Midea Group Co., Ltd.
The 2023 Annual Report
March 2024

Letter to Shareholders
Amidst the profound changes in the market environment and formidable challenges in
2023, Midea remained steadfast in implementing the annual business principle of
"Stabilize Profitability & Drive Growth”. Our focus on certainties over the long cycle has
ultimately resulted in our best-ever business results. In 2023, Midea recorded total
revenue of RMB373.7 billion, with a net profit reaching RMB33.7 billion. Our net operating
cash flow surpassed RMB57.9 billion. Additionally, Midea ranked No. 278 on the Fortune
Global 500 list and was included on the Fortune China ESG Impact list and the Fortune
Most Admired Chinese Companies list in 2023. We were also lauded by Forbes as an
Industry Benchmark for Sustainable Development Industrial Enterprises in China. We
extend our heartfelt gratitude to all Mideans for your going ever onwards. With
determination and calmness, we have been pushing our way through the thick mud of all
the difficulties. Extraordinary dedication even in the most ordinary positions and a deep-
rooted entrepreneurial spirit have been the cornerstone of Midea's continuing vitality for
generations, warming every corner of Midea like sunshine every single day. Appreciation
also goes to all of our shareholders for your steadfast support through thick and thin. Your
trust has been the driving force and bedrock of our unremitting pursuit of long-term growth
and sustained shareholder returns.
We stand at a new juncture, where we can view the vast world from a fresh perspective. In
the past, our business journey resembled a mountaineering expedition, relying solely on
our capabilities for success. However, running a business today is more akin to surfing the
waves, navigating through rippling uncertainties. We are often caught off guard by the
sudden decline of once glorious corporations and rapid falls of new-money. Even industry
giants are adapting swiftly. Corporate succession has accelerated, with reshuffles and
phaseouts happening every day. The rules of the game are being rewritten, and business
paradigms are shifting, leaving every sector and individual facing similar challenges, as
we find ourselves in uncharted territory. It's time to bid farewell to illusions and the past
cycle, breaking free from outdated thinking and embarking on a journey of reflecting on
and challenging ourselves. In this process, resilience and determination are crucial.
In the face of sluggish global growth, how does Midea secure its growth? How does Midea
cultivate new competitive strengths amidst waves of technological advancements and
shifting business models? With formidable challenges overseas, how do we expedite our
global business distribution? In the face of anxieties over economic restructuring and
shifts in growth models, how do we navigate through the cycles?
These challenges test our corporate governance, compliance, operational systems, and
agility. In this world, there's no room for pessimism or optimism; only realism. As Game of
Thrones, a popular TV drama, aptly put, "Chaos isn't a pit. Chaos is a ladder”. Our choices,
not fate, determine our path. In this ever-evolving era, our success depends solely on how
we define ourselves. What is certainty? To be certain is to ascend beyond time and space,
and to summarize common sense knowledge and methods. To achieve industrial
upgrades from basic to premium offerings and from low to high added value, it is essential
to harness the cost-efficiency strengths and the force of technological advancement. In
essence, innovation and creativity play a pivotal role in this process. The greatness of a
company lies in taking common sense to the utmost level, doing the right things,
upholding principles, and weathering any storm with resilience. It's not time or
circumstances that trap us, but our mindset. We must reflect on ourselves, confront
challenges head-on, and brave the waves. Guided by our common sense knowledge and
courage as a compass, we are ready to confront storms and sail into uncharted territory.
In 2024, Midea will focus on enhancing value chain-wide efficiency alongside structural
growth through upgrades. Several economic crises occurred in the world’s history.
Maintaining ample liquidity, high-performance operations with low cost and high efficiency,
and competitiveness of core business operations is key to navigating economic crises and
market downturns. Hence, Midea must stay committed to business model upgrades,
structural upgrades, and industrial upgrades and navigate the ever-evolving environment
and changes with strategic certainty.

Business model upgrades: Midea will adhere to the “Chinese Market DTC (Direct To
Customer), Overseas OBM Priority” strategy. The essence of the DTC strategy is
customer-oriented retailing. Meanwhile, global breakthroughs are critical at this time. A
truly globalized company is localized. With an interna