Terry Gou cedes Foxconn control as he eyes Taiwan presidency

Foxconn founder Terry Gou speaks during a press conference after an investors conference in Tucheng district, New Taipei City on June 21, 2019.  AFP

TAIPEI, Taiwan — Taiwan’s richest man Terry Gou said on Friday he would cede control of tech giant Foxconn to a committee, leaving the Apple-supplier in uncharted waters while he runs for president.

Billionaire Gou has been at the helm of Foxconn, the world’s largest electronics assembler, for more than four decades but has set his sights on becoming Taiwan’s next president.

Those political aspirations come at a sensitive time for a company that is acutely vulnerable to the US-China trade war.
Taiwan goes to the polls in January, with the contest set to be dominated by relations with China.

Gou — whose company is China’s largest private employer — is seeking to run for the Beijing-friendly Kuomintang (KMT) although he still has to win its nomination.

As that contest intensifies, Gou announced plans to hand the reins at Foxconn to a nine-member committee of trusted lieutenants.

“For the past 40 years of my life, I was like a bull and I fought for Hon Hai,” Gou said at a shareholder meeting Friday, using Foxconn’s official name.

“Now I am letting go of Hon Hai,” he said, adding he was now going to “fight for the future of Taiwan.”

Foxconn is the world’s largest contract electronics maker and assembles gadgets for major brands including Apple and Huawei.

The bulk of Gou’s investments are in China, employing more than one million workers in the country where cheap labour helped fuel his company’s meteoric rise.

Nod from a goddess

His foray into politics came in April, when he announced that the sea goddess Matsu had encouraged him to run for the presidency.

His chief challenger within the KMT is Han Kuo-yu, a populist local mayor and political outsider who has drawn huge rallies of supporters in recent months. The KMT primary is expected to be announced in mid-July.

Whoever wins will be up against President Tsai Ing-wen, who is running for a second term. She hails from the much more anti-Chinese Democratic Progressive Party (DPP).

Since Tsai’s 2016 election, Beijing has cut communication with her government, ramped up military drills and poached several of Taiwan’s dwindling diplomatic allies because she refuses to acknowledge the self-ruled island is part of “one China.”

Gou and Han have spoken of wanting to reset ties with Beijing. Critics accuse both of being too close to China’s leaders while Gou’s huge investments there have raised fears of a conflict of interest.

In a statement to the stock exchange, Foxconn announced Liu Yang-wei, who previously led the semiconductor unit, as the new chairman. Liu is also a member of the committee running day-to-day operations.

Sun Ming-te, an analyst at Taiwan Institute of Economic Research, said other major Taiwanese conglomerates like Formosa Plastics Group and semiconductor giant TSMC have successfully transitioned to being run by committees after their founders stepped down.

“It will take some time to see how well this model can operate in Hon Hai,” he told AFP.

The company’s shares closed 1.16 percent lower on the Taipei bourse Friday.

Buying spree

With so much of Foxconn’s electronics assembled in China, the company is dealing with ramped up tariffs caused by its trade war with the US.

It is also a major assembler of phones for Chinese tech-giant Huawei, which has been hammered by US moves to blacklist the company.

In recent years Foxconn has gone on a buying spree, snapping up assets from Japan to India to diversify from electronics assembly. But the bulk of his investments remain in China.

Gou has boasted of his White House connections and has met US President Donald Trump repeatedly.

Foxconn has vowed to build a $10 billion display screen factory in Wisconsin, creating 13,000 jobs but the project has been hit by uncertainty over how many jobs will really be created and the huge tax breaks offered to Foxconn.

The company has said plans are going ahead as scheduled with mass production set for late 2020.

Gou’s  self-made tale is legendary in Taiwan and mimics the island’s phenomenal economic success.

He was born in 1950 in Taipei to parents who had fled the Communist victory in China’s civil war. He studied shipping management in college while supporting himself with part-time jobs.

He started his business in 1974 making television parts with an investment of Tw$100,000 ($3,225 at current exchange rates) from his mother, and later began producing computer parts — eventually growing to become the world’s biggest contract electronics maker. /ee