"You can become beautiful in one week", Dong Mingzhu launches a new beauty instrument worth 9,800 yuan
2024-08-06
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"As long as you use it for a week, you will find that you have become more beautiful."
Recently, at the 2024 Gree refrigerator and washing machine home appliance strategy launch conference held in Zhengding, Shijiazhuang, Hebei, Dong Mingzhu, chairman and president of Gree Electric Appliances, said this when talking about the beauty devices developed by Gree.
It turns out that Gree Electric Appliances, which has repeatedly failed in diversification, has recently sounded a new clarion call. China News Weekly found that recently, a Gree beauty instrument was launched in the Gree Dong Mingzhu store mini program.
According to the product page, the product is positioned as a micro-current beauty instrument with anti-aging function, priced at 9,800 yuan, and is expected to be shipped from August 25. As of press time, more than 960 units of the micro-current beauty instrument have been sold.
It is worth noting that the price of 9,800 yuan is three times that of the top-selling beauty device on Tmall in the past seven days.
Dong Mingzhu. Photo: Gree Electric Appliances official WeChat
Cross-border
"Everyone says, 'Dong Mingzhu, how come you are living so well now?' I tell you, we at Gree have developed a beauty instrument." When talking about the beauty instrument, Gree's latest cross-border achievement, Dong Mingzhu remains confident.
At the press conference, she personally launched an advertisement that took effect in a week, and mobilized dealers on site to place orders for their wives, daughters and themselves - the main theme was that regardless of gender, everyone can enjoy beauty together.
On the details page of Gree's microcurrent beauty instrument, you can also see Gree's introduction of its series of functions, including improving forehead wrinkles and nasolabial folds, deeply improving facial fine lines, improving rough and dull skin, calming and soothing, shrinking pores, etc., and calling it "the choice of quality identity."
But from the consumer side, it is still difficult to feel the same enthusiasm as Ms. Dong.
Judging from the heated discussions this beauty device has sparked on social platforms, there are many complaints from netizens such as "For 9,800 yuan, you can use photon (skin rejuvenation) for four or five years", "There is no seven-day no-questions-asked return after a week", "What is the core technology", and "Is this false advertising".
Picture/Screenshot from Gree Dong Mingzhu Store Mini Program
China Newsweek observed that consumers' doubts are mainly divided into two types: one is how Gree, a home appliance company, can ensure that the beauty instrument it develops is really useful, and the other is whether the price of 9,800 yuan is suspected of cutting leeks.
In the view of Zhang Yi, CEO and chief analyst of iMedia Consulting, beauty devices are essentially industrial products. Large home appliance companies like Gree have strong manufacturing capabilities and technological accumulation. Therefore, compared with existing beauty device manufacturers on the market, Gree still has certain advantages in the research and development and production of beauty devices.
"Beauty devices are emerging home appliances. Gree has a deep foundation in the field of home appliances. Once Gree invests resources in research and development, it will soon have products suitable for the market." Home appliance industry analyst Zhang Yanbin also believes that Gree has inherent advantages in the research and development of beauty devices.
Judging from public information, there were signs of Gree’s cross-border move a long time ago.
According to Tianyancha data, Gree's application for beauty device-related patents can be traced back to September last year. Currently, one utility model patent has been authorized, and the remaining eight beauty device-related invention patents are in the public or substantive examination stage. Simply put, they have passed the preliminary examination and are awaiting in-depth evaluation of their innovativeness.
Gree Electric Appliances applied for patents related to beauty devices. Photo/screenshot from Tianyancha
In April this year, Gree Electric invested in the establishment of "Zhuhai Gree Medical Equipment Co., Ltd.", whose business scope includes medical services, medical beauty services and the production of Class II and Class III medical devices.
However, it is difficult to tell from the existing information how good the first microcurrent beauty instrument launched by Gree is, and whether it can truly provide users with a high-end experience that matches its pricing while avoiding the controversy of "whether home beauty instruments are IQ taxes". After all, on Tmall's beauty instrument hot-selling list in the past seven days, the post-coupon prices of the top five products were only 3199, 2399, 2399, 299, and 6998 yuan respectively, and the price of 9800 yuan can be considered "luxury".
Liang Zhenpeng, an analyst in the home appliance industry, said, "The pricing system of the beauty instrument market itself is quite chaotic. Due to differences in models, styles, functions, etc., prices range from hundreds of yuan to tens of thousands of yuan. Therefore, it is difficult for us to use prices to determine whether a beauty instrument is extremely profitable or reasonably priced. We mainly have to look at its effects."
However, in the current competitive landscape of home beauty devices, if Gree wants to establish its own market position in a short period of time, "it all comes down to the product." Zhang Yi told China News Weekly: "If consumers lack confidence in the quality and efficacy, this price may become a price threshold that hinders its market sales."
China Newsweek sent an interview letter to Gree asking about the core technologies Gree has mastered in the beauty instrument category, the verification of its efficacy, and the advantages of its microcurrent beauty instruments compared to other products on the market. As of press time, no response has been received.
Rush to diversify
Although it will take some time to convince consumers, many interviewees are optimistic about Gree's cross-border beauty devices.
This optimism mainly comes from the fact that the current home beauty device market is entering a reshuffle period due to regulatory changes.
In March 2022, the National Medical Products Administration issued an announcement that it will implement Class III medical device management for radio frequency therapy devices, radio frequency skin therapy devices, etc. from April 1 this year. That is, products that have not obtained a medical device registration certificate in accordance with the law shall not be produced, imported or sold; before that, home beauty devices are managed as small household appliances, and their efficacy does not require clinical verification.
Although the National Medical Products Administration postponed the regulation for two years at the beginning of last month and it will be officially implemented on April 1, 2026, the waves caused by this regulation in the industry have already begun.
According to data from market analysis company Jiuqian, online sales of beauty devices fell 32% year-on-year in the first quarter of 2024. Even though the new regulations have been postponed, many brands have not re-listed such products and have turned to other categories, developing optoelectronic and sonic products.
"The new regulation on radio frequency beauty devices directly cleared out some non-compliant manufacturers, which to a certain extent purified the beauty device market and also freed up a certain amount of market space for compliant companies," Zhang Yanbin said. "Gree's announcement of entering the beauty device market at this time is an excellent opportunity."
But does this mean that cross-border beauty devices can become a breakthrough for Gree's diversification? The answer is, I'm afraid it's not that easy.
On the one hand, consumers' perception of Gree is still constrained by "good air conditioners, made by Gree."
"Consumers are not very aware of Gree's non-home appliance sector, and it will take time to accumulate," Zhang Yi said. It can be seen that even with Dong Mingzhu's personal influence and Gree's existing brand awareness, Gree has not been able to replicate its growth myth of air conditioners in non-air conditioner consumer appliances or electronic products.
On the other hand, the beauty instrument category may pose certain challenges to Gree’s current dealer system.
"In terms of industry integration, beauty devices involve more complex professional knowledge. For dealers who mainly deal in home appliances, there is still a certain period of adaptation in terms of product skills, and they also need to invest more resources in market education. Objectively, the higher pricing also puts higher demands on the dealers' after-sales service capabilities." Zhang Yi said.
In fact, this is true. The consumption scenarios of large appliances such as air conditioners and small appliances such as beauty devices are very different, whether online or offline. It is hard to imagine that home appliance stores like Suning will introduce and demonstrate the use of beauty devices in detail.
In addition, perhaps the more important point is that although the home beauty device market still has a lot of room for growth driven by the growing demand for contemporary medical beauty, it is not very impressive compared to Gree’s revenue scale.
According to the "2020-2026 China Beauty Instrument Industry Market Size Research and Development Trend Analysis Report" released by Zhiyan Consulting, the scale of China's home beauty instrument market in 2021 is close to 10 billion yuan, and is expanding at an annual compound growth rate of over 30%, and is expected to exceed 20 billion yuan by 2026. In comparison, Gree's revenue last year was as high as 203.979 billion yuan.
"I think beauty devices can only be a relatively unimportant part of Gree's diversification, just a relatively niche small product line." Liang Zhenpeng told China News Weekly, "Whether Gree's diversification can be successful depends on whether Gree can do well in other home appliance product categories that can generate more sales, such as refrigerators, washing machines, and kitchen appliances, in addition to air conditioners."
Looking at every step of diversification that Gree has taken in the past decade, whether it is home appliance-related refrigerators, washing machines, kitchen appliances, etc., or unrelated businesses such as mobile phones, medical equipment, pre-prepared meals, and new energy, almost all of them have fallen into a quagmire that cannot be called a failure but is far from a success. From the results, air conditioners are still the main revenue source of Gree, accounting for 74.14% of revenue last year, even higher than 71.36% in 2022.
Gree's revenue composition. Photo/Compiled from Gree's financial report
Unlike Gree, whose performance is highly dependent on the air-conditioning business, the other two major white appliance giants, Midea and Haier Smart Home (a listed home appliance company under Haier Group), are flourishing in many areas.
Last year, 36.20% of Midea's revenue came from consumer appliances (washing machines, refrigerators, kitchen appliances and other home appliances), and another 10.01% came from robots, automation systems and other manufacturing industries; while Haier Smart Home's refrigerators, washing machines, and kitchen appliances accounted for 31.36%, 23.54% and 15.98% of its revenue respectively.
Although the two companies have not yet surpassed Gree in the air-conditioning field (Note: Midea's HVAC business includes new energy and industrial technology, smart building technology and other businesses outside of air-conditioning), and even Haier Smart Home's air-conditioning business revenue is only 30% of Gree's, the two companies' revenue from other consumer appliances and extended businesses makes it difficult for Gree to catch up for the time being.
As a result, the gap in revenue between Gree, Midea and Haier is getting bigger and bigger. Last year, Gree's revenue was less than 80% of Haier Zhijia's and less than 60% of Midea's.
Comparison of revenues of the three major white goods giants, unit: 100 million yuan/Figure: compiled from financial reports
When focus turns from an advantage into a disadvantage, Gree's diversification becomes increasingly necessary and urgent.
However, in the view of Liu Buchen, an analyst in the home appliance industry, the fundamental reason why Gree's diversification lags behind the other two is that Gree's diversification strategy is not clear and there is a lack of logical relationship between its diversified products; at the same time, its diversification started relatively late and the products themselves are not very competitive.
Rather than eagerly taking big steps and expanding its business, perhaps it is more important for Gree to truly understand its own advantages.
Author: Shi Hanxu
