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Hon Hai dismisses concerns over impact of Gou's presidential bid

2019/04/18 12:29:57

Hon Hai Precision Industry Co. Chairman Terry Gou

Taipei, April 18 (CNA) Taiwan-based Hon Hai Precision Industry Co., the world's biggest contract electronics maker, on Thursday dismissed concerns raised by international news media over the impact on the company's operations in the wake of a presidential bid announced by Chairman Terry Gou (郭台銘) a day earlier.

In a statement, Hon Hai, an iPhone assembler, which is also known as Foxconn in the global market, said all of the subsidiaries under the company's corporate umbrella operate independently and every unit is run by professional managers, indicating that Gou's shift into politics will not affect the day-to-day operations of these units.

Among the foreign media that voiced concern over Hon Hai's operations, the Nikkei Asian Review cited Joseph P.H. Fan, a professor at the Chinese University of Hong Kong, as saying that Gou's presidential bid could pose a risk to the company.

"Gou is a strongman. The biggest concern will be whether his gigantic tech empire can be set in driverless mode and still run smoothly during his absence," Fan said in the report.

"It remains a big question whether these senior Foxconn executives can cooperate with each other without a big boss, and there is no system to audit the decision-making processes," Fan said.

Such concerns arose after Gou announced his intention to join the opposition Kuomintang's (KMT's) presidential primary, saying that the decision came from divine intervention from the Sea Goddess Mazu.

Despite the media reports, shares of Hon Hai, the second-largest stock in terms of market capitalization in Taiwan, extended its momentum Thursday on the Taiwan Stock Exchange.

It seemed that investors were happy to celebrate Gou's presidential bid, pushing up Hon Hai's shares by 1.96 percent to NT$93.60 (US$3.03) on the local main board as of 12:20 p.m. Thursday, when the weighted index was down 0.02 percent at 10,995.09 points.

Before Thursday's gains, foreign institutional investors had registered a net buy for the 15th consecutive trading session Wednesday. In the previous 15 trading sessions, the net buy hit 157.05 million shares, according to the Taiwan Stock Exchange.

Before the presidential bid announcement, Gou had said that Hon Hai will allow board members more power to run the company, while he himself intends to reduce his personal influence on the company.

Gou said that how Hon Hai will develop will still be under his instruction, although he will retreat from the front line for the company's day-to-day operations.

A source close to Hon Hai who asked not be named said that Gou will not retire any time soon, since he is building up a succession for the company.

Under Hon Hai, there are 13 sub-business groups, including Internet-focused Foxconn Industrial Internet Co. Ltd. (FII), Japanese electronics giant Sharp Corp., smartphone assembler FIH Mobile Ltd. and flat panel maker Innolux Corp.

Hon Hai is integrating hardware production with software development capability, such as cloud computing, the Internet of Things, big data and artificial intelligence, with its contract electronics operations set to expand beyond pure manufacturing.

(By Chung Jung-feng and Frances Huang)
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