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EXCLUSIVE: Sharp Subsidaries Face The Axe Distributor Model Mooted For OZ

Foxconn Technology has said that they are set to close “inefficient” Sharp subsidiaries, ChannelNews understands that Australian operation will survive for six months before a decision is made on its future.

According to Foxconn sources Sharp management have been given the job of deciding which subsidiaries will stay and which ones will go.

A Foxconn source said “If a subsidiary is unprofitable it will not survive”.

Joe Constantino the Deputy Managing Director of Sharp Australia has refused to comment. He has become so concerned about his own future that he recently called in lawyers to try and protect his reputation. He has insisted that all requests for comment are made via his lawyer.

ChannelNews has also been told, that a group of current and former management from Sharp Australia. are looking at the concept of pitching to Foxconn and Sharp management in Japan the concept, that Sharp Australia should move to a distributor role.

The group is believed to be costing the setting up of a distribution operation with Sharp as a foundation brand.

Insiders who are close to the group said that they believe that Sharp TV’s and appliances can be successfully sold in Australia.

They claim that a slump in sales of the Sharp appliances business and their exit from the TV market was “solely because of poor management”.

A leading Australian distributor has already met with Foxconn management in Taiwan, regarding the Australian subsidiary, that has seen consumer electronics and appliance sales slump from close to $100M to less than $30M in five years.

They said that the decision regarding the future of Sharp Australia, rests with Sharp regional management who are looking at the concept of one Distributor Company taking over distribution of Sharp products for the entire Asia Pacific region including India, Australia, Malaysia, Singapore, Hong Kong, New Zealand and Vietnam and several other Countries in the region.
Sharp Corp was recently acquired for US$3.5 billion by Foxconn who at this stage is “More interested in getting Sharp’s display business sorted, than having to address sales of TV’s and appliances” said one informed source who has spoken at length to Foxconn.

“All Foxconn are interested in is profitable subsidiaries. “They know and have read about the problems the Australian subsidiary is facing. The move to new offices is all about trying to deliver profits, however Foxconn are smarter than that and what they want is growth and profits from sales not someone rearranging deckchairs”.

Terry Gou, Foxconn’s founder and chairman, said at the Taiwanese company’s annual shareholder meeting last week that he plans to accelerate commercialization of Sharp’s patents to help turn the business profitable.

“Sharp has lots of technology but it isn’t able to market it,” he said. “Turning patents to technology, then turning technology to products, that’s what we are good at.”

Foxconn, formally known as Hon Hai Precision Industry, is the world’s largest electronics contract manufacturer and a key supplier for Apple and other major brands.

Mr. Gou said Foxconn has completed legal aspects of the takeover and new management will oversee Sharp starting next month.

He said that Foxconn plans to close some of Sharp’s redundant and inefficient overseas operations, including some sales joint ventures, Mr. Gou said.

“Sharp has too many subsidiaries, which results in too much overhead,” he said.

Foxconn posted in May a 9.2% decline in first-quarter net profit to $848.2 million, as growth slowed in the global smartphone market.

Mr. Gou said Tuesday that the company faced challenging market conditions, including a trend of growing protectionism in many countries.

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