Foxconn's Gou Takes Just 50 Days to Decide His Biggest China Investment in a Decade
Yicai Global
/SOURCE : Yicai
Foxconn's Gou Takes Just 50 Days to Decide His Biggest China Investment in a Decade

(Yicai Global) Jan. 3 -- Foxconn Technology Group founder Terry Gou said on the last workday of 2016 that he plans to invest CNY61 billion (USD8.77 billion) to build a television flat-panel screen factory in Guangzhou, the tycoon's biggest investment in mainland China in 10 years. It took just 50 days to reach the deal.

At the signing ceremony, Gou said Guangzhou's leaders had communicated with him many times before over a period of 28 years, hoping for him to invest in the southern Chinese city, but talks would break down due to various reasons. The eco-industrial park is expected to be completed within one and a half years.

According to the deal, Sakai Display Products Corp. will set up in the city's Zengcheng district to make large 8K ultra-high-resolution liquid crystal displays worth CNY92 billion a year. As SDP's largest individual shareholder, Gou said the displays will bring a revolution in areas such as the internet of vehicles, entertainment and medical care, and expects the market value to reach CNY35.8 trillion.

Explaining the reason for such a swift decision on the investment following talks with Guangzhou municipal government, Gou said, "You can see the efficiency of the mainland government and officials, the government's commitment to the economy and importance attached to high technology."

As Chinese firms increasingly build factories in the US, Yicai Global asked Gou whether he'll move his production center out of mainland China and whether the manufacturing costs of an Apple smartphone are cheaper in the US or in China. He smiled and avoided answering the second question.

"For the first question, I can say that Foxconn didn't run away," he said. "It will stay in mainland China. The best evidence proving that Foxconn will not run away is that I settled the best technology in Guangzhou." In fact, Gou's Guangzhou investment is a key step for him to address his attitude to both suppliers and cooperators.

Son-Trump meeting

On Dec. 6, the head of Japan's Softbank Group, Masayoshi Son, met with President-elect Donald Trump in the US. When meeting reporters afterward, Son showed materials from the meeting that included the name of Foxconn, the world's biggest contract maker of consumer electronics including Apple's iPhones and iPads.

The next day, Hon Hai Precision Industry Co., which trades as Foxconn, issued a statement saying it was assessing potential investment opportunities in the US and would be conducting further talks with relevant parties in the US. Outsiders took it as a sign that Foxconn may 'run off,' leaving China. Gou told Yicai Global that he does not yet know whether the company will set up factories in the US.

"The new US administration hasn't come into power and new policies also haven't been released yet," Gou said. "I'm sure that all of you have seen that the negotiations for this Guangdong project lasted no more than 50 days and the importance attached to high-tech by the government."

Gou said China's government has released policies forcing the real economy back to substantial businesses while eliminating irrational virtual ones, and the combination of both virtual and real businesses is just the right direction. However, he has no idea whether the US government has been aware of this key. Gou will continue to invest more in mainland China.

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