Hon Hai/Sharp Joint Venture: An Inspiration

Hon Hai/Sharp Joint Venture: An Inspiration
China Times editorial (Taipei, Taiwan, ROC)
A Translation
September 3, 2012

Summary: Terry Gou, chairman of Hon Hai Precision Industry Co., aka Foxconn, was absent during a press conference in Japan. The Hon Hai/Sharp joint venture has undergone some sudden changes. Chairman Guo spoke from Taiwan. He said the joint venture is still being negotiated. It is not dead. We sincerely hope it will succeed, and become a landmark for industry cooperation between Taiwan and Japan.

Full Text below:

Terry Gou, chairman of Hon Hai Precision Industry Co., aka Foxconn, was absent during a press conference in Japan. The Hon Hai/Sharp joint venture has undergone some sudden changes. Chairman Guo spoke from Taiwan. He said the joint venture is still being negotiated. It is not dead. We sincerely hope it will succeed, and become a landmark for industry cooperation between Taiwan and Japan.

Sharp is an important panel manufacturer in Japan. The company name is derived from "Ever Sharp Pencil," the mechanical retractable pencil invented by company founder Tokuji Hayakawa. Hayakawa's ambition was to "make products that others want to imitate." In addition to the mechanical pencil, the company was the first to sell radios in Japan. It is famous in Japan for its high definition TVs.

Much time has passed. Sharp has become a "old line company." In the flat panel industry the company occupies at least two important niches. One is the AMOLED technology for active matrix organic light-emitting diode. The other is 10th-generation panel plants. The Hon Hai/Sharp joint venture will share production facilities and these two technologies. The resulting products will help the two companies become key manufacturing partners of the Apple mobile phone series, and the soon to be launched Apple iTV.

AMOLED screens are power-saving and thin. They have high color saturation, wide viewing angles, and high contrast. This makes them suitable for use in portable electronic equipment. Tenth generation flat panel plants use 2.9 meter by 3.1 meter supersized glass substrates. These are cut into large-size TV panels. Costs are more competitive than older generation panel plants.

Hon Hai is important to Sharp. Sharp may dominate the technology niche. But it has lost market share to South Korea. An alliance with Hon Hai means becoming part of Hon Hai's electronic goods supply chain. Its revenue could improve. Sharp and most Japanese manufacturers are caught in a bitter struggle with South Korea's Samsung, LG, and Hyundai. The exchange rate is an important factor. Since the Plaza Accord of 1985, the Japanese Yen has appreciated from 239 Yen per USD to 78 Yen per USD. During the same period the Korean Won has depreciated from 870 Won per USD to 1100 Won per USD.

A successful Hon Hai/Sharp joint venture would be ideal. It would be the only good news out of Taiwan's electronics industry over the past six months. Taiwan's electronics manufacturing industry faces its biggest predicament since the financial tsunami. Mobile phone exports last year increased by 40%. The first five months of this year saw a 36% decrease compared to the same period last year. Four DRAM factories lost over 38.5 billion NT during the first half of this year, a 30% increase in losses over the same period last year.

Every business has its own problems and challenges. But Japan, followed by Taiwan and South Korea, have each been leaders of the East Asian economic miracle. The vitality of the private sector was one factor. Another important factor was that all three economies had a development-oriented government. The government set economic growth as a goal. It established industrial policy and used taxes to develop and financed all sorts of means to realize that goal. The entire country was rooted in the concept of collective action. Officials and the public cooperated. They advanced toward the goal of economic growth. This was the source of the expression "Japan, Incorporated."

During the 1980s, Ronald Reagan and Margaret Thatcher ruled, one after the other. The international winds began to change. The government leadership model began to decline in Taiwan, Japan, and South Korea. This told governments they must respect the market economy. There should be no industrial policy, there should only be a competitive environment. Once the basic infrastructure was established, the rest should be left up to the market.

Such change has the biggest impact on Taiwan and Japan. It also had an impact on South Korea. But South Korea underwent industry consolidation following the Asian financial crisis. Only a few very large companies remain in the market. These companies are extremely wealthy. They are more or less able to fulfill the role the government once did in industrial development. Taiwan businessmen find the going much harder. Their companies are much smaller in scale than the Korean companies. They are also engaged in price competition with each other.

We suggest that the competent authorities change their economic thinking and economic strategy. They should not resume their highly interventionist past policy. But neither should they sit like a fly on the wall. They should actively cooperate with important leaders of export industries. They should work with them to enhance future competitiveness, to plan and strategize. The government has the Industrial Innovation Bill, the ITR, the Institute for Information Industry and Foreign Trade Association, and excellent research resources within the universities. Why not jointly develop key technologies with Taiwan companies? Why not file patents, develop markets, and play a more active role in multinational industrial cooperation such as the Hon Hai/Sharp joint venture?

Lest we forget, the British exercised a high degree of protectionism at the beginning of the Industrial Revolution. So did the United States during its rise, including the post-war economic takeoff, when it developed its infant industries. When these advanced nations began to lead the world, they advocated free trade and respect for market mechanisms, consistent with their national interests. But these are not necessarily consistent with the national interests of the Republic of China. We hope that government decision-makers break free from their ideological shackles. We hope they take the initiative to reverse the predicament of industry. We hope they actively cooperate with Taiwan and Japanese companies, and lead Taiwan's economy to new peaks.

鴻夏戀帶給我們的啟示
    2012-09-03
    中國時報

　日前鴻海公司郭台銘董事長在日本的記者會缺席，「鴻夏戀曲」驟添變數，其後郭董事長在台灣發聲，表示本案還在談，沒有破局。我們衷心希望這個案子未來朝正面的方向發展，並能成為台灣與日本產業攜手合作的指標性案例。

　夏普是日本的重要面板製造商，其商標由創始人早川德次發明「永遠保持尖銳」的活芯自動鉛筆而來。早川先生以「生產令世人爭相模仿的商品」為志向，除自動鉛筆外，率先在日本發售收音機，也在日本銷售以螢幕高顯像度著稱的電視機，戰戰成名。

　往日已遠，夏普已成「老將」，但在面板方面，該公司至少還握有兩項重要的利基：主動式有機發光二極體也就是ＡＭＯＬＥＤ技術，和第十代面板廠。如果能經由談判，鴻夏雙方合作生產和使用這兩項技術衍生的產品，對於雙方成為蘋果手機系列，和未來蘋果所將推出ｉＴＶ的關鍵製造伙伴，將有極大的助益。

　ＡＭＯＬＥＤ螢幕具有省電、輕薄、色彩飽和、廣視角、高對比等優點，適合用於攜帶型電子設備中。而十代面板廠使用兩米九乘三米一的超大型玻璃基板，切割成大尺寸電視面版，和其他較舊世代面板廠相比，在成本上更具競爭力。

　對夏普而言，鴻海也很重要。夏普固然擁有技術利基，但在與南韓的競爭中其實已經失利；若能與鴻海結盟，穩定地加入鴻海組裝各式電子商品的供應鏈，其營收可望獲得轉機。依目前情況來看，包括夏普在內的幾乎所有日本製造廠商，面對韓國三星、ＬＧ、現代的崛起，都陷入苦戰。匯率是其中一個重要的因素：一九八五年紐約花園廣場協議以來，日圓從一美元兌二三九日圓，升值到現在的七十八日圓，同期間韓圜從八七○貶值到一千一百比一美元。

　鴻夏戀若能成功是最好，因為這將是台灣電子業近半年來所發生的極少數正面訊息。整體而言，台灣電子製造業正面臨金融海嘯以來最大的困境。手機出口，去年全年增加了四十％，今年前五個月較同期減少三十六％；四家動態記憶存取ＤＲＡＭ廠，今年上半年共虧損三百八十五億元，比去年同期增加三成。

　每個行業都有它個別的問題及挑戰，但整體而言，我們必須認識到，日本在先、台韓其次，均曾被視為東亞經濟奇蹟的領頭羊。除了民間企業的活力以外，當初創造出佳績的一個重要原因，在於三個經濟體都由一個「發展導向政府」在領導。政府確立經濟成長的目標，設定產業政策，並運用租稅、研發和融資各類工具來落實。整個國家是以一個集體行動的概念，官民合作，朝經濟成長的目標邁進。這就是當年日本被描述為「日本公司」的由來。

　一九八○年代雷根、柴契爾相繼執政以後，國際的風向球開始改變，原來的政府領導模式在台、日、韓三個地方都已經式微。政府被告知：要尊重市場經濟，不應有產業政策，只應把競爭環境、基本設施弄好，其他都應當交由市場決定。

　這種改變，對台灣和日本衝擊最大。對韓國而言，也有衝擊，但該國在亞洲金融風暴後，經過產業整併，市場上只剩下幾個超大型的企業；這些企業富可敵國，多少還可以替代當年國家在產業發展中所扮演的角色。相對而言，台商就很辛苦了，規模比韓商小很多，而且還互相殺價競爭。

　當今之計，我們建議經濟主管當局要改變思維，改變策略。不見得要恢復以前高度干預性的政策，但絕對不應當作壁上觀，而應積極地協同各重要出口行業的領導廠商，共同為未來競爭力的提升，來謀定策略。政府有產創條例可用，有工研院、資策會和外貿協會，有各大學的優異研究資源，為什麼不能在台商關鍵性技術的共同開發、專利布局、市場拓展和類似鴻夏戀的跨國產業合作方面，扮演更積極的角色？

　我們不要忘記，當年英國在工業革命崛起之初，美國在內戰後經濟起飛之時，都實行高度保護主義，發展其幼稚工業。當這些先進國家的企業競爭力領先全世界之後，改而主張自由貿易，尊重市場機制，符合其國家利益，但卻不一定符合中華民國的國家利益。希望政府決策當局能打破思想上的桎梏，主動地扭轉產業困境，配合台灣和日本在產業方面的積極合作，將台灣經濟帶往一個新的高峰。