Feature Article

Free eNews Subscription>>
February 12, 2016

Patents, Trust and Brand: The Foxconn Acquisition of Sharp

For those of us old enough to remember, RCA used to be a trusted brand for radios and TV sets, and was the parent company to the likes NBC and ABC.  If you did not live through the history, keeping track of these iterations and changes would be hard.

I mention it because to understand what is happening with Sharp, you have to have a willingness to look at intrigue and integrity.

So let’s talk about Sharp’s situation. It is no longer a trusted brand in the market and is bleeding cash. Its LCD business for TV sets is being beaten in the market by LG, and its solar business is like an anchor tipping the boat.

So the offer by Foxconn (Called Hon Hai in Asia) is a restructuring that makes the company solid and retools to compete with the LG.

However, Foxconn is not a Japanese company. It runs out of Taiwan and has a history of managing Chinese manufacturing well.

So for Sharp to become a Japanese brand owned by a Taiwanese company would be a first.

It would also be a change in the dynamics of power. Japan became a powerhouse at a time when the U.S. dominated industrial production, and while the U.S. had experts on efficiency, we ignored them.  

The efficiency in Japan resulted in delivering products cheaper than the American brands, and also of better quality. 

They had another secret weapon.  A government that wanted them to succeed and would structure support in ways that gave companies the ability to diversify and collaborate within Japan. The term we all learned was keiretsu, and since there were so many it was talked about as “Japan, Inc.”.

Japan, Inc. looked like it would dominate in the 1980s for decades, but the combination of Korea learning the same lean lessons and China ending its isolation stalled Japan’s domination and economy.

Now we come to today, and the keiretsu strategy that is being proposed for Sharp to maintain its relationship as part of Japan Inc., has the Innovation Network Corporation of Japan (aka INC Japan) looking to keep Sharp in the fold and not be an outsider’s company.

However, the deals are not even close in terms of value and valuation. 

From a deal perspective Foxconn is better. However, if you are Japan, Inc., the idea that the keiretsu system has failed and reform is needed is putting incredible pressure on Sharp to keep patents and intellectual property an internal and not international asset.

The deal has to be complete with Foxconn by the end of this month and if it happens, it will bring a change in the way that Japan deals with its neighbors.

If the deal does not go through, it is entirely likely that we will Sharp as a brand disappear like RCA.

FOLLOW MobilityTechzone

Subscribe to MobilityTechzone eNews

MobilityTechzone eNews delivers the latest news impacting technology in the Wireless industry each week. Sign up to receive FREE breaking news today!
FREE eNewsletter