Without layoffs, what can Midea rely on for transformation?

36Kr "Workplace Bonus" (ID: ZhiChangHongLi)

At the end of June, Midea's second wave of large-scale layoffs did not "arrive as promised."

Xu Fei, an employee laid off from the air-conditioning division, was convinced in April that the layoffs would continue. He told "Workplace Bonus": "There will be another major wave of layoffs in June. Midea plans to lay off 30,000 employees this year." After a quiet June, he began to wonder: Could it be that the more than 50% layoff rate in some departments in March (such as 50 out of 80 employees laid off in the Micro-cleaning division) [1] had too great an impact on the brand, so the plan was changed midway?

Four months after the layoff "escape," on July 9, Wang Jianguo, the vice president of Midea Group, revealed that Midea Group plans to invest at least 50 billion yuan in the next three years to focus on cutting-edge fields such as artificial intelligence (AI) large models, new energy, robotics, and embodied intelligence.

Corresponding to this is the recent establishment of Midea (Zhongshan) E-commerce Co., Ltd.. According to the Qichacha APP, the company has a registered capital of 10 million yuan, and its business scope includes: sales of intelligent robots; sales of intelligent unmanned aerial vehicles; sales of semiconductor lighting devices; sales of artificial intelligence hardware, etc. Qichacha's equity penetration shows that the company is indirectly wholly-owned by Midea Group (000333).

This is not Midea's first attempt at transformation. Since 2022, Midea has accelerated its transformation to the ToB market, integrating the four major sectors of industrial technology, building technology, robotics and automation, and digital innovation into the ToB business system.

"Commercial and industrial solutions have become one of the main engines for Midea's continuous business growth." According to the financial report data, in 2024, Midea Group's revenue from commercial and industrial solutions exceeded 100 billion yuan for the first time, reaching 104.496 billion yuan, accounting for 25.67% of the total revenue, a 7-percentage-point increase from 18.5% in 2020.

36Kr "Workplace Bonus" (ID: ZhiChangHongLi)

However, the contrast lies in that, on the one hand, Midea is carrying out large-scale layoffs; on the other hand, Midea's overall revenue is growing, and it is increasing dividends for shareholders - According to the annual report released on the evening of March 28, Midea Group achieved a revenue of 407.1 billion yuan in 2024 and proposed a shareholder dividend plan of up to 26.7 billion yuan.

In the face of the rolling tides of the times and the continuous attempts to change the track, Midea's frequent personnel adjustments are just the appearance.

[1] Data source: "Phoenix WEEKLY Finance"

Streamlining + Layoffs: Has the Goal of Improving Efficiency Been Achieved? ╱ 01

"Normalized Layoffs" under the Result-Oriented Approach: Are Campus Recruits No Longer Popular? ╱ 02

Iron Fist ╱ 03

The Favorite of the Previous Cycle Is Saving Itself ╱ 04

Streamlining + Layoffs: Has the Goal of Improving Efficiency Been Achieved?

On the evening of January 22, 2025, Fang Hongbo, the chairman and president of Midea Group, issued an internal document titled "Requirements for Streamlining Work Methods."

"I think streamlining is more beneficial than harmful to the company," said Xu Jia, a person in charge of Midea's online channels. According to his observation, in the past, a task had to go through multiple levels of approval from proposal to implementation, and the meetings were long and numerous; now, the process has been streamlined, not only making work collaboration more efficient, but also changing the previous multiple meetings a week to once a week.

In March, the news that "Midea was reported to enforce leaving work at 6:20 p.m." hit the hot search. What impressed Xu Jia the most was that when a colleague was working overtime until 7 p.m., an employee from the President's Office came directly to the colleague and persuaded him to go home.

However, Midea also launched a layoff plan in the same month, which led to another voice within the organization - Sun Jingyi, a remaining management trainee, found that the workload originally shared by many people was now placed on a few people. For example, colleagues in the finance department who were originally only responsible for the financial settlement of a single product category now have to take care of multiple categories; colleagues in the marketing department who were originally responsible for product training also started to do various marketing tasks such as new media, product category promotion, and terminal management.

Parallel to the layoffs, Midea carried out a bold move to streamline its "Regional Operation Centers" (ROC).

Originally, there were two or three ROCs in each province, operating independently. Now they have been merged into one, aiming to reduce management costs and improve operational efficiency: Foshan was merged into Shenzhen, Guangdong; Linyi was merged into Jinan and Qingdao; Tianjin was merged into Beijing and Shijiazhuang; Wuxi was merged into Nanjing; Ningbo was merged into Hangzhou; and Wuhu was merged into Hefei.

Previously, each ROC had its own complete set of functional teams and leadership. After the integration, these "duplicated" human resources became the first to be optimized. According to internal sources, during the ROC merger process, Midea prioritized retaining positions directly related to business development, and a large proportion of the optimized personnel were in functional positions - even the ROCs that were not merged were not spared from the layoffs of functional positions.

The ROC is just an epitome of this layoff. The shadow of layoffs hangs over every Midea employee.

The layoffs in March were not targeted at a single department but involved multiple business lines. "Each department has a quota, and the leaders have to lay off employees." Even some profitable departments were not spared: Although the washing machine division achieved revenue growth in 2024, it started laying off employees because its profit margin did not meet expectations.

As March ended, the profile of the laid-off employees became clearer: Among campus recruits, those who still couldn't adapt to their positions after the rotation, had poor performance, or whose departments were streamlined were on the list; among social recruits, those with short tenure, who had not yet integrated into the Midea system, and those over 35 years old were also on the layoff list. Even pregnant women and long-term employees with over 20 years of service were not spared - Although Midea offered some compensation plans within the framework of labor laws, it was still cruel for these employees in relatively special situations.

Xu Fei found that some laid-off employees were transferred to outsourcing on the spot, or those who did not accept the compensation plan were transferred to front-line factories. "However, this is not common. Over 90% of the employees were properly handled."

There is a lot of controversy on the Internet about Midea's "efficiency improvement" actions. On the surface, the company publicly advocated that employees leave work on time and prohibited meetings after work, which was praised by netizens. However, many employees reported that in order to complete their work before the specified time, they had to work overtime at home at night, and the actual overtime hours did not decrease - "they just changed the place."

An interesting contrast is that Fang Hongbo, who had not been interviewed for more than a decade, participated in an interview with "LatePost" in May. When talking about concepts such as "promoting growth through streamlining," he said that he never worked overtime [2]. However, netizens screenshot his Weibo post from 10 years ago, in which he expressed: "Working overtime can sometimes be addictive. Being immersed in work is actually a kind of happiness..."

Xu Fei told "Workplace Bonus": "Forcing employees to leave work was not written in the streamlining document. It was not put on paper and was a flexible measure."

At the same time, the rumor that "there will be a major layoff in June" spread and made people panic.

[2] During the interview, Fang Hongbo's original answer was: "I never work overtime. It's absolutely impossible for me to work after 6 p.m. I've never worked overtime on weekends either. I've been like this for the past 20 years."

"Normalized Layoffs" under the Result-Oriented Approach: Are Campus Recruits No Longer Popular?

In the eyes of some employees, Midea can be regarded as the "Whampoa Military Academy" in the home appliance industry.

These employees said that Midea is neither a "state-owned enterprise" nor an "old company." Although the company has a long history, its decoration and working style are very trendy and "big-company" style.

Although the salary is not as high as that of big tech companies, Midea's high industry recognition and emphasis on collaboration are obvious to all. Xu Jia felt the charm of teamwork in the workplace for the first time here: The company adheres to the principle of cross-management and horizontal collaboration. He once applied for assistance from other departments through the process and achieved good live-streaming results. After leaving Midea, "he could go to any home appliance company such as Gree or Haier as he wished."

Midea's internal management also seems to be relatively flat. Senior leaders work in the open office area with ordinary employees. Xu Jia told "Workplace Bonus" that he often saw Fang Hongbo in the cafeteria. "He is very approachable."

Sun Jingyi, a campus recruit, believes that Midea has a practical and efficient corporate culture. Midea's current internal organizational structure is young, with a low average age of management and many promotion opportunities. After she joined the company, Midea made some important adjustments to aspects that could not adapt to market changes and enhance brand influence, such as streamlining processes and carrying out online marketing (encouraging "IP-based marketing of senior leaders").

Midea not only dares to set goals but also dares to strive for the first place. In Xu Jia's work experience, the emergence of the "Number One Strategy" [3] made Midea "achieve miracles with great efforts" - In 2020, when new brands brought pressure, Midea clearly required each product category to be "either the only one or the first." Driven by this strategy, in 2024, Midea surpassed Gree in the overall market share of the air-conditioning market. At the same time, in 9 product categories such as household air-conditioners, whether it was online or offline sales, Midea's market share ranked first in the industry.

The pressure of goals has given rise to a unique wolf culture, and Midea employees are driven by results and data. "This layoff is just wider in scope than before, so it seems more significant. Actually, the employee turnover rate at Midea has always been relatively high."

There is a saying widely circulated within Midea: "As long as you have good performance, you don't even need to come to work." - Although in reality, even if employees have excellent performance, they will still arrive at work on time. However, the performance pressure at Midea is imposed on every employee, forming a top-down goal responsibility system.

The pressure of the bottom elimination and the temptation of promotion and commissions constitute the tension and motivation of Midea employees. In addition to the regular rule of gradually decomposing goals, Midea makes the performance rankings transparent. The performance evaluation grades at Midea's mid-year assessment are divided into 5 levels: "S - A - B - C - D", distributed in a fixed proportion. When laying off employees, those with C or D-level performance are considered first, while employees with excellent performance can be promoted at a faster pace.

Xu Jia is a beneficiary of the result-oriented approach. He was promoted to a relatively high position that a social recruit could reach in 3 years, but he soon chose to leave. "Because for a social recruit like me, it would take at least 10 years to be promoted further."

Midea prefers to cultivate internal talents. Campus recruits account for at least two-thirds of the middle and senior management positions. For the same position, social recruits need to put in more effort and time to be promoted. Campus recruits enter Midea through the "Midea Star" program. Under the guidance of mentors, they go through rotation training (even rotating to logistics positions) and are responsible for important projects. Over time, they become the employees who know Midea best and are most suitable for Midea.

As a "more favored" campus recruit, there were no campus recruits laid off in Sun Jingyi's area. However, according to Liu Fang, also a campus recruit, there were indeed layoffs among campus recruits in surrounding functional positions.

However, the consensus among multiple interviewees is that the threshold for Midea's campus recruitment system has become higher, and the recruitment targets have become more restricted. In other words, Midea now needs high-quality "insiders" - The "Midea Star" program mainly targets students from 985, 211, and key universities, and the campus recruitment program for second-tier universities has been cancelled. In the future, Midea may only select talents from summer interns. There used to be a large number of social recruits, but now the recruitment focuses more on high education and loyalty to Midea, and many positions have closed the social recruitment channel.

Regarding the most controversial claim that "Midea laid off campus recruits to defraud national subsidies and violated the three-year protection period," both Sun Jingyi and Liu Fang think it is unlikely, but "the three-year protection period was indeed not written in the contract; it was just a verbal promise from the HR."

[3] Number One Strategy: He Xiangjian, the founder of Midea, once proposed the business philosophy of "when entering a product field, one must rank among the top three in the industry; otherwise, do not enter or withdraw resolutely." On this basis, after Fang Hongbo took over, he further strengthened it by cutting off low-value-added businesses and some non-core businesses, making the company's resources more focused.

Iron Fist

The interviewee Xu Fei believes that layoffs are Fang Hongbo's path dependence.

The air-conditioning division where this employee works laid off 10% of its employees. In sharp contrast, in the first half of 2024, Midea Group's revenue from heating, ventilation, and air-conditioning was 101.461 billion yuan, accounting for as high as 46.7% of the total revenue - This may also demonstrate Fang Hongbo's iron fist.

In 1992, Fang Hongbo joined Midea Group and started as an in-house magazine editor. With his excellent writing skills and work ability, he quickly won the appreciation of He Xiangjian, the founder of Midea.

During the Asian financial crisis in 1997, Midea's sales department responded slowly, resulting in inventory backlogs. Fang Hongbo was appointed as the general manager of the air-conditioning division in a critical situation. After taking office, he boldly changed the sales system, laid off more than 30 regional marketing managers (including relatives of board members), and recruited fresh college graduates. This move sparked great controversy. His car was smashed, and he was blocked at the door. However, He Xiangjian, who was the chairman and general manager of Midea's controlling shareholder at that time, firmly supported him and asked Fang Hongbo to drive his car to the front of Midea's headquarters to show his attitude.

Fang Hongbo is undoubtedly bold. The reform quickly took effect. The sales volume of the air-conditioning business reached 900,000 units, with a growth rate of 200%, and the sales revenue exceeded 5 billion yuan. The company successfully got out of trouble. He also led the team to explore new markets, making Midea's air-conditioners