Hon Hai to tap auto-parts business via acquisitions

Taipei, Nov. 5, 2004 (CENS)--Taiwan's Hon Hai Precision Ind. Co. Ltd. is expected to tap the auto-parts business by way of a series of acquisitions through its investment platforms in Taiwan and other nations, according company chairman Terry Gou.

Currently, Hon Hai is the world's largest maker of barebone PCs, connectors, TV game consoles, as well as the largest private manufacturer in Taiwan.

In the auto-parts business, Gou claimed that his group would exchange resources with various targeted small and medium-sized enterprises (SMEs) and grant operation rights to the acquired companies.

Gou claimed that in the past 10 years, Hon Hai's sales revenue, earnings and patent number grew by 56, 38, and 75-folds, respectively. In the coming 10 years, the firm will introduce new concepts for future business deployment from a group of successful SMEs, he continued.

According to Gou, the network-economy era has come and SMEs will face serious challenges for future development if they move forward on their own. To perform well in the new era, Hon Hai has established platforms in hopes of seeking the "1+1>5" effect, Gou said.

Hon Hai can provide SMEs with needed management and operation systems as well as overseas operating experiences; but after the SMEs are merged into the Hon Hai Group, they will still own their operation rights. "What Hon Hai needs is talents, management teams and product lines," said Gou. He added that SMEs acquired by Hon Hai would maintain their operation rights but their company names would be changed.

Industry sources said that Hon Hai has decided to set up a big auto-parts production zone in Shanxi Province, mainland China, using a land area of 3,000 hectares. The group's magnesium-alloy production business has won the QS 9000 certification, the basic passport for entry into the global auto-parts market.

According to Hon Hai, the QS 9000 standard was jointly set up by Chrysler, GM and Ford of the U.S. and all of the three auto makers' parts suppliers are required to meet related quality and production standards.