Terry Gou, chairman of Taiwan-based Hon Hai Precision Industry, the parent of electronics manufacturing giant Foxconn, is looking to expand the company’s global footprint using its recently acquired majority stake in Sharp Corp., but Hisense is standing in the way.
In recent weeks, Gou’s companies have been the focus of almost daily news articles concerning Foxconn’s efforts to expand its electronics manufacturing plants, including several flat-panel display plants, around the world. What is becoming increasingly clear is that a central part of these plans involves resurrecting the Sharp brand for TV marketing on a global scale.
The problem is, in 2015, cash-strapped managers of Japan-based Sharp Corp. licensed off the rights to the Sharp trademark for TV marketing in North America to China’s Hisense. This occurred just before Foxconn acquired a 62 percent majority stake in the company.
Almost immediately after Foxconn gained control of Sharp, incoming managers began to talk about plans to get the rights to the Sharp brand back from Hisense—but Hisense wasn’t interested. The globally third-ranked television maker licensed the rights to the brand for a five-year term, and has begun to use the Sharp name to build a distribution bridge into retail accounts with the sales expertise to sell better-performing television technologies.
Hisense USA marketing executives said their strategy is working, and they plan to continue using it.
Undeterred, Gou’s teams have hinted at plans to build a flat-panel display plant in the United States, creating new employment opportunities and an infusion of cash into the local marketplace. Sharp/Foxconn also reportedly told Hisense that it would not sell LCD panels to Hisense television assembly factories in 2017, forcing the China-based television supplier to find last-minute, alternative sources of supply.
According to reports, Foxconn then tried and failed to regain the North American marketing rights to the Sharp television brand through arbitration.
Still undeterred, Sharp Corp. then filed a suit in U.S. courts claiming Sharp branded TVs from Hisense allegedly violated U.S. regulations on electromagnetic emissions, were advertised with misleading screen sizes and were promoted with false claims about picture quality.
Further, the complaint charges Hisense’s Sharp-branded TVs were “shoddily made” and were damaging the value of the Sharp trademark. Sharp is asking that Hisense be required to stop using the Sharp brand.
Hisense has categorically denied the lawsuit claims and says it looks forward to addressing the charges in court.
Meanwhile, Gou continues to expand Foxconn’s electronics empire, further vowing to continue the company’s bid to acquire Toshiba Corp.’s semiconductor business, which would give Foxconn a significant presence in the memory chip business.
Foxconn also revealed that, in coming years, Sharp Corp. is planning to produce television-sized organic light emitting diode (OLED) displays at a plant in Sakai, Japan, which is the location of Sharp’s 10 Gen LED LCD panel plant.
Foxconn, which is the world’s largest maker of iPhones, appears to be dangling a huge bunch of carrots in front of U.S. decision makers. It comes in the form of a claimed $10 billion investment across several U.S. states, including a pending decision (as this was written) on the location for a proposed $7 billion display-making plant in the United States.
On the surface, the decision to bring a display plant to the U.S. makes only partial sense. It would put difficult-to-transport, large screen displays closer to the North American customer base, saving on shipping, damage and other expenses. However, there is only one final assembly plant for television sets in the United States (Element), and Sharp doesn’t have rights to its own brand to put on any televisions the plant could possibly produce for the U.S. market.
Gou and Sharp are applying the pressure at a time when the Trump Administration would love a big dose of positive news. But Hisense is holding all the cards.
It should be interesting to see who blinks first.