In three years, a planned investment of 60 billion yuan in AI, Midea aims to reinvent growth this year through two major hubs.

Ask AI · How is Midea’s massive AI investment reshaping the future growth engine?

On the evening of March 30, Midea Group’s 2025 annual report was officially released. For the full year, it achieved total operating revenue of 458.5 billion yuan, up 12.11% year over year; net profit attributable to shareholders of listed companies was 43.95 billion yuan, up 14.03% year over year. Against the backdrop of fluctuations in the global economy and intensifying industry competition, this set of results looks especially impressive.

B2B business becomes a new growth engine; over the past 10 years, Midea has cumulatively returned more than RMB 150 billion in dividends

Looking back at the data from the past three years: in 2023, Midea’s revenue was RMB 345.7 billion and net profit was RMB 29.6 billion; in 2024, revenue broke the RMB 400 billion mark, reaching RMB 409.0 billion, with net profit of RMB 38.5 billion. In terms of growth rates, year-on-year revenue growth slowed from 18.3% in 2024 to 12.11% in 2025; net profit growth decelerated from 30.1% in 2024 to 14.03%, but it still maintained double-digit growth.

The strong growth on the business side also provides solid support for Midea’s continued delivery of high dividends. Midea stated that the company’s full-year net profit attributable to shareholders will be used 100% to reward shareholders, with cash dividends and share buybacks totaling RMB 44.0 billion. During the reporting period, Midea’s net cash flow from operating activities was RMB 53.3 billion. It plans to pay RMB 3.8 in cash dividend for every 10 shares; the total cash dividend for this round will be RMB 28.6 billion. Together with the 2025 interim dividend of RMB 0.5 per 10 shares, Midea will pay RMB 4.3 per 10 shares for all of 2025, bringing total cash dividends for the full year to RMB 32.4 billion. According to statistics, over the past 10 years, Midea has cumulatively paid more than RMB 150 billion in dividends.

By business segment, the B2B business has become a new growth engine. In 2025, B2B revenue reached RMB 122.8 billion, up 17.5%, with growth significantly higher than B2C business at 13.3%. Among them, intelligent building technology performed most prominently: in the first half of 2025, gross margin was 29.33%, the highest among all business segments, exceeding intelligent home at 28.52%. In the new energy and industrial technology segment, KangKang New Energy’s profit in the first half increased 733% year over year, with profit growth far outpacing revenue growth. The robotics and automation business also maintained a stable growth momentum. By contrast, although B2C remains the “core base,” contributing more than 60% of revenue, growth slowed somewhat due to the industry price war.

Midea’s global footprint is evolving from “product going overseas” toward deeper “brand going overseas” and “technology going overseas.” In 2025, Midea’s overseas revenue was RMB 195.9 billion, up 15.9%, and its share of total revenue increased to 42.7%, further improving from 38.2% in 2023. Expanding its self-operated channels is a key driver of Midea’s overseas growth. In 2025, the number of countries/regions covered by Midea’s self-operated subsidiaries increased from 27 to 50, and its own-brand presence ranked first in market share among 32 sub-product categories in core markets such as North America, Europe, and Japan on Amazon.

Improvements in local operating capabilities have also helped Midea shed the label of “low-price competition.” By the end of 2025, Midea had 38 R&D centers and 63 major manufacturing bases worldwide. The proportion of overseas R&D personnel exceeded 30%, enabling the company to quickly launch products tailored to the needs of different markets.

Fourth-quarter growth slows and gross margin comes under pressure

Although full-year performance remained steady, Midea’s performance in the fourth quarter of 2025 looked somewhat dimmer. Data shows that in the fourth quarter, Midea achieved revenue of approximately RMB 8B, up 8.25% year over year. Net profit was approximately RMB 8B, down 11.3% year over year. Its growth rate was far below 13.85% and 19.51% in the first three quarters.

The slowdown in fourth-quarter growth was mainly driven by multiple factors. First, seasonal demand in the industry declined, combined with the high base effect from the fourth quarter of 2024, which resulted in sluggish revenue growth. Second, raw material prices rebounded in the fourth quarter; prices of bulk commodities such as copper and aluminum rose 5%–8% quarter over quarter, compressing profit margins. In addition, in the fourth quarter, Midea increased market spending for new product promotion and channel expansion, further impacting short-term profits.

On gross margin, Midea’s overall gross margin in 2025 was 26.39%, down 1.41 percentage points from 27.8% in 2024. Among them, the most noticeable decline was in the B2C business gross margin, falling from 28.1% in 2024 to 26.2% in 2025. This was mainly due to the continued escalation of the industry price war. In the first half of 2025, the average selling price in the air-conditioning industry fell 8% year over year. To solidify its market share, Midea was forced to follow with price cuts, putting pressure on profitability. At the same time, product mix adjustments have not yet taken full effect, and the proportion of mid-to-low-end products remains high, pulling down overall gross margin.

2026 strategy: focus on three major directions and kick off a new growth curve

It is worth noting that in recent years, Midea has gradually increased its布局 in cutting-edge technology areas. In 2025, Midea’s R&D spending reached RMB 17.8 billion, up 9.6%, accounting for about 3.88% of revenue. The share of AI-related R&D spending continued to rise, with total investment exceeding RMB 5.0 billion for the full year. Midea has now assembled an AI R&D team of over 400 people, with more than 13,000 intelligent agents running across many scenarios every day, such as residential, office, manufacturing, and medical settings. The application of AI technology has brought Midea clear efficiency gains: in intelligent manufacturing, AI-optimized production processes improved internal operational efficiency by over 15 million hours and saved RMB 700 million in costs; in intelligent home, the “home brain,” via AI algorithms, enables interconnection and interoperability among devices, resulting in monthly active users of over 23 million and significantly enhanced user stickiness; in the medical field, Midea Medical’s “Super Matrix” AI computing platform promotes a 30% improvement in imaging precision of MRI equipment and a 40% increase in diagnostic efficiency.

In its 2025 annual report, Midea formally announced its transformation into a global technology group “AI+.” Over the next three years, it plans to invest more than RMB 60 billion in cutting-edge research, focusing on two key hubs: the “home brain” and the “factory brain,” and further deepening AI applications across four major scenarios: smart homes, intelligent manufacturing, smart office, and industry enablement.

Looking ahead to 2026, Midea will open a new round of growth by centering on three major strategic themes: “technological leadership, direct access to users, and global breakthroughs.” Midea will continue to increase AI R&D investment and drive technological iteration of the “home brain” and “factory brain.” In the intelligent home sector, it will launch more AI-native products to move from “device intelligence” to “scenario intelligence.” In intelligent manufacturing, it will build a Dark Factory 2.0 version to achieve autonomous decision-making and optimization across the entire production process. In smart office, it will roll out AI office solutions to improve enterprise operational efficiency. At present, Midea has completed AI-based deployments across more than 150 categories. The number of connected smart home appliances worldwide exceeds 140 million units, and connected users exceed 150 million.

B2B business will become a key focus for Midea’s growth in 2026. In the intelligent building technology arena, Midea will integrate resources such as Arbonia’s climate business and Toshiba elevators (China) to launch one-stop smart building solutions. In new energy, it will focus on businesses such as energy storage and photovoltaic power and build a complete industrial chain from zero components to systems. In robotics, it will advance R&D and commercialization of humanoid and fully humanoid robots, expanding applications across multiple scenarios including industry and the home.

Amid geopolitical risks and supply-chain fluctuations, Midea will further optimize its global manufacturing layout by building new production bases in Southeast Asia, Europe, and other locations to strengthen regional supply capability. At the same time, it will increase investment in supply-chain digitalization, using AI algorithms to enable demand forecasting and inventory optimization, thereby lowering operating costs.

Written by: Nandu · Bay Finance and Society reporter Kong Xueshao