Terry Gou Is Ironic

2012-11-09 01:13:00

CBA was struck by the irony of a news article recently quoting Terry Gou, head of Taiwanese EMS company Foxconn (Hon Hai), offering to train Americans in electronics manufacturing. The thought was he wanted to help President Obama bring jobs back from China. We read some arrogance and perhaps taunting in that comment from Mr. Gou. It caused us to reflect on the background of his company. We recalled that Mr. Gou got his start driving around to US high tech companies like IBM and Dell in a rented Lincoln Continental selling connectors out of the trunk. He forged partnerships that allowed him to be in the right place at the right time when Wall St. convinced high tech industry executives that manufacturing was not a core competency, and they should dump their factories. That started the great outsourcing, and then off-shoring trend that enabled Foxconn and other companies in China to experience their miraculous expansions. It also arguably gave the Chinese people a shot at a better life, but not without a LOT of support from Chinese government officials, who were and are, shall we say, "flexible" about workers' rights, finance, and intellectual property. As CBA has been saying for many years, OEMs that do business with the aptly named Foxconn are in about as good a position as the fabled chickens negotiating with the fox for a ride across the river. Apple is about to find out firsthand if the rumors about Foxconn branding their own cell phones are true. They already know what it's like to see knock-off Apple stores selling knock-off iPads, iPhones, and so forth in the world's largest emerging consumer market. Young Chinese workers are also having second thoughts about the model. We think it's unsustainable. So, we wonder what exactly Mr. Gou could teach Americans about manufacturing? Human rights abuses and sourcing counterfeit parts springs to mind. Ultimately we firmly believe Americans can figure out robotics and the next evolution of electronics manufacturing on their own, thank you very much.

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