Foxconn plans bring to market products, using Sharp’s valuable patents and technology as quickly as possible and also has plans to close the costly and redundant overseas operations of new acquisition Sharp Corp. The chief of the world’s largest electronics manufacturer said this on Wednesday.
The comments were made by Terry Gou at his company’s first annual general meeting since announcing the purchase of two-thirds of the money-losing Japanese display maker for $3.5 billion. The formal name of Foxconn is Hon Hai Precision Industry Co Ltd and was founded by Taiwanese national Terry Gou.
Gou said that the new management will take charge of Sharp on July 1 after all legal procedures for the acquisition get completed by this month.
“We will start overseas. Those improper, high-cost joint ventures overseas, we will close them to reduce a lot of the operational cost, which will lead to lower (product) sales prices,” Gou said while talking about the restructuring of Sharp.
In order to strengthen its pricing power with major client Apple Inc, Foxconn is seeking to make use of the technology and branding of Sharp and the comments come amidst an environment of those efforts.
This takeover of sharp happened at a time when Japan’s technology companies are being out-manoeuvred by upstart Asian rivals despite the Japanese companies being once synonymous with cutting-edge electronics and the deal has been like a lifeline for Sharp.
In addition to a metrics-based review of all Sharp staff, a part of the initial restructuring process of Sharp would be speeding up the transformation of Sharp’s patents into technologies that yield commercially viable products, Gou said.
Layoffs were a must and would be carried out “responsibly and sensitively”, Foxconn had told Sharp employees in May this year. The cuts could total 3,000 in Japan, and more when Sharp’s global operations are included, Reuters had reported at that time citing sources with knowledge about the matter.
A significant growth potential in Sharp’s home appliances business is being seen by Foxconn, Gou also said. Foxconn is in discussions with a major U.S. wholesaler as the Taiwanese hip maker is working hard to expand sales channels in the United States, Goud further clarified.
Gou said that Sharp had once held many patents in its flowering semiconductor business but had later sold some to plough resources into display technology and this is one area that Foxconn will also work to rebuild.
Gou added that bringing Sharp’s financial management in line with methods used at Foxconn is another immediate task at hand for him and his company. For example, the three bads – accounts, personnel and materials department at Sharp, would be reviewed by Foxconn twice a year, Gou informed.
“We have very conservative accounting principles,” said Gou.
Unlike Japanese companies which tend to have top down financial management that may involve fulfilling profit targets, Foxconn’s accounts are checked from the bottom up, Gou said.
(Adapted from Reuters)