Gree Should Increase Marketing Costs to Maintain Competitiveness, Resulting in Lower Margin

Gree has been one of the leading air conditioner manufacturers in China for the past decade, with high-quality products for residential, commercial, and industrial uses. We think the company’s sector leadership is cemented by its superior brand equity, strong technological capabilities, and effective distribution through online and offline channels. While Gree focuses on cost-competitive air conditioning products in the domestic market, it has seen continued progress in premiumization, such as leading by sales value in high-end central air conditioners to household and commercial clients in China, as per Aircon.com.cn. We also expect Gree's core product sales to keep benefiting from ongoing national subsidies in China.