A global glow

A crisis for some can be a golden opportunity for others. When oil prices broke $100 a barrel at the beginning of this year, many in the market felt gloomy, but Ellis Yan saw the sunshine.

"It's a good thing. Everyone will wake up now," says Yan, the 54-year-old owner of TCP Inc, one of the world's major manufacturers of energy-efficient light bulbs.

According to Yan, TCP holds about 70 percent of the energy-efficient bulb market in the US. In addition to its own brands, TCP also manufactures lights labeled as self-owned brands for retailers such as Wal-Mart and Home Depot, and it also serves as the original equipment manufacturer for other lighting brands such as General Electric and Philips.

As the entire globe wakes up to the need for environmental protection and energy conservation, Yan finds his business in a prime spot. "When you want to reach a large goal, you need to start from something tangible," he says. "A light bulb is the easiest thing consumers can get when it comes to saving energy So I count myself as very lucky."

He is lucky indeed in that both governments and large businesses worldwide seem to agree with him. Companies worldwide are eager to be labeled as "green", and they encourage customers do the same.

Through cooperation with Wal-Mart TCP sold around 50 million compact-fluorescent bulbs in the retailer's stores in 2007. Yan estimates that in total his company will sell 454 million lights this year.

But the impressive figures do not allow him to relax. Yan flies from the US to China twice a month to inspect his factories in East China's Jiangsu province. "The business is expanding so fast that I cannot bear any minor mistakes," he says.

Yan and his elder brother, Solomon own four factories in Zhenjiang and Yangzhou, cities in Jiangsu province along the Yangtze River. Around 1 million light bulbs are made daily in these factories, and then shipped along the river all the way to North America and Europe.

Yan spends most of his time in the US, in charge of a sales team of more than 200 people. His brother, based in Shanghai, oversees the local factories with more than 14,000 workers.

Yan, a Shanghai native, spent his youth working in farms during China's "cultural revolution" and later went to the US and lived with his aunt when he was 20. He studied accounting in Cleveland State University in Ohio and later joined a consultancy company. Meanwhile, his brother, who is 10 years older, stayed in China as a medical science technician and the pair reunited when the younger one went into the lighting business.

In 1986, Yan bought used equipment in the US, exported them to China and began manufacturing halogen lighting products. In 1993, Technical Consumer Products, Inc (TCP) was founded.

TCP gradually shifted to energy efficient compact fluorescent lamps (CFL). Many lighting manufacturers did not make the product at the time - though they were aware of its energy saving potential - because the glass can only be hand curved which makes the manufacturing cost extremely high, especially for European companies.

But Yan was in a better position because the Yangtze River Delta has abundance skilled workers working for low salaries.

His TCP business went smoothly and also slowly until lately, when energy saving became a hotter topic from the US to China. In the US, an energy bill that was signed into law last year requires lighting to use as much as 30 percent less energy. The move is expected to phase out the traditional energy-eating incandescent light bulbs. Compact fluorescents use 75 percent less energy and are considered a likely replacement for most home users.

A major step for Yan has been linking up with mega-retailers such as Wal-Mart and Home Depot as well as manufacturing for electrical lighting giants such as GE and Philips with whom he prefers to cooperate rather than compete. Yan says he aims to be the world's largest energy saving lighting manufacturer in the world with this strategy.

But compared with his large market share in the US, Yan is only in the starting blocks in China.

"I have not touched the domestic market over the past years, " says Yan. The Chinese market has had energy saving light bulbs for years, but cheaper, short-lived bulbs have dominated the market for a long time. Yan hopes by selling in Wal-Mart stores in China, domestic market will increase as well.

Yan admits he is a tough manager who often "makes unreasonable requirements" of his staff. He asks his sales team to reach any goal he sets and won't accept excuses.

James Wang, sales director of TCP in the Chinese mainland, recalls that Yan required them to achieve a 200 percent of annual sales increase, while that average local brands is at 20 to 30 percent.

"He also helped us to analyze the market," says Wang. As a result, they did achieve the goal.

Despite his expertise in the US, Yan's TCP, like the rest of China's manufacturing business, is also faced with challenges. Yan summed up the difficulties they met as three, namely, the rising raw material costs, higher labor costs and the appreciation of yuan.

"That means a lot of manufacturing enterprises in China will die," say Yan, "and we will die if we don't work hard." Yan says the only way to survive was through improved efficiency and cutting production costs to the lowest possible levels.

For enterprises like TCP, large retailers like Wal-Mart can be good examples in terms of management and cost control. In addition, the retailer works with its providers to share risks and costs brought by the appreciation of yuan. Yan says they talk with Wal-Mart officers every two or three months to adjust prices, following changes in the exchange rate.

The cost controls can also be seen in his own factories. On the wall of one of his factories, a sign reads "Those who throw away glass will be punished severely", and Yan has hired former staff from Philips and GE in China to work for him.

Flying between the two countries frequently, Yan doesn't have time to recover from jet lag. Instead, he gets up before 6 am to jog. Asked the secret for being so energetic, Yan says few people can be as lucky as he.

"I feel that even the movement of the stars follows my steps," he says, citing the energy bill that US President George W Bush pushed last year. "When you are that lucky, you've got to work hard, otherwise you will feel sorry for yourself."

(China Daily 05/03/2008 page12)