Tue, Aug 28, 2012 - Page 14 News List

Hon Hai, Sharp ‘need to tackle high tax and labor’

HELP FROM TAIWAN:The well-known Japanese brand is hoping that wealthy Hon Hai can help stave off big losses in its money-losing LCD unit with a lucrative tie-up

Bloomberg

Hon Hai Precision Industry Co (鴻海精密) and Sharp Corp need to tackle Japan’s high tax rate, strong yen and expensive labor market to make their tie-up succeed, Hon Hai chairman Terry Gou (郭台銘) said yesterday.

Gou spoke with Sharp president Takashi Okuda by telephone yesterday and hopes to meet with his Japanese counterpart on Thursday evening or the following day, he said after a press conference in Tokyo. Gou said he hopes talks with the Osaka-based company will proceed smoothly this week.

Sharp, facing a back-to-back annual loss, is seeking to raise money by selling a stake even as its shares have plunged 71 percent this year. Gou and Hon Hai on March 27 announced plans to invest ¥133 billion (US$1.7 billion) in the TV maker and its display venture before a decline in Sharp’s market value prompted Hon Hai to say it would renegotiate.

“Hon Hai wants to come in as soon as possible,” Gou said. “If Hon Hai can’t come soon to help Sharp speed up development of products, lower manufacturing cost, improve supply-chain management, it’s probably hard to make an achievement.”

Gou, who invested ¥66 billion of his own money into a display venture with Sharp, will be in Japan until Friday, Hon Hai spokesman Simon Hsing (邢治平) said by telephone yesterday.

Gou’s schedule includes attending meetings with a Taiwan-Japan business delegation in Tokyo, and leading the group on a tour of the Sakai Display Products Corp facility in Osaka on Aug. 30, Hsing said.

Operations at Sakai Display are running smoothly, Gou said.

Hon Hai in March agreed to pay ¥66.9 billion for a 9.88 percent stake in Sharp at ¥550 per share. The Taiwanese company said earlier this month it will renegotiate the deal and hopes to finalize details by the end of the month.

The two sides agreed on Aug. 3 not to discuss the matter with outside parties, Gou said yesterday.

The Japanese company is counting on the proposed tie-up with Foxconn to turn around its money-losing LCD unit. The unit may lose ¥105 billion in the year ending in March next year, Sharp said on Aug. 2.

Sharp will keep its Taiwanese partner’s stake in the firm below 10 percent, Japan’s Yomiuri Shimbun quoted Sharp’s president Takashi Okuda as saying yesterday.

Shares in Sharp rose 2.6 percent to ¥197 at the close in Tokyo yesterday, trimming its loss this year to 71 percent. Hon Hai edged up 0.69 percent to NT$87.5 in Taipei trading, rising 5.55 percent so far this year.

Additional reporting by AFP

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