Gree Electric Sees 2011 Sales Over 80 Billion Yuan, Dong Says

Gree Electric Appliances Inc. (000651), China’s largest home air conditioner maker, has raised revenue by at least one-third in 2011 as it sells aggressively in rural China, a senior executive said.

Gree Electric, which also manufactures air conditioners for overseas companies including Daikin Industries Ltd., will report revenue of greater than 80 billion yuan ($12.6 Billion) this year, said Dong Mingzhu, the company’s president, in an interview at its Zhuhai headquarters on Dec. 17. Revenue in 2010 was 60.3 billion yuan.

In addition to selling inside China, Gree is looking to expand overseas and will target emerging markets where the cost of setting up manufacturing facilities is lower, she said.

“We want to bring Gree’s products to every corner of the world, but it’s not easy to plant a flag everywhere,” Dong said. “For example, the cost of setting up a manufacturing hub in the U.S. will be very high, so we’ll first focus on developing countries where both wages, land and other operating expenses are lower.”

Gree competes against GD Midea Holding Co. (000527) and Haier Group Corp. in the world’s most-populous nation, which embarked on a rural appliances stimulus program in 2009 to boost domestic consumption at the height of the global financial crisis. China sold 29.8 billion yuan ($4.7 billion) worth of appliances in November under the program, a 66 percent jump from a year earlier, according to the Ministry of Commerce.

Gree, which generated 17 percent of its sales outside China last year, set up a subsidiary in the U.S. in June.

The shares of Gree have declined 6 percent this year in Shenzhen, compared with a 21 percent drop in the benchmark Shanghai Composite Index. Gree rose 3.3 percent to 17.03 yuan on Dec. 16.

The company’s third-quarter net income rose 19 percent from a year ago earlier to 1.57 billion yuan, according to a statement to the Shenzhen stock exchange on Oct. 27.

Sales of electronics and appliances in China are estimated to surge 70 percent to 2.14 trillion yuan by 2015 from 2010, according to London-based researcher Euromonitor International.

To contact Bloomberg News staff for this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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