Chapter 13 12. Guo Taiming: The sun may rise from the west in a crisis

Guo Taiming is the richest man in Taiwan. He is known as the new god of management in Taiwan after Wang Yongqing. He led Foxconn to grow into a trillion-dollar enterprise within 30 years and became the "king of global foundry". In 1950, Guo Taiming was born in Taipei, Taiwan, China. His father was from Jincheng, Shanxi, and his mother was from Yantai, Shandong. After arriving in Taiwan with the Kuomintang, his life was extremely unstable. The life of the six members of the family was borne by his father who was a policeman; in 1966 Admitted to the "China Maritime College"; after retiring from the army in 1974, Guo Taiming worked at the dock and was responsible for the business of scheduling.After receiving an order for plastic electronic components this year, I founded "Hon Hai Plastic Enterprise Co., Ltd." with 75,000 yuan from my mother, and started my business in a rented 70-square-meter factory building. In the face of the global oil crisis, the price of raw materials rose sharply. One year later, the partners withdrew their capital, and the company was supported by Terry Gou alone; in 1976, he made his first pot of gold and had 500,000 yuan in his hand. Someone mobilized him to buy land Or buy raw materials to make money, but he still went to buy mold equipment. The mold factory has been losing money, but the price of the land and raw materials has increased several times. Guo Taiming has no regrets. It is the mold making that laid the foundation for the company's early Competitiveness; In 1985, Terry Gou held a five-day strategic seminar to fully enter the field of computer connectors, and established business contacts with major computer companies such as IBM and Apple in the United States. In October 1988, Guo Taiming decided to invest in Shenzhen, mainland China, and initially built an "ocean factory". business. In 1990, relying on the success of investing in the mainland, Guo Taiming's "Hon Hai" came to the fore, with several times the scale, successfully listed in Taiwan, becoming the number one computer connector company in Taiwan and the sixth in Asia; in 1996, Guo Taiming transferred to the computer Case production, received an order, went to Shenzhen Longhua to look at the land, stood on a high place and shouted: "I want all the land I can see"; in 2000, Hon Hai became the world's largest computer manufacturer, and then entered the mobile phone field , two mobile phone giants, Nokia and Motorola, have become his OEM customers; in 2004, Foxconn was not only the number one technology manufacturer in Taiwan, but also became the global OEM king instead of Flextronics; starting from a connector, Guo Taiming entered the computer, mobile phone , game consoles, DVD, digital cameras, program-controlled switches, network equipment and other 3C fields, the top three corporate giants in these fields are all Foxconn's OEM customers.In addition to mobile phones, Foxconn has a market share of more than 35% of the global market in every field of products involved.Guo Taiming said boldly: "I have no competitors in my field!" In recent years, Foxconn has entered the new 3C field of automobiles, channels, and digital content.

Guo Taiming said: "Failure is the best teacher", but he seems to have no record of failure; Guo Taiming said: "Success is a terrible thing", but he has always been successful. Viewpoint: There are booms and busts in the world economy, and there is no way to avoid them.There is no such thing as a boom in the economy, only a question of competitiveness.Regardless of whether the boom is coming or not, some will grow and some will fail; no matter whether the boom is good or bad, some will lose money and some will make money. The test of running a business is not only that the business leader can lead the company through the crisis when it encounters a crisis, but more importantly, it is the emphasis on daily operations. Terry Gou can expand against the trend during the downturn and lead Foxconn to become the world's OEM King, without the emphasis on daily operations, for an OEM company, those achievements are almost impossible tasks.

background of the crisis In 2000, the boiling global Internet industry bubble burst. In 2001, the global economy fell into a downturn due to the impact. The IT industry was particularly affected, and Foxconn, which is an IT electronics OEM, inevitably suffered a greater impact.Guo Taiming described the situation at the time and said: "The recession in 2001 was rare in the past 20 years. Europe, the Americas, and Asia were in decline at the same time. Generally speaking, the previous economic downturn was a push wave type, and the recession in the Americas, Europe is on the top; Europe is in recession, Asia is on the top, but this year all three regions are in recession." This shows the severity of the recession at that time.

The market situation in the first and second quarters of 2001 was already very tragic. In the third quarter, people were anxiously looking forward to the improvement of the situation. People in the industry had different views on whether the industry’s prospects could recover. Zhang Zhongmou, Chairman of TSMC I think that the third quarter should bottom out and pick up, and Chunyan will return.However, Guo Taiming believes that the third quarter is not the lowest point of the boom, and will continue to bottom out, and the depth of the water is unpredictable. The industrial structure is changing, and it is necessary to deal with it as soon as possible. 2001 will be a "hard landing", not a "soft landing".

At the general meeting of shareholders on May 31, 2001, Guo Taiming boosted morale in the group in the face of the economic downturn. Guo Taiming said: "When the world economy has booms and recessions, you can't hide. But In my opinion, there is no such thing as a boom in the economy, only a problem of competitiveness. Regardless of whether the boom is coming or not, some people will grow and some will fail; no matter whether the boom is good or bad, some will lose money and some will make money." ": "If this year's revenue is less than NT$100 billion, I will kneel down to everyone." Guo Taiming's reasoning is very simple. When there is a recession, if someone falls, the left order will belong to the winner.In addition, during the downturn, major IT manufacturers tend to plan carefully. In order to reduce costs as much as possible, they have increased the amount of outsourcing orders, which has brought more order opportunities for OEMs like Foxconn.

Against this background, through "reverse integration", Terry Gou led Hon Hai (Foxconn's parent company) from Asia to the world, achieving the realm of "two-site R&D, three-zone design and manufacturing, global assembly and delivery", with "deficit Accepting orders and shipping in black” by accepting orders at a lower price than competitors, reducing costs and saving costs through efforts in all aspects of manufacturing and marketing, with competitive prices and the principle of “caring more about customers than customers themselves” In July 2001, Foxconn's foundry Intel chip connector passed Intel's testing and inspection, and the quality of the prototype fully met the standard, and Foxconn obtained the OEM production license.In the same year, Foxconn received an order for Sony's game console PSP, and entered the mobile phone industry at the same time. In 2002, it also obtained an order for Intel P4 connector, which further consolidated the manufacturer relationship with Intel. In 2003, Foxconn also won orders from Nokia and Motorola, two rivals in the mobile phone market, and gained a larger market share of mobile phone OEMs.During this period, the order volume of Compaq, Dell, Hewlett-Packard, Cisco, Apple, Sony, Nokia, Motorola and other companies contracted by Foxconn has increased significantly.

In 2001, Foxconn's revenue exceeded NT$150 billion, and it became the largest manufacturer in Taiwan. Guo Taiming led Foxconn to overfulfill the annual revenue of NT$100 billion set in the middle of the year.For this reason, Guo Taiming compared Foxconn at this time to "a lone goose in the cold winter". This recession has been going on for several years. In 2004, the global oil price hit a record high in 10 years. Even high-profit and high-growth IC design companies are no longer sought after by investors. The US NASDAQ index, which symbolizes the rise and fall of global technology stocks, It fell into a trough again in 2004, falling from a high of 2,700 in 2003 to around 1,400.Stocks such as Taiwan Quanta and Baoren have all hit record lows.However, Guo Taiming turned the crisis into a turning point by improving his own competitiveness. In the past few years of recession, Foxconn has been making great strides all the way, expanding with a compound growth rate of more than 50% every year. In 2004, it surpassed Flextronics and became the global foundry king.In addition to the rapid growth of the company's revenue performance, Foxconn's stock in Taiwan has also risen sharply.Since Foxconn’s stock was listed in Taiwan, from the perspective of the parent company’s return on shareholders’ equity, except for the period from 1990 to 1993 when it was lower than 20%, it has been above 26% since 1994, and it has been greater than the return on assets every year. .

Foxconn's stable and rapid growth during the downturn is just fulfilling another view of Terry Gou on the issue of prosperity: "The economic downturn is a test for enterprises. All enterprises must survive the survival of the fittest in the end, and they have to go through a process during the period. , It’s like pushing a boat with the current, everyone can do it, it’s just a matter of speed; in a recession, it’s sailing against the current, it’s a test of ability, some people will succeed, some will make progress, and some will be eliminated. It will intensify the process of natural selection and survival of the fittest."

Perspective: Businesses around the world are undergoing a structural shift.Who can stand out in this process depends on your efforts and efforts over the past few years. "How to harvest depends on how you plant." Regardless of whether it is an individual or a company, one must always "be the best of oneself". This is probably the most important capital for a company to make a smooth transition when the industry is undergoing structural adjustments. It is an important bargaining chip to seize opportunities, enter new fields, and take advantage of the trend to expand. background of the crisis

When the economy is sluggish, it is often the time when the industrial structure begins to change, and the structural change means the arrival of new opportunities. In this case, the ability to judge the prosperity becomes a kind of business wisdom of the business leaders. Performance.Guo Taiming has always paid attention to the ability to survive and develop in a recession, and believes that "the years of prosperity test a company's ability to 'grow', and the years of recession test its ability to 'survive'", but he also emphasized that in addition to hard work, there is more It depends on years of layout and hard work.He said: "Enterprises all over the world are undergoing structural changes. Who can stand out in this process depends on your efforts and efforts in the past few years." '."

Therefore, in the downturn, Foxconn can often go against the trend and enter a new industry because it can make structural adjustments in advance. When entering a certain industry, Foxconn is not going to drink what everyone thinks is the most valuable , the most nutritious "first taste soup", and often enter when everyone is already fighting to the death and the industry is already in recession.Entering the mobile phone industry is a typical example of Foxconn entering the recession. In the mid-1990s, with the rapid development of the global wireless communication industry, major international manufacturers leveraged their advantages in capital, talent, technology, marketing, and marketing to conquer cities and territories around the world; as competition intensified, major international manufacturers began to actively cultivate local supply The business system and agent system; Immediately afterwards, China’s domestic telecommunications reform was intensified, and the market pie became more and more attractive. Many domestic manufacturers were divided into three groups. Food, or transform into a marketing agency to share the surplus profit, or transform and connect with the international supply chain to strive for meager profits.Faced with such a fierce and chaotic industrial situation, some senior executives within the Foxconn Group have a high voice to immediately enter the mobile phone industry, but Guo Taiming is not moved and is not in a hurry to enter. Guo Taiming has always believed that "to be world-class if we want to do it", this has almost become the basis for his sizing up the situation and strategic thinking.Because many of his peers were caught up in the boom due to their aggressive entry into new industries, Guo Taiming warned those senior executives who wanted to enter the mobile phone industry immediately: "It takes three years of practice to grow rice, but it only takes ten minutes to put on lipstick." Terry Gou clearly knew that what Foxconn needed to do at that time was first to strengthen the joint research and development capabilities and vertical integration capabilities accumulated in the previous personal computer industry, and continue to strengthen its own advantages in key components and standard modules; It is to collect failure cases in the industry and learn from failures, so that once you enter in the future, you can bypass the minefield and go straight to the core goal. Consistent with Guo Taiming's view, a Foxconn executive once described Foxconn International Holdings Co., Ltd. (FIH), which is in charge of the mobile phone business, as "a newborn calf looking for food amidst challenges and opportunities."And made an interesting analysis on the competition and living environment faced by this calf: the field of global wireless communication is the grassland in front of FIH, which is vast enough, so it must delimit its own grassland.The scope of the pasture is also its target market, and the title deed of this pasture is still held by a large international factory. However, if FIH is not allowed to graze, the pasture will not have high productivity.The outcome of the competition is obvious: the livestock capacity of the grassland at this time seems to be declining, and new cattle herders from the edge of the Gobi desert are rolling towards the grassland where FIH is located; in addition, those non-cattle wolves are not far away wandering.The subsequent performance of Foxconn mobile phones completely reproduced these descriptions. It was not until 2000, when the economic downturn continued to decline, that Foxconn officially entered the mobile phone OEM market.Just as Foxconn has entered other markets, Gou has replicated his "highly vertically integrated" model in the mobile phone business.Start with components first, and then gradually move into the assembly of the whole machine.With the successive construction and production of Shenzhen Longhua factory, Beijing factory and Hangzhou factory, Foxconn's mobile phone production capacity has begun to take shape. In 2003, Foxconn successively acquired EIMO Group, Nokia's main casing supplier in Finland, a Motorola factory in Mexico, and network communication equipment manufacturer Guodian.And after cutting into the OEM market of Nokia and Motorola, Foxconn has risen rapidly in the global mobile phone OEM market.In addition, the early deployment in the mainland led to the recession in 2000. When the major mobile phone manufacturers turned their attention to China, Foxconn had already taken root in the mainland. Manufactured so that it can suck up orders with surprisingly low quotes, allowing itself to inflate rapidly.The mainland has become the support point for it to grasp the overall situation in the recession.And finally let Foxconn's mobile phone manufacturing as a new industry in recent years, once it comes out of the mountain, it will gallop all the way to the front, and take off the crown of the global mobile phone OEM king in one jump, allowing the industry to once again appreciate the world's manufacturing overlord. style. In 2005, when Foxconn International Holdings Co., Ltd. (FIH), which was in charge of the mobile phone business, was listed in Hong Kong, domestic mobile phone companies were falling into an unprecedented trough. The market share continued to decline, companies suffered huge losses, and many companies were forced to withdraw.This downward trend began when the mobile phone industry reached its peak in 2003 and has not stopped until 2007. In February 2005, FIH was listed on the main board of Hong Kong with a listing price of 3.88 Hong Kong dollars and an initial public offering of approximately 3.27 billion Hong Kong dollars. By the end of 2005, FIH's share price had climbed to 11.6 Hong Kong dollars. Guo Taiming said, don't ask others about the prosperity, but ask yourself who knows best. "Prosperity is no longer a problem. It should be to understand your own competitiveness. Understand your international competitiveness, where your strengths are, test yourself, and make a five-year or ten-year plan. Whether the economy is good or not is best known to yourself. "The seeds of opportunity for entering new areas during a downturn were planted five, ten years ago. Viewpoint: "When the economy undergoes structural changes, the sun may not rise in the morning but in the evening, or it may rise from the west instead of the east. Against the background of major changes brewing in the global economic structure, the past and inherent The thinking is outdated, it must be discarded, it must be changed.” Everything is possible.When the crisis comes, when the global economic structure is undergoing major changes, when the old thinking and methods can no longer allow enterprises to resist the impact of the crisis and the disruption brought about by the changes, the only thing that enterprises must do is to do, It is to abandon the past, change yourself, and achieve a new self. background of the crisis The impact of the world financial crisis in 2008 on the world economy exceeded many people's expectations. Although shortly after the crisis came, Guo Taiming said that the severity of the economic downturn was three times worse than people expected. The worst moment has not yet come. The high-tech industry has been more sluggish than many expected.However, as a product supplier of many well-known high-tech companies in the world led by Guo Taiming, the Hon Hai Group, known as the "global foundry king", may be affected more than he expected. amazing: According to the financial data for December 2008 released by Hon Hai Group in January 2009, the operating income was NT$122.15 billion, a decline of 18%.Hon Hai Group's annual revenue in 2008 was NT$1.473 trillion, a year-on-year increase of 19.1%, but it failed to achieve the goal of 30% annual revenue growth expected by Guo Taiming. In 2008, Hon Hai's non-consolidated operating profit in the first three quarters was 22.14 billion Taiwan dollars, down 12% from the same period in 2007, and its operating profit margin fell from 3.1% to 2.1%. first decline in years.As Foxconn, which once accounted for 30% of Hon Hai's profit, its net profit in the first half of 2008 fell by 56% compared with the same period of the previous year, of which revenue in Asia fell by 24%.As Hon Hai's boss, Terry Gou's worth has also been affected by the stock market fluctuations caused by the decline in profits. His personal wealth has dropped from the highest NT$324.66 billion to NT$86.225 billion, and his wealth has shrunk by nearly 3/4. Behind the digital changes is the reduction in the number of orders after the global electronics market was hit by the financial crisis.As the world's largest electronic product OEM, Hon Hai Group has always been known for its excellent manufacturing management capabilities and the best vertical integration capabilities. The cost is lower than others, and when the economy is good, no one can beat Hon Hai, the orders are endless, and the gross profit is very high.However, when the orders cannot meet the production capacity, not only a large number of assembly factories are idle, but also the equipment depreciation utilization rate of parts factories is generally low. This will increase the proportion of fixed expenses in revenue, and the gross profit rate of the entire Hon Hai Group is bound to decline sharply. The sharp reduction in orders, the decline in gross profit margins, and the severity of the crisis stimulated the "global foundry king". Under such severe circumstances, Guo Taiming, who had announced that he would retire to the second line after his wedding, came out again. Just after Christmas in 2008 , I came to the Longhua headquarters of Foxconn Shenzhen, a subsidiary of Foxconn, and held Foxconn's year-end national internal mobilization meeting to mobilize everyone to meet the most severe challenges. When considering the countermeasures, Guo Taiming emphasized that in the past, he was "preparing for danger in times of danger", but now he must "prepare for danger in times of danger", or "think of safety in times of danger", especially "thinking of danger in times of danger".In his opinion, "In the economic chaos, the competition among enterprises is no longer how many things you do right, but how many mistakes you do less. You must do fewer mistakes. Now the consequences of doing wrong things are more serious than you It has a much greater impact on the consequences of things." Based on this, Guo Taiming announced the Hon Hai Group's global layoff plan to increase revenue and reduce expenditure, further effectively integrate the group's resources, and implement the reduction of "dead assets" (idle assets), "dead inventory" (overstocked inventory), and "bad accounts" (accounts receivable). The "Three Stays" policy, to further improve cost control, and at the same time make important strategic adjustments. In terms of increasing revenue and reducing expenditure, in addition to cutting 20% ​​of the operating expense budget in 2009, relying on the preferential tax system provided by the third-tier cities in mainland China, we will carry out a large-scale relocation of employees in the production base—reducing the number of employees in Shenzhen Longhua Factory from 260,000 to 100,000. People, turned to bases such as Wuhan in Hubei and Jincheng in Shanxi.As early as June 2008, Foxconn had signed an agreement with the Xiamen Municipal Government to choose Xiamen Haicang to build a new industrial base.In addition to establishing production bases in 17 cities with different product categories in mainland China, Hon Hai is also actively deploying globally following the footsteps of customers, taking India, Russia and Brazil out of the "BRIC countries" as a In recent years, it has become a new target of key business investment.However, driven by "cost" and "scale", the expansion path of Foxconn, a low-margin OEM company, is encountering a "ceiling" in the recession. With major changes brewing in the global economic structure, the past and inherent thinking are out of date and must be discarded and changed." It is proposed to change the inherent thinking of employees, especially senior leaders, and focus on cultivating three kinds of thinking: one is innovative thinking.It is necessary to innovate thinking and abandon the so-called successful experience of the past.The second is the thinking of Guangshen Expressway.When looking at problems and doing things, you must have breadth (the mind is thousands of miles away) and depth (the mind is as thin as silk); when making decisions and making decisions, you must have a height, and you must stand tall to see far; then you must be fast, without hesitation Indecision.The third is the thinking of leading by example.As a supervisor, you must take the lead, charge forward, and bravely lead the team out of the predicament.Guo Taiming hopes that Hon Hai will change from pure OEM thinking to market thinking. After these adjustments, Guo Taiming said: "When the economy undergoes structural changes, the sun may not rise from the morning but from the evening, or it may not rise from the east but from the west. Past experience cannot be used as your current reference. The problems you face are not something that your past experience can tell you how to solve. Against the backdrop of major changes brewing in the global economic structure, the past and inherent thinking is outdated and must be abandoned and changed.” Crisis is turning point, but also That is to say, everything is possible. In the face of the crisis, the key to the problem is as it is said: abandon the previous thinking and experience, and change the thinking to cope with the transformation of the economic structure.