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June 23, 2017

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B2B e-trading platform to be launched by Hon Hai in March: sources

TAIPEI--Hon Hai Precision Industry Co., the world's largest contract electronics maker, will launch a business to business (B2B) trading platform in early March, a move perceived as a way for the company to broaden its business model, market sources said yesterday.

The sources said Hon Hai Chairman Terry Gou made an internal announcement before the Lunar New Year holiday, saying that the company will gear up to develop its electronics commerce business this year.

As the first step for the new initiative, Gou has instructed his company to develop B2B e-trading business by launching a platform called B2B, the sources said.

The sources said Hon Hai started the development of the B2B platform in the second half of last year, which will become a venue for selling semi-finished electronics products in the initial stage.

Hon Hai declined to comment on the launch of the e-commerce trading platform.

The sources said that Hon Hai has ambitions to transform itself into a commerce-oriented company from a manufacturing heavy weight by selling its products by itself, and that the B2B platform is expected to help the manufacturer reach this goal.

They said Hon Hai is not satisfied with its manufacturing prowess and technology development strength, but aims to develop its commerce operations in a bid to provide value-added services to its clients.

To facilitate the e-commerce development, the new business will be supervised directly by Hon Hai's headquarters, while the company will coordinate its subsidiaries in a bid to develop their e-commerce platforms, they added.

Meanwhile, the sources said Gou has also instructed the group to reinforce its internal management, while Hon Hai will forge closer business ties with the manufacturers in its supply chain.

The sources said Hon Hai will continue its efforts to seek clients aiming to sell their products in the regional market.

Hon Hai is planning to build a plant to roll out cellphones and related products in Indonesia, possibly in central or west Java, but the location remains undecided. The Taiwanese firm will use the plant to penetrate the populous Southeast Asian market.

Hon Hai plans to work with Indonesian 3C retailer Erajaya Swasembada to seek greater business opportunities.

Gou said Hon Hai sticks to a goal of posting a 15 percent increase in consolidated sales for 2014, adding that his company is likely to post higher earnings in 2013 than 2012, when its earnings per share stood at NT$8.03 (US$0.26).

In the fourth quarter of last year, Hon Hai's consolidated sales hit a record high of NT$1.33 trillion, up 44.64 percent from the third quarter, on the back of the launch of Apple Inc.'s new iPhones and iPads. Apple accounts for more than 40 percent of Hon Hai's totalsales.

Amid optimism toward orders placed by Apple, Merrill Lynch has raised its target price for Hon Hai shares to NT$107 from NT$101.

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