When Signify announced a major factory expansion in China earlier this month, the lighting giant shed new insight on its relationship with its 51% owned Chinese manufacturing company, Zhejiang Klite Lighting Holdings Co., Ltd.
The four-year-old hook-up with Klite is a “joint venture,” Signify stated in a press release trumpeting a new 200,000-square-meter (2.15 million square feet) facility that will fully operate 192 production lines by the end of the year.
The phrase “joint venture” stood out, as related to Klite. It was the first time that LEDs Magazine has noticed it in Signify’s communications in the four years since Signify disclosed that it would buy 51% of the manufacturer, a Haining-based maker of lamps and luminaires for Signify and other outfits.
Joint ventures are often 50/50 in ownership. So LEDs asked Signify two weeks ago whether the “JV” phrasing reflected any change in the relationship or in the ownership pie.
“As 51% owner of Klite, it is considered a joint venture under PRC [the People’s Republic of China] law,” a Signify spokesperson clarified by email after our initial story ran, adding that Signify continues to hold a 51% share.
The joint venture tag affirms that, as LEDs pointed out four years ago, 51% does not necessarily buy a controlling interest in China.
Signify’s intention in buying over half of Klite was to gain more control — but not outright control per se — of a key supplier. In so doing, it would be able to assert greater protection of intellectual property, of supply chain issues, and of industrialization of new products.
The Eindhoven, Netherlands lighting giant has presumably accomplished that much since closing the acquisition around October 2019.
But in another sign that the control is not absolute, Signify appears to be treating Klite as an outsourcer, if a photo of seven executives and dignitaries at the factory’s recent opening ceremony in Jiujiang is a reliable indication.
The lineup includes Signify’s Angelica Zhou, whose title is head of outsourced operations for Signify’s Digital Products division. Digital Products is the Signify division focused on the consumer market.
If the arrangement is indeed an outsourced one and has been all along, then LEDs overstated it as “in house” back in 2019, although the spirit of the Signify announcement at the time conveyed internal manufacturing. We recently asked Signify for clarification but had not heard back in time for this article.
It’s possible that the new factory is “outsourced” but that older Klite facilities have a different status. While Klite makes products both for Signify’s consumer and professional — or Digital Solutions — divisions, the new factory will supply only the consumer division, the spokesperson explained.
The spokesperson also clarified that the new factory has opened, and will be fully operational with 192 production lines by the end of this year. Construction started last summer.
He declined to state how much Signify and Klite have invested in the new plant, or to quantify the percentage of Signify goods that the company makes versus those it outsources. He would also not indicate whether the opening of the new plant coincides with facility closures elsewhere.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).