Midea Predicts Profit Up 50% As Alibaba Cloud Strategy Takes Hold

Chinese home appliances group Midea is expecting a huge jump in its 2014 earnings.

The company published its semi-annual performance prediction for 2014, stating that during the first six months of 2014, the company's net profit is expected to increase by between 45% and 60% over the same period of last year; its earnings will reach between CNY6.059 billion and CNY6.686 billion; and its earnings per share will be about CNY1.44 to CNY1.59.

Prior to this announcement, Midea's executives were increasing investment in the company's stock and the total investment reached CNY122 million. This represented their confidence in the performance of the company.

Midea Group said that since the beginning of 2014, when the company launched its smart home strategy named M-Smart and teamed with Alibaba for cloud computing strategic cooperation, the company's prospects have improved. With those moves, Midea aims to apply "Internet thinking and technologies" to promote an industrial model and operations model transformation of its traditional home appliances industry. In 2013, Midea reportedly completed the development of its smart products in eight categories. For 2014, they will accelerate the launch of new smart products and plan to develop 25 product categories.

In addition, Midea will enhance e-commerce development. In March 2014, the company established its own e-commerce subsidiary responsible for its flagship store on Tmall.com and the operation of its official online store. The e-commerce company will adopt big data technology to analyze user purchase behavior to help improve development, manufacturing, logistics, e-commerce IT system, and member management systems.

For logistics, Midea's wholly-owned logistics subsidiary has already established 143 service platforms, covering 31 provinces, cities, and autonomous regions in China. It has a warehousing area of 4.5 million square meters, over 10,000 controllable vehicles, and six major warehouses in Beijing, Shanghai, Hubei, Sichuan, Zhejiang, and Guangdong, respectively. The company plans to add four more warehouses in Liaoning, Shandong, Jiangsu, and Xi'an in the future.