Signify bullish on China biz with 'long-term commitment'

Lighting MNC's CEO applauds govt support to new production unit in Jiangxi

Eyeing the growth potential of the Chinese market, Dutch multinational lighting company Signify has further expanded its investment in the country to deepen localization for a bigger market share.

"Long-term commitment to the Chinese market is part of our business strategy. We are here for the long run, and have already been here for many years," said Eric Rondolat, CEO of the Amsterdam-based company.

The remarks came after the company announced earlier this month the inauguration of its light-emitting diode (LED) factory in Jiangxi province — its largest factory globally. Covering an area of 200,000 square meters, the new factory is expected to produce branded LED lighting products for both China and other markets.

The factory will be fully operational by the end of this year with 192 production lines. It will leverage global production technology, process control and intelligent logistics to manufacture advanced LED lighting sources and luminaires, including connected and ultra-efficient lighting, for both professional and consumer lighting markets, Signify said.

Excluding the Jiujiang unit, the company currently has nine production facilities in China. It also has a research and development center in Shanghai, which is its second-largest R&D center globally.

"The new factory is an important addition to our global supply chain," Rondolat said.

For a lighting company, localization is specifically important, as aesthetic standards and brightness requirements vary from region to region. Designing and manufacturing LED lighting sources and luminaires locally provides higher efficiency and lower costs for the company, experts said.

To deepen its localization in the country, Signify in 2019 completed the acquisition of a 51 percent stake in Zhejiang Klite Lighting Holdings Co Ltd, a local manufacturer of high-quality, cost-efficient LED sources and luminaires.

With regards to the location of the plant in Jiujiang, Jiangxi, Klite's CEO Shen Yanwei said: "East China's Jiangxi has advantages in transportation and labor resources, making the province a great location for an LED manufacturing base."

Rondolat highlighted the "timely support" offered by the local government during construction and said: "Government officials paid visits to the construction site on weekends to check the latest progress.

"I have been involved in the country's development over the past 20 to 25 years. The local governments are always very supportive of our businesses and help us to develop our capacity quickly. That is one of China's major strengths."

The State Council, the nation's Cabinet, issued a 24-measure guideline earlier this month to attract more global capital and further optimize the country's business environment for multinational corporations, with measures including ensuring equal treatment of foreign and domestic companies and supporting the rational and progressive movement of production between regions.

Wang Peng, associate research fellow at the Beijing Academy of Social Sciences, said, "The measures encourage MNCs to set up production bases in inland China, where there are some comparative advantages, such as resources."

Lu Dingliang, a senior partner at Beijing Jingshi Law Firm, said, "China has emphasized the importance of foreign investment quality by offering more precise support to MNCs."

Rondolat said the company will continue its investment concerning the Jiangxi plant after it turns fully operational to improve its daily operations and enhance talent cultivation.

Deeming China Signify's "another home market", Rondolat said: "Our strategy in China is long-term. We don't ignore the frictions around the world; we adapt to them. But it doesn't mean that our presence in China and our fundamental strategic decision to be in China will change.

"We also understand how we can export from China to other countries, given some of the tariffs that are in place and so on. But this is what companies are doing. Our commitment to China has never changed."