Hon Hai Precision Industry is no household name, but the company assembles many of the world’s top-selling gadgets. Now its hard-driving founder has even bigger ambitions. Alex Rankine reports.
Terry Gou's Hon Hai Precision Industry is best known for assembling the iPhone for Apple, but he now has bigger plans, says Quentin Webb for Breakingviews. The Taiwanese billionaire who Forbes estimates is worth $8.5bn plans to diversify after acquiring Japan's Sharp in 2016 and splashing $866m on electronics-accessories maker Belkin in March this year.
Gou met Donald Trump several times last year, with the White House claiming credit for his promise to invest $10bn in an LCD-manufacturing plant in Wisconsin. And he is also pouring funds into "research-intensive areas such as cloud computing and super-fast wireless", with plans to fund it by raising $50bn through a "blockbuster" listing of a Hon Hai subsidiary in mainland China.
For all the talk of innovation, Gou still "thinks like a manufacturer", giving short shrift to R&D efforts unless they can turn a profit quickly, says Tim Culpan for Bloomberg Gadfly. Employees work long hours, "rushing to hit deadlines, and rarely given a chance to breathe or think outside the box". Indeed, Gou faced "uncomfortable questions about long hours and low pay at his mega-factories" in 2010 after 14 workers committed suicide in China, says Time magazine.
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The incidents served as a reminder to consumers that "some costs of their beloved gadgets don't show up on the price tag". The suicides introduced Hon Hai which also trades under the name of Foxconn to much of the world "in the worst terms imaginable", said Frederik Balfour and Tim Culpan for Bloomberg Businessweek in 2010. After a slow start, the firm responded to the crisis by raising wages, organising employee counselling, and even putting nets around its buildings to catch jumpers.
Catching Taiwan's export boom
Gou, the son of a policeman, was born in 1950 to parents who fled the mainland after the Communists came to power. He started work as a shipping clerk while Taiwan's export economy boomed in the mid-1970s. Using a NT$100,000 (£2,400)loan from his mother, he then started a business manufacturing television parts. He got his first break making components for Atari in the 1980s and then embarked on an 11-month tour of the United States, dropping in at businesses unannounced "like a door-to-door salesman". The strategy garnered him orders from the likes of IBM, but wages in Taiwan were rising.
At that time, mainland China was opening up to investment, but many entrepreneurs were wary. Undeterred, Gou invested in a facility in Shenzhen that grew to employ 300,000 workers it even has its own chicken farm to keep everyone fed. Foxconn today employs a staggering 1.3 million people.
Gou's early career was marked by both "chutzpah" and a "totalitarian leadership style", say Sheree Chuang and Jimmy Hsiung in CommonWealth. But this one-time workaholic is said to have slowed down following the deaths of his first wife in 2005 and his brother in 2007.
"The chairman is now always telling colleagues to take more vacation," says one Hon Hai executive. He re-married in 2008 and even considered retirement, but decided to recommit himself to business and perhaps more. Gou's regular meetings with Trump have sparked rumours that he is planning to run in Taiwan's 2020 presidential election. If so, opinion polls suggest he would beat President Tsai Ing-wen by a comfortable margin, reported the Taipei Times last year.
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
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