|Designed in the US, manufacturing logistics determined in Taiwan, made in China.|
In the value-added chain, then, Taiwanese occupy the middle position. They don't quite harvest the largest profits like Apple does by virtue of having a commercial monopoly on a globally recognized brand name. At the same time, they aren't just stuck with the grunt work either which is Chinese manufacturing, Rather, they represent fairly sophisticated middlemen who are able to translate others' designs into production on a large scale together with distribution to key consumer markets such as North America. Their place in global value chain governance is thus modular or relational in that they are able to deal with complex transactions given their formidable and expanding capabilities as suppliers. According to Terry Gou (founder and chairman of Foxconn - Hon Hai Precision, the world's largest OEM concern):
Our company grew from being a mere EMS (electronics manufacturing service) provider, or assembler, quite a while ago. Today we do upstream processes for our customers. For instance, we provide BlackBerry with IIDM (innovative integrated design manufacture) services, in which we take over from the product planning. We also work with the Canadian company in sales in Asia as well as customer support. We make our own smartphones under the InFocus brand by engaging in all stages, from planning to sales, and this helps to bolster our IIDM service.
Foxconn aspires to become a high-tech service company for the information age. We do not have to be a brand name. The business results of brand companies justify that. Except for a handful of them, these companies haven't generated sizable profits.Quibble if you will with his business practices, but few would doubt that Terry Gou knows what direction to take his business in. He is obviously a smart guy, and the other Taiwanese aren't too far behind. BTW, kudos to Nikkei Asian Review for another fine article with this interview. It is becoming a go-to source for Asian business news.
In the information age, a long-established brand can't necessarily retain consumer trust and adoration. Tesla Motors of the U.S. is a case in point. Its history is far shorter than that of Toyota Motor, or Germany's Daimler and Porsche. Nevertheless, Tesla cars are gaining popularity against those brand automakers at bay area. I myself own two Teslas. The vehicles offer a totally new driving experience.