Internal strife returns to China’s NVC Lighting

Earlier this month, the board said it would remove Changjiang Wu as CEO and sack three vice presidents of the company. It is alleged that Wu signed licensing agreements on behalf of a subsidiary granting three companies the right to use the NVC brand for 20 years without first seeking board approval. Wu denied any allegations of wrongdoing via his Weibo microblog.

Hong Kong-listed NVC was suspended from trading on August 11. It was followed by announcement this week that board had declared an emergency situation, appointing a three-member emergency committee to act on its behalf. This came after Wu refused to comply with the earlier resolution. Operations have been suspended at NVC's main base in Chongqing and a temporary headquarters established in the company's Huizhou offices.

Wu has previously been accused of making-related transactions and presiding over a culture of weak corporate governance. He resigned in May 2012 and was replaced as chairman by Andrew Yan, SAIF's managing partner. A war of words duly broke out between the two on Weibo. NVC workers demanded Wu's reinstatement, three senior executives quit in the space of two days, and suppliers refused to do business with the company.

Following profit warnings and a struggling stock price, a compromise was reached four months later as Wu was appointed head of a temporary operations committee responsible for day-to-day management of NVC. He returned to the role of CEO in January 2013 and Yan resigned as chairman four months later.

At the time of the dispute, SAIF was NVC's second-largest shareholder. It invested $22 million in 2006 and took a 36% stake and then re-upped when Goldman invested $36 million in 2008. Schneider Electric bought a 9.2% interest in the company in 2011. As of December 2013, SAIF was still the second-largest shareholder with 18.5%, while Schneider held 9.22% and Goldman owned 5.99%.

In late 2012, Wu sold an 11.81% interest in NVC to Elec-Tech International, making the Shenzhen-listed electronics manufacturer the largest-shareholder with 20.05%. Elec-Tech bought another 6.86% from Wu in April of this year, leaving him with a 2.54% stake in the company.

NVC saw its net profit tumble to RMB48.5 million ($7.9 million) in 2012 from RMB574 million the previous year as sales slipped to RMB3.55 billion. Strikes and supply chain disruptions caused by the management upheaval were in part to blame. Its fortunes were revived in 2013 as net profit came to RMB282.1 million and revenues reached RMB3.77 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• People
• GPs
• Investments
• SAIF Partners
• Goldman Sachs
• China
• manufacturing