Gree smoothed seasonal production by paying dealers for off-season orders

Room air-conditioner demand in China is brutally seasonal: dealers place the bulk of their orders in the few months before summer, driving factories to scramble for peak capacity from April through August while machinery and cash sat comparatively idle from September through March. For a manufacturer, this meant either building enough factory capacity to cover the summer rush and letting it sit underused most of the year, or under-building and losing sales when the season hit — with working capital tied up unevenly across a boom-and-bust production calendar either way.

Gree, still a mid-sized player in the mid-1990s air-conditioner market and freshly organized around a 'big distributor' (大户) channel system, faced this seasonality with less balance-sheet cushion than larger rivals. The conventional response was to borrow against the off-season and staff up hard for the rush; Gree's newly appointed sales head, Dong Mingzhu, instead looked at the dealers' own idle off-season cash.

Paid dealers to take and pay for off-season stock, reversing cash flow so dealers pre-financed production in exchange for a discount and priority supply.

Dealers had idle cash in the off-season, which they were willing to deploy for a discount.

Gree got working capital upfront, avoiding bank debt and keeping factories running.

Early stock built ahead of peak demand reduced scramble and lost sales.

Dealers became financially tied to Gree, locking in loyalty ahead of competitors.

When demand is seasonal, use your channel's idle cash to finance your own off-season production by offering a price advantage for early commitment.

1 billion yuan, according to Dong Mingzhu's own account, giving Gree working capital to keep factories running through the off-season and stock built ahead of demand instead of scrambling to meet it.