Takeover her­alded a bright fu­ture

When Chi­nese com­pany bought ail­ing light­ing im­porter for a bar­gain price, it was the start of a re­mark­able suc­cess story

China Daily European Weekly - - Front Page - By CE­CILY LIU ce­cily.liu@mail.chi­nadai­lyuk.com

In 2007, the Chi­nese light­ing com­pany NVC ac­quired a Bri­tish light­ing im­port com­pany that was ex­pe­ri­enc­ing fi­nan­cial trou­bles.

The pur­chase, for only £100,000 ($133,600; 113,720 eu­ros), was a bar­gain buy, con­sid­er­ing there was al­ready £300,000 worth of light­ing stock sit­ting in­side the Bri­tish com­pany’s ware­house. In ad­di­tion, NVC also gained the Bri­tish com­pany’s sales team, es­tab­lished sales chan­nels in the UK and in­tel­lec­tual prop­erty re­lat­ing to a col­lec­tion of light de­signs.

Fast-for­ward just over a decade, and NVC’s UK team has ex­panded to the point where it em­ploys more than 90 peo­ple. An­nual sales in the UK and Europe have reached £30 mil­lion. Its clients in­clude Tata Steel, Easy­Jet and Marks & Spencer.

The com­pany also has an am­bi­tious tar­get of dou­bling sales over the next four years, an out­come that would put it among the UK’s hand­ful of “tierone” light­ing equip­ment mak­ers, such as Zum­to­bel, Dex­tra Light­ing and White­croft Light­ing.

In the UK’s £1.5 bil­lion to £2 bil­lion light­ing mar­ket, tier-one play­ers are char­ac­ter­ized by hav­ing rev­enue rang­ing from £50 mil­lion to £150 mil­lion. NVC cur­rently sits in the tier-two bracket, along­side the likes of Ansell Light­ing and JCC Light­ing.

Per­haps more sig­nif­i­cant than sales fig­ures, NVC has made a name for it­self in the UK as a rep­utable brand. To­day, 80 per­cent of the lights it sells in the UK and Europe are NVC’s own branded prod­ucts. In com­par­i­son, NVC only made lights as an orig­i­nal equip­ment man­u­fac­turer for other brands when it first en­tered the UK.

“Over the past few years, the light­ing in­dus­try’s per­cep­tion of ‘made in China’ has sig­nif­i­cantly changed, thanks to the growth of high-qual­ity LED lights man­u­fac­tured in China,” says Joe Clark, CEO of NVC UK.

“Be­cause China’s LED pro­duc­tion and qual­ity has risen so much over the past few years, cus­tomers feel more com­fort­able know­ing we are a Chi­nese com­pany, as ri­val com­pa­nies most likely out­source their LED pro­duc­tion to third-party man­u­fac­tur­ers in China any­way,” Clark says, sit­ting in his spa­cious of­fice above the com­pany’s ex­pan­sive ware­hous­ing and assem­bly fa­cil­ity.

Ac­cord­ing to fig­ures gath­ered by Bei­jing-based For­ward In­tel­li­gence, China’s share of global LED light pro­duc­tion grew from 27 per­cent in 2013 to 37.1 per­cent in 2017.

LED stands for light-emit­ting diode. Com­pared with tra­di­tional in­can­des­cent light­ing, LED lights use at least 75 per­cent less en­ergy and last 25 per­cent longer.

In the UK and Euro­pean mar­kets, NVC en­joys the ad­van­tage of “ver­ti­cal in­te­gra­tion”, Clark says. Whereas other com­pet­ing light­ing com­pa­nies out­source pro­duc­tion to China, NVC sells light­ing prod­ucts made in its own fac­to­ries in China to UK and Euro­pean cus­tomers.

This means cus­tomers’ re­quire­ments will be bet­ter com­mu­ni­cated to the re­search and de­vel­op­ment and man­u­fac­tur­ing teams. In ad­di­tion, ver­ti­cal in­te­gra­tion cuts out the mar­gins for mid­dle­men, so NVC is able to give cus­tomers more value for their money.

“We are very proud of the fact that we are now a well-known and re­spected com­pany in the UK light­ing in­dus­try. We ex­plain to our cus­tomers about our Chi­nese roots, and how that gen­er­ates ben­e­fits to them. They feel it makes sense.”

Mean­while, the team of 200 R&D engi­neers at NVC’s China of­fices has contributed to the com­pany’s cut­tingedge innovative light­ing pro­duc­tion, and NVC is now in­tro­duc­ing these tech­nolo­gies to the UK mar­ket.

In the sec­ond half of this year, NVC will sup­ply a smart light­ing sys­tem to the Kent Po­lice call cen­ter which will help night shift work­ers to bet­ter ad­just their bi­o­log­i­cal clocks to the de­mand of sleep­ing dur­ing the day and be­ing awake at night.

Kent Po­lice will be­come one of the first pub­lic or­ga­ni­za­tions in the UK to adopt this type of smart light­ing sys­tem.

An­other key ad­van­tage that NVC en­joys in the UK as a Chi­nese com­pany is its unique op­por­tu­nity to com­mu­ni­cate with Chi­nese com­pa­nies de­vel­op­ing large-scale com­mer­cial and res­i­den­tial build­ing projects in the UK, with a view to di­rectly en­ter­ing their sup­ply chains.

The first such project that NVC has se­cured is to sup­ply the light­ing sys­tem for a £1.7 bil­lion busi­ness park on East Lon­don’s Royal Al­bert Dock, de­vel­oped by the Chi­nese devel­oper ABP, which be­gan ear­lier this year.

NVC’s and ABP’s shared Chi­nese roots helped ease com­mu­ni­ca­tion and ce­ment trust, Clark says. Di­rect com­mu­ni­ca­tion dis­penses with mar­gins for light­ing whole­salers, to the ben­e­fit of both par­ties.

NVC, founded in 1998, is a com­pany that grew rapidly from hum­ble ori­gins. Its founder, Wu Changjiang, started the busi­ness in Huizhou, Guang­dong province, with just 1 mil­lion yuan ($158,600) of in­vest­ment.

Wu, a self-made en­trepreneur, grew the com­pany quickly through the strat­egy of shar­ing re­wards with sup­pli­ers, buy­ers and em­ploy­ees through fi­nan­cial in­cen­tives. He also put NVC’s ad­ver­tise­ments on high­ways and in other re­mote places, whereas his com­peti­tors fol­lowed the more tra­di­tional routes of ad­ver­tis­ing in light­ing shops.

These brave steps proved ef­fec­tive and in its first year of op­er­a­tion, NVC achieved 30 mil­lion yuan in rev­enue. For the next few years, the com­pany’s sales grew by nearly 100 per­cent yearon-year. By 2010, the com­pany was listed on the Hong Kong Stock Ex­change, rais­ing HK$1.37 bil­lion ($170 mil­lion).

NVC’s spon­sor­ship of ma­jor events, in­clud­ing the Bei­jing Olympics in 2008, the Shang­hai World Expo in 2010 and the soc­cer World Cup in South Africa the same year, pro­vided great pub­lic­ity.

The com­pany fo­cused on the in­dus­trial light­ing sec­tor in its early years, lev­er­ag­ing on China’s high growth mo­men­tum, fu­eled by large-scale in­dus­trial con­struc­tion. In more re­cent years, it has shifted to high-end res­i­den­tial build­ing light­ing as China’s in­dus­trial de­vel­op­ment has slowed and the pur­chas­ing power of the coun­try’s mid­dle class has in­creased.

How­ever, the com­pany’s path to suc­cess has not been without chal­lenges.

In 2014, NVC’s founder Wu and the com­pany’s chair­man, Wang Don­glei, be­came locked in a power strug­gle, with Wu con­se­quently be­ing voted off the board of the com­pany. Si­mul­ta­ne­ously, the po­lice started in­ves­ti­gat­ing him for ei­ther em­bez­zling or falsely ob­tain­ing loan guar­an­tees of a sig­nif­i­cant sum without the knowl­edge of the com­pany’s cur­rent board. In De­cem­ber 2016, Wu was sen­tenced 14 years in prison for em­bez­zle­ment.

He has since left the com­pany com­pletely, and NVC’s op­er­a­tions have con­tin­ued un­der the lead­er­ship of Wang. In 2016, the com­pany gen­er­ated rev­enue of 3.81 bil­lion yuan, which makes it one of China’s largest light­ing com­pa­nies.

The dra­matic events in China cer­tainly cast a shadow of doubt on the sus­tain­abil­ity of its UK op­er­a­tion but, for­tu­nately for NVC’s Bri­tish team, Wang and the man­age­ment team in China have en­cour­aged the UK team to con­tinue its in­de­pen­dent sales, re­search and assem­bly.

Over a decade of suc­cess for NVC in Birm­ing­ham has en­cour­aged the par­ent com­pany to con­tinue ey­ing in­ter­na­tional ex­pan­sion. Last year, NVC es­tab­lished an of­fice in Dubai, with a vi­sion of even­tu­ally ex­pand­ing it into a fac­tory like the one in Birm­ing­ham. The Dubai team will seek to learn from Clark’s team about its suc­cess­ful ex­pe­ri­ences.

How­ever, Clark ad­mits that lead­ing the first and big­gest over­seas op­er­a­tion of such a large Chi­nese com­pany is still a case of trial and er­ror. One chal­lenge is that much of NVC’s cut­ting-edge light­ing tech­nol­ogy for new lux­ury apart­ments is too ex­pen­sive for the UK mar­ket.

“Be­cause NVC is such a big player in China’s high-end res­i­den­tial new­build sec­tor, it is a shame that we couldn’t lever­age on our head­quar­ters’ strength in a bet­ter way,” Clark says.

But on a day-to-day ba­sis, Clark is more wor­ried about how to im­prove NVC’s op­er­a­tional ef­fi­ciency, ware­house man­age­ment and mo­ti­vata­tion of em­ploy­ees.

Walk­ing around NVC’s Birm­ing­ham fac­tory, there are sur­pris­ingly few clues that the com­pany is Chi­nese. More than 95 per­cent of its work­ers have been hired lo­cally, and there are hardly any signs writ­ten in Chi­nese.

“We are keen to be a highly lo­cal­ized com­pany, while en­joy­ing the longterm vi­sion and huge in­no­va­tion and fi­nan­cial sup­port from our par­ent com­pany,” Clark says.


A worker as­sem­bles lights in NVC’s Birm­ing­ham fac­tory.

Joe Clark, CEO of NVC UK.

NVC’s fac­tory in Birm­ing­ham.

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