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.
In the Philippines since the 2000s, the authorities in charge of maintaining local order, such as local governments and the police, have strengthened their crackdown on informality. They have strengthened the claim that informality that deviates from the law is a problem that needs to be solved. However, previous studies on informality in the developing world have argued that authorities do not always exercise strict crackdowns. These studies pointed out that the authorities prioritized the goals they were supposed to fulfill, such as maintaining local order, and that minor deviations were tolerated to achieve these goals efficiently.
In explaining the changes in the Philippines in the 2000s, this paper uses the case of electricity theft, which is the use of electricity without paying regular fees. A medium- to long-term analysis was conducted based on newspaper articles from 1986 to 2020 and parliamentary minutes on laws to control electricity theft. The power distribution companies began to crackdown on electricity theft from 1986 on and the percentage of electricity theft was already decreasing in the 2000s. Thus, the incentive for the authorities to participate in the crackdown was considered to be low in the 2000s. However, the authorities began to consider electricity theft as a problem from that period. The factors that led to a change in the authorities’ stance toward informality will be explained by examining this case.
A review of the said newspaper articles and parliamentary minutes revealed the following points. From 1986 to 2000, electricity theft had been seen as a problem by the power distribution companies as it was mainly committed by industrial and commercial users and the elite, causing negative effects on economic growth and higher electricity prices. However, since around 2000, electricity theft has been seen as a problem by the authorities because it is mainly committed by the poor and causes damage, such as fires and accidents. The reason the authorities began to see electricity theft as a problem could be attributed to two factors that arose from the economic growth in the late 1990s. Firstly, the use of electricity by the poor has increased and the proportion of electricity theft by them has also increased. Secondly, the middle-income group, who are highly anxious about damage to their bodies and their property, has expanded. Before 2000, electricity theft was considered to be a problem in an economic context, which did not overlap with the objectives of the authorities. However, since the 2000s, electricity theft has been seen as a cause of fires and accidents, and the authorities that aim to maintain local order have an increased need to crack down on electricity theft to achieve their goals. In other words, it can be hypothesized that the situation discussed by previous studies on informality, where strict crackdown is not implemented as long as the goals of the authorities are achieved, has no longer applied in the Philippines since the 2000s.