Venture lights the way to more exports

Lumileds Automotive Lighting, a Chinese-Dutch component manufacturer, will build a new production line in the country for automotive light-emitting diode bulbs for the domestic and overseas markets.

Lumileds represents the former LED components and automotive lighting business unit of the Netherlands-based company Royal Philips NV. A consortium led by GO Scale Capital acquired an 80.1 percent stake in the unit in April. Philips retains the remaining 19.9 percent equity.

Klemens Brunner, senior vice-president of Lumileds, said the company has increased exports to markets such as Indonesia, India and Thailand from its plants in Shanghai's Jiading district and Songzi in Hubei province. It also plans to ship products to European markets.

The company plans to expand capacity and accelerate the localization of D5S lighting for vehicles and products for halogen lamps in these plants.

"If you look at the global business setting, the Belt and Road Initiative is a great opportunity to enlarge our sales channels," said Brunner. "It will not only boost the size of the automobile market in China, but also help ship more products to various destinations throughout the world."

The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives were proposed by President Xi Jinping in 2013, with the purpose of rejuvenating the two ancient trading routes and further opening up markets for Chinese companies.

As a major supplier of lighting components to the general illumination, automotive and consumer electronics markets, the company has operations in more than 30 countries and has about 8,300 employees worldwide. Sales totaled $2 billion in 2014.

Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics of the Chinese Academy of Social Sciences, said the Chinese LED industry, which has long been hampered by a lack of patents, may have reached a turning point. LED lamps last several times as incandescent lamps or most fluorescent bulbs. They are also more efficient.

"The acquisition represents a significant deal in terms of the strategic transformation of traditional Chinese industries as well as for China's energy-conservation and emissions-cutting targets," said Zhao.

Brunner said the company will continue to seize opportunities that arise from China's industrial upgrading and urbanization. The nation's new focus is on quality urban development, as well as green, low-carbon and sustainable growth such as promoting the use of new-energy vehicles and energy-saving automobile products.

Alternative-fuel vehicle production in the first quarter of 2015 tripled year-on-year to 25,400 units, according to data released by the Ministry of Industry and Information Technology.

Lumileds started operations in China in 1995 and has built up partnerships with Volkswagen AG, General Motors Co, Ford Motor Co, PSA Peugeot Citroen, Toyota Motor Corp and Hyundai Motor Co. It also has close cooperation with Great Wall Motors Co Ltd, SAIC Motor Corp Ltd and First Automotive Works Co.

"We're not just looking at China's new vehicle market, but also the nation's used car market as it has a huge demand for after-sales service ... as well as expanding our dealerships in more second-and third-tier cities and building an e-commerce trading platform to diversify our sales channels," said Brunner.

"As China is moving up the value chain amid the 'new normal' of slower growth of better quality, both domestic and foreign investment in green-energy and advanced products will benefit the economy and the environment in the long term," said Sun Fuquan, a researcher at the Chinese Academy of Science and Technology for Development in Beijing.