Elec-Tech revealed on January 14th plans to establish a joint venture focused on LED production in Bengbu city, Anhui Providence. The joint venture will have a registered capital of RMB 1.4 billion (US $231.4 million), of which RMB 1 million is provided by Elec-Tech through funds, materials, and intangible assets. The company will own 71.43 percent in shares. The other 28.57 percent is owned by Bengbu City Holding Corporation who invested RMB 400 million.
The joint venture will be known as Bengbu Sanyi Semiconductor. Main operations will be in LED chip R&D, production, sales, and technical consultation, as well as development, production, LED component sales, LED lighting, LED fixtures, and LED display screens.
The goal in establishing the joint venture is mainly to build a LED R&D and production base, to expand LED production capabilities, take steps towards improving the company’s business strategy, as well as taking advantage of opportunities with local investment companies to develop the sales market for LED products, said the company.
However, since Elec-Tech is currently involved in many LED industry investment projects and regional distribution is scattered, there are certain levels of fund, management, and market risks toward foreign investment.
The company has therefore taken several measures for investment risk prevention. Elec-Tech has taken advantage of support by national and regional governments of energy efficient and environmentally conservative businesses. Elec-Tech has received government policies which support their LED investment project by the local government, which reduces investment risk. In addition, by cooperating with local investment companies and taking full advantage of the area’s human resources and market influence, the project’s market risk can be lowered.
The investment project has already demonstrated that if the future prospect of the market is good, then more projects can be started to compliment the company’s LED supply chain after the project is established. This will ultimately be beneficial to strengthening the competitiveness of the company’s overall LED supply chain.
It has been revealed by someone in relation to the company that Elec-Tech already has LED investment projects in Wuhu, Yangzhou, and Dalian. The company established a subsidiary in Bengbu (Bengbu Elec-Tech Optical Electronics) in 2012. Plans to expand investment in the region are due to growing demands from the downstream LED lighting market.
source: China Business News