Hon Hai suffers setback in establishing retail chains
June 23, 2014 Leave a comment
Hon Hai suffers setback in establishing retail chains
Staff Reporter
2014-06-19
Pan International Electronics, a subsidiary of Taiwan-based Hon Hai Precision Industry (also known as Foxconn), has already dumped its 48% stake in consumer electronics retail chain Cybermart, according to Shanghai’s China Business News, citing Taiwanese media reports.
It means that Hon Hai, the world’s largest electronics contract manufacturer, now only operates in the e-commerce sector in China, the paper said.
Hon Hai last year unveiled plans to establish the largest retail sales network for electronics on the mainland in an ambitious attempt to transform itself from a contract producer to a retailer, wholesaler and technology service provider. However, with setbacks in opening retailing channels, the road to establishing its own marketing channels seemed to have been tougher than the group anticipated.
For Hon Hai CEO Terry Gou, e-commerce was the only channel left to help expand his empire on the mainland. At a shareholder conference last year, Gou stated that the trade-in-services agreement between China and Taiwan, which was signed in June 2013, covered e-commerce. Against the backdrop, Hon Hai would spare no effort to make inroads into the growing e-commerce industry in mainland China, he said.
However, as the controversial pact remains stalled in Taiwan’s Legislature, the company reported slow progress in the development of its e-commerce platform. Sources from Hon Hai’s e-commerce sector told China Business News that Money Link, which Gou set up in 2013 to capture a share of the Chinese e-commerce market, was run by an number of individuals who were inexperienced in handling e-business operations.
There is a problem of experience, the sources told the paper, noting that some products which Hon Hai had manufactured under contract had sold well overseas but not in China.
The Taiwan-headquartered company had sold its brand name products in the mainland market through its retail chains, but the approach failed because it was only good at playing the role of a contract maker. “It was not easy for it to turn to the field of research and development,” household electronics expert Liu Buchen said.
“Foxconn (Hon Hai) is now walking on two legs — one big and the other small,” Liu said, explaining that the big leg represented contract production and the small one signaled brands. If the enterprise wanted to have a reasonable industrial structure, it had to fashion two legs of the same size, Liu added.
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