Push low price strategy?
Foxconn is trying to win back what Sharp once lost. The reporter learned from Sharp China that Sharp had officially submitted an application to the Tokyo Stock Exchange at the end of June and hoped to return to the East Securities Department as soon as possible.
In August of last year, Sharp was downgraded from Dongzhi Part 1 (equivalent to the Main Board) to Dongchao II (equivalent to a small board) due to insolvency of stocks. After Foxconn entered the game, Sharp realized a turnaround in the fourth quarter of last year. Sharp expects the 2017 fiscal year (as of March 31, 2018) to achieve a profit of 59 billion yen, ending Sharp's loss for three consecutive fiscal years.
However, in the eyes of people in the industry, Sharp's crisis has not been completely lifted. At present, Sharp's losses mainly come from the cost control after Dai Zhengwu took office, and the increase in the price of LCD panels since the second half of last year continued to be high, but Sharp's own continued profitability is still a test.
Return to a
At the Sharp shareholders meeting on June 20, Sharp president Dai Zhengwu stated that he would strive to return from the second floor of the Tokyo Stock Exchange to one in March next year and submit an application to the East Exchange on June 29 or 30. . Dai Zhengwu also said that Sharp will step down as president after returning to the mainboard market.
Sharp China told this reporter that Sharp had submitted an application to the Tokyo Stock Exchange at the end of June. However, when it can return to the first part of the Dongchao Securities, it still needs to be determined according to the review of the Tokyo Stock Exchange. Dai Zhengwu will be responsible for resigning after reaching the mid-term business plan. Since Sharp is a Japanese company, it is better for the Japanese to assume the president in the future, but the president does not necessarily have to serve as a Sharp internal employee.
In March of last year, Sharp fell into a quagmire of loss-making losses. On August 1st of that year, Sharp's stock was downgraded from the East Exchange to a second division. Subsequently, Hon Hai Group acquired Sharp's 66% stake in 388.8 billion yen (approximately US$3.5 billion), and pulled Sharp out of its debt inevitability through capital increase and share placement.
After Hon Hai's admission to Sharp, Terry Goh sent the No.2 figure of Hon Hai Dai Zhengwu as the president of Sharp and tried to revive Sharp. Since then, Dai Zhengwu has stated on many occasions that he would strive to return Sharp to the Eastern Securities Department as soon as possible before the end of the 2018 fiscal year.
After Dai Zhengwu took office, he made sweeping reforms to Sharp and put forward strategies such as rationalizing strategies and investing in areas with potential for development. Sharp achieved losses after two quarters.
Sharp announced in the fourth quarter of last year's earnings report in February this year, Sharp achieved a net profit of 4.2 billion yen (about $ 37 million) in the quarter, becoming Sharp's first profit after the third quarter of 2014. However, Sharp's 2016 fiscal year still suffered a loss of 27.1 billion yen. In May of this year, Sharp expects to achieve a net profit of US$359 million in FY17. If it does, it means Sharp will end its loss for three consecutive fiscal years.
“One or two departments have completely different meanings for enterprises. One represents the mainstream companies in Japan and they have a relatively high threshold. If Sharp wants to return to the second department, it must first satisfy the profitability requirements. The company must have good expectations.†Zhang Jifeng, director of the Economic Department of the Japan Institute of the Chinese Academy of Social Sciences, told this reporter that he believes that Sharp has solved the operational problems after Hon Hai's capital injection and that it is very likely to return to the first part of the Dongzheng Securities. Basically, it can be considered that returning to a part means that Sharp's crisis was lifted.
Open source or throttling?
At that time, Sharp caused continuous losses due to over-investment in its 10th-generation line LCD panel factory, coupled with poor internal operations, overstaffed personnel, and other factors, which plunged deeper into the quagmire of losses.
"Japan's enterprises are defeated in technology because they are winning over technology." Zhang Qifeng said that Sharp's technology is still strong, but the company's business decision-making is slow and cost control is not doing well. Foxconn has good supply chain management and control capabilities, and it has injected new vitality into Sharp.
After Dai Zhengwu took office, he made structural adjustments to Sharp to carry out internal restructuring, divest non-core businesses, and streamline personnel. At that time, media reports said that the total number of Sharp employees decreased by more than 20% from the peak. About 6,000 of them are voluntarily retired.
According to Cui Jilong, senior research manager of Ove Cloud Network Black Power Division, Sharp’s current turnaround from losses is mainly from two aspects. On the one hand, Dai Zhengwu's cost-cutting measures such as streamlined personnel and business restructuring after taking office are "throttling."
On the other hand, panel prices have continued to soar since the second half of last year, but this year it has fallen but is still at a high level, and Sharp is still the only company that has the production capacity of LCD screens with a generation above the 10-generation line. In fact, global panel makers are making profits. This is Sharp's main source of profit, and it is "open source."
Dai Zhengwu also proposed the "open source" move after taking office. In March this year, Sharp and Foxconn jointly invested 61 billion yuan to establish a 10.5-generation LCD TV panel factory in Guangzhou, which is expected to be completed by 2019.
At present, the Sharp panel factory of Foxconn "Shoubao" can not bring real benefits to Sharp in the short term, but will be exposed to the risk of overcapacity after mass production after 2019.
“There are already nine 10.5-generation line panel factories on the market. If they can all be put into operation smoothly in 2019 and around 2010, then Sharp is likely to face excess capacity. This will be very big for Sharp. The challenge," said Cui Jilong.
In May of this year, Dai Zhengwu confirmed that Sharp and Hon Hai will go to the U.S. investment panel factory again. Dong Min, general manager of Owen Cloud Network Black Power Division, said that to treat the new Sharp, we should put it on the level of the entire industry chain of Innolux - Foxconn-Sharp. The current top priority is to realize the panel factory, especially the 10th generation line. The full production of the full sales, thereby enhancing the efficiency and benefits of the entire chain.
Low end route?
In addition to the panel, the color TV business is also an increase in the market value that Terry Guo highly valued. Gou Ming initiated a "Tian Tiger Plan" within Foxconn and asked Foxconn employees to promote Sharp's home appliances.
However, it can be seen that Sharp LCD TV has changed its image of “noble†in the past and prices have continued to decline. According to data provided to our reporter by Ovid Cloud Network, from the first week to the fifteenth week of this year, the average price of Sharp TVs dropped from 6,330 yuan to 3,564 yuan, and the price was almost "backlash."
This price has shown significant growth in sales. According to data from Ove Cloud Network, in the first quarter of 2017, Sharp sold 511,000 units in China, an increase of 42.6% year-on-year. In the “6·18†Online Shopping Festival just past, Sharp TV ranks first in Jingdong Mall’s sales volume, with sales exceeding one billion yuan.
This also prompted people inside and outside the industry to question Sharp's aggressive price war. Some media pointed out that some of Sharp's models do not use Sharp's original production screen, but use the INX screen.
In this regard, Sharp told reporters that this will not respond. However, according to media reports, Sharp said that INX is referring to the Invasive Screen, and the above-mentioned INX screens are all customized according to Sharp's quality standards and clearly marked at the merchandise department.
Innolux is a panel factory under the Hon Hai Group. Cui Jilong said that it is understood that approximately 20% of Sharp's TV screens come from innocent groups. In fact, the Chinese people are more willing to "superstitious" the Sharp screen, but the Sharp screen does not necessarily mean that the quality must be higher than other manufacturers' screens.
For Sharp's low-cost strategy, the head of Sharp China told the reporter that in order to expand the global business, the Chinese market is one of the important markets. Sharp actively develops unique 8K technologies to promote the Sharp brand. In addition, Sharp has also launched a wide range of products, including low-priced products.
In Cui Jilong's view, Sharp's long-term exchange for low prices, in fact, has been damaging its brand image, indicating that its brand positioning is not clear. When the high-end image is affected, it is more difficult to return to the high end.
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