Hon Hai Comes up With Ambitious Expansion Plan

Chairman of the Hon Hai Group, Terry Guo, has mapped out several ambitious goals for the group, including boosting the group's annual consolidated revenue to NT$10 trillion (US$333.3 billion) in five years, breaking the group into 12 subgroups, and developing strong presence in Indonesia and Germany.

The Taiwan's No.1 manufacturing conglomerate by revenue saw consolidated revenue for Q4, 2013 hit a new high of NT$1.33 trillion (US$44.3 billion), bringing its revenue for that year to NT$3.95 trillion (US$131.6 billion). Although the annual revenue represented an increase of 1.25% from 2012, the growth rate is far behind the targeted 15% set by Guo for the company.

The chairman concedes being  “pretty disappointed” about the low year-on-year growth of the company's 2013 revenue. Nevertheless, he is confident of the company's planned 15% growth for 2014 on ground that 2013 was a year of preparation for the company. He points out that global tech market was gloomy in the first half of 2013 because of the lack of new products.

Guo says the group took around 40 years since its 1964  inception of its parent company to generate annual revenue close to NT$4 trillion (US$133 billion), and that the group's next goal is NT$10 trillion, which he feels will be attained in five or six years.

Since 1964, the group has gone through four stages of expansion, Guo recalls. In the beginning, the company had only around 30 employees generating revenue of around NT$20 million (US$666,666) a year. In the second stage, the company learnt the business by trial and error. The group's turning point, he says, happened in the third stage, when it migrated to manufacturing and assembling PC components and electronics from mold tooling, machine building, and injection molding.

The group's brisk growth came in the fourth stage (2003-2013), during which Guo said that he would leave the group when its revenue reached NT$1 trillion (US$33.3 billion), but still remains chairman despite the group's consolidated revenue nearing NT$4 trillion in 2013. He recently promised to captain the group for another 10 years to reach the NT$10 trillion goal and groom his successor.

Over the next 10 years, the group will also reorganize its 10 groups into 12 subgroups so that more competent young mangers may become subgroup presidents. Guo says the group will hand over all authorities to subgroups except for finance and patent management, and to have at least 100 companies of the group go public in Taiwan,  China, Hong Kong and the United States in 10 years, up from the current 10-plus companies.

In 2014, the group will target Indonesia and Germany in its global presence scheme. Guo notes that when China transforms from a world factory to world market, Indonesia, instead of India, will become the next world factory.

He says Indonesia has three advantages for his group's operation there: its submissive people, its 10 million overseas Chinese, and its position as a gateway into a market of 1.6 billion Muslims. When many Taiwanese tech enterprises have transplanted production in China to Vietnam for cheaper production costs, Guo feels that Vietnam is still immature in some aspects.

According to Guo, he will fly to Indonesia sometime in February 2014 to close some investment deals. His group has a cooperation deal in Indonesia with handset maker BlackBerry Ltd. of Canada.

In Germany, Hon Hai will work with carmakers Benz, BMW and Audi on several deals, according to Guo. Industry executives say the deals could be about automotive electronics and metal technology, and the group will use its factories in the Czech Republic, Hungary, and Slovakia as the springboard into the German market. (KL)