After the 2008 global financial crisis, the weakness and flaws of the Chinese manufacturing sector relying on scale merit and low cost became prominent. Unable to sustain business with a low-cost development path, Midea began to explore a new business model.

The company started its digital transformation in 2011, driving its business and business model with digital intelligence. It has built four Lighthouse Factories in three years, becoming one of the enterprises with the most Lighthouse Factories in China.

This has reduced the delivery cycle from 27 days to 12 days, down 56%, and channel inventory fell 40% year over year. It’s also increased the inventory turnover of finished products by 125% and lit up the digital transformation path for other manufacturing enterprises.

Taking Midea’s electric appliance manufacturing as an example, through M.IoT: 

• We have reduced our raw materials inventory by 80%. 

• Our failure rate has decreased by 36%.

• We have increased production efficiency by 17%. 

• We have reduced fault response time by 57% 

• Artificial intelligence quality testing has slashed inspection costs by 55%. 

• External appearance assessment accuracy has improved by 80%. 

• Abnormal response time has been cut by 75%.

Midea has specified the goals of its 2025 digital strategy:

100% digitalization of the entire operation across the whole value chain, driving business through a user perspective and reaching high-tech industry standards, maintaining industry leadership by building core technology barriers, becoming the first choice in the global smart home industry, and integrating digital technology into business development to innovate business models.