Against the trend of building mobile phones, Dong Mingzhu can not be sure, should Li Shufu make a bet?

Written by | Yin Taibai

Edit | Pack school thousands

Caption figure | IC Photo

The clarion call for a borderless war was once again sounded. This time, Li Shufu, chairman of Geely Group, has set his sights on the mobile phone market.

On September 28, Hubei Xingji Times Technology Co., Ltd., which is 55% owned by Li Shufu, signed a strategic cooperation agreement with Wuhan Economic and Technological Development Zone, officially announcing its entry into the mobile phone industry, positioning high-end smart phones, and integrating global technology and resources to serve the global market.

The news that Geely made a mobile phone caused an uproar, but in the eyes of the outside world, Li Shufu was most likely just a joke. Someone asked on social platforms, "Isn't serving the global market a sword against Apple and Samsung?" How to benchmark the two giants when there is nothing in research and development, channels, and technology? Some people also said, "Geely mobile phones will not land soon, and even if they do, it may be difficult to shake the domestic market." ”

Although the competition in the domestic mobile phone market has long been popular, the outside world has obviously underestimated Li Shufu's determination and ambition.

On October 19, according to the IT Times, geely mobile phone research and development center has been settled in Shanghai, and geely mobile phone project headquarters will be located in Wuhan Economic and Technological Development Zone, the factory is in the preparatory period. A person close to Geely revealed that Geely's attitude of making mobile phones is very firm, and it does not take the way of OEM, and is ready to develop completely independently.

At the same time, the matter of when Geely's mobile phone will land has also been put on the agenda. According to the Financial Associated Press, Geely will launch its first mobile phone product within one to two years, and does not rule out the possibility of cooperation with Foxconn on the mobile phone business.

Unlike the mobile phone industry that has fallen into the Competition of the Red Sea, under the continuous support of domestic and foreign policies and the enthusiasm of the capital market, new energy vehicles and their upstream and downstream industries have been rising rapidly in the past two years, while Geely, which is in the middle of the dividend and as a fuel vehicle giant, has built a mobile phone against the trend, and Li Shufu's behavior has made many people feel puzzled.

A question that has always lingered is that when Huawei, Xiaomi, Apple, OPPO and other mobile phone manufacturers have entered the new car-making track in order to get rid of the bitter sea, how much splash can Geely, which is the opposite way, splash in the field of mobile phones?

What is the intention of entering the field of mobile phones?

Whether judging from the environment or the current situation, Geely's mobile phone does not seem to be a wise choice. However, in Li Shufu's view, mobile phones have a strong connection function, which not only allows users to share innovative achievements as soon as possible, but also transfers a safe and reliable part of the results to the application of cars, realizing the close interaction between car machines and mobile phone software technology.

There is a deeper reason why Li Shufu made mobile phones. At the "2021 Chongqing Automotive Forum" on June 13 this year, Li Shufu said in his speech that it is necessary to have the courage of self-denial and the ability to surpass oneself, but also to combine vertical and horizontal to create new advantages in the industrial chain and expand new friends in the ecosystem. If this logic is followed, then Geely's crossover from cars to mobile phones may not be so surprising.

In fact, not only making mobile phones, Geely has also dropped satellites, chips, flying cars and other fields, as well as smart watches, smart glasses and other smart wearable devices that are closely related to mobile phones, which are in the process of synchronous advancement.

Therefore, it is not difficult to see that what Li Shufu is trying to create is a closed loop of the Geely technology ecosystem, whether it is a car or a mobile phone, it is a chess piece on the "chessboard".

With the implementation and application of disruptive technologies such as 5G, AI, and big data, cars will be more closely linked to mobile phones. The scene of "people in the car, cars in the palm of the hand" is no longer a bold idea that is out of reach. A new energy automobile industry practitioner analyzed to DoNews (ID: ilovedonews) that if Geely mobile phones, Geely automobiles and other products form an ecological chain to achieve data sharing and cross-device applications, then the user experience and user stickiness will be significantly improved.

"Just like the smart home, people have not yet arrived at home, but they can control the sweeping robot sweeping the floor, the hot water kettle and so on through the mobile phone." In the future, users will also be able to control all the functions of the car through their mobile phones. Industry practitioners said.

The above practitioners believe that Geely chose this time node to do mobile phones, precisely because all technologies have basically matured. The interconnection of mobile phones and cars will be an inevitable trend and direction in the future.

And it is. Automobile manufacturers make mobile phones, mobile phone manufacturers build cars, and the correlation between the two industries is gradually strengthening. For example, Xiaomi announced that it will invest 10 billion US dollars in car manufacturing in the next ten years, with an initial investment of 10 billion yuan, which is expected to be officially mass-produced in the first half of 2024; Huawei has cut in from the perspective of technology suppliers and cooperated with a number of traditional car companies and new car-making forces to gradually expand the penetration rate of systems and software; OPPO, although it has not yet officially announced the construction of cars, has recently made frequent moves in terms of vehicle-machine mutual integration. In addition, mobile phone giants such as Apple and Samsung have also continued to have news of car manufacturing.

However, Geely's entry into the field of serious mobile phones does not seem to be to compete directly with mainstream mobile phone manufacturers, but to achieve synergy with its automotive business. On April 21 this year, Jijia Intelligent Robot Co., Ltd., an intelligent robot enterprise jointly invested by Geely Automobile Group Co., Ltd. and Hubei Yijiatong Technology Co., Ltd., was established in Suzhou.

Previously, Hubei Yijiatong had put forward the concept of smart cars at a press conference in 2018, that is, based on global online cloud services, let mobile phones and car machines be online all the time, through the same account, let vehicles and mobile phones recognize each other, data sharing, thousands of people, to create an industry-leading intelligent networking ecological open platform.

High open low walk, from attack to defense

Geely's borderless war has rekindled scrutiny of its main business.

In January 2021, Geely set its full-year sales target at 1.53 million units. However, according to the financial report for the first half of 2021, Geely's sales volume was 630,200 units, an increase of 19% year-on-year. Among them, the sales volume of new energy vehicles was 30,700 units, which was almost the same as the same period last year.

On October 11, Geely released the latest sales data showing that Geely's sales exceeded the 100,000 vehicle mark again in September, down about 18% year-on-year. In the first nine months of 2021, Geely's total sales volume was 921,800 units, a slight increase of 5% year-on-year, and only 60% of the full-year sales target. This means that if Geely wants to achieve the above goals, it will face the pressure of selling 200,000 cars per month for the next month.

Changan and Great Wall, which are also domestic independent car brands, are catching up and posing a local threat to Geely. According to the latest sales data disclosed by the former two companies, in September, Changan's sales volume was 188,200 units, down 8.41% year-on-year; Great Wall Motor's sales were 100,000 units, down 15.1% year-on-year. In the first nine months of 2021, Changan's total sales volume was 1.7322 million units, up 26.36% year-on-year, and the total sales of the Great Wall were 884,000 units, up 29.87% year-on-year.

Through data comparison, it is not difficult to find that Geely's growth rate has lagged behind Chang'an and the Great Wall, but what is more fatal is that Geely's operating data is not optimistic.

According to the financial report for the first half of 2021 disclosed by the three parties, Changan's total revenue was 56.785 billion yuan, an increase of 73.22% year-on-year, and net profit was 1.729 billion yuan, down 33.55% year-on-year; the total revenue of the Great Wall was 61.928 billion yuan, an increase of 72.36% year-on-year, and the net profit was 3.529 billion yuan, an increase of 207.87% year-on-year. In contrast, Geely's total revenue was 45.032 billion yuan, an increase of 22.3% year-on-year, and net profit was 2.409 billion yuan, a slight increase of 3.84% year-on-year. In addition, an indicator that cannot be ignored is that Geely's gross profit margin decreased from 20.18% in 2018 to 16% in 2020, and showed a continuous downward trend.

Not only that, Geely's new energy vehicle business is not developing satisfactorily.

In November 2015, Geely released the "Blue Geely Action", which aims to account for more than 90% of the overall sales of new energy vehicles in 2020. But it turns out that this goal is more like a decision made by the brain, Geely's 2020 financial report shows that its total annual sales of 1.32 million vehicles, of which new energy vehicle sales are 68,000 units, accounting for only 5.2% of the overall sales, far from the target, and in 2019, its new energy vehicle sales are still 113,000 units, accounting for 8.3%.

With the intensification of competition in the field of new energy vehicles and the pressure facing the main business, if it does not respond in time, Geely may lose its right to speak in the field of new energy vehicles, or even gradually become marginalized.

Li Shufu urgently needs a stepping stone that can open up the new energy vehicle market, so Geely's "Extreme Kr" brand, which invests and holds 51% of the shares, has high hopes.

However, what Li Shufu did not expect was that once it was released, it was sought after by thousands of people, because the reduction of the allocation quickly encountered a "unsubscribe" storm. It was not until Extreme Kr CEO An Conghui came forward and released a small apology essay.

According to DoNews, the first mass production model of Extreme Krypton, "Extreme Kr 001", has been officially rolled off the production line at the Ningbo Hangzhou Bay Extreme Kr Smart Factory on October 19, and the first batch of mass production vehicles will be delivered on October 23.

Carrying Li Shufu's ambitions and expectations, Extreme Kr has become the main force in Geely's new energy strategy. On August 18, Geely CEO Gan Jiayue proposed in the five-year development plan that by 2025, the sales volume of smart electric vehicles should reach more than 30%, and the market share of high-end electric vehicles ranked among the top three in the world, and sales should reach 650,000 vehicles. However, in the view of the above practitioners, Geely wants to use extreme krypton to turn the market is not easy, "the competition in the new energy vehicle market is too fierce, this is a vicious battle."

Geely is taking the old path of Gree?

When the main business is under pressure, can Geely make waves in the field of mobile phones?

There is a view in the industry that the diversified layout of mobile phones will affect Geely's main business, the larger the plate, the slower the growth of car sales, and the new challenge for Geely to make mobile phones.

Geely does need to face the challenge head-on. The challenge mainly comes from two aspects, one is that the fierce competition in the mobile phone market today can be called "purgatory", and the space left for Geely has been very narrow.

According to statistics from the China Academy of Information and Communications Technology, in September, the domestic mobile phone market shipments were 21.44 million units, down 8.1% year-on-year and 11.8% month-on-month; the cumulative shipments in the first nine months of 2021 were 249 million units, although an increase of 10.2% year-on-year, but down 13.5% from the same period in 2019. According to the China mobile phone market report released by IDC in the second quarter of 2021, apple, OV, millet and other mobile phone manufacturers have shared more than 80% of the market share.

This means that at the moment when the mobile phone industry is caught in stock competition, it is necessary to give users a reason to abandon existing high-end brands to choose emerging high-end brands. If Geely wants to grab the high-end market, key innovative technologies and core configurations will be a hurdle that it needs to cross. And this hurdle is also the second challenge that Geely needs to face.

Mobile phone research and development investment is also a major challenge for Geely. According to Xiaomi's financial report data, from 2016 to 2020, Xiaomi's expenditure on research and development investment has accumulated 27.9 billion yuan. In 2020 alone, Huawei invested 131.7 billion yuan in research and development expenses, while Apple also reached 127.7 billion yuan. This will be a big burden for Geely, whose main business is under pressure.

In addition, Geely, which lacks experience in mobile phone manufacturing, has to build a mobile phone research and development system, supply chain system and sales channels from scratch. As for whether Geely adapts to the environment and playing style of the mobile phone industry, it is still a question mark.

Countless examples of cross-border mobile phone folding are just around the corner. Gree, 360, LeTV, Lenovo, etc. have all had the experience of making mobile phones, but due to various reasons, they have not been able to receive much response in the market. Among them, the geely-made mobile phone has reference significance is the Gree mobile phone.

As with Li Shufu's logic of "expanding the ecosystem of new friends in vertical and horizontal", Dong Mingzhu, chairman of Gree Electric Appliance Co., Ltd., also wanted to use mobile phones to open up mobile scenes and home scenes.

In March 2015, Dong Mingzhu was invited to give a speech at Sun Yat-sen University in Guangzhou, and in the interactive exchange at the end of the speech, she gently announced that the Gree mobile phone had been made and appeared with the Gree mobile phone. In June of the same year, Dong Mingzhu said in a speech that the characteristics of Gree mobile phones are "intelligent Internet of Things", which is implanted with wireless modules on mobile phones, which can be remotely monitored, remotely controlled electrical appliances, and can also buy Gree products, and even design software for enterprises, and the management of enterprises can be solved through Gree mobile phones.

Dong Mingzhu once put forward that "I hope that Huawei can be the first in the world, Gree can be the second", and has also issued a bold statement of "destroying Xiaomi" and "selling 100 million units", and even set the goal of "selling 50 million units a year", but to this day, Gree mobile phones are still marginal roles.

However, Dong Mingzhu has not given up the mobile phone business, she once stressed, "Gree mobile phone must be done, and must be done" "in the future smart home, if there is no mobile phone to control it completely, it is not OK."

The lack of selling points (backward technology and configuration), unprofessional marketing, and unprofessional team have been regarded as the three major reasons for the folding of Gree mobile phones, and this has also become a lesson for Geely to enter the field of mobile phones. Perhaps, before Li Shufu makes a mobile phone, he should first ask Dong Mingzhu how to chew on the mobile phone and the "hard bones".