Caixin
Nov 25, 2016 08:09 PM
BUSINESS & TECH

Appliance Giant Gree Grants Companywide Pay Raises to 70,000 Employees

(Beijing) — Gree Electric Appliances Inc., China’s largest domestic air-conditioner maker, unexpectedly announced pay raises for virtually all of its 70,000 employees in the wake of two key personnel changes and amid lingering negative publicity over a failed bid to buy an electric-car company.

Starting in December, employees who have worked at the Zhuhai-based company for more than three months will see their monthly salary rise by 1,000 yuan ($145) from their current amounts, the company announced Friday.

Gree will have to spend an extra 847 million yuan each year to cover the salary raises, an amount equivalent to about 6.8% of the company’s net profit for 2015.

"It has been the largest salary hike (by the company), as far as I know," a director of Gree Electric Appliances Inc.’s marketing department told Caixin.

The move came days after Gree scrapped a bid to acquire local electric-car firm Zhuhai Yinlong New Energy Co. Ltd. in an effort to diversify its business.

Gree’s board had initially proposed to fund the Yinlong deal by issuing additional stock worth 9.7 billion yuan to specific shareholders, but the move was voted down by smaller shareholders excluded from the plan who feared the value of their shares would be diluted.

Two recent management changes have also helped to taint the image of the home-appliance giant. Dong Mingzhu, Gree’s chairwoman and president, was removed two weeks ago from the post of chairperson of the government-held Gree Group, the largest shareholder in the firm.

The move was ordered by the authority that oversees state-owned firms, the State-Owned Assets Supervision and Administration Commission of Zhuhai. On Tuesday, board member Meng Xiangkai also tendered his resignation, saying he wanted to "change jobs."

A Gree spokesperson told Caixin that Dong had voluntarily asked to step down from the position at Gree Group to fulfill “national regulations” and was a “personal decision.”

According to rules regarding state-owned enterprises, an individual is not allowed to head both a group and its listed subsidiary, the official Xinhua News Agency reported, citing sources.

However, some industry watchers question whether the move by Gree was designed to irk the smaller shareholders who had blocked the funding plan for the Yinlong acquisition.

"Listed companies don’t make emotional decisions,” said Gree’s marketing director, adding that the company has been leading the industry in terms of granting dividends.

Shares in the Shenzhen-listed Gree Electric Appliances rose 3.2% to 27.23 yuan on Friday.

Contact reporter Coco Feng (renkefeng@caixin.com); editor Calum Gordon (calum@caixin.com)

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