Jack Huang: the Importance of Int'l Cooperation in Global Lighting Market

During an interview with CENS Lighting in his Taichung office on a hot August morning, Jack Huang, clad in shorts and T-shirt, was trying to explain the thinking behind his establishment of the Aurora International Lighting Corp. together with British importer Andrew Johnson 10 years ago. "Do you really want to work tediously by yourself with a 100%-owned business to earn revenues of only NT$500 million [US$15 million at NT$33:US$1] a year at best?" he asked. "Or do you want to work at a leisurely pace with a complementary partner to create a business with an annual revenue potential of NT$5 billion [US$155 million]?"

Huang chose the latter route, and today is the Asia managing director of the Britain-based lighting venture. He reported that the company had worldwide revenues of NT$3.5 billion (US$106 million) last year, including 35 million pounds (US$56.7 million at GBP1: US$1.6) generated by its British operation and NT$1.5 billion (US$45 million) by its Asian operation.

Huang co-founded Aurora with Johnson in 1999, after working as a contract supplier to his British partner for three years. He said Aurora is already the No.1 lighting wholesaler in Britain, supplying 80% of London Heathrow Airport's lighting fixtures with transformers and having been contracted to supply lighting fixtures for the 2012 London Olympic Games. "Also," Huang added, "we have been contracted to supply lighting fixtures to big lighting names such as Philips and Sylvania."

Huang started his own lighting business in 1993 to deal in electrical components, including transformers and ballasts. He won contracts from Johnson three years later, and the two quickly become good friends. "We decided to found Aurora together because we have a good rapport with each other, we share many common ideas regarding business, and our expertise is complementary. He's a marketing specialist who handles sales, and I'm a graduate of mechanical engineering science who is responsible for manufacturing," Huang explained.

One of their shared ideas is about risk management. "To minimize the risk stemming from uncertain manufacturing by contract suppliers," Huang commented, "Aurora has amassed a huge number of contract manufacturers of varying size in mainland China and put them on file. In case any of our contract suppliers becomes lax in quality and fails to improve, we can find a replacement immediately and our shipments won't be delayed."

In addition to the three factories in mainland China that it partly owns, Aurora has entered into cooperation with 70 manufacturers there to produce over 4,000 lighting items. "We usually measure our suppliers against three standards to see if they meet our needs: delivery efficiency, defect rate, and customer complaint frequency," Huang said. Contract suppliers fill 70-80% of the company's needs, he added.

The company's risk management also covers marketing, and Huang and Johnson have hammered out a set of measures to reduce the risk as much as possible. "Our sales reps are requested to watch the market closely," Huang reported, "and when they find signs of an emerging demand for some products, they immediately meet to determine how to fill that demand. As soon as they reach a conclusion they send me layouts, which I will later discuss with factory managers. This means that our products are usually marketable."

To make sure the cooperative project went as smoothly as possible, Johnson took his families to live in Taichung for seven months before opening the lighting company. During that period, Huang took him to visit lighting factories throughout Taiwan, giving him an insight into lighting manufacturing. "Seven months are not a short time," Huang said, "and that settled his determination to enter into partnership with me."

Cooperation with Johnson conforms to Huang's idea that "distribution channels are the key to success." "Although I have a degree in mechanical-engineering science, and could develop unique products by myself or team up with other manufacturers," he commented, "distribution channels are still the determining factor in success."

Internationalization came to Huang naturally. Before setting up his own company he worked for precision-machine maker Victor Taichung Machinery Works Co for seven years, during which time he was sent to the Netherlands, Germany, the United Kingdom, and Japan to learn the trade. That allowed him to sharpen his English and broaden his international vision. "A three-year stay in the Netherlands, in particular, offered me a chance to gain an insight into Europe, and that experience helped me decide to work with Andrew Johnson," Huang recalls.

Knowing full well the importance of international vision to all business professions, Huang has sent his two daughters to bilingual schools ever since their kindergarten years. He often takes them with him on business trips overseas, where they stay with business partners. One of the girls is now a university student, while the other is in junior high.

Huang views the lighting industry with a Zen mind. "Lanterns show people the direction to go, and they make people feel warm in the dark," he said. "And I'm free from the pressures that often weigh on second-generation business owners, because my father was a teacher."

Ever since the establishment of Aurora, Huang has stressed the value of partnership over the amount of the profit the company generates. "Aurora now has seven subsidiaries staffed with a total of five to six hundred workers, mostly sales reps," he noted. "The parent company and its subsidiaries operate on a partnership basis, with the parent responsible for management and ensuring supply sources while the subsidiaries are responsible for filling orders. Both sides share operating costs and profits. The parent gives its subsidiaries a huge amount of leeway in marketing operations, asking only that they follow the company's general rules. Despite very little pressure from the parent, the subsidiaries have been actively competing to hunt for orders so as to earn more profit. That's how we were able to increase revenue from zero to NT$3.5 billion over the past 10 years."

Aurora has also built up a solid technological foundation over the past decade, notably in the field of energy-saving lighting technology. According to Huang, the company began developing energy-saving lamps shortly after it was founded. "Our globe fluorescent lamps give off 40 lumens per watt," he claims. "Usually, this type of compact fluorescent lamp can hardly achieve that kind of efficiency, as the globe case seals heat inside the lamps and erodes their performance."

Currently the company has a team of six R&D specialists, holding either Ph. D. or Master's degrees, working in Changhua County in central Taiwan. Worldwide, the company has around 40 layout and design specialists. In recent years Aurora has also stepped up its efforts in the area of LED lighting, which is expected to account for 15% of the company's revenue this year, up from 8% in 2008.

Last year's global financial crisis brought the most severe difficulties ever to Aurora; but, Huang said, his company has set its 2009 revenue target at a record NT$4 billion (US$121 million). "This year is a milestone for the company," Huang commented, "because we will begin to copy the success we have achieved in the past 10 years in the markets that we will enter over the next 10 years." To celebrate its 10 years in business, and to mark the beginning of expansion into a new decade, the company will hold a grand party at the Hong Kong International Lighting Fair in October.