Strategic decision

PUBLISHED : Wednesday, 25 April, 2012, 12:00am
UPDATED : Wednesday, 25 April, 2012, 12:00am


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Philips, the world's largest electronics company, has set its sights on China by investing Euro25 million (HK$254.58 million) in Chengdu, to set up its second regional headquarters in the mainland's west.

As part of the company's plan to develop China as a 'global home' alongside the Netherlands and the United States, Philips has signed a strategic co-operation memorandum with the Chengdu People's government in constructing the Chengdu Hi-Tech Zone.

Chengdu becomes the company's second regional headquarters on the mainland that will focus, among others, on an LED lighting project. Shanghai is the company's other regional operation.

'This is really a strategic decision with far-reaching prospects,' says Patrick Kung, executive vice-president and CEO of Philips Greater China, and member of Philips' global executive committee.

'It breaks the traditional way of multinational companies just regarding China as a manufacturing base and sales market, but rather starts viewing it as another 'home market' that offers the same business opportunities as the US and Europe.'

Besides being the company's regional headquarters, the Chengdu operation will also perform other business activities and functions, ranging from an online sales technology support centre to a health care training facility and a lighting LED and application centre.

The Chengdu headquarters and LED facility will be constructed in a 35,000-square-metre techno park expected to be completed by 2015, and will create more than 800 jobs.

'It's not only an important initiative to implement the strategy of transforming Philips China from a key market to another 'global home', but also a response to the call from the Chinese government of 'going West',' Kung says.

China is predicted to become the largest market and the biggest LED manufacturing base in the world. The combined Asia and China LED market is projected to grow sixfold from less than Euro1 billion in 2010 to Euro6 billion in 2015.

'We've seen that trend and with China's central government aggressively supporting the industry by launching several programmes to subsidise the sector, we're encouraged to invest in this field,' Kung says.

He adds that Philips considers western China as one of the most important regions for the company's future investments, and is encouraged by the strong support of local government.

'We want to strengthen our leadership in this business and double our market share by 2015.

'By setting up our LED manufacturing plant in Chengdu, it will definitely help enhance our strength in this area.'

As part of Philips' strategy, the Chengdu headquarters functions as a traditional manufacturing and sales unit, and helps the company to accelerate its end-to-end complete value chain.