August 16, 2023
Signify Unveils Mega Factory in China
Expanding presence in its "second home market" with 2.1 million square-foot factory
Netherlands-based Signify has announced the imminent opening of its largest LED lighting production facility, located in Jiujiang, Jiangxi Province, China. The plant is a venture of Signify's company, Zhejiang Klite Lighting Holdings Co., Ltd. ("Klite"). This facility will produce LED lighting sources and luminaires, including Philips-branded lamps, catering to both the Chinese and international markets.
The facility, which spans over 2.1 million square feet (200,000 square meters), is set to be fully functional by the close of this year. Housing 192 production lines, the factory will utilize modern manufacturing technology, process control and smart logistics to create LED lighting sources and fixtures for professional and consumer markets globally.
In 2022, Signify generated 7% of its global sales in China compared to 34% of revenues generated in the United States.
Signify and China production
The establishment of this factory aligns with Signify's evolving strategy in China. In 2019, the company acquired a majority 51% stake in Klite. Prior to the acquisition, Klite had been a prime supplier to Signify, delivering high-grade LED products at competitive prices. Klite reported sales to third parties amounting to approximately EUR 250 million in 2018.
Additionally, Signify is no stranger to the Chinese manufacturing landscape. It operates nine other facilities across China. This vast in-house production capability, coupled with strategic partnerships with third-party manufacturers, has facilitated an agile supply chain strategy for the world’s largest lighting maker. This model has enabled Signify's growth on a global scale.
More to come in India?
In May, Signify CEO Eric Rondolat told Fortune India "Because of friction between China and U.S., we decided to have a less saturated and global supply chain. We want to depend less on China for other markets as things will become more complicated. This is where our strategies see India as a potential hub where we will invest to bring more manufacturing — making in India, for India and the world."
Signify in the Chinese Economic Landscape
A Tuesday article in China Daily indicates a 2.7% decline in foreign direct investment in China in the first half of 2023, with investments totaling 703.65 billion yuan ($96.93 billion). Despite this, John Wang, Signify's president of North East Asia and senior vice-president, stressed that China is one of the group's most important markets and it has always been its "second home market."
“Further growth in China is a key component of our global business strategy. This new factory is an important addition to our global production capacity, supporting Signify’s growth in China and across the world. Fully in line with our growth vision, the plant illustrates our long-term commitment to China, and enhances our manufacturing and innovation presence in this important market to support China’s sustainability goals,” said Rondolat.
China's recent shift in policies — centered around technological growth, innovation, and broader reforms — has seemingly unveiled a slew of opportunities for Signify.