Hon Hai Precision Industry Co’s (鴻海) acquisition of a 66 percent stake in Japan’s Sharp Corp will allow Hon Hai to maintain its advantage as a supplier of Apple smartphones, Chinese-language newspaper the Commercial Times said.
Taiwan’s incoming government should build on the example of the Hon Hai-Sharp union to develop the five innovative industries it has identified, using foreign acquisitions and international cooperation to boost Taiwanese industrial competitiveness on a global scale, the daily said.
Worldwide mergers and acquisitions totaled US$4.7 trillion last year, surpassing the previous record of US$4.4 trillion in 2007.
China has become a major participant in the field, concluding foreign acquisitions worth US$87.7 billion last year, the paper said.
Taiwan’s new government, which is to be sworn in on May 20, has selected “green” energy, the Internet of Things, biotechnology, smart machinery and national defense industries as strategic industries.
These five strategic industries are to face direct competition from China, the paper said.
To prepare for the threat from China’s emerging “red supply chain,” the new government should take precautions, it said.
First, it should view foreign acquisition or international cooperation as important tools to develop local industries.
The government should assess technology gaps in the sectors, help local companies find viable partners and help them work with their foreign partners in the technology, distribution or branding areas, the daily said.
Second, the key to a successful foreign acquisition lies in a professional assessment before any deal is made, the paper said.
The evaluation should focus on the target company’s valuation and due diligence of its finances and operations, it said.
Potential buyers must also consider accounting, tax, legal and human resources issues and carefully plan the cooperation model, their sources of funds and overall finances, and then communicate with their partners and integrate their operations once a deal is done, the paper said.
Taiwanese companies are in need of government assistance in all of these areas, it added.
Finally, the government should actively push industrial technology exchanges between Taiwanese companies and their Japanese, US and European counterparts in next generation information and communications technology, the Internet of Things, “green” energy, biotechnology, medical care, smart machinery, smart cities and national defense, the daily said.
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