Nikkei Asian Review: ”Japanese company needs to drop arrogant stance to survive”

Sharp’s head office in Abeno Ward, Osaka

”………………TOKYO — Sharp decided Thursday to accept a takeover offer from Taiwan’s Hon Hai Precision Industry, becoming the first major Japanese electronics maker to be acquired by a foreign company.

While Sharp will seek to resurrect itself under the umbrella of the Taiwanese contract electronics manufacturer also known as Foxconn, the key to successful rehabilitation will be the ability of the Osaka-based company to drop its arrogant stance.

 Foreign support for auto industry

Sharp faced a choice between Hon Hai’s takeover bid and support from a state-backed fund. While a variety of rumors regarding terms for bailout investment and rehabilitation plans have swirled around the negotiations since the start of this year, one particularly bothersome issue has been the seeming allergic reaction to Hon Hai on the part of Sharp and other Japanese concerns.

The Sharp board had maintained a cautious stance on Hon Hai’s takeover bid, because the Taiwanese company failed to deliver on its 2012 pledge to invest in the struggling Japanese company.

Sharp has proprietary cutting-edge technologies for devices such as liquid crystal displays and duplicators, which its Japanese rivals worry about losing to a foreign company. It may be understandable for Japanese government officials to fear that the Hon Hai deal will result in Japan losing the technologies to an Asian rival.

But how would the Sharp board, the state-backed fund Innovation Network Corp. of Japan and government officials have reacted if a leading U.S. or European company, instead of Hon Hai, had made the takeover bid? Had it come from a company like Apple or General Electric, they might have wholeheartedly welcomed it……..

…Takeover deals by foreign companies occurred in the globally renowned Japanese auto industry in the 1990s as Ford Motor bailed out Mazda Motor, and Renault invested in Nissan Motor. Business partners and employees of the Japanese automakers, though concerned about restructuring, did not show a bizarre allergic reaction to the foreign carmakers. Government officials may have felt the same way.

Ideas and activities of companies should be permitted free range unless they pose a threat to the security of a country or to the safety of its citizens or to social rules. And there is no “nationality” for them. In this respect, the presence of emerging companies in Asia and other regions cannot be brushed aside.

The rise of emerging businesses gives dynamism to their industry even if they are in an unrefined state. Japanese business managers will lose a large number of management options if they keep looking at American and European companies while disregarding Hon Hai and other Asian companies as business partners….

…As an important approach to remove them, Sharp should stop looking down on Hon Hai.

Major Japanese electrical and electronic equipment makers have led Japan’s postwar economic growth, along with automakers. They have woven respected technologies and established brands. Sharp is one of them but now finds itself in hot water as it has ridden its past success instead of looking to the future.

There may be generational differences in sentiment toward Hon Hai among Sharp employees.

“Young people may prefer Hon Hai,” a Sharp executive said when negotiations between the two companies were underway. “They may be considering that they can improve their abilities if they accumulate business experience [with Hon Hai] around the world.”…  ”

Read full article here: http://asia.nikkei.com/Business/Companies/Japanese-company-needs-to-drop-arrogant-stance-to-survive?n_cid=NARAN012

Source: Nikkei Asian Review

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