The synergy between the traditional Chinese home appliance leader Gree Electric and Xiaomi on the investment fund will accelerate core technology development around electronics product manufacturing.
Having long held to the slogan of 'Holding Core Technologies,' the Chinese home appliance leader Gree Electric (000651:SZ) is moving further towards integrating with the upper stream component and solution providers by joining Xiaomi's (01810:HK) industrial fund. A total amount of CNY 3.55 billion will be injected into Xiaomi's industry fund and the future investment deals will be focused on integrated circuits, artificial intelligence, industrial Internet, core equipment and cutting-edge technologies.
Xiaomi's IoT strategy, which involves home appliances, is followed by more and more consumer electronic vendors, the pattern is actually casting threats for traditional home appliance manufacturers such as Gree Electric and Media (000333:SZ). The rising competitors are urging Gree to deliver more innovations within conventional products – and thus the cooperation with Xiaomi will help pick up the slack.
While Xiaomi, on the other side, should boost its power and attain a higher margin for its hardware revenue. As the CEO of the company addressed in his recent public speech, Xiaomi's next long-term strategy partly lies in the 'smart' manufacturing industry. Thus, Gree's billion-level capital injection in the industrial fund will fuel the overall development of smart manufacturing.