In May this year, the news that “the United States is considering the acquisition of the well-known European household appliance brand Electrolux” spread like fire, so that the household appliance circle that has not appeared in large mergers and acquisitions for many years is once again boiling up. In response to this matter, Wang Jianguo, vice president of Midea Group, gave an intriguing response: “If it matches our strategy, we will pay attention.”
For the current stage of Chinese home appliance enterprises, “accelerating the global layout” is an important and necessary topic. And a number of successful large-scale “mergers and acquisitions” cases have allowed Haier, the United States, Hisense and other Chinese head enterprises to attack the global market “like a tiger.” So would Midea’s acquisition of Electrolux be a good deal? For Midea, the acquisition of well-known international brands is considered a “familiar road”. In 2016, Midea Group acquired Toshiba’s white goods business and won a 40-year global license for the Toshiba brand. Since 2017, Midea has started the long road of acquisition of German robot manufacturer Kuka. Now, these two famous cross-border mergers and acquisitions of the United States have seen results. Toshiba, since the acquisition of Midea Group in 2016, after a year and a half of integration, to 2018 Toshiba after 15 years of losses for the first time to achieve profit, by 2020 Toshiba profitability has returned to the average level of Midea Group; Before the acquisition, Toshiba had global sales of about 6.5 billion yuan in 2015, and turnover of about 20 billion yuan in 2022. In terms of Kuka, Midea completed the privatization of Kuka (100% shareholding by Midea) in the fourth quarter of 2022 after six and a half years. At the time of the acquisition, Kuka’s China business accounted for 7% of revenue, and in 2022, it will reach 23%.
From the perspective of corporate strategy, the acquisition of European high-end home appliance brand Electrolux is in line with the latest overall blueprint of the Midea Group and is a move to make up for shortcomings. In the highly mature and

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competitive home appliance industry, “global layout” and “aiming at the high-end market” are two parallel routes. First of all, in terms of globalization, the United States as early as 2012, the “global operation” included in the three strategic axis, in 2021, the United States again to change the strategic axis, “global breakthrough” is one of the key words, the United States and Germany occupy the United States of the world’s five strategic markets two seats. Electrolux, which is more competitive in the European and American markets, was once called the “white power duo” with Whirlpool of the United States. Secondly, in the high-end market, Fang Hongbo, chairman of the United States Group, admitted at the annual meeting of management in early February 2018 that “the biggest regret of the United States is that it does nothing in the face of the tide of consumption upgrading and misses the high-end market.” Since the second half of 2022, Midea has clearly proposed to build Toshiba and COLMO dual high-end brands, and Toshiba will also carry out global layout as an important high-end brand to enhance the growth of overseas private brands. But obviously, the performance of the United States in the high-end market at this stage can not make Fang Hongbo satisfied, the current high-end brand is not enough to complete the United States in the global high-end market in the “short board”. Third, Midea is no stranger to Electrolux. As early as 2017, Midea Group signed an agreement with Electrolux Group to establish long-term strategic cooperation in the Chinese market and jointly set up a joint venture company to introduce the latter’s high-end home appliance brand AEG to Chinese consumers.

Returning to the “Midea acquisition of Electrolux” itself, if the deal can come true, will it be a “cost-effective” deal? For Electrolux, this may be a “helpless but beneficial” choice. In fact, the annual revenue of more than 100 billion yuan of European and American home appliance giant began to enter the Chinese market as early as 1997, but has been in the Chinese market for more than 20 years, the development is difficult to get and Siemens, Panasonic and other brands comparable performance. However, the Chinese market is an important weight that Electrolux can not give up, although it has established a joint venture with Midea in 2017 to introduce high-end German brand AEG in China, the final result is not satisfactory. Elektra is also currently under operating pressure, with a profit loss of 1.32 billion Swedish kronor in 2022. For Midea, its overseas market needs to be further broken through, and the transformation of overseas market to OBM is an important breakthrough point. The overseas revenue of the United States Group has exceeded 100 billion yuan for the first time since 2017, and has been stable at more than 40% since then, but many companies such as SONY and Canon have accounted for 70%-80% of overseas revenue in the process of globalization, which shows that the future overseas space of the United States is huge, and the ratio of OBM has a significant impact on profitability.