Feature Article

March 28, 2012

Sharpening Japan with Foxconn's China Practices

Sharp has sold an 11 percent stake of its company to Taiwan’s Hon Hai, better known to us as Foxconn.

Foxconn is the company that provides us with our Apple products and in the last few weeks has been reported and false reported regarding their treatment of the labor work force.   In fact, last week This American Life dedicated an entire show to a retraction of the facts of Mike Daisey’s The Agony and the Ecstasy of Steve Jobs, which was the basis of a show they ran in January.,

Much of the more dramatic parts of the show are fabrications sometimes based on facts, however, the big picture is a lot more complicated, since for many Chinese the factories are opportunities for improvement in their lives. From the Western perspective we think this is enslavement based on the wages.

With Foxconn and Sharp working together to retool Sharp’s factories that produces screens for mobile devices, the expectation is that Foxconn will bring a new level of manufacturing management to Sharp’s Japan.

This is going to be interesting to watch since the Japanese workers have a better standard of living than the Chinese workers do. 

Another key aspect to consider is the success that Samsung represents in the video market.   A friend of mine connected to Samsung execs reminded me that everything in Samsung is based on forecast and inventory. If you exceed demand you are a hero, if the company ends up with excess inventory, you are probably going to have send out your resume.

Sharp, in effect is in that position with its inventory. The company has been undercut in the LCD marketplace and the surplus has crushed its books.

But with Foxconn coming into the equation, we may see Sharp becoming a supplier for Apple on the display side.

Alliances are excess and insults being hurled by Apple and Samsung indicate the battle is far from over. Samsung is still the major Flash Memory provider for Apple, but Apple calling out Samsung indicates the passive response from Samsung has to change.

All of this points to the trend I have been foretelling about Chinese companies in the market. As Americans flock to look at the Cherry Blossoms (Newark, NJ’s Branch Brook Park is one the best), all of the Japanese influence on the U.S. is less than two centuries old. We are reminded how quickly things change. We may see Chinese standards be implemented in the U.S. After all, who would have predicted a decade ago that China would be investing in Japan for manufacturing?

Edited by Stefanie Mosca

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