(Yicai Global) July 3 -- Gree Electric Appliances has been stripped of its successful bid for part of China Mobile’s bulk air-conditioner contract, allegedly because of dishonest practices, the world’s largest mobile network operator said yesterday.

The home appliance maker is no longer in the running for China Mobile's 2020 to 2021 bulk-buy orders for high-pressure centrifugal chillers, worth CNY63.3 million (USD9 million), the Beijing-based carrier said without going into further detail. Gree has yet to comment.

As punishment, China Mobile will also lower Gree's mark in future competitive tenders for products of the same category over the next three years, it added.

The disqualification will cost Gree, which had been awarded 30 percent of the contract in June, around CNY19 million (USD2.7 million). Rival Chongqing Midea General Refrigeration Equipment has secured the other 70 percent.

With a market share of 14.7 percent, Gree was the top selling central air-conditioning maker in China for the eighth year in a row last year, according to air-con industry magazine Journal of HV&AC.

But business has been bad this year. Zhuhai-based Gree's net profit for the first three months was a quarter of what it was a year ago, falling to between CNY1.3 billion and CNY1.7 billion (USD184 million and USD240.6 million) from CNY5.7 billion in 2019. Operating revenue halved to between CNY20.7 billion and CNY22.9 billion (USD2.93 billion and USD3.24 billion), well below expectations.

The country’s central air-conditioning sales slumped 34.1 percent in the first quarter from a year earlier to CNY13.4 billion (USD1.9 billion), the lowest figure in five years, due to the fallout from Covid-19, according to industry website ChinaIOL. Sales of large water chilling units dropped 34 percent to CNY3.4 billion.

Editor: Kim Taylor