Head Map Source | Vision China Whatever the reason for privatization of Kuka, Midea has two international financial management background CFO Successive departures have raised doubts about Midea's acquisition 。
writing ｜ Chinese Entrepreneurs Journalists Liu Weiqi
Edit | Mina
In less than a year, Midea Group changed two CFOs successively, and several senior executives changed their positions, which attracted the attention of the market.
On February 23, Midea Group (hereinafter referred to as Midea) issued an announcement announcing a new round of personnel adjustment, with Zhong Zheng and Zhao Wenxin as the new CFO and CPO respectively. They joined Midea in 2002 and 2004, and have served in Midea for nearly 20 years.
On January 29, Cai Weiding, the former CFO of Midea, resigned. He took office as the CFO of Midea in April 2021 for less than one year. His predecessor, Helmut Zodl, the former chief financial officer of the United States, also announced his inauguration in October 2019 and resigned in January 2021 for just over a year. According to Midea's annual report, Helmut Zodl's annual pre tax salary during his tenure was up to 7.77 million yuan. In this regard, Midea's explanation for the two resignations is: personal reasons.
Two consecutive CFOs left their jobs in a relatively short time, which made the outside world suspicious. Several senior industry observers told China Entrepreneur that such frequent turnover is not a normal phenomenon. Liang Zhenpeng, a senior industrial economy observer, observed that over the years, the middle and senior level employees hired by Midea from outside will probably leave because it is difficult to integrate into Midea's corporate culture. An insider of Meimei also confirmed this statement to China Entrepreneur, "Many of Midea's senior executives came in when they were enrolled in school, and later stepped into the management level step by step. Although Midea has also introduced many external senior executives in recent years, the turnover rate is high."
In addition, China Entrepreneur found that in addition to the two former CFOs mentioned above, in the past year, Midea also had two senior executives at the level of vice president, Liu Min and Xiao Mingguang, respectively. Among them, Xiao Mingguang used to be the financial director of Midea Group, and Liu Min used to be the vice president of the Robotics and Automation Business Department and a member of the Board of Supervisors of Kuka Group. in other words, In just one year, Midea's management has four senior executives at or above the level of vice president who have resigned or changed their positions, three of whom were once responsible for finance.
In response to the above-mentioned frequent personnel changes of the management, the Chinese Entrepreneur asked Midea for the first time, and its official response said: this is a normal personnel change, and the company's production and operation are normal. The free flow of personnel in science and technology enterprises is not only the industry norm, but also a healthy ecology.
Midea Group headquarters located in Foshan, Guangdong. Photographer: Shi Xiaobing On the other hand, in recent years, Midea's diversified investment has also accelerated in an all-round way, involving in robots, semiconductors, new energy vehicles, medical care and other fields. Midea has successively invested in German Kuka Group, Lingwang Elevator, Hekang New Energy and Wandong Medical and other enterprises, and almost all of them are big investments.
Fang Hongbo, the chairman of Midea Group, once said, "Midea should dare to make subversive investment in the future." Therefore, since January 6, 2017, when it purchased Kuka Robot at a cost of 29.2 billion yuan, Midea has opened its subversive investment path. However, most of its investment businesses are not related to Midea's own business, so they have also been questioned by the outside world.
In this regard, Liang Zhenpeng said, "Midea's diversified layout in recent years is not strongly related to its own business. Moreover, the current operating conditions of these companies still need Midea's home appliance business to transfuse blood, which is financially dangerous. Two consecutive CFOs who have been hired from outside have left, perhaps because of some conflict of ideas between the two sides in the process of financial work."
"Indigestible" Kuka
It is easy to find from the past resumes of the two former CFOs that both have global working backgrounds.
According to the announcement, Cai Weiding worked in Midea from 2011 to 2015 JPMorgan Chase , acting as executive director in charge of M&A business in North Asia; From 2015 to 2019, he worked at Huaxing Capital as the Managing Director and Co head of the M&A Business Department; From 2019 to 2021, he worked for HSBC and was responsible for science and technology M&A business in Asia.
Helmut Zodl is a foreigner. He is an Austrian financial expert who has served successively IBM and association Financial directors of different continents of the Group and Advance Auto Parts.
Among them, Cai Weiding's past experience focused more on M&A business. Helmut Zodl served as a director of Kuka Robot, a subsidiary of Midea, in February 2020.
As we all know, since the huge acquisition of Kuka in 2017, Midea has tried every way to accelerate the integration of Kuka Robot's business in China. Even in that year, Midea announced that it would join hands with Kuka and Servotronix (Gaochuang) to transform from a household appliance enterprise to a "global technology group" with the strategy of "smart home+smart manufacturing". At present, it is difficult to define that these two CFOs were introduced to integrate Kuka's Chinese business, or to reserve talents for Midea's investment and M&A business.
"After the acquisition of Kuka, Midea's management philosophy and financial system need to be in line with the international practice, introducing talents with international financial management background, and can also introduce some advanced operating concepts." Liu Buchen, a senior observer in the household appliance industry, told China Entrepreneur.
But, Since the acquisition of Kuka, Midea's troubles have come one after another. In 2018, Kuka's performance fell precipitously, and its after tax profit plummeted by 81.2%. To make matters worse, in December 2018, the former CEO of Kuka, Tyr Royt, resigned early. His term of office was originally to 2020.
Roy served as the global CEO of Kuka for 10 years. In 2009, he joined Kuka and led Kuka out of the economic crisis. Under his leadership, Kuka maintained its first position in the field of automation, and further entered new markets in a diversified way, realizing the doubling of operating revenue. Roy's importance to Kuka is self-evident, so his resignation once caused Kuka's share price to drop 3.2%.
In 2019, Kuka China CEO Wang Jiangbing resigned, which was rumored to be caused by his substandard performance. Before that, Kuka China has replaced several CEOs in succession. Both the global headquarters of Kuka and the China region, the senior management team is quite turbulent.
On November 23, 2021, Midea announced that it planned to fully acquire Kuka's equity and privatize it. After the completion of this acquisition, Kuka will become a wholly-owned overseas subsidiary of Midea and be delisted from the Frankfurt Exchange. But at the beginning, when signing the M&A agreement, Midea signed a commitment agreement to ensure the independence of Kuka, including the independence of Kuka's Board of Supervisors and Executive Management Committee, ensuring that the number of employees and jobs would not be changed, and that Kuka would not seek delisting. The agreement is valid for eight years, until the beginning of 2024.
Midea, eager to fully acquire Kuka, has broken its previous commitment. Midea's response to this is that this acquisition is conducive to Kuka's focusing on business operation and improving the company's internal resource coordination and sharing in the fields of robotics and automation related businesses.
Whatever the reason for privatization of Kuka Group, at the critical time node of preparing to fully acquire this overseas enterprise, two CFOs with international financial management background of Midea left successively, which made the acquisition of Midea suspicious again.
"Airborne" is risky
The low survival rate of the introduced external executives is a long-standing problem for many enterprises in the market. Whether for enterprises or talents, "airborne" risks exist.
Large enterprises introduce external executives, and there are many successful cases and failures everywhere. The more successful ones are tencent Liu Chiping Alibaba Zhang Yong of the Group and others have now become a good story in the business world. Those who fail are also typical, such as those who took office Baidu Lu Qi, the chief operating officer, was forced to leave after only one year and four months. Lu Qi's resignation was once thought to be affected by the factionalism within Baidu.
Source: Visual China The two CFOs introduced from outside Midea who left the company in succession are also quite strange. "It's not just personal reasons that two CFOs leave in succession. It's hard to guess what the problem is." A senior person in the household appliance industry told China Entrepreneur that, for risk reasons, enterprises are usually cautious when selecting external executives, and Midea is also the same.
According to the statistics of 2020 annual report, Midea now has 15 senior executives and 4 independent directors. Only two of them were introduced from outside, and the rest were executives who grew up inside Midea. Most of them have served for more than 20 years.
The two executives introduced from outside are Dong Wentao and Hu Ziqiang. It is reported that Dong Wentao joined Midea in 2016. Previously, he worked for CIMC Group and ZTE Communications, and successively served in Midea Group's legal affairs, investor relations and other departments. He has nearly 10 years of experience in legal risk control, market value management and capital operation. Hu Ziqiang joined Midea in 2012. He used to work for GE and Samsung, served as the deputy general manager of Wuxi Little Swan Co., Ltd., and now serves as the vice president and CTO of Midea.
"On the whole, many of Midea's senior management teams have grown up from within, but in recent years, Midea has also introduced a lot of external talents, especially in the technical field, such as Hu Ziqiang." Liu Buchen said that promotion from within, which mostly occurs in members of the board of directors or senior executives at the level of vice presidents, From the perspective of the whole company, Midea still adheres to the talent mechanism of combining internal training and external introduction.
Previously, Fang Hongbo said, "Midea needs to recruit talents globally." Many years ago, He Xiangjian also said, "In the 1980s, we used Beiyao people, in the 1990s, we used Chinese people, and in the 21st century, we used people from all over the world." In terms of talent recruitment, Fang Hongbo and He Xiangjian almost reached an agreement, focusing on talent globalization.
According to public data, in 2019, Midea had 130000 employees worldwide, more than 30000 overseas employees and nationalities in 21 countries and regions. There are more than 10000 global R&D personnel and more than 500 foreign senior experts.
reference material:
How to manage 130000 employees? The selection and employment password of Midea Group Economic Daily, Zhang Jianjun
Why is Midea anxious to privatize Kuka? Finance and economics, Jiang Fan and Han Shulin
