‘t it?

Germán: I think the objective is to take the best aspects of each party, and the exciting aspect that Midea brings is the Chinese

way of moving and adapting quickly in business. Of course, we need to maintain some local practices which are best suited for

this market.

ADV: Your office just launched the Midea brand last month. Was it challenging to insert Midea into the market alongside your



35

ABC JVABC JV PEOPLE


Surrey and Carrier brands?

Germán: Well yes, absolutely, because it‘s totally new for us, and creating a new brand isn‘t easy anywhere in the world, and

Midea was an unknown brand until the summer, and as you mentioned, we already have two strong brands with great position-

ing and long histories in the market: Carrier with 80 years in the market, and for Surrey, more than 60, 65 years in the market.

So when we decided to move forward with the Midea brand, we studied very carefully which positioning this brand should

have, and as I said, our two brands are very strong, both in the high tier segment. So we decided to put Midea into the mid-tier

segment, to play in that segment. You see in this market, there are many brands with three different segments: high tier, high

price; mid-tier; and the private label brands which belong to the retailers, and these reside in the entry level tier. So we decided

to grow Midea in the mid-tier so that it would not hurt our other brands up above. We launched the brand using two air condi-

tioning products, a high wall and a portable, which we call the ―Muv.‖ They started with a small volume, and we were pretty

satisfied with the sales so far, but they are in the main retailer chains across the country, which is good. We want to brand to be

known by the end user.

ADV: Yes, it makes a lot of sense to take advantage of a lower segment that hasn‘t yet been addressed, while avoiding any can-

nibalization with your other established brands in the upper tier. Can you discuss the differences between the market here in

Argentina, in comparison to those in Brazil and Chile?

Germán: Well, Argentina is a closed market, this is the first difference. In Chile, it‘s entirely open, you can import everything,

whereas here, you can import nothing. Then in the case of air conditioning, there are many, many brands. I would say, as many

as 60. Many of them are unknown brands, but they are there and they have their own volume, and this is a mature market for

high walls. We have strong retailers that

manage their own brands, and in fact,

the two biggest retailers not only have

their own brands, but also produce their

own goods in Tierra del Fuego, air con-

ditioning and other goods. So this is

different from Brazil and Chile. In Bra-

zil, you have far fewer brands, but they

are stronger.

ADV: That‘s quite remarkable. In Cana-

da, the big electronics retailers also have

their own brands in the entry level tier,

but only for smaller items, such as

memory cards, printer refill cartridges;

commodity-style goods, but nothing like

white goods.

Germán: Yes, here you can find those

private labels on everything from air

conditioning, televisions, refrigerators,

washing machines, microwave ovens – everything. Speaking of air conditioning though, this is another difference – you will not

Germán hustles James Yu, visiting from Sao Paulo, at a game of foosball, or canchitas



36

ABC JVABC JV PEOPLE


see much of a market for high wall units in Chile, and you don‘t see any air conditioning in retailer channels, whereas here, re-

tail is the place to get air conditioning. And because Argentina is closed, everything you find here is made in Argentina, usually

Tierra del Fuego, but also in the continent. For air conditioning and electronics, usually TDF, but others are more often made

in the continent.

ADV: Why would this be?

Germán: Well, two reasons: the history of production in the continent goes further back, and so there was no reason to move

this production once facilities had already been established in the continent. Secondly, the production of larger items such as

refrigerators is better suited to the continent because the cost of transporting it to the cities will be less than from TDF. Also a

big reason is that the government, when it first began promoting TDF as a production site, promoted it only for certain goods,

as it wanted to protect the existing production bases in the continent, and the local jobs that were associated with those.

ADV: The Midea launch was accompanied by a celebrity endorsement, from Luciana Aymar, a famous hockey player in Argen-

tina. Are endorsements like this common

in ABC JV, and how did this one come

together?

Germán: well they are not common at all,

but we don‘t have experience to launch a

new brand, and we discussed how we

could have a good first impression to the

market.

ADV: How to come out with a ‗bang‘.

Germán: Yes. So we thought we should

look at celebrities, and we thought of Luci-

ana. She was number one in the world for

seven straight years, and she has a very

good image and reputation. Luckily we

were able to afford this endorsement, and

so far the result is very good.

ADV: And while football is probably more

popular, the expense of that would likely

be quite dear, and many famous football

players tend to have troubles with their

image, anyhow.

Germán: Exactly. For the Midea brand, we wanted an image of youth, beauty, performance, but also good values, someone

wholesome, that everybody can look up to.

ADV: Under the Midea brand, what else does Argentina sell beyond air conditioning?

Germán posing with the first ad featuring his new star endorsement, Argentini-an hockey legend and world champion, Luciana Aymar



37

ABC JVABC JV PEOPLE


Germán: At the moment, we only sell the high wall and portable units, but we do have plans to eventually expand into other

home appliances. The challenge is that Argentina is a closed country, and so to venture into other new product categories re-

quires quite a lot of investment, and any mistakes would be very costly. Our focus now is to carefully build the brand, and to

avoid any undue risk.

ADV: In speaking with Roberto and Benjamin in Chile, it sounds as though there might be an interesting opportunity for your

people here to look over at the product launches in Chile to see how they‘re received by consumers. Their air conditioning

market is too different to be relevant, but with other larger categories, they can test their market much more quickly and with-

out the same investment risk that you would face here.

Germán: Yes, it will help to see how the people there receive

those products. Of course, our market is different here, we have

some aspects here that are not the same as in Chile, but it will be

good to see the success of those white goods in their market

first. Now, we have many years of experience in retail, whereas

they will be building those channels from almost nothing, so it

will be a challenge for them.

ADV: Yes, and since some of the retailers here are actually Chile-

an, not only will they benefit from your experience in the retail

channels, but I imagine you will also be able to help them build

their relationship with those retailers over in Chile. It seems like a

very nice two-way synergy.

Germán: Yes, we are going to complement each other very well,

so it‘s very exciting as we move forward with the Midea brand.

ADV: This might seem a bit obvious, but what do you think has

been this office‘s greatest achievement over the first year since

the inception of the JV?

Germán: Yes, well, certainly the launch of the Midea brand

would be a good candidate for this, but I could also mention the

financial results, which we were very happy to present to our new

shareholder, as a sign that we can perform. And I think what

we‘ve been able to learn from Fred, although it seems small com-

pared to brand launches and financial results, is something that

has helped us quite a bit.

ADV: Well, I‘m sure Fred would say that he‘s learned a lot from

all of you, too! [laughing]

Germán: Yes, yes, it‘s good to have this mutual benefit, so that we

María José Cisneros, Product Specialist, posing with a gourd of Maté, a tasty traditional South American in-fused drink, of which I was lucky to have a taste



38

Cesar Ramos, Product Specialist, waves from across the Buenos Aires office

ABC JVABC JV PEOPLE


can grow more easily. Sometimes when you have a joint venture like this, people can be scared of the changes at first, but I

think the communication and learning have helped all of us to experience this as nothing short of a very positive first year.

ADV: What do you see for Midea in Argentina over the next year and beyond?

Germán: I think we need to keep launching, and to keep advertising – we need to keep building the brand over the next 3-5

years. Of course we need to achieve our financial targets every year, and identify the opportunities that will allow us to grow. I

think there‘s room to grow with our brands, and particularly with the Midea brand, because we are taking it into areas where

we‘ve never been before.

ADV: What categories do you see for the Midea brand in Argentina?

Germán: Well, we are going to have a look at kettles, vacuum cleaners, toaster ovens…

ADV: I know in Chile, they were very enthusiastic about the kettles.

Germán: Yes, the kettle has a big market here. Maybe not big in revenue, but it will be a part of the learning process that we

need to follow in the home appliances business. We need to setup the processes for handling the after-sales service, and how

to manage point-of-sale, many, many things we need to learn, and at the same time, we need to build the brand very carefully

without damaging it.

ADV: If you could make any suggestions or

offer any advice to the people at Midea head-

quarters, what would you say?

Germán: First, I would like them to continue

knowing our market better, and I think Fred

helps a lot with that, but we will always wel-

come new visitors from other offices, because

I think it is important to develop closer rela-

tionships and communications so that people

can understand Argentina better, as each

country is different.

ADV: Yes, I‘m sure it‘s tempting for people

from outside of Latin America to look at each

of the Brazil, Argentina, and Chile markets

and figure that they‘re all in the same region,

so they‘re probably almost the same, but

they‘re not.

Germán: No, no, each country has its own unique features, absolutely. Another thing I would suggest is to feel free to ask us

anything. We are very open to explain anything, and confident in what we are doing here, so don‘t be shy! I feel if they can

understand what is happening here in the market, they will see there are many opportunities here to take advantage of.



39

PEOPLE Midea SNAPSHOT

Santa visits Carrier Midea India!Santa visits Carrier Midea India!Santa visits Carrier Midea India!

Photo by Himani Joshi

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