On June 8, Foxconn Industrial Internet Co., Ltd. (601138.SH), the largest "unicorn" company in history, officially landed on the A-share market, with the stock name "Industrial Foxconn" (hereinafter referred to as "Foxconn"). After the opening, its stock price rose to the highest limit on the first day. Based on the current stock price of 19.83 yuan, Foxconn surpassed Hikvision with a market value of 390.6 billion, becoming the technology company with the highest market value of A-shares. Securities companies predict that if 11 consecutive daily limit increases, their market value will exceed Kweichow Moutai and reach one trillion yuan.
As the founder of Foxconn, Terry Gou, the richest man in Taiwan, will continue to soar from US$8.5 billion, and will also make great strides in the ranking of the world's top rich clubs.
However, reality is always cruel. After experiencing three daily limits, on June 20, FIA fell out of a "gorgeous parabola" in just 12 trading days, and its stock price suffered a continuous plummeting, its market value evaporated by 160 billion yuan, and its market value shrank by nearly five China Telecom's volume (37 billion)!
So, how did Foxconn, which has always been criticized by the outside world for "sweatshops" and "OEM factories", struggle to move towards IPO? Why is it not favored by the capital market after its stock price "spent" after its listing? Where should Foxconn, who is at its thirty, go to the future transformation path?
From the low point to the listing, the road to enhancing brand value is not easy to follow
Looking back at every detail of Foxconn's roots and development in mainland China, this magical and mysterious company has unknowingly celebrated its 30th birthday. In the eyes of many people, their impression of Foxconn is limited to "workers jump off buildings" and "Apple OEM". Indeed, Foxconn did start with an "Office Factory", and the former "singleap" also brought a significant blow to Foxconn. It can be seen that Foxconn's growth path has been very bumpy over the years, and it is not easy to achieve today's achievements.
In 1974, Terry Gou founded Foxconn's parent company, Hon Hai Precision Group, in Taiwan, China. During the reform and opening up, Terry Gou chose to take root in Shenzhen and established his first factory in 1988, which is today's Foxconn. Terry Gou relied on mainland workers to reduce production costs, continuously expanded the export industry, and his performance also achieved rapid growth.
. Foxconn is truly well-known in 1993. Foxconn won an IMAC order during Apple's trough. In 2002, Foxconn entered the PC motherboard industry. Three years later, Hon Hai's shipments were close to those of industry giants ASUS, traditional motherboard manufacturers such as Jiaji, MSI, and Elite. In 2007, Apple launched the first generation of iPhones, and Terry Gou met with Jobs and reached a cooperation. For Foxconn, it has also begun to gradually grow from a small factory with a hundred people to solve the employment problem of migrant workers to the "world's largest OEM factory".
After 30 years of development, Foxconn's customers are now spread all over the world, including Apple, Amazon, Cisco, Dell, HP, Huawei, Lenovo, NetApp, Nokia and many other well-known companies. For a world-renowned company, the process of finding a qualified supplier is very complicated and lasting, and Foxconn's stickiness is self-evident. Today, Foxconn is a "super enterprise" with an annual income of nearly 900 billion yuan and an employee of 1.2 million, and has successfully listed on the A-share market. It is hard to imagine that an enterprise called OEM factory can achieve such impressive results.
In fact, Terry Gou has always wanted to take off the label of Foxconn's "Office Factory", and often says on many different occasions: "We are not factories, but smart manufacturing bases." This reminds me that Lei Jun has always emphasized that Xiaomi is not a hardware company but an Internet company. However, according to various data, Xiaomi is still a hardware company, while Foxconn itself is still a traditional manufacturing industry, and is essentially an OEM company.
For this reason, Terry Gou has been trying new fields. With the development of the Internet, in 2010, Foxconn launched the system concept of "store + website". In 2013, Foxconn launched the online sales channel "Fulian.com" to expand its brand.In 2014, Foxconn's subsidiary FIH Mobile selected startups from abroad and wanted to establish its own hardware startup incubation center. In 2015, withdrew from the Tmall platform, Foxconn plans to build an independent business department to operate Fulian.com.
Obviously, all of these attempts ended in failure. However, Terry Gou did not give up. On January 29 this year, Terry Gou also tried to get involved in the car manufacturing field. Xiaopeng Motors announced that it had successfully completed a B round of financing of 2.2 billion yuan, and Foxconn appeared on the shareholder list. All the above signs seem to deeply reflect the anxiety behind this listed company.
Two mountains that Foxconn cannot cross: technology and artificial
Seeing Foxconn constantly trying new models to prove that it is not a simple OEM factory, I can't help but feel a little sad. So, why has Foxconn slowed down in his technology? What pain points does Foxconn, which is proud of the number of workers, face?
From a technical perspective, in fact, in the first half of 2008, Foxconn's product manual already included 4 robots. In 2009, Foxconn had more than 10 robots. At the same time, the team has also applied for dozens of patents in the United States. However, since 2011, Foxconn proposed to assemble 1 million robotic arms within 5 to 10 years, but the "Million Robot" plan does not seem to be smooth. With the rise of artificial intelligence and big data, Foxconn robots have gradually lagged behind their competitors for many years.
According to the prospectus of FULL Industry, from 2015 to 2017, the proportion of the company's R&D expenses to operating income was 1.75%, 2.01% and 2.24% respectively. Although it has been rising year by year, the proportion is still not high. In addition, in the past three years, the proportion of revenue of Industrial FULL in precision tools and industrial robots has remained too small, with sales revenue of RMB 934 million, RMB 651 million and RMB 966 million, respectively, accounting for less than 0.35% of the main business revenue in the current period.
In addition, companies that have developed through cheap labor have not used their huge size to further work hard to develop core technologies that are comparable to those of the United States, Europe, South Korea and Japan, and still rely on low-end OEM to obtain main profits. Such companies seem to have "no soul" and are about to touch the "ceiling".
According to Foxconn's financial report, the profits of producing iPhone X have fallen by 40%. The People's Daily once published an article saying that an Apple phone was only 1/20 of it, including the $3 that Chinese workers worked hard to assemble. In front of Apple, whether it is the supply chain or the OEM, the bargaining power is not strong.
But even so, Apple is still very important to Foxconn. As the recent escalation of the Sino-US trade war, the relationship between Apple and Foxconn seems to have fluctuated. The good Apple concept has become a poison for stock prices. Nowadays, the U.S. has made Foxconn fight all the things. Once Apple orders are lost or Apple sales declines, it will be a very heavy blow to Foxconn. The so-called "international OEM" is more bitter behind it while creating job opportunities and profits.
Although Foxconn has absolutely abundant resources compared to startups, due to the manufacturing industry at the bottom of the market, Foxconn is a typical company that opens high and closes low in technology, and its inability to understand the Internet business operation model is a real flaw. For Foxconn, OEM has always been the main business, and the benefits it has gained far exceed those of the Internet business after the "transformation". When a skill that makes money easier and familiar with is about to be "snatched", there will definitely be strong resistance in traditional enterprises.
Let’s look at the artificial aspect. From the first jump of Foxconn employees on January 23, 2010 to November 5, 2010, with the heavy and dull sound of life when they landed, 14 buildings jumping out of Foxconn factories across the country, attracting attention from all walks of life and even the world. It was also during this period that this "Office Emperor" was questioned unprecedentedly, and the "Foxconn Empire" he created was also known as a "sweatshop" and became a curse that would be difficult to get rid of in the future.
Although Foxconn has taken some remedial measures against the "stop jump" incident, the management system itself has not been substantially improved, and some new problems have emerged. For example, local governments abuse public resources to recruit workers for Foxconn; Foxconn exploits student workers; strict management has not been changed, workers commit suicide; wage increases are actually blank checks. The sequelae of
that followed also emerged. Now Foxconn recruits people has become a problem. It is understood that Foxconn has adopted the method of spending money to recruit employees, but it still has not improved. Due to the labor-intensive production model, it is difficult for Foxconn to suffer even more miserable.
"Office Factory" model is gradually fading, where should we go to break the deadlock?
To a certain extent, Foxconn is like a noble lady in the A-share market. At first glance, it is high-sounding and as gorgeous as it is, it seems that everything is possible. But removing the gorgeous coat is just a heavy asset hardware OEM. If you cannot break free from this essence, it is quite difficult to achieve good performance in the stock market. Therefore, the need for Foxconn's transformation is imminent, but transformation is much more difficult than entrepreneurship, especially for traditional companies.
First of all, if Foxconn wants to take off the hat of "OK Factory", it must change its core model. Only by mastering its own overall production chain can one have some say. That is, Foxconn will begin to extend the research and development of the upstream market and the sales of finished products in the downstream market, but this is equivalent to changing the industrial model, from a simple reprocessing enterprise to a comprehensive enterprise of technology, processing and sales. This is what Terry Gou advocates for the "industrial Internet".
From Foxconn's perspective, if the idea of the industrial Internet can be realized, then Apple's identity of Foxconn will be transformed from an upstream task contractor to a product designer. As the industrial integration unit of the final product, Foxconn may become the hub of the entire Internet.
However, Foxconn's diversification efforts to diversify its business from pure manufacturing to branded products are mixed, partly because it cannot compete with big players such as Apple. Moreover, due to the business model of OEM, it is not easy for Foxconn to successfully transform into the industrial Internet and re-transform yourself.
The so-called God closes a door for you and will open a window for you. It seems that improving the competitive force, transforming labor-intensive to technology-intensive, and exploring artificial intelligence and robot production are the best solutions for Foxconn to break the deadlock. Moreover, today, when China's labor costs are indeed gradually losing their advantages, workflow automation can also effectively resolve Foxconn's deep pain points in labor.
According to a report by Deutsche Bank, the average annual shipment growth rate of robots was 16% from 2010 to 2016, and for industrial companies, the growth rate is already very high. After the wave of automation arrives, at least one-third of the work will be automated for about 60% of the work.
For example, Amazon deployed 30,000 warehousing robots. The storage center of Amazon, a technology giant in the United States, has basically been fully automated, and logistics robots have replaced most jobs that originally needed blue-collar workers.
However, robot replacement does not mean unemployment. The artificial intelligence strategy only allows intelligent robots to replace "dangerous, boring, and boring" human work. At that time, new jobs will be created, and people need to learn new skills to face the "big employment migration". From the perspective of population size, China will face the largest employment changes by then.
As mentioned above, Foxconn also has a foundation in mechanical manufacturing and AI technology, but the lack of follow-up in recent years has led to insufficient momentum. In the future, you can increase your investment or seek to cooperate with more artificial intelligence companies to strengthen your competitiveness in artificial intelligence.
According to Terry Gou, Foxconn is building an intelligent production base, and the average education of employees who are currently building an intelligent production base is a master's degree. In the next five years, Foxconn will also invest more than US$341 million to recruit top talents and deploy artificial intelligence applications in all production bases.According to his vision, Foxconn will become a global innovative AI platform, rather than just being named after a manufacturing company.
has experienced ups and downs, and Foxconn, who is in his thirty, will embark on a new journey after it is listed on the A-share market. But to truly enhance brand value, Foxconn needs to turn to the consumer industry more and build terminal brands. What will the future of Foxconn, which is at its thirty? Can the label of "OEM" be torn off? I just wait for spring to bloom and turn into a cocoon into a butterfly.
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