Live NVC lighting was torn and Wu Changjiang’s return is still pending

The "empiricism" adhered to by the founder of the company and "modern governance" proclaimed by the PE, these two "philosophy" with different temperament, from friction to struggle, lively torn NVC lighting.

Several months of infighting have accumulated deep distrust among investors Saifu Asia, Schneider Electric and NVC founder Wu Changjiang (Weibo). The former feels that the latter is reckless and the latter believes that the former is engaged in conspiracy. . Even if Wu Changjiang eventually returns, NVC will not be the former NVC.

Although Wu Changjiang received an exclusive interview, he still said he was eager to return to rejuvenate the company's performance. However, the dealer's decision to force the factory to return to the hill forced the factory to return to work, which meant that the cards in his hand seemed to have already been completed.

Reswah solves the critical situation On July 27th, the national core dealer of China Lighting's first brand, NVC, met behind closed doors to discuss the establishment of an operator alliance company and wanted to establish its own business.

With more than 20,000 lighting companies from across the country, NVC started from more than RMB 1 million and has achieved the first domestic lighting brand for over 10 years. The distributors all know that it is impossible to replicate this myth, but “Wu Changjiang can't keep himself. We have to develop ourselves”.

In the face of the crisis of distributors' divisions, at the request of Wu Changjiang, the NVC Chongqing and Huizhou factories that had been shut down for two weeks for “quite Wu” resumed work on July 27th. At this point, Wu Changjiang, who was the founder, still failed to return to the board of directors and his card had already been played.

Even if the media disclosed on July 30 that NVC’s current chairman, Saifu’s chief partner, Yan Yan, also affiliated with NVC, Wu Changjiang could not change the passive situation.

Talking about the hope of coming back, Wu Changjiang told the newspaper on July 30th: “I want to come back emotionally, and I have to come back on responsibility. During the period when I didn’t manage, the performance of the company dropped sharply. I just saw my child’s weight loss. I was sick and very anxious. NVC is not a person's NVC. It is not only a shareholder. It involves the employment of hundreds of thousands of people upstream and downstream, and the tax revenue for a year is several hundred million yuan."

After the shutdown of NVC on July 13, Wu Changjiang and Fang Yan had personally communicated on the 14th. “We also talked on the phone. We talked nicely on the phone and when we met, he said I hope you come back early. I said I’d also like to come back early, but he said (the board) is taking the procedure. I don’t know if the program is How kind." Wu Changjiang tone with a bit helpless.

The board still holds an overwhelming majority of equity and board seats. After holding an increase in May this year, Wu Changjiang holds 19.95% of shares and returns to the largest shareholder, but it is also far less than about 33% of the three foreign shareholders — Saifu, Schneider, and Goldman Sachs. In the board seats, Saifu, Schneider, and Goldman Sachs, NVC management only one seat.

Therefore, according to the law, NVC's board of directors can continue to keep Wu Changjiang out of the door; in a voice of “inverting”, he continued to support Schneider’s chief executive, NVC. Schneider can use this to extend the lighting business in China, according to its Western management model, reshape NVC's supply and sales system, and take advantage of China's coveted massive retail channels.

The management of the “forced soldiers” of the employers has already made the dealers' “Very Wu” camp loose. There are dealers who stand, regardless of who controls NVC, as long as they can treat dealers, "We will cooperate with them." There is also speculation that Saifu supports Schneider’s control, and as a result, Schneider’s shareholding in Raytheon’s shares at the high price of 4.5 yuan per share.

However, NVC has the risk of becoming an "empty shell." As Schneider reduces credit, dealers will develop their own co-brands more confidently, and NVC's channel advantage will fall apart. Second, it will lose its soul. Under its peers, NVC’s core management team also Will be scattered birds and animals.

PE can't see Wu Changjiang. At the beginning of this year, NVC signed contracts with the sports delegations of Hong Kong, Macau and Taiwan to become their sponsors for the London Olympic Games; NVC also established an LED joint venture with Ruifeng Optoelectronics. Obviously, it is still leaping on the road of rapid development - NVC revenue growth of about 24% last year, the net rate of 15% - until May 25 this year.

On that day, Wu Changjiang, who was then chairman and president of NVC, resigned from the company for personal reasons. NVC stocks fell sharply. Looking back at the sudden change two months ago, Wu Changjiang said: “Said that I was investigated and unfounded. The relevant person (a NVC consultant in Chongqing) was investigated. I only assisted the investigation. This matter is over and painting has long since been done. The end of the sentence."

However, in fact this is only a fuse. There are grievances between NVC's board of directors and founders. Assisting in the investigation incident just provided an opportunity for Wu Changjiang to go out.

In the eyes of foreign shareholders, Wu Changjiang, who is the founder, has repeatedly and arbitrarily made a choice. Yan Yan had accused Wu Changjiang of transferring NVC’s headquarters from Huizhou to Chongqing, and had obtained 20 million yuan of local government concessional funds and the land was not included in the listed company.

In this regard, Wu Changjiang also has some explanations. He told the newspaper that the board of directors had a resolution to approve the establishment of a sales company in Chongqing. “What is the matter for the government propaganda for the relocation of the headquarters? But I didn’t have the right to be a listed company and the board authorized 200 million yuan. I only used 200 million yuan. The establishment of a sales company only moved part of the functional departments in the past (Chongqing) Some departments are still in Huizhou."

What makes foreign shareholders unbearable is the related transactions of Wu Changjiang. Established in 2006, Zhongshan Shengdi Aishi Lighting Co., Ltd. is one of Wu Changjiang's affiliated companies. It mainly produces family lanterns and is controlled by its mother-in-law Chen Min, 40.93%. Chongqing Enlin Electric Appliance Co., Ltd., which manufactures electrical products, was also controlled by Chen Min, 36.2%, and later transferred to Schneider.

From the perspective of PE, Wu Changjiang's above-mentioned approach is undoubtedly inconsistent with modern corporate governance practices.

For example, Yan Yan believes that the affiliated company has a back door for value transfer. For example, he said that someone opened a restaurant and planted a vegetable garden. "We invest in restaurants, but if that person makes more money by selling vegetables, it will transfer value."

Therefore, in accordance with Yu's explanation, in order to avoid the transfer of value, Saifu also made investments in related companies.

Wu Changjiang granted credits to distributors and was also accused of transferring the interests of listed companies to dealers. Some people also compared NVC lighting with Foshan lighting, saying that NVC lighting has high gross profit margins and low net margin. "Although NVC's earnings are good, shareholders can already get more profits," said one investor.

Wu Changjiang’s comment on this is “a nonsense”. He believes that NVC’s gross profit margin was 25.6% last year and its net interest rate was 15%. Can several companies across the country do this? Foshan lighting is far worse.

"I can let companies make money." Wu Changjiang said with full confidence, "I support the dealer, it is a win-win situation. Without support, the company may make less money. Corporate financing can be loaned, but dealer loans are difficult ... ... In order to allow dealers to keep pace, I give them support, but it is also limited, and it is also risk control.Our credit and bank credit cards are similar, but also to buy accounts receivable insurance.This is innovation, without harming the interests of listed companies ."

Conspiracy or cultural conflict?

For those who support Wu Changjiang, Schneider, the strategic partner that Wu Changjiang introduced with his hands, is also playing a big game.

This French multinational company is very strong in the low-voltage electrical appliance market in China, but the lighting business and retail network are still weak. NVC's huge sales network with 36 operating centers and 3,000 specialty stores in the country makes it hot.

Li Zhanxi, chairman of NVC Yunnan Operations Center, disclosed that after the acquisition of Schneider by NVC (Chongqing Enlin) last year, Schneider pressed to each operation center. “We have pressed more than 2 million yuan, and now In the warehouse, things are bad and they are expensive. If we don't purchase them, we will find another dealer."

Contradictions escalate after May 25. After Wu Changjiang resigned, Zhang Kaipeng, Li Xinyu, and Li Rui with Schneider background entered the NVC executive board, among which Zhang Kaipeng was appointed CEO of NVC. When Schneider came to power, he denied Nancy’s previous policy.

"Schneider wants to change NVC's original marketing system, reduce credits to operation centers, and does not give operation centers additional engineering orders. Adding more dealers in different locations and reducing dependence on operation centers is like "cutting down." "Li Nong said," Schneider wanted to turn NVC's channels into its channels. It did not expect that NVC channel would not belong to NVC.

NVC's existing management is worried that after Schneider comes to power, it will be like a big shake-up for Delixi Electric. Therefore, at the meeting of the management and the board of directors on July 12, the management and distributors decided to let Schneider withdraw from NVC.

From a deeper level, NVC's infighting also reflects two management concepts and two cultural conflicts.

A senior person in the lighting industry in Guangdong believes that Wu Changjiang’s return to NVC is the best solution, because the founder has the most affection for the company. Schneider ran too quickly and thought it was so easy to control a company. "Capital wants too simple."

People familiar with the PE industry stated that the reason why the PE industry exists is to use the power of capital to correct the conceit of business operators, help companies achieve healthy development, obtain higher market prices, and earn profits.

However, in Wu Changjiang’s view, PE should not be involved in business operations: “Earning capital can determine the rules of the game, and management or the founder should do it. The employer sets the KPI target, and the management team does the reward; Withdrawals. Now that employers have no set targets, they interfere in operations.”