NVC Lighting (02222.HK) recently issued an announcement that Wu Changjiang, the founder of NVC Lighting, has withdrawn from the directorship of 10 subsidiaries of NVC Lighting. Among them, Huizhou NVC Optoelectronics and NVC Lighting (China) were replaced by Wang Donglei, chairman of NVC Lighting Group, as the new chairman. NVC Lighting, which is rich in capital suspense plots, is experiencing the largest "purge storm" of NVC executives.
Conjecture on NVC’s control
A year and a half after Wu Changjiang returned to NVC Lighting, he withdrew from the board of directors of all subsidiary companies. However, Dehao Runda, which was introduced by Wu Changjiang, became the party in full control of NVC Lighting. The reporter learned that Wu Changjiang still serves as the executive director and president of NVC Lighting. Regarding this plot, the outside world is full of speculation that Wu Changjiang "led the wolf into the house" but was defeated by external forces.
Tan Ying, secretary of the Board of Directors of NVC Lighting, emphasized to the media, "Wu Changjiang himself also agrees with the adjustment plan." The main purpose of this adjustment is to strengthen the management of the NVC Lighting board of directors, which reflects the balance of shareholder interests and also complies with the governance requirements of listed companies.
From Wu Changjiang’s frequent actions after returning to NVC Lighting, it is not difficult to see the trajectory of his plot to control power.
In December 2012, Wu Changjiang’s first major event after returning to NVC Lighting, which lasted for half a year, was the introduction of Dehao Runda. Dehao Runda spent HK$1.65 billion to acquire about 20% of NVC Lighting's equity by absorbing Wu Changjiang's personal shares. After a series of equity changes, in the past April, Dehao Runda spent another HK$500 million to increase its 6.86% stake in NVC Lighting. Currently, it continues to be the largest shareholder of NVC with a total of 27.10% equity.
"When Dehao Runda was introduced, the industry thought it was an expedient measure for Wu Changjiang to find alliance power and equalize the rights of shareholders." Suppliers who have cooperated with NVC Lighting analyzed to reporters that over the past year, NVC Lighting has strengthened resource integration with Dehao Runda on the one hand, and strengthened its own development in LED on the other.
In fact, after many struggles of NVC Lighting, Wu Changjiang’s control over NVC Lighting has been further weakened. Wu Changjiang has no choice but to fight back continuously. Dehao Runda is a lever that can not only conform to the overall interests of NVC Lighting Company, but also cooperate with Wu Changjiang to enhance his own control.
In the view of the above-mentioned suppliers, Wu Changjiang was "asked to leave" on the surface, but in fact he was "retreating in order to advance", living in seclusion behind Dehao Runda, and promoting the development of NVC Lighting through Dehao Runda. "In the eyes of those of us in the industry, this figure who was once regarded as a reckless hero is probably a conspiracy learned in the struggle with capital and foreign giants." He commented.
It is understood that at this time, Wu Changjiang has strengthened his penetration into Dehao Runda's operations. Not only does he hold nearly 10% of Dehao Runda's shares, but many former NVC backbones have been transferred to Dehao Runda. For example, Xu Fengyun, the former NVC vice president in charge of channel dealers, is now the vice president of Dehao Runda.
There are obvious traces of interaction between the backbone of the Wu Changjiang Clan and the Dehao Runda Clan.
Wang Donglei said that since Dehao Runda became the majority shareholder of NVC, it has actually been doing business in partnership with Wu Changjiang. Whether NVC is good or Dehao Runda is good, the interests of the two companies are highly bound.
This change in the power structure also reflects the expediency of Wu Changjiang's peaceful struggle forces.
According to the announcement, the adjustment of director seats reflects the multi-party strength of NVC Lighting’s board of directors. In addition to Dehao Runda’s Wang Donglei, Xiao Yu and other representatives joining the subsidiary’s board of directors, Schneider China President Zhu Hai and SoftBank SAIF partner Lin Heping also joined the subsidiary as board representatives and served as directors.
Wu Changjiang New Direction
"Through more practical control, we will promote the development of NVC Lighting in a new direction." This is the direction of NVC Lighting that a dealer of NVC Lighting felt after participating in many investment promotion meetings this year.
He said that at the investment meeting, Wu Changjiang still appeared as a family member and supported the dealer "brothers" as always.
Industry observers believe that the long-standing community of interest relationship between NVC and dealers is one of the reasons for NVC's rapid development. This is due to his "loyalty", supporting dealers, issuing loans and rewards to the latter, and ultimately forming a "brotherly alliance."
The "new direction" mentioned by the above dealers is NVC Lighting's vision in the LED direction. This is regarded by the industry as Wu Changjiang's business to consolidate the strength of NVC Lighting by leveraging Dehao Runda.
NVC Lighting has continued to launch new products in the LED field this year. Currently, NVC has become a lighting company with the most complete range of LED products in the industry. In 2014, at the LED new product launch conference, Wu Changjiang, who attended the conference as the president of NVC Lighting, said, "In the next three years, the LED industry will usher in explosive growth. It will quickly increase NVC Lighting's sales to more than 10 billion, launching an impact on the world's top three in the lighting industry." Wu Changjiang said that this year is a "watershed" in the development of China's LED lighting industry and will further increase this proportion.
In the past, the industry believed that NVC was slow to respond in the field of LED lighting, paving the way for the decline in NVC lighting performance. Nowadays, behind the signal of NVC Lighting's fierce attack on LED is the accelerated integration between Wu Changjiang and Dehao Runda. NVC Lighting has become Dehao Runda's "golden partner" in entering LED.
Tan Ying disclosed to the public that firstly, NVC Dehao co-branded light source products are sold through NVC channels. This year the two parties have signed a sales cooperation framework agreement of 1 billion yuan; secondly, NVC purchases Dehao LED chips in larger quantities. In 2013, the quantity was very small, but this year it has grown rapidly.
Wang Donglei said externally that the two parties may become the same group. These are only possibilities and there is no definite timetable.
The above-mentioned NVC Lighting dealer said that in the past, the heads of many subsidiaries were Wu Changjiang or people from this faction, but in fact, management encountered many obstacles and the efficiency was low. He hopes that through a similar personnel layout, the management structure of NVC Lighting can be optimized so that NVC Lighting can release the big layout expected by Wu Changjiang in LED.
Some analysts believe that the personnel changes at NVC Lighting may be a step in this overall deployment. The adjustment of board members is also conducive to improving the synergy between NVC's manufacturing system and Dehao Runda's system. What is more positive for Dehao Runda is that products including LED core devices can be quickly and effectively promoted in NVC.
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