Internet means challenges, opportunities for industries(2)

In addition to opening more flagship stores this year, Gree Electronic Appliances Inc, one of the most competitive manufacturers of air conditioners in China, will better promote products online and use the Internet to improve its production and management efficiency, said Dong Mingzhu, president of Gree.

"Nobody can ignore the powerful challenges and opportunities that the Internet industry has brought about. For Gree, we're using the Internet service not only in sales but also in corporate management and technology research in the past few years," Dong said.

Raising efficiency by using the Internet is the only way to meet the needs of increasingly demanding customers, and manufacturers need to turn to the Internet and technology to cope with rapid change, according to Dong.

Although Gree's growth plan will focus more on innovation and technology to improve product quality, Dong said Gree won't abandon e-commerce, since the company has started to sell products on its website.

"As an emerging sales channel, e-commerce would complement, rather than replace, the traditional model," she said.

Media reports have said Gree will cooperate with mobile Internet companies, including smartphone maker Meizhu Telecom Equipment Co and Huawei Technologies Co, to develop an online to offline platform.

"So far, we have not reached any deals with these Internet service providers. But we will definitely introduce strategic investors to help expand our business in the near future," Dong said.

Dong said the company "won't give up" on the Internet, since it helps greatly improve production and management efficiency.

"We have developed a big production and sales network, which can be thoroughly monitored by a live online data system," Dong said.

At the company's headquarters in Zhuhai, Guangdong province, customers' use of Gree's air conditioners across the globe can be recorded.

"We can detect faulty products in a timely way through the data system and provide prompt maintenance. In the past, consumers were only offered such service after they reported problems," Dong said.

Dong said manufacturing still has advantages if it is well integrated with the booming Internet industry.

"In the Internet era, I don't think manufacturing is at the lower end of the industrial chain. For traditional manufacturers like us, giving priority to technology and innovation by using the Internet will help maintain sustainable business growth," Dong said.

Gree's sales rose 20 percent last year to 120 billion yuan, according to the company. Sales are expected to increase by 20 billion yuan annually in the next four years, lifted by efforts to improve the quality of its core product of air conditioners, according to Dong.

Gree's own-brand air conditioners have been shipped to more than 100 countries and regions, according to Dong.

"We are no longer engaged in original equipment manufacturing. As a traditional manufacturer, building an internationally recognized brand is one of our major targets," said Dong, who is also an NPC deputy.

Dong said the company will also open more flagship stores, given that Gree's products are quite different from some other consumer goods.

"Shoes and garments, for example, don't need installation or after-sales service," said Dong, adding the company will introduce more tailored services for customers at its flagship stores.

"For traditional manufacturers, Internet service should not only be used in sales but also in corporate management and product research to improve efficiency," Dong said.

Li Dongsheng, a national lawmaker and chief executive officer of TCL Corp, one of China's leading consumer electronics makers, said domestic manufacturers should focus more on innovation, not only in technology but also the emerging Internet business model.

"Facing the challenge of the booming Internet industry, we need to give priority to improving the quality of our products by investing more in technology. Moreover, we need to develop new business models that are well integrated with the Internet," Li said.

At a panel discussion during the annual NPC session, Li said the company, which has a large market share in TV sets, has also developed smartphones.

The company's sales of smartphones grew by 56 percent year-on-year in 2014, according to Li.

TCL's exports rose 37 percent last year, becoming an engine of the company's growth. Sales were up 23 percent to 85.5 billion yuan, according to Li, and the company aims to record sales of more than 100 billion yuan this year.

In the Report on the Work of the Government, Premier Li Keqiang said China will promote information consumption and implement China's broadband strategy.

"We will encourage the creative development of e-commerce," said Li, while delivering the report to deputies to the NPC and members of the Chinese People's Political Consultative Conference.

China's e-commerce market grew more than 25 percent last year to surpass 10 trillion yuan, according to the National Development and Reform Commission.

That growing market means further challenges to the traditional business model of manufacturers, analysts said.

"It also means potential opportunities for manufacturers that are willing to be actively engaged in the booming e-commerce, sector" said Feng Shengping, chief researcher of the Guangdong Provincial Situation Research Center.

Feng urged domestic manufacturers to focus more on the overseas market by promoting and selling products on the Internet to help reduce operating and sales costs.