Company sees the world as its light globe

Wu Changjiang, founder of NVC Lighting, says the company is looking at expanding in Europe. [Zhang Chunyan / China Daily]

A Chinese lighting firm is growing in europe, and bigger things beckon

Wherever and whenever NVC says "Let there be light", there is indeed light, and a lot of it. At the Beijing Olympics in 2008, the Shanghai World Expo in 2010 and the soccer World Cup in South Africa the same year, NVC Lighting Technology was doing its thing, to stunning effect.

Now the biggest lighting company from China is also trying its best to light up more space in Europe.

In April NVC revealed its plans when a new building was opened in Birmingham, doubling the size of its operations there. The new building includes warehouse, office and assembly facilities.

"The UK market kind of mirrors European markets," says Wu Changjiang, founder and CEO of NVC. "Our success in the UK can act as a springboard to our European expansion."

Wu is so busy in China that a visit to the British subsidiary is a rarity, but the plant's expansion was an occasion he simply could not miss.

The British operation supplies commercial, industrial and exterior lighting products to wholesalers in Britain and the Irish Republic.

The British subsidiary now employs 70 staff, 10 times the number five years ago, and that has provided a fillip to Birmingham, on old industrial city, because 95 percent of its staff are employed locally. Not only that, but by 2015 the company forecasts that it will have 250 people on its payroll.

The newly added industrial unit brings NVC's total investment in Britain to 15 million pounds ($24 million, 18 million euros).

It expects turnover to reach 25 million pounds in Britain by the end of December, and aims for annual turnover of 50 million pounds by 2015.

But sitting down for a chat after the morning launch ceremony, Wu focuses on the past for a minute or two, particularly NVC's entry into Britain five years ago.

In 2007 NVC only supplied lighting products to British brands as an original equipment manufacturer.

"We made a loss for the first two years we were in Britain, because our operation had a lot of set-up costs. It was at this time we had to make a decision about whether we should continue as an OEM supplier or sell branded products."

Wu chose the latter, and NVC started supplying lighting directly to wholesalers using its own brand in April 2009, although its OEM business did not stop.

"We had to go through a very difficult process, and we managed to do that. Not only did sales of our own branded products rise, our OEM revenue did not fall."

NVC says its latest expansion represents part of the second phase of its British growth plan but is already looking beyond that to move into manufacturing in Britain.

That hardly comes as a surprise, given NVC's rapid development in China.

In 1998 Wu founded NVC with capital of 1 million yuan ($158,600, 120,000 euros) in Huizhou, Guangdong province. Eleven years later it had become China's largest lighting manufacturer, with annual sales revenue of 2 billion yuan and listed in Hong Kong in 2010.

Wu says that a branding strategy that highlights differentiation is the key. While most lighting manufacturers advertise their wares in lighting shops, NVC takes to the highways and byways to advertise to the masses.

As NVC's competitors attend lighting trade fairs, NVC promotes itself at fashion, property, outdoor and interior design trade fairs.

"All these exhibitors are potential customers of my lights," Wu says. "As a lighting manufacturer, NVC stands out at these fairs and people remember us.

"If I pay 30,000 yuan to advertise in a lighting shop, another manufacturer may pay 50,000 yuan to put up an advertisement out front, and a third may pay 100,000 yuan to advertise in front of the second. Then the customer remembers no one."

Instead of spending on celebrity advertising, NVC paid 10 million yuan to become the exclusive worldwide strategic partner of Confucius, an epic film in 2010 that recounts the life story of the Chinese philosopher.

"I want to promote Chinese culture," Wu says.

"I think our culture is great, and if our culture is recognized internationally, our people are recognized, and my company is recognized."

Something else that has helped NVC in Britain is its acquisition of a lighting wholesaler that went bankrupt during the 2008 financial crisis. Before the acquisition the wholesaler was a good customer of NVC, and Wu recognized the value of its team and sales channel.

The 100,000-pound acquisition brought to NVC about 10 highly skilled staff, whom Wu kept in NVC's team so they could bring their customers to NVC.

At the moment NVC does much of its heavy manufacturing in China, where it has abundant production resources and relatively low labor costs, but product design and final assembly are done in Britain to meet customers' needs and European regulatory standards.

Key components of products manufactured for the European market are bought from European brands including Tridonic, Helvar and Mackwell.

Kelvin Lay, of Helvar, a component supplier for NVC, says NVC's use of European manufactured components for products sold in Europe shows its commitment to quality.

"The European regulation is stricter with regards to how much one component can affect the performance of another, the amount of energy a light emits, and the level of heat it produces compared to China."

Paul Mans, of CP Electronics, another NVC supplier, says NVC's products are cheaper than those of its British competitors, but its products are just as good.

NVC's abundance of stock also makes it attractive for wholesalers, who often need to order additional supply at short notice, Mans says.

"Not all lighting manufacturers can afford to stock as much inventory as it's very expensive. So having the assurance of being able to receive additional supply when they need it could increase the chances for wholesalers to choose NVC."

Wu says that NVC will expand into other European markets, also through acquisition, as these markets tend to have mature sales channels.

Indeed, going abroad through acquisition has become increasingly common for Chinese businesses.

Some of the trendsetters have been Lenovo, when it bought IBM's PC business in 2004, TCL, when it bought assets from the French multinationals Thomson and Alcatel in 2005, and Geely, when it bought Volvo in 2010.

According to an Ernst & Young report, China and Japan made the most investments in Europe in the first two months of this year, signing nearly $11 billion (8.3 billion euros) in deals.

But how to keep sustainable development after such acquisitions is a big problem for all the companies.

Wu says Chinese businesses that cannot succeed in post-acquisition integration are fighting a losing battle. "Cultural differences make integration extremely difficult," he says.

Apart from the British market, NVC also has research and development centers in Australia, the United States and Hong Kong, and representative offices in more than 40 countries.

Contrary to the Western-expansion model, Wu believes it is more efficient to send teams to build sales channels when expanding to emerging economies where sales channels are still developing, such as India and South-East Asia.

Wu feels confident about sending ambitious workers of a younger generation to establish these markets. The perseverance and hard work that he practices himself are values Wu teaches his employees.

As for him, there is more satisfaction in the challenges ahead than in the victories of the past. He compares the achievement of an entrepreneur to that of a mountaineer reaching the summit.

"Just as the climber needs to leave the mountain and find a higher one to climb, an entrepreneur needs to find new territories to conquer." And for Wu, new territory represents his dream of one day making NVC a truly global brand.

Contact the writers at cecily.liu@chinadaily.com.cn and zhangchunyan@chinadaily.com.cn