2022 年 68 巻 2 号 p. 1-26
Honhai has come to be a representative ICT firm not only in Taiwan but also the world through its EMS business. However, it has been forced to reorganize its business structure because its profitability worsened in the 2010s. Honhai is extending its business domain to the upstream and downstream of the value chain and is strengthening its business base. In the beginning, Honhai tried to do all this in-house but in vain, and therefore it acquired Sharp in 2016. The business resources of Sharp, particularly R&D capability and brand value, have been indispensable for Honhai’s catch-up.
After the acquisition of Sharp, Honhai firstly reconstructed Sharp’s management system. More specifically, Honhai reorganized Sharp’s procurement system to reduce procurement cost, expanded sales of Sharp’s LCD TVs in the Chinese market where Honhai has an extensive sales network and re-formed Sharp’s personnel system to enhance motivation among young employees. When Honhai carried out a series of restructuring moves for Sharp, it utilized its own advantage as a big ICT firm, with domestic and foreign networks and a high capability of business administration.
Honhai is promoting its own catch-up while restructuring Sharp’s management. For instance, Honhai plans to establish factories producing large-size LCDs and high-performance ICs in the US and China by applying Sharp’s technology. Honhai also is promoting sales of Sharp’s LCD TVs as a quasi-own brand in the Chinese market and is likely to expand to other global markets. These efforts of catch-up started around 2017 or 2018. Therefore, it will take more time to evaluate their results precisely. If these trials succeed, Honhai will be able to strengthen its business base and the catch-up process will be almost complete.
Based on the case study of Honhai, we deduce that a typical pattern of catch-up for a latecomer firm is to first establish a vertical division of labor with a first-mover firm and later acquire the firm to realize a vertical integration. This is still a tentative theory, however. We will have to conduct other case studies to verify it.
Currently, Honhai has revealed that it is focusing on three new industries: EV, digital health, and robotics, as well as strengthening three other new technologies: AI, IC, and new generation communications. Sharp’s business resources seem to be insufficient for these new businesses. It could be more important for Honhai to exploit the new businesses with Sharp together rather than promote its catch-up by relying on Sharp since the business environment surrounding Honhai is rapidly changing. We would like to explore this issue in another setting.