LIGHTING A NEW PATH

Wu Guomin profited a lot for at least a decade by producing lamps under the big brands of "Philips" and "Wipro." But that was before the financial crisis.

After an array of trade barriers, Wu, vice president of Zhejiang Yankon, China's largest producer of energy-saving lamps, decided to brand its lamps as "Energetic" in the electricity-strapped India last month.

"It takes years for us to realize that self-owned brand is the formula of long-term success for Chinese exporters," Wu told Xinhua at the ongoing Canton Fair in Guangzhou, South China's Guangdong Province. "To push for our own brand is a must, not an alternative."

Yankon produced 300 million bulbs annually, about 60 percent of which were for exports, but more than half of them were sold under other foreign big names which outsourced their businesses to countries with low labor cost.

Many Chinese exporters had a similar story as Yankon, who, without self-owned names, had to serve as a workshop for the world's big brands.

In 2002, India imposed anti-dumping tariffs on made-in-China lamps to make way for their domestic producers. Although the imports from China were slashed from five million a year to one million as a result, Chinese exporters could still have a niche in India.

But this year, the situation is getting worse as India has added 50 percent anti-dumping taxes on average on the burners imported from China, a key component of lamps. That meant Yankon's product would be knocked out of the country with huge demand for energy efficient lamps.

Made-in-China goods have frequently been the targets of anti-dumping investigations because their low prices, which is a natural result of lacking a self-owned brand, could threaten the domestic producers in the importing nations.

The company suffered another pinch of its OEM business model after its overseas orders were slashed by half in the year to this May, the worst days of the global financial crisis.

"Without the self-owned brand, we are the most vulnerable in the face of the slightest market changes," said Wu, who added that he was determined to launch a global brand offensive from that moment.

Improved durability and reasonable prices make Energetic lamps quickly accepted by Indian consumers. The one million bulbs churned out in its factory 70 kilometers south of New Delhi is far from enough to meet the rocketing market needs.

"Under the OEM model, we sold at $1 a lamp in India, and made 10 percent of it for profits. Now, we have doubled the prices with our Energetic icon, and earned 20 percent to 30 percent," Wu said.

Before Yankon encountered those hardships, it thought the OEM model was ok, so it simply waited for the big names to pick it up.

"Years later, the head-on competition forced us to adopt more proactive and aggressive tactics," he said.

Having tasted the success of the self-owned brand, Yankon plans to expand its brand presence in the United States, the European Union and other emerging markets such as the Middle East and South America.

The company has already set up distribution subsidiaries in Los Angeles and Belgium to pave way for a full entry, but remains cautious of building factories in the developed countries considering the high labor costs.

The company has set up a goal of selling half of its products under its self-owned brands in the overseas market by the end of 2018.

Energetic's global reach would not come easily. Wu will have to counter obstacles to snatch a share in the US and European markets where jigsaw competitions among industrial giants are regular.

Aggressive as it is, the company knows quite well that it is unrealistic to stop the OEM business in the short run as the business is its "starting point" and "cornerstone."

Self-owned brands and OEMs should be developed at the same time, Wu said.

"I hope someday Yankon will become an outsourcer, instead of an outsourcee," he said.

Xinhua

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