Terry Gou Moving Hon Hai Production Lines from Shenzhen to Kaohsiung
Exclusive Interview
Against the backdrop of rising punitive tariffs on electronics made in China, can Taiwan look forward to becoming a manufacturing hub for high-end Foxconn network communication equipment and servers?
Hon Hai/Foxconn Technology Group Chairman Terry Gou, who is competing for the presidential ticket of Taiwan’s major opposition party the Kuomintang (KMT), revealed in a recent exclusive interview with CommonWealth Magazine that his company is planning to relocate production lines from Shenzhen and Tianjin in China to Taiwan’s southern port city of Kaohsiung. The following is a translated excerpt of the exclusive interview:
Q: Why should people choose you as their president and not another candidate?
A: The person who is most suitable to serve as Taiwan’s future leader needs to be able to solve two major problems.
The first is the ability to find a peaceful economic counter policy that allows us to gain advantage from both sides as we remain wedged between two strong powers.
You have read my speech in which I said I would reshape the supply chain. Normally, we speak about rebuilding the supply chain, but what I mean to say is “reshaping” it, just like molding plastic.
Now everyone says (Hon Hai/Foxconn) should relocate production lines to the United States. China is such a huge market; why on earth should I move them?
After I recently began to build a factory in the United States, I discovered that the American supply chain is insufficient. We have 20,000 employees in Mexico. Therefore, we are now sorting out which products we will produce in Mexico, which we will make in the United States, and how we can use the free trade agreement between the U.S. and Mexico to that aim.
We have factories in Houston and Indianapolis. We are now reshaping all their supply chains. In the past, the U.S. did not attach importance to local workers, now Trump greatly values them. That’s why he wants all factories to relocate back from abroad, and we are helping him to do this, which is the reshaping of supply chains.
In my present situation as an individual, I am weak. If I am elected president of the Republic of China, I will bring companies from all over Taiwan to the United States, because the U.S. is after all still the ultimate high-end market.
The problem with the United States is that they don’t have enough skilled workers.
Regarding that part, I will help the United States reach [the goal]; why else would I talk about a win-win-win situation between the United States, China and Taiwan?
Taiwan makes a profit, and the United States achieves its goal. Achieving its goal means “Make America Great Again.” I think Trump wants to be reelected; there’s no doubt about that. If Trump serves another four years, then Taiwan can lend him a helping hand when he reshapes the supply chain.
I believe that we need to work with the United States, helping them reshape the supply chain and train skilled workers again, when we design Taiwan’s entire economic structure from the top echelons. Then the United States will become more affluent; they will buy more products from us. Moreover, at least the United States won’t copy our things.
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Serving as Chairman of Tech Island Taiwan
Q: Many “Taishang” (China-based Taiwanese companies) have recently been returning to invest in Taiwan because of the trade war between China and the United States. What is your stance on this issue? Does Hon Hai/Foxconn have a concrete direction on that?
A: I must say the current return of the Taishang is a mediocre backflow. In economic science this is called a comparative advantage. It means that, if I return now, will the situation improve? Will it be cheaper?
But if I am the president of the Republic of China, then I will be the president of all of Taiwan, because I won’t be the chairman of a company but the chairman of high-tech island Taiwan.
How can I not sing the praises of my own company? Alright, I will set an example, and in the future everyone can join in.
(I have said before that Taiwan’s future leader must be able to solve two major problems). The second is that we need to transform mediocre supply chains as well as high added value supply chains. We need to create vertically and horizontally integrated industry value chains. I am still working on this slogan.
I am not moving old stuff back; that would be mediocre growth. I will bring in new technology. That’s different.
Relocating Production for Export of High-end Network Communication Equipment and Servers to Taiwan
Now, there are a few things we won’t able to manufacture in China (because of the trade war) such as servers, network communication equipment, a lot of high-end stuff we manufacture in Taiwan. We currently have a factory in Taoyuan.
Moreover, I have a very large project in the Kaohsiung Software Technology Park. We will go down to Kaohsiung within the coming month to decide on a factory site. When I briefed Mayor Han Kuo-yu the other day, I mentioned that I will make Kaohsiung our hub, our gateway.
We will probably move back all production for export, including a factory in Tianjin and a part of our factories in Shenzhen. We won’t relocate factories that produce for the Chinese domestic market. This is vertical and horizontal integration. When I went to see Mayor Han last time, I let him take a look at this plot of land, and now that he has seen it, we need to decide to build a factory.
We are in the process of doing all these things. When this (the Kaohsiung factory) is done, we will ship our things to the United States, Japan and other places except China. We will use this base (as a production base) for our high-end products, all kinds of cloud networking equipment and servers.
If I become president of the Republic of China, I will definitely tell Trump, place production for all the products that you can’t produce in China in Taiwan. And, of course, I will encourage the next Hon Hai/Foxconn chairman to move back some more production lines to Taiwan.
Translated by Susanne Ganz
Edited by Sharon Tseng
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