Thu, Feb 06, 2014 - Page 14 News List

Hon Hai unveils plan to become e-commerce titan

Staff writer, with CNA

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, is to launch a business-to-business (B2B) trading platform early next month, a move that some see as a way for the company to broaden its business model, market sources said on Tuesday.

The sources said that Hon Hai chairman Terry Gou (郭台銘) made an internal announcement before the Lunar New Year holiday saying that the company is planning to develop its electronic commerce business this year.

STEP ONE

For the first step of the business-to-business initiative, Gou has instructed his company to develop Hon Hai’s B2B e-trading business by launching a platform called B2B Foxconn.com, the sources said.

They added that Hon Hai started developing the platform in the second half of last year and that in the initial stages, it is aimed at becoming a venue for selling semi-finished electronic products.

Hon Haih has so far declined to comment on the launch of the Foxconn.com platform.

METAMORPHOSIS

The sources said that Hon Hai wants to transform itself from a manufacturing heavyweight into a commerce-oriented company by starting to sell its products autonomously and the planned B2B platform is meant to help the firm attain this goal.

They added that Hon Hai is not satisfied with its leadership in manufacturing and technology development, and wants to develop its commerce operations in a bid to offer more value-added services to its clients.

To facilitate the development of its e-commerce capabilities, the new business will be directly supervised by Hon Hai’s headquarters, while the company will coordinate its subsidiaries to develop their e-commerce platforms, the sources added.

They said that Gou has also instructed the group to reinforce its internal management and forge closer business ties with the manufacturers in its supply chain.

EXPANSION

The market sources also said that Hon Hai will continue its efforts to obtain clients aiming to sell their products in the regional market and is planning to build a plant to manufacture cellphones and related products in Indonesia — possibly in central or west Java — but that the location remains undecided.

The Taiwanese firm aims to use the plant to penetrate the populous Southeast Asian market and has plans to work with Indonesian consumer electronics retailer Erajaya Swasembada to seek greater business opportunities, the sources said.

GOALS

Gou said that Hon Hai is sticking to its goal of posting a 15 percent increase in consolidated sales this year, adding that his company is likely to post higher earnings last year than 2012, when its earnings per share stood at NT$8.03.

In the fourth quarter of last year, Hon Hai’s consolidated sales hit a record-high NT$1.33 trillion (US$43.9 billion), up 44.64 percent from the third quarter, on the back of the launches of Apple Inc’s new iPhones and iPads.

Apple accounts for more than 40 percent of Hon Hai’s total sales.

Driven by rising optimism toward orders placed by the US giant, Merrill Lynch has raised its target price for Hon Hai shares to NT$107 from NT$101.

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