Core Insights - The air conditioning market in China is experiencing significant changes, with Midea, Gree, and Xiaomi leading in sales as of July 2025. Xiaomi stands out with a remarkable year-on-year growth rate of 53.9%, making it the only top brand to maintain positive growth [1][2]. Market Share and Growth - Midea holds the largest market share at 26.8%, but has seen a decline of 5.3% compared to the previous year [2]. - Gree ranks second with a market share of 17.2%, experiencing a substantial drop of 16.9% year-on-year [2]. - Xiaomi's market share has increased from 8.9% to 13.7%, narrowing the gap with Gree from 11.8% to just 3.5% [1][2]. Competitive Strategies - Xiaomi's success is attributed to its competitive pricing strategy, particularly with its "Giant Energy Saving Pro" series, which can be priced as low as 1500 yuan after government subsidies, offering significant savings compared to Gree's products [4]. - The energy efficiency of Xiaomi's products is highlighted, with an APF efficiency ratio of 5.65, allowing users to save approximately 30% on monthly electricity bills [4]. Technological Advancements - Xiaomi's air conditioners support remote control via the Mi Home app and voice control through Xiao Ai, contrasting with Gree's traditional remote control approach [5]. - The innovative "Pro Air Outlet" model utilizes advanced millimeter-wave radar technology for human sensing, enhancing user comfort by intelligently adjusting airflow [5]. Supply Chain and Business Model - Xiaomi's unique supply chain management, integrating resources from established manufacturers like Changhong, allows for quality assurance while significantly reducing manufacturing costs [5]. - This asset-light operational model provides Xiaomi with greater flexibility and cost advantages in a competitive pricing environment, contrasting with Gree's heavy asset strategy [5]. Industry Challenges - Gree faces challenges in adapting to market changes, as highlighted by the ongoing patent disputes initiated by its CEO, Dong Mingzhu, against Xiaomi [6]. - Analysts suggest that Gree's reliance on patent barriers and traditional sales channels may not be sufficient to counter Xiaomi's innovative approach [6]. - Gree is attempting to respond to market competition by accelerating its own smart transformation with new products and applications [6].