LEDVANCE hosted a press conference on June 10th during GILE under its GILE slogan “The Standard Redefined.” The new CEO of LEDVANCE, Jacob C. Tarn Ph.D., with his management team revealed the company strategy “LEDVANCE 2.0”.

(Image:LEDVANCE)

Strategy modified: becoming a full-scale LED general lighting provider

LEDVANCE, previously owned by Osram, was acquired by a Chinese consortium including MLS in March, 2017. Since April 2018, MLS has taken over the full ownership of LEDVANCE.

Managing Director of LEDVANCE, Erol Kirilmaz (Image:LEDVANCE)

In the past two years LEDVANCE had been through a dramatic change. Erol Kirilmaz, Chief Sales and Marketing Officer and Managing Director of LEDVANCE, stated that now is the most exciting time since he joined Siemens (the parent company of Osram) 27 years ago. Since LEDVANCE has parted from Osram, the company could for the first time focus 100 per cent on its general lighting business, which is why Erol feels confident about the prospect of the company.

The business strategy of LEDVANCE while being part of Osram, was to conduct R&D mainly in the German headquarters, producing most of its products in-house in Europe or the Americas (NAFTA) to then deliver and market them in 140 countries. This global strategy used to bring great advantages to Osram back in the era of conventional lighting, where the market dynamics and products did not change substantially for many years.

The CEO of LEDVANCE, Jacob C. Tarn Ph.D. (Image: LEDVANCE)

However, in times of LED lighting, the situation has changed. Dr. Tarn described the three characteristics of the LED lighting market:

1. Irrationality: There are more and more functions and additional value that LED products can provide, but their prices keep dropping. In the conventional lighting market, it was different: the price rose when the products got better.

2. Intense business competition: There are thousands of new competitors, who have entered the market, resulting in intense competition and more difficulty to achieve profits. Many companies have already collapsed.

3. Dynamic: The life cycle of products becomes shorter; the related regulations push conventional lighting out of the market. LED products also need to be amended to meet different needs of clients.

The global strategy could no longer respond to this radically changed market dynamics in different areas. Thus, it has been essential for LEDVANCE to adjust its business strategy.Dr. Tarn outlined five core strategic initiatives for LEDVANCE to achieve its long-term vision of becoming the leading LED general lighting company globally:

1. Leadership: regional teams will have more entrepreneurial independency in managing their daily business in order to meet the requests of clients and the market.

2. Business development: the company will keep developing new products by applying market pull as well as technology push methodologies to meet the needs of its clients from different regions.

3. Research and development: LEDVANCE will strengthen its R&D centers around the world: in Germany, USA and China – each with different technology focuses. Hereby, the R&D center in Shenzhen will focus on development execution for mass market products. The R&D center in the German headquarters on the other hand will be responsible for the overall R&D strategy and driving highly innovative topics like for example Human Centric Lighting. One key focus topic for the R&D Center in the US, close to Boston, will be smart lighting.

4. Outstanding supply chain management: there will be a centrally coordinated and monitored department to yield the advantages brought by economies of scale.

5. Manufacturing and sourcing: The factories in Europe and the Americas (NAFTA) will produce high-end products while mass-market commodity products, particularly also for Emerging Markets, will be made in China.

With the new strategic initiatives, LEDVANCE is keen to also explore the potential in the Chinese market. The “Chinese Silicon Valley,” Pearl River Delta Economic Zone has become one of LEDVANCE’s most important R&D centers and the biggest manufacturing base.

Combining the strengths of the west and the east to realize full potential for LEDVANCE

LEDVANCE used to be a typical German company before becoming acquired by MLS. According to the description from Erol Kirilmaz, the relationship between Siemens, Osram and LEDVANCE resembles that between a grandmother, mother and an adolescent man. The German company is very experienced, has a lot of knowledge, well-established processes and customer relationships but –in the past - used to react slowly when adapting to disruptive changes in a fast-paced LED lighting market. Since the spinoff from Osram that has changed. Meanwhile, MLS, as an Asian company, may not have the same amount of experience, global reach and structures but is very adaptable and proactive.

Dr. Tarn indicated that he joined LEDVANCE to help bridge cultural differences between LEDVANCE and MLS. Currently the most difficult phase has passed and LEDVANCE is on its way of becoming LEDVANCE 2.0. After joining the company, Dr. Tarn amended the company structure to support the coordination between two different cultures. Now LEDVANCE combines the advantages of both cultures, which is a key element of its competitive strength.

LEDVANCE is a global lighting company with more than 100 years business experiences. With its solid R&D capability and famous brands, the company has developed distribution channels and a reliable reputation in over 140 counties in the world. Meanwhile, LEDVANCE also steps into the Greater China region, which takes a critical role in the LED lighting industry. With the strong manufacturing power from China and the pioneer LED technology and knowledge in Asia, combined with its global presence and knowhow, LEDVANCE will provide excellent services to the Chinese market.