The production of entry level espresso machines by Gaggia is about to be brought back to Italy from China. The news, confirmed by some industry rumors, comes while the ownership of the brand is making a mirror journey. Indeed, after the summer, the sale to the Chinese financial giant was completed Hillhouse Capital Management of Domestic Appliances division of Philips, which includes domestic espresso machines Gaggia and Saeco, with the related production sites.
In any case, even in the long interregnum for the passage to the Chinese Gaggia has collected record numbers. Exports have increased by 20-30% each year for the past four years, while the turnover grew by 25% in 2020 and by 25% in 2021, to the point that the last financial year should close with sales well over 40 million euros.
Meanwhile, in recent weeks a problem has emerged concerning Hillhouse and another Chinese giant, the Gree Electric Appliances. The two companies are connected through the Xianying Zhuhai Mingjun Investment Partnership, fund managed by Hillhouse and major shareholder of Gree Electric with a 15% stake. A case of horizontal competition is therefore configured which is not permitted by the regulations for market transparency established by the China Securities Regulatory Commission.
Now since it is not allowed to compete with Gree Electric in the same industry, Hillhouse will transfer the Domestic Appliances business to Gree Electric? This seems to be the intention, but the matter is extremely complicated, also because in September the Zhuhai Mingjun sold to the Agricultural Bank of China 90,236 million shares of Gree Electric. The latter explained that the operation was performed separately from Hillhouse, but did not deny the possibility of integrating the Domestic Appliances division.
The comment from much of the Asian press was snide: the brands and market shares of the former Philips division would be very convenient for Gree, which has seen a decline in revenues, market shares and profits in recent years. The troubles came especially in the air conditioning sector, the core business of the Chinese giant, which was particularly affected by the increases in copper prices, the most used raw material in the sector. It is no coincidence, in fact, that the Japanese Daikin has decided to drastically reduce the use of copper by 2024progressively replacing it with aluminum. The choice will also be imitated by other air conditioning giants and will therefore have important repercussions on the global raw material market.
