Electronics contract manufacturer Foxconn Technology Group (富士康) is reportedly to set up six financial services companies in China to extend its reach into the financial sector.
A Foxconn executive familiar with the matter, was quoted by the Wall Street Journal as saying that the Foxconn Financial Service Platform has been providing loans and other financing services to electronics component suppliers in China over the past year.
The platform has two offices, in Beijing and Shanghai, said the executive, who declined to be named.
Foxconn, known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan, is the main assembler for Apple Inc’s iPhones and Xiaomi Corp’s (小米) handsets.
Foxconn is upbeat about the financial services business in China, the executive said, adding that Foxconn knows the electronics suppliers’ business better than others.
“This is where we have a niche advantage,” the executive said.
Foxconn’s financial services unit has more than 100 customers, with transactions exceeding 1 billion yuan (US$157 million) since it rolled out the services last year The unit has about 500 million yuan on outstanding financing, the executive said.
The new unit’s financial services include offering loans, financial guarantees and equipment leasing, the executive said.
The unit’s major clients are electronics component suppliers at the moment, but Foxconn plans to expand its business profile to selling financial products directly to end users in the next few years, the executive said.
The executive said the loans by Foxconn’s financial services business unit are currently funded by Foxconn and refinancing by the company’s bankers, but the firm plans to invite strategic investors in the next few years and launch an initial public offering within the next five years.
The Taiwanese firm is also setting up a 300 million yuan private-equity fund to invest in Chinese start-ups, he added.
Foxconn has aggressively expanded its business scope into various industries over the past few years, a move that analysts have viewed as part of the firm’s efforts to become more than just a contract manufacturer.
In June, Foxconn announced a deal with China’s Alibaba Group Holding Ltd (阿里巴巴) to invest in a robotic subsidiary of Japan’s Softbank Corp, while a joint solar power venture between Softbank, Foxconn and Bharti Enterprises moved forward in India last month.
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