Dispute turns spotlight on NVC
A year ago, Wu Changjiang, then chairman of NVC Lighting, believed he had the world at his feet, running China's largest lighting product-maker, and the support - or so he thought - of major investors.
'They [the investors] all had a high opinion of me. They strongly asked me to lead NVC,' Wu said in July last year.
But now the entrepreneur is battling SAIF Partners and Schneider Electric, NVC's second- and third-largest shareholders, in an attempt to regain control of the company from which he resigned two months ago.
Wu and NVC Lighting's board chairman Andrew Yan, managing partner with SAIF Partners, have different accounts of Wu's departure.
But Wu is not alone in his fight, with workers - as well as some executives, distributors and suppliers - saying the company needs Wu at the helm.
Yan said on Wednesday that directors were considering requests from some managers and distributors to re-elect Wu as chairman.
The managers and distributors also urged certain top management members who came from Schneider Electric to step down.
While the board had not disclosed how the talks were going yesterday afternoon, some mainland media reports said Schneider had agreed to withdraw from the company's day-to-day operations and that Wu would return.
Guangzhou Daily quoted Zhu Hai, the president of Schneider Electric China, as saying that he 'hopes Wu Changjiang will return and NVC can go back to normal'.
The conflict between Wu and current NVC board members hit the headlines last week when its factory workers in the city of Huizhou, in Guangdong province, and those at 36 regional plants across the mainland went on strike last Friday to express their discontent over the leadership change.
They complained that the business had declined dramatically since Wu quit the company, and that the current chief executive and two other top management members from Schneider Electric knew nothing about lighting production.
The strike continued yesterday.
NVC's distributors and suppliers are also putting pressure on the board to reinstate Wu.
A number of distributors have reportedly cancelled orders with NVC since Wu's departure.
They also issued a public letter to Yan, saying they would stop doing business with NVC if Wu was not reinstated.
Wu, who studied aircraft engineering, was formerly a manager in a lighting company in Shenzhen before setting up NVC Lighting in 1998.
He quickly developed an extensive sales network by establishing strong connections with regional distributors.
The maker of LED displays, indoor and outdoor lights now has distribution channels in more than 1,200 counties and 275 cities across the mainland's 31 provinces.
In addition, the company also exports products to more than 40 countries, including Britain and the United States.
In August 2006, SAIF Partners took a stake in NVC, which listed in Hong Kong in 2010.
SAIF Partners now holds 18.4 per cent of NVC, and Schneider Electric, which invested in NVC last July, owns 9.21 per cent.
Wu is still the controlling stakeholder with 19.53 per cent.
The dispute between Wu and Yan has been increasingly high-profile in the past month.
Yan said Wu resigned because he was being investigated at the time by the Chongqing government.
However, Wu denied this, saying Yan and other investors forced him to leave the company.
He said he and his wife were only helping a government probe into another company.
Liu Qiangdong, president of 360buy.com, the largest B2C portal in China, last week criticised Yan on Weibo, a mainland version of Twitter, in a public show of support for Wu.
'I called for Chinese entrepreneurs not to work with these kind of investors who tell lies and harm the interests of the founding members of companies,' said Liu.
But another renowned e-commerce entrepreneur, Chen Nian - the founder of online fashion retailer Vancl - is backing SAIF Partners.
'Entrepreneurs should be grateful for investors' support. It's a basic principle for an entrepreneur to follow the rules of the game,' he said.
NVC's profit plunged this much in June because of a sharp decline in orders