Three years after being acquired by Foxconn, Sharp is looking for a new way to survive. On May 21, Sharp China General Manager Sun Yuewei told reporters that Sharp began to refocus on mid-to-high-end products and return to the technical level.

was acquired by Foxconn , Sharp is looking for a new way to survive.

On May 21, Sharp China General Manager Sun Yuewei told reporters that Sharp has begun to refocus on mid-to-high-end products and return to the technical level.

A month later, Sharp will determine whether the new board list will take effect. If no accidents occur, Hu Guohui, Lin Zhongzheng and Chen Weiming will join the board of directors. Their common background is from Hon Hai Group (also known as Foxconn ).

At the end of March 2016, Foxconn announced the acquisition of Sharp shares, with a total transaction price of 388.8 billion yen. On April 2, Foxconn signed a contract with Sharp, and the four-year acquisition negotiations were finally completed. After completing the acquisition, personnel adjustments, strategies change, and positioning are frequently encountered. Now, this operation is quite successful. One year after the acquisition, Sharp reduced its losses by nearly 90% in fiscal 2016 and returned to the Eastern Stock Exchange Main Board at the end of the year. Sharp's net profit in fiscal year 2017 was 70.2 billion yen, achieving its first profit in four years. In 2018, Sharp failed to achieve double growth in revenue and profit. Some people believe that the sharp price cut of Foxconn on Sharp once damaged the century-old account, and the brand value shrank caused controversy.

Due to performance controversy, the outside world doubts whether the global OEM giant Foxconn really grasps Sharp, and speculates whether Sharp will change hands again. This led to Sharp having to respond publicly. In April 2019, the company denied its plans to sell its TV business and proposed new business strategies such as "black and white progress" in the United States, China and other markets in May.

lasted four years Terry Gou "eat" Sharp

For Sharp, Foxconn was a rescuer of the business and an ally against Samsung Electronics.

Nine years ago, then Sharp's president, Katayama, met with Terry Gou to discuss patent authorization and capacity allocation cooperation, because Sharp's 10th-generation line panel factory faced the dilemma of inefficiency.

Two years later, in March 2012, Foxconn invested about 133 billion yen in Sharp and bought 9.9% of its shares. Terry Gou also invested in Sharp Display Manufacturing Company (which is later SDP), the operating company of Sakai Factory in his personal name, with a 46.5% stake, the same proportion as Sharp.

For this investment, nine years later, Sun Yuewei and many other insiders told the Beijing News reporter that Sakai Factory was the only 10th generation line in the world at that time and was of great significance to the large-panel color TV business. Generations are divided according to the size of the glass substrate. The 10th generation line can cut 6 65-inch, 8 55-inch panels, and mastering production capacity is the key to downstream companies participating in competition.

, which made Terry Gou decide to buy the entire Sharp, because of the delay in his subsequent cooperation.

At that time, Foxconn was already the OEM of Apple's iPhone and iPad, and Sharp was the main panel supplier of Apple devices. The conflict between different supervisors within Sharp's company has led to several delays in cooperation with Foxconn . Terry Gou couldn't help but say his heart, "If this is the case, I might as well buy the entire Sharp." Japanese media quoted people familiar with the matter as saying that Sharp was panicked because his interest-bearing debt was as high as about 1.15 billion yen at that time.

Not only that, Sun Yuewei told reporters that Foxconn has been undergoing transformation and requires various technical sources. At that time, many top Japanese companies such as Sharp were discussing technology transfer, hoping to combine Japan's manufacturing process with the huge domestic market and the advantages of Foxconn .

In June 2012, Terry Gou said that the cooperation with Sharp will help defeat Samsung Electronics.

However, the process of Terry Gou's acquisition of Sharp was not smooth. Shortly after Sharp reached an agreement with Foxconn , its stock price began to plummet. Terry Gou asked for a significant adjustment of relevant conditions and expected to directly participate in the operation, rather than just providing financial assistance to Sharp to the banking industry. He once told the media, "It's like you can't just give your children pocket money." The agreement between the two parties broke down.

In 2015, Terry Gou and then Sharp President Hiroshi Takahashi discussed Sharp's reform before they met.In 2016, under a series of commitments including not splitting the company and not abolition of employees under the age of 40, Sharp signed a priority negotiation agreement with Foxconn . But soon Foxconn slowed down the negotiation process because Sharp revealed contingent debt worth about 20 billion yuan, which is nearly half of the Foxconn offer. Therefore, Foxconn requires in-depth audit.

In this process, Sharp disclosed a quarterly result of a net loss of 108.3 billion yen, and its layoffs, asset sales and bank loans did not solve the tightness of funds. Taking advantage of this opportunity, Foxconn was able to lower the price. When it was announced on the afternoon of March 30, the total final investment of Foxconn was 388.8 billion yen.

A few days later, on April 2, Terry Gou, Dai Zhengwu and Takahashi Xingsan attended the signing ceremony together. Terry Gou was full of energy at the venue and expressed his intention to transform Sharp with the "working spirit of seven days a week". Dai Zhengwu then became President Sharp, stayed in the dormitory with his employees, and arrived at the company before 7:10 every day.

Another month later, Dai Zhengwu announced his goal to turn losses into profits in the second half of that year, which was a year earlier than previously expected. Previously, Sharp had lost more than 200 billion yen for two consecutive years.

layoffs and price cuts, Terry Gou took the lead to squeeze profits

On May 17, Sharp announced the list of candidates for the next director, and the current president Dai Zhengwu is still on the list of candidates for the next director. It is worth noting that the current Sharp directors Liu Yangwei and Wang Jianer will both withdraw from the next Sharp board of directors. Previously, foreign media speculated that Liu Yangwei is the successor of Terry Gou, chairman of Hon Hai Group ( Foxconn ), and may become chairman of Hon Hai.

Dai Zhengwu is the first foreign president in Sharp's eight-year history. He is the Japanese communication within Foxconn , known as "Daisang". He helped Foxconn win the order for Sony PS2 gaming consoles and enter the Sony supply chain. Before taking charge of Sharp, he was responsible for the vice president of the Foxconn consumer product business sub-group and important peripheral function group.

Dai Zhengwu’s style is tough. He sent two open letters to 47,000 Sharp employees within a month, announcing the reform. Japanese media reported that when Dai Zhengwu was in charge of Sharp's home appliances, electronic parts, LCD, solar cells and other businesses, he asked the management to respond to his questions as soon as possible through video conferences, and set up a president's office with 200 employees to decide on the right to appoint and remove all personnel, and refused to hold a meeting with external directors.

One of Dai Zhengwu's specialties is to dismantle costs and squeeze out profits. Regarding Sharp's transformation, Dai Zhengwu's three tricks include layoffs, price cuts and allocation reductions. The scale of layoffs was eventually expanded from 1,000 people who were considered at the beginning to 7,000 people. At the same time, in order to reduce costs, Dai Zhengwu transferred the purchase to Foxconn , and cleared inventory through Fulian.com, an e-commerce platform under Foxconn . During Double 11 in 2016, Sharp even launched a "buy big and get small" promotion in the Chinese market, that is, to buy a 70-inch TV and give away a 60-inch TV.

This is inseparable from the support of Foxconn Terry Gou. The Sharp product promotion project led by Foxconn was named "Tianhu Plan", and Terry Gou even took charge of the command.

In September 2017, in order to prepare for Double 11 of that year, Foxconn even announced that as long as one device is sold, there will be a promotion fee of 50 to 300 yuan; to the outside world, Terry Gou put forward the slogan of "noble and inexpensive" and announced the construction of production lines in the mainland, with an investment of 61 billion yuan to set up a 10.5-generation line 8K display ecological industrial park in Guangzhou.

Not only that, Sharp also reduced its configuration. Since LCD screens account for nearly 70% of the TV costs, Sharp abandoned the original Sharp screen in mid- and low-end products, but chose the LCD screen produced by Qunchuang, which is a lower-cost under Foxconn . In addition, the frame and chip of the body have been replaced. Foxconn Vice President Chen Zhenguo In an interview, he repeatedly emphasized the view that low prices and high-end do not conflict. One year after the acquisition of

, Sharp announced a loss of 25 billion yen in fiscal 2016, a decrease of about 90% compared with the loss of 255.9 billion yen in fiscal 2015.In fiscal 2017, Sharp's sales increased by 18.4%, achieving revenue of 2.43 trillion yen and net profit of 70.2 billion yen, achieving its first profit in four years. Because of the significant effect, Sharp set a goal of selling 10 million LCD TVs worldwide in fiscal 2018, which is twice that of fiscal 2016. This goal was subsequently raised to 14 million units. Sharp also further proposed a plan to increase operating profit by 2.5 times in the next three years.

This is a complete set of Foxconn OEM logic, which is to market at a low price and concentrate resources to compete for business.

However, behind the turn of performance losses, the adjustment of Sharp's market strategy by Foxconn also ignited the fuse for the outbreak of the first major crisis after the acquisition of Sharp. On May 10, 2019, Sun Yuewei, general manager of Sharp China, said in an interview with reporters that in 2018, only about 80% of the annual target was achieved.

Sun Yuewei told reporters that he was asked to enter Sharp in April 2018. His business was previously responsible for panels and upstream of TVs and other screen devices.

"Tianhu Plan" has ended, re-entering the high-end

Some consumers have reported that if it were not for the "SHARP" trademark printed on the front of the product, it would be difficult to connect such a low-priced product with Sharp's brand. GfK analyst Li Mo told reporters that the main difference between international TV brands in the domestic market is that they have a high-end brand image.

Zhongyikang data confirms the process of Sharp's cliff-style price reduction. The average price of Sharp TV has dropped from around 6,000 yuan in early 2016 to around 3,800 yuan in May 2017.

In addition, behind the massive cost reduction of Foxconn , complaints about Sharp TV are also rising.

Due to the strategy of selling one unit and losing one unit to seize the market, Foxconn net profit in the second quarter of 2017 fell by 36% month-on-month, and operating costs increased by 9.1%. This model of seizing the market has not lasted for long. Sharp TV, which entered the top five in the world in the first half of 2017, slowed down in the second half of the year, ranking only eighth in the whole year.

In the second half of 2018, Sharp finally realized the crisis.

In September, Dai Zhengwu spoke to hundreds of dealers in mainland China at the Shenzhen Foxconn factory in Shenzhen , saying that Sharp will pursue a balance between quality and quantity growth in the Chinese market in the future . This is regarded by the industry as the end declaration of the "Tianhu Plan". Not only that, Dai Zhengwu stopped the decision to entrust sales in the Chinese market to Fulian.com, a subsidiary of Foxconn , in the past two years.

Sun Yuewei explained that Sharp began to refocus on mid-to-high-end products and return to the technical level. Regarding the strategy of Foxconn before September 2018, he believes that this has laid the foundation for the Chinese market. After taking over the business in September, all he had to do was to promote Sharp to get support from consumers. The method was to change from the strategy of pursuing "quantity" to pursuing "quality". The reason was that under fierce competition, consumption upgrading is a urgent need.

Recently, Sharp released 8K TVs and AIoTh white goods products in Guangzhou. This is seen by the industry as Sharp returning to the old path of cutting-edge technology to cultivate brand value.

In addition, according to Japanese media reports, Sharp announced that it will launch 5G smartphones as early as spring 2020.

In order to cope with the new competition, Sharp adjusted his daily management model. In addition to being led by the president, Sharp has established an operating committee including R&D, supply chain, products, sales, logistics and after-sales department heads, responsible for all policy and strategic layouts. This operating committee holds two meetings a month to discuss issues, make final decisions, and implement them. The reason why discussions are held so frequently is that due to market competition, it must improve the accuracy of planning and prediction, so it needs to be corrected in a timely manner.

stops the " Foxconn transformation" and is an important step to regaining Sharp's brand value. Terry Gou once saw that Sharp's brand could realize his long-term brand dream. Foxconn has launched its own brands such as "FuKivision", but they are all overwhelmed in the market and have failed to get rid of the label of "OKE Empire".

entered the 8K competition, retained the basic platform of black electric , and introduced white electric

In November 2018, the focus of Sharp promotion activities turned to small household appliances such as Sharp water purifiers and air purifiers, and the crazy promotion of Sharp TV disappeared.

In May 2019, Sharp announced that "black and white progress" has become an important strategy for the Chinese market this year. The so-called "black and white progress" means that while Sharp is promoting 8K TVs, he is focusing on white electric products such as refrigerators and air purifiers. Due to the limited increase in the black electric market dominated by color TVs, Sharp will need to maintain the fundamentals of black electric while protecting profits through white electric, thus entering the 8K stage market competition.

For Sharp, it is no longer easy to maintain the basic platform of TV. A technical expert from a Chinese color TV company told reporters that 8K does not mean an industrial revolution, it is just technological innovation. Therefore, 8K cannot form a drastic industrial transformation like flat-screen TVs replacing image tube TVs, and the bottleneck of the TV industry itself requires breakthroughs at the physical and chemical technical levels. The threshold for the production of 8K TVs is not high, because supporting industries such as content are not yet mature and products are difficult to sell on a large scale.

Why Sharp attaches importance to 8K, the technical expert told reporters that 8K has the power to boost the brand itself and can increase the premium space. It can be seen that the increase in 8K TVs in 2020 will definitely be significantly higher than in 2019, but in the long run, 4K TVs have not yet been popularized, and 8K may take 8 to 10 years to reach the level of 60% of the market share.

At present, the profit of 8K TVs is higher than that of other types of products, but there are only four or five thousand units in the domestic market, and there are not many of them per brand. The expert said that the main purpose of 8K is to support the storefront. Manufacturers are not active in entering the commercial market, because transparent prices lead to meager profits, and project credit may lose money and make a profit.

Not only that, Sharp also has to face fierce market competition. GfK analyst Yang Yisheng told reporters that the low-price strategy of Xiaomi has caused it to rise all the way since 2017. Its TV price is 10%-20% lower than domestic brands, and its average selling price was 1,800 yuan in 2018. It is the only TV manufacturer in China with an average price of less than 2,000 yuan.

The agency predicts that the sales of Xiaomi in the official brand website may reach 10 million units in 2019, while other traditional domestic TV manufacturers only reach about 6.5 million units at most. Sharp ranked behind six major domestic products and and Xiaomi in 2018, and it has declined compared with 2017 because it changed its strategy to impact sales. However, due to the limited supply of 8K panels, manufacturers with resources give priority to self-supply, thus gaining the monopoly advantage in the early stage of the market and maximizing it.

Sun Yuewei said that the 2017 fiscal year has prevented further losses, and profits have begun in the 2018 fiscal year. Next, the color TV market will be very large, but the competition will be very fierce, and it will be difficult to make profits alone. Therefore, in addition to improving the product's own competitiveness and thus making profits, introducing white electricity and expanding operations on the basis of black electricity will balance the overall profitability.

Sun Yuewei said, "In 2017, discussions began to introduce white electricity, and it was confirmed that it would start to be implemented in September 2018."

For white goods, the current strategy is to provide consumers with urgent needs in daily life, refrigerators and laundry opportunities are imported in all markets, but for special needs, different products will be selected according to different regions and seasons. Sun Yuewei takes the haze in Northeast China and North China as an example and will introduce air purifier products with mature technology in this area. In addition, Sharp also conducts research and development of beauty appliances and pet appliances, and plans the order of product development according to the needs of smart homes.

white goods are difficult to fight a price war, smart homes are not popular

Sun Yuewei told reporters that Sharp currently targets two main types of consumer groups. One is the traditional group of people around 40 who buy home appliances with a traditional way of thinking, while the other is the younger consumer group around 20 who is no longer price-oriented. However, regarding the market estimate in 2019, Sun Yuewei believes that it will take until the "6•18" promotion to be completed, because the Chinese market has declined due to the impact of the international environment from January to April 2019, but this does not represent the annual data.

For Sharp, the white goods market cannot use the "low price to exchange volume" strategy. Li Mo told reporters that at present, China's white goods market mainly covers most categories with two larger groups, , Haier, and Midea. In subdivided industries such as air conditioners, there are also giants like Gree. White goods are a consumer-resistant product market, with a slower iteration cycle and are closely related to population trends and the real estate industry.

Usually the iteration cycle of air conditioners is 5 to 8 years, washing machines are 8 to 10 years, and refrigerators are 10-12 years. Only when the user realizes that the replacement or the product is damaged will he buy it, and the offer is just an increase in the purchase. The last period of China's home appliance growth was around 2009 when home appliances began to go to the countryside, expanding the new market.

Not only that, Li Mo said that the white goods market is not easy to make money. The home retail channels of multiple categories declined significantly in 2018, with air conditioner sales falling by 0.2% year-on-year, refrigerators falling by 5.2%, and washing machines falling by 2% year-on-year; and in many sub-categories, the top players account for more than 50%, and manufacturers are no longer willing to fight price wars. First-line brands have gradually given up the mid- and low-end markets in order to pursue profits.

With the view that the Internet of Things is recognized by the industry, Sharp proposed the 8K+AIoT (artificial intelligence and the Internet of Things) strategy two years ago. Dai Zhengwu once explained that the AIoT strategy covers the fields of smart homes, smart offices, smart factories and smart cities. Sharp will provide a COCORO+ ecological platform, making it a system with continuous expansion of self-cycles.

Although smart home is the direction of development of manufacturers, consumers' needs are still related to actual use. The scenario demand for smart home is not obvious, and consumers are not willing to purchase all home appliances from the same brand. A vice president of a white power manufacturer told reporters that there is no timetable for the popularization of smart homes.

Foxconn promotes the recovery of intellectual property rights and other assets sold by Sharp

Founded in 1912, Sharp has focused on and led the LCD panels and related industries for decades. Sharp, known as the "father of LCD", once occupied 40% of the global market share. Around 2012, when Sharp faced bankruptcy, he transferred some of his intellectual property rights to the outside world to raise funds. Dai Zhengwu once said that he had plans to gradually recover the sold assets.

In the second half of 2016, Sharp and Foxconn established an intellectual property management company ScienBiziP Japan. According to information, the company has a registered capital of US$49,000 and is headquartered in Osaka, Japan. Sharp holds 51% of its shares, ScienBiziP consulting company, a subsidiary of Foxconn , holds 20% of its shares, and management holds 29% of its shares. ScienBiziP Japan was previously Sharp's intellectual property division and promoted the transaction of Sharp's patent portfolio after it established an independent company.

ScienBIzIP CEO is YP Jou, namely Zhou Yanpeng. Public information shows that Zhou Yanpeng has served as the general counsel for Foxconn for 18 years. He served as the legal officer of Foxconn and participated in the formulation of Foxconn 's strategy. Zhou Yanpeng once said that in recent years, the Foxconn business has undergone great changes, giving up many patents, and focusing on the intellectual property deployment of 5G, 8K technologies and key components.

After taking control of Sharp, Foxconn wants to get back the assets acquired by Hisense . In July 2015, Hisense acquired all the equity and assets of Sharp Mexico for US$23.7 million, and also obtained Sharp TV's brand usage rights and channel resources for five years in the Americas. Originally, according to the agreement, Hisense will operate the Sharp North American brand until January 5, 2021.

In June 2017, Foxconn filed a lawsuit against Hisense in the California court, accusing Hisense of using the Sharp brand in the United States to damage its brand image, demanding that it stop using the trademark and compensate for losses of US$100 million. Although this incident ended in Sharp's defeat, analysts pointed out that Foxconn 's move is eager to save Sharp's increasingly declining brand image.

In May 2019, Sharp shook hands with Hisense and had regained Sharp's brand usage rights and sales business in the US market. Sharp plans to re-lay out the U.S. market in the third quarter of 2019 and catch up with the peak sales season at the end of the year.Sun Yuewei told reporters that the US market is currently being re-planned, and Sharp's other major markets include China, Japan and Europe, and will invest more resources in the future.

In addition to restarting Sharp's US business, Sun Yuewei is also responsible for promoting the construction of the Foxconn 6th generation line project in Wisconsin, USA. In July 2017, Foxconn announced a $10 billion investment to build a factory in the region to produce LCD panels for use in TVs and other electronic products. Project progress was once hindered due to changes in the state government.

In April 2019, Foxconn issued a statement saying that it looks forward to further consultations with the current governor and his team on cooperation. A week ago, Sun Yuewei went to the United States on a business trip. He told reporters that as Sharp's manager, he must adapt to the cultures of multiple countries. While Sharp has gained a foothold in China, he has already focused on other markets.

Beijing News reporter Liang Chen Editor Liu Xiaoyang Proofreading Li Xiangling