Changhong's first half of the transition to hand over 200 million yuan "tuition"

In the past six months, Sichuan Changhong, which has taken a big step in the transformation of household appliances companies, has not paid attention to its recent half-year performance report. It is expected that operating results from January to June 2014 will turn from losses to profits, and will be attributable to shareholders of listed companies. The net profit loss was between RMB 170 million and RMB 190 million, a sharp drop from the same period of last year. In the first half of last year, Sichuan Changhong achieved a profit of RMB 227 million, which led to the review and discussion of its transformation strategy.

Losses incurred by transformation and upgrading

Sichuan Changhong pointed out in the announcement that one of the reasons for the pre-loss was the declining demand in the domestic appliance market. As a result, the company’s domestic sales of color TVs and refrigerators did not reach expectations. Although the gross profit margin remained basically stable, the gross profit dropped sharply due to the decline in scale; The company continued to promote the transformation and upgrading of its brand image and product structure. The company continued to invest heavily in R&D, branding, and sales. However, the benefits of product upgrades and structural adjustments lag behind, and the profit contribution of color TV services in the current period was greatly reduced; After the “national energy-saving products benefit the people’s project” policy was withdrawn, the related energy-saving subsidy income was cancelled.

In this year's tide of Internet transformation that swept through the traditional home appliance industry, Changhong was one of the earliest to take a big step. As early as last October, Changhong took the lead in releasing its “home Internet strategy” for its transformation. Since this year, Changhong has launched the CHIQ series of smart TVs, smart refrigerators and smart devices on smart products. Air-conditioners also drove the stock price of Sichuan Changhong to keep rising. However, the performance is not satisfactory. Previous quarterly report data showed that its revenue in the first quarter was 12.531 billion yuan and net profit was 9,236,600 yuan, which was a year-on-year decrease of 3.53% and 93.75% respectively. There is no lack of doubt in the industry and it is believed that Changhong is not moving too fast.

Liu Buchen, a senior observer in the home appliance industry, wrote that “this is the price that Changhong must pay for its transformation and upgrading”. He believes that since Changhong’s intelligent transformation and upgrade since October last year, the investment in R&D and promotion has been huge, but it has not received a response from the market. “That is Changhong's intelligent strategy is expected to be high, but the product does not appear to be expected sales.” However, he emphasized that intelligence is a major trend. From the current situation, the speed of intelligent arrival is not as fast as everyone expected. Changhong’s losses can instead promote corporate transformation. “Changhong has already sought breakthroughs in terms of product and corporate strategy, but it comes from companies. The change at the mechanism level has still not started substantively."

At the beginning of last month, chairman of Sichuan Changhong Zhao Yong announced at the general meeting of shareholders that “the company will initiate a new round of internal reforms”. This year, it will adjust the industry and strategically reorganize subsidiaries that are not in line with the company’s strategy and cause drag on development. Or exit. According to Zhao Yong’s plan, Changhong’s transformation work will focus on three major areas. The first is to promote reform of the enterprise mechanism system, with the focus on accelerating the reform of the state-owned system and mechanism, rationalizing the relationship between the company and the government, the board of directors and management, and the parent company and subsidiary companies. relationship. The second step is to intensify industrial adjustment and layout of the company, and finally establish an internal management system with product managers as the core.

Subsidy dependency "not yet cured"

Sichuan Changhong mentioned that in the cause of self-declaration loss, after the “national energy-saving products benefit the people’s project” policy was withdrawn, the related energy-saving subsidy income was cancelled. This, along with another recent news, once again triggered the discussion of the over-reliance on subsidies for home appliance companies.

According to media reports, in the second instance ruling of the Guangzhou Intermediate People's Court, Yang Xue, former Director of the Electronic Information Department of the Guangdong Economic and Information Commission, was accused of using the responsibility for reporting and reviewing financial support projects for the development of the flat panel display industry in Guangdong in 2008. Between 2005 and 2013, he received bribery of nearly 3 million yuan from 5 business owners or executives, including high-level optoelectronic technology under TCL. Under the care of Yang Xue, TCL once declared the "LCD TV module-integration project Three projects including the “Research and Industrialization of LCDTV Dynamic Backlight Control Technology” have received a total amount of government support funds of approximately 80 million yuan.

On Monday, TCL issued an explanation letter on its official website stating that the consultation service contract between TCL Optoelectronics Technology and the Guangdong Flat Panel Display Industry Promotion Association complied with the company's procedures and regulations. The TCL Group privately described the individual company members mentioned in the court ruling cited in the media report. The situation of the transaction is unaware of the fact that the company did not participate in the motive and behavior of bribery. The explanatory letter also stated that among the various government subsidy incomes received by the TCL Corporation in 2013, the subsidy amount related to the company’s operating activities was 860 million yuan, both of which were national industry policy-based fund returns. According to regulations, this part of the amount was already being sold. The loss of operating costs of returning consumers or compensation companies in the price is only reflected in different accounting subjects and has no material impact on the company’s profits.

There are views in the industry that government subsidies make it easier for corrupt elements in officials to create rent-seeking space. They also make companies develop reliance on the government, mislead the choice and decision-making of corporate investment, and are not conducive to their development and growth in accordance with the path of marketization. In fact, the "subsidy dependency syndrome" of home appliance companies is already a "chaos." From 2009 to 2013, China successively implemented multiple rounds of home appliance subsidy policies. Although the original intention was to support the healthy development of enterprises and industries, many problems were revealed in the actual implementation process, and there was a wave of market demand after the subsidy policy was withdrawn. Loss of performance and decline in corporate performance. In the first half of this month, at the State Council Premier Li Keqiang presided over the economic situation forum, Gree Electric Chairman Dong Mingzhu spoke when he spoke no to subsidies, saying that he did not need the country's industrial policy support. The view of Lu Jiebo, deputy secretary-general of the China Electronic Chamber of Commerce, also believes that the market should be used to force companies to transform and upgrade their products. Leveraging the market's “leverage” to lead the industry to a steady growth track will be more conducive to the healthy development of the home appliance industry.