Shining bright lights on China

Bouquets of LED flowers displayed at an international lighting exposition held in Guangzhou. LED is a promising business for Royal Philips Electronics Ltd. [Photo / Bloomberg]

LED in China

"Unlike in many European countries, China's government has given strong support to the LED industry, which has a positive effect on the development of the LED business, especially for LED road lighting," Leong said.

He added that, in general, sales of the lighting sector make up approximately 40 percent of the company's business as a whole, and the lighting business in China accounted for 10 percent of the company's global lighting sales in 2011.

Obviously, China is a market that cannot be ignored by Philips.

The company released its 2011 fourth-quarter financial report in January, saying that the company realized 3 percent year-on-year growth in sales in all of its businesses. The biggest contributor of growth came from the lighting business, which increased by 7 percent year-on-year.

Within the lighting arm, sales of the LED business had a growth of 37 percent year-on-year, accounting for 18 percent of the entire lighting business.

Frans van Houten, president and CEO of Royal Philips Electronics, said the company's performance in the fourth quarter of 2011 was affected by uncertainty over the European economy.

He predicted the company's business will be affected similarly this year but the company is still expecting an increase in profits in the latter half of 2012.

In 2010, China overtook Germany to become the second-biggest market for Philips after the US. Among its businesses in the Chinese market, LED has the fastest growth.

In early November, China's National Development and Reform Commission announced that the country will gradually stop importing and selling incandescent electric lamps, a move seen as an incentive for the LED industry.

According to analysis by the Topology Research Institute, China's domestic LED market will have a boom this year. The market scale will rapidly grow from $2.8 billion in 2011 to $8 billion - an annual increase of 185 percent.

Leong said that Philips will not compete on low prices with thousands of domestic LED companies. Rather, it will work on providing clients with the most advanced and customer-oriented integrated LED "solution services".

"We have to react fast in the LED industry even though we have a long history of research and production," he said. "We need to be more creative on lowering the costs and meeting the demands, which is also the key reason that we increased investment in western China."

According to Philips, there are about 5,000 traditional lighting companies and 4,000 LED makers in China.

Further vision

As CEO of Philips Greater China, Kung's ambition is far more than just growing the market and increasing profits. He wants to win respect for Philips in China.

"The continuous increase of sales and profits in China is one part of our goals," he said. "I want to build Philips into a brand that is loved and respected by the Chinese. Let me give an example: I hope that one day, once a young person gets the chance to work at Philips, his or her parents will be proud of him or her. Once the customers think about Philips, they will have strong trust in its qualities."

Having worked at Motorola for 27 years in various executive level roles in the US and Asia, Kung has extensive experience in managing multinational corporations. He is also very familiar with the Chinese market.

He said he found a more free and bigger stage at Philips where he can fully use all his former experience in his new job.

"The global board encourages me to try to explore. When we achieve something, we can try even more. In that way we will keep trying and achieving," he said.

dujuan@chinadaily.com.cn