Appliance giant Midea flounders in auto market

China's home appliances giant Guangdong Midea Group has come up against a brick wall five years after its high-profile foray into the automobile industry, said xinhuanet.com yesterday. The group's pluralistic strategy is stranded, with its auto-making division turning into a low-key restructuring period.

Online sources said Midea has suspended its bus production, and Midea Bus is discussing about partnership issues with bus-maker Zhengzhou Yutong Group. Midea brand executive Dong Xiaohua said earlier this week that auto-making was not the company's pillar business and had just a little investment. Midea's future development strategy will center on home appliances manufacturing.

In early 2008, Midea amended its three-year plan, not mentioning the auto-making business in the 120-billion-yuan revenue goal set for the year 2010. Midea Bus discloses that it will not accept new orders until the top management gives the approval. Its plant is being regrouped, but still can supply vehicles from its stockpiles.

Midea Group marched into the commercial vehicle market in 2003. From 2004 to early 2006, the company acquired Yunnan Bus Factory, Yunnan Aerospace Shenzhou Automobile Co., Ltd., and Hunan Sanxiang Bus Group Co., Ltd. in succession.

It remains unclear how Midea will drop out of the auto industry. Its counterparts, Chunlan Group, Ningbo AUX Group, Ningbo Bird, and Greencool Tech have all seen their auto-making dreams dashed. The only survivor is refrigerator maker Henan Xinfei Electric, whose refrigerator cars are sold well.

Their retreat is inexorable, said auto analyst Xiang Hansong, who noted that newcomers to the market usually lack professional talents and follow-up investment. When the auto industry gets increasingly denser, laymen have little chance to succeed in this field.