Caixin
Aug 14, 2012 07:01 PM

Suppliers Stop Deliveries to NVC Lighting

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(Beijing) – Most suppliers of NVC Lighting Holding Ltd. have stopped delivering goods because its board of directors did not reply to a request regarding management structure.

The suppliers had wanted Wu Changjiang to return as chairman and Schneider Electric to leave the management team.

The battle between the founder of the firm and its investors has been closely watched in China. Some investors have claimed weak corporate governance and hinted at financial irregularities under Wu, who had resigned. Workers who want Wu to return went on strike for one day.

Eighty to 90 percent of suppliers suspended delivering to NVC on August 10, a company spokesperson said. NVC can only continue production for three to four days based on its inventory.

Suppliers said in a written statement that they were unhappy the board directors did not respond to their appeal.

NVC called suppliers and distributors to a meeting on July 12. At the meeting, NVC employees, dealers and suppliers demanded Wu return and Schneider Electric, the firm's third-largest shareholder, leave.

NVC chairman Yan Yan had said the company would reply by August 1. The date was then postponed to August 10. Yan has indicated he would rather let the company stock suffer for one to two years rather than back down in the row.

A supplier in Chongqing said that it had not received a reply from NVC's board of directors regarding the request. On August 10, the supplier decided to stop delivering goods and asked the company to settle payments.

A supplier in Shenzhen said that considering NVC's chaotic situation, most suppliers had decided to stop deliveries. "We are not big enough to bear the payment risk," an executive from the Shenzhen supplier said.

By August 13, few trucks were arriving at an NVC factory in Huizhou, Guangdong Province, an executive at the plant said. "Before that, more than 100 trucks delivered goods to us daily, but today only 20 came.
 
It would take up to two months to find new suppliers, the executive said.

 

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