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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
