In the last week of October, three home appliance giants—Midea, Haier, and Gree—released their Q3 financial reports. While the other two companies maintained overall growth, Gree Electric's performance decelerated sharply, with a noticeable decline in both quarterly revenue and net profit, exposing the company's internal and external challenges as if winter had arrived prematurely.
**Double Decline in Revenue and Profit** For the first three quarters of the year, Gree Electric reported revenue of 137.18 billion yuan, down 6.5% year-on-year, and net profit attributable to shareholders of 21.461 billion yuan, a 2.27% decline. Adjusted net profit fell 2.73%. In Q3 alone, revenue dropped 15.09% to 39.855 billion yuan, while net profit slid 9.92% to 7.049 billion yuan—far steeper declines than the nine-month average.
Gree remains heavily reliant on its air conditioning business. Although Q3 segment breakdowns were not disclosed, its H1 report showed that consumer appliances—primarily air conditioners—accounted for 78.38% of revenue, meaning core business fluctuations directly impact overall performance.
The air conditioning sector remains in an adjustment phase. Data from AVC indicates persistent downward pressure, with November domestic production plans down 19.8% year-on-year and exports down 15.7%. September retail sales fell 21.2%, with online and offline channels dropping 29% and 38.1%, respectively, weighed down by inventory cycles, a sluggish property market, and weak consumer sentiment.
Zhang Xinyuan, research head at Kfounder Think Tank, noted that product homogenization in the industry is acute, with recent innovations failing to resonate clearly with consumers, intensifying competition and complicating purchasing decisions.
From 2021 to 2024, Gree had sustained growth in net profit and adjusted net profit, peaking in 2023 with revenue up 7.93% and net profit surging 18.41%. However, both profit metrics turned negative in 2025’s first three quarters, signaling fading momentum amid industry headwinds.
Gao Zhengyang, a researcher at Suzhou Merchant Bank, observed that even with technological strengths, Gree struggles to convert them into demand during market downturns, exposing earnings pressure.
**Internal Struggles and Xiaomi’s Challenge** Gree’s operational woes are compounded by external threats—most notably from Xiaomi. The launch of Xiaomi’s smart appliance factory in Wuhan, announced in late October, marks another assault on Gree’s stronghold. The facility, which founder Lei Jun highlighted as fully automated, can produce an air conditioner indoor unit every 6.5 seconds, with Phase 1 annual capacity hitting 7 million units and long-term goals aiming for 10 billion yuan output by 2030 and a top-two industry rank.
Xiaomi’s shift from OEM to in-house manufacturing boosts supply chain efficiency and product quality, sharpening its price-performance edge and threatening Gree’s market share.
The rivalry spans years, from their 2013 “1 billion yuan bet” to Xiaomi’s 2018 entry into air conditioning and subsequent clashes—online sales disputes (Xiaomi claimed overtaking Gree in July, countered by Gree’s alternative data), warranty policy one-upmanship (Xiaomi expanded coverage to central ACs, Gree mocked its “promise vs. reliability”), and product teardown debates.
Xiaomi’s latest H1 report underscores aggressive expansion in major appliances: Q2 IoT and lifestyle product revenue surged 44.7% to 38.7 billion yuan, a record high, with smart major appliances up 66.2% driven by over 5.4 million AC shipments (60% growth) and rising ASPs from premiumization. The segment’s revenue share climbed from 30.1% to 33.4%, with ACs as a key driver.
Gree did not respond to inquiries. For the company, this winter’s chill stems from both cyclical pressures and disruptors like Xiaomi. To break through, Gree must align inventory digestion with demand recovery while accelerating channel and ecosystem reforms—or risk missing spring’s revival.