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Shares of NVC Lighting, China’s largest maker of lighting products, were suspended from trading in Hong Kong on Friday, as its workers went on strike over reshuffling of the company’s board of directors.
According to Caixin.com, a Chinese financial news provider, NVC Lighting workers had gone on strike on Friday morning and the company’s 36 operating centers all stopped merchandise purchasing, demanding its former chairman and founder Wu Changjiang return to the company, and the exit of its third largest shareholder Schneider Electric.
Wu Changjiang, who holds over 19 percent shares of NVC Lighting, resigned as chief executive and chairman on May 24. The new chairman Andrew Y Yan is the managing partner of private equity firm SAIF Partners, while the new CEO Zhang Kaipeng is from Schneider Electric.
Staff at NVC Lighting’s headquarters in Huizhou, Guangdong province, told Caixin.com that orders had reduced two thirds after Wu resigned, and the company has reached a point “where its very existence is at stake”.
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Workers were also upset that their wages were cut and described the company’s operation as being in “chaos”.
“The strike will certainly have a negative impact on the company and we are concerned that it would hurt NVC Lighting’s brand,” Felix Kwok, research analyst at Core Pacific-Yamaichi International (HK), told China Daily.
Kwok said Wu has a strong connection with NVC Lighting’s distribution networks, which is one of NVC’s key competitive advantages, while most of the company’s institutional investors had confidence in Wu’s management style.
“As we can see, the share price of NVC Lighting had taken a dive after Wu’s resignation.”
He said Wu had stepped down from the chairman’s position once before in 2005, due to some serious disagreement with other shareholders, but he returned to the company shortly after that with the support from suppliers and distributors.
“I think it is very likely it will happen again,” said Kwok, adding that if Wu indeed returns, it would be positive for NVC Lighting’s share price.