Reports of Gree Electric Appliances, Inc. of Zhuhai subsidizing its distribution channels are now being implemented. On May 7, it was reported that Gree has enacted a comprehensive subsidy policy for all sales channels to counter the pressures facing offline distributors, with top-performing merchants eligible for special subsidies of up to RMB 5 million. The actual implementation differs from earlier reports; while initial coverage focused more on offline dealers, the recent policy has expanded to encompass "all channels." This indicates that offline channels remain under significant pressure, but Gree aims to restore confidence across its entire sales ecosystem, not just address localized issues for offline dealers.
The move highlights a loosening of channel confidence. Since 2025, competition in China's air conditioning market has intensified. Although government subsidies have supported market scale, they have also amplified price competition. Gree has chosen not to pass the main pressure directly onto end-consumer prices, instead maintaining its pricing structure and profit margins. The cost, however, is that distributors must more directly face challenges such as difficulty in closing sales, extended inventory cycles, and compressed profits. Therefore, the core purpose of this all-channel subsidy is not merely to compensate merchants for price differences but to rebuild their confidence in continuing to align with Gree, ensuring they uphold Gree's pricing and service systems.
For Gree, which has long relied on channel collaboration, the real concern is not a temporary dip in merchant earnings but the risk of merchants beginning to doubt whether continued investment in the Gree system can still yield stable returns. When merchants find that adhering to price maintenance, display arrangements, and sales personnel investments may not guarantee sufficient returns, confidence in the brand ecosystem starts to waver. This erosion typically manifests not as immediate mass exits but first as reduced stockpiling, diminished merchandising efforts, and cuts in service investments.
For many years, Gree's advantage has been built not only on products but also on a community of shared interests with its channels. However, as the industry enters a price war, manufacturers aiming to maintain prices face conflicts with distributors grappling with cash flow and end-market competitive pressures. Thus, the all-channel subsidy appears to be a signal from Gree to its distribution network: as long as merchants continue to stock inventory, maintain prices, and serve customers, Gree will use subsidies to absorb some of the pressure back onto its own accounts.
Gree retains financial flexibility. Its 2025 financial report shows operating revenue of RMB 171.118 billion, down 9.96% year-on-year, and net profit attributable to shareholders of RMB 29.003 billion, down 9.89%. However, net cash flow from operating activities reached RMB 46.383 billion, a significant increase of 57.93% year-on-year. This indicates that Gree's cash flow has not been crippled by the price war. Beyond channel subsidies, Gree has maintained its ability to reward shareholders, proposing a cash dividend of RMB 20 per 10 shares for 2025, totaling over RMB 10 billion.
For a manufacturing leader like Gree, confidence extends beyond channels and shareholders; workers, engineers, and the foundational management system also crucially influence product quality and service experience. This all-channel subsidy proves Gree still has the capacity to underpin its commercial ecosystem. Yet, true corporate resilience also depends on whether internal stakeholders believe the company's cash flow will translate into tangible returns they can perceive.
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