NVC seeking to acquire European lighting firms

Updated: 2011-07-20 10:11

By Li Wenfang (China Daily)

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HUIZHOU, Guangdong - Hong Kong-listed NVC Lighting Holding Ltd, a leading Chinese lighting products maker, plans to acquire small and medium-sized European firms, as the firm aims to expand into new markets.

"We will combine the customer bases, the branding capacity and the research and development (R&D) strength of those firms with the manufacturing power of NVC," said chairman Wu Changjiang, at a press conference on Monday.

The company is actively tapping the emerging markets of India, Brazil and South Africa, Wu said.

NVC signed an agreement with the Olympic Council of Asia on Monday to become its long-term lighting and service partner, having supplied to the World Cup in South Africa and the Olympic Games in Beijing and served as the official supplier of the Asian Games in Guangzhou.

Although the four-year partnership does not guarantee NVC's supply to the future sporting events of the Olympic Council of Asia, the company expects to enjoy a constant flow of orders, Wu said.

NVC has applied to become the sole lighting supplier for the Asian Games in South Korea and the Asian Beach Games in Thailand in 2014.

Although it is not an official supplier to the Olympic Games in London, the company will provide its lighting expertise in certain venues for the Games.

Overseas sales, which are growing faster than those in the domestic market, accounted for about 20 percent of the firm's total revenue of $471.725 million last year.

NVC plans to increase overseas sales to 50 percent of the company's total sales in the near future. Making its foray overseas in 2006 and selling both original equipment manufacturing products and those bearing its own brand, the company has sales offices in 40 countries.

Listed on the Hong Kong Stock Exchange in May last year, Wu said NVC has about $200 million proceeds left from the IPO, which will be used to expand capacity and R&D, Wu said.

An improved production capacity is intended to meet demand to support potential annual sales of up to 10 billion yuan ($1.55billion) in the next three to five years.

NVC started developing energy-efficient light emitting diode (LED) lighting products five years ago, and the category made up about 2 percent of revenue last year. The proportion is expected to grow to 5 percent this year and 50 percent in five years, Wu said.

In June, the company won a bid from the government worth about 150 million yuan, to supply to a high-efficiency lighting program that encourages Chinese households through State subsidies to replace obsolete lighting products.

The promotion of energy saving products among households takes time and can only be realized with support from the government and lower prices of upstream products like chips, Wu said. To counter the price hike of raw materials, NVC increased the prices of its products earlier this month to maintain profit margins.