Foxconn is listed: B-side transformation and C-side ambition outside "OEM"

In the process of Foxconn's transformation, in addition to upgrading its advanced manufacturing capabilities through the Industrial Internet, it is also actively exploring its own branded roads. The C-terminal dream continues.

In 1988, Chairman Guo Jianming of Foxconn Group visited the Shenzhen Luohu District. Eight years later, Foxconn Longhua Technology Park began to piling; 30 years later, on June 8, Foxconn Industrial Internet Co., Ltd. formally debuted, landing A-share market, referred to as Industrial Rich. In the same day, the market value reached 390.6 billion yuan.

At the time of Foxconn’s 30th anniversary of its investment in the mainland, Gou said on June 6th at the annual forum that Foxconn is facing the transitional phase of the historical integration of the “real economy + digital economy” in the deep integration of the Internet, and his transformation direction for Foxconn planning is Industrial Internet and industrial riches will also play a leading role in the transformation of the parent company Hon Hai Group's other sub-groups.

Foxconn wants to become an industrial Internet platform company, and its benchmark BEACON platform is GE's Predix. Comparing with the global industrial Internet platform, Chen Yongzheng, chairman of Industrial Fulian, said in an interview with a 21st Century Business Herald reporter: “Industrie 4.0 is industrial plus service, connecting equipment; the United States’ information service is the strongest, and Industrial integration; our Chinese industrial manufacturing starts from the industry, and now industrial technology capabilities and manufacturing capabilities are still in the early and middle period. The automation of industrial upgrading requires robots, sensors, and intelligence to collect information.”

In the process of Foxconn's transformation, in addition to upgrading its advanced manufacturing capabilities through the Industrial Internet, it is also actively exploring its own branded roads. The C-terminal dream continues.

Industrial Internet B-side business

In fact, in the eyes of the Chinese people, Foxconn has almost been upgraded from a large, ordinary company to a cultural symbol. The impression of this cultural symbol is complex and vague. As the world’s largest foundry company, it has grown as the iPhone dominates the world. However, public opinion on Foxconn's two issues has always lingered, and will be accompanied by long-term lingering for a long time.

The first question has evolved from a serious public relations dilemma into a lacy news - large-scale negative comments on Foxconn's sweatshops, which have a hard blow to corporate image. The second question is about Foxconn’s industrial status.

The eager desire for core technology rather than production technology after the ZTE incident has made many public opinion's comments on Foxconn not polite. Because getting a higher P/E ratio means more core competitiveness, but for now, Foxconn does not seem to have a higher ceiling, at least in the impression of the general public and investors.

Foxconn has never been single-line combat. Its products cover most electronic products such as mobile phones and computers in addition to chips. Today, the Industrial Internet has become the new profit growth point sought by Foxconn, which is also an upgrade based on the original manufacturing industry and an extension of the business model. In a nutshell, Foxconn will output its capabilities such as unmanned factories and intelligent production to SMEs through its industrial Internet platform, and provide industrial-grade system solutions.

According to Chen Yongzheng, the layout of the Industrial Fulian is collected from core data and extends to the cloud network layer, platform layer, and application layer. As early as 2015, the company began to develop BEACON, an industrial Internet platform that aims to collect production data and equipment data through terminal sensors on the production line, realize comprehensive monitoring and prediction of manufacturing equipment and manufacturing processes, and collect and integrate data. Processing, classification and analysis.

Industrial Fulian has laid out layouts for industrial robots, machine vision, numerical control machine tools, communication gateways, high-performance computing, edge computing, and other intelligent equipment and underlying technologies. Chen Yongzheng said: "The company has actively introduced the BEACON platform at various sites, established the Foxconn Industrial Cloud, and established unmanned factories throughout the country, with 60,000 industrial robots."

Zheng Hongmeng, general manager of Industrial Fulian, told reporters of the 21st Century Business Herald: "The industrial Internet will have a future volume of 500 billion U.S. dollars and 82 trillion U.S. dollars. It is now 100 times the value of the consumer Internet. It is cut into 100 industries and is now more than any one. The value of the consumer internet is big."

On June 7, the Industrial Internet ushered in a dividend of a wave of policies. The Ministry of Industry and Information Technology released the Industrial Internet Development Action Plan (2018-2020) and the Industrial Internet Task Force's 2018 Work Plan. The action goal is By the end of 2020, an industrial Internet infrastructure and industrial system will be initially established.

The industrial Internet needs stronger software capabilities and Internet strength. For Foxconn, which specializes in hardware manufacturing, hard and soft integration is a major challenge. On the other hand, if you really want to increase the brand value, Foxconn will need to shift more to the consumer industry and build a terminal brand.

After years of exploration

From the perspective of the existing business model, Foxconn has been an out-and-out To B company for the past 30 years, serving the downstream consumer goods company To C. Foxconn hopes to expand its industrial chain into the consumer goods industry. This should be the dream of any Chinese OEM company. Foxconn is one of the few capable people.

Foxconn has several important nodes in its own brand building. In April 2016, Foxconn acquired Sharp, but at that time, Sharp continued to lose money. Like other Japanese electronics companies in the golden age, it faced fierce competition and forced transformation. It was not a full-fledged asset. In May 2016, Microsoft sold Nokia brand and mobile phone software services to Foxconn. On June 5 this year, Japanese media reported that Sharp is negotiating with Toshiba to acquire Toshiba's PC division at a price of approximately 5 billion yen (approximately US$45.5 million). If this acquisition comes true, Foxconn will be able to enter the three To C consumer products fields in TVs, computers, and mobile phones through Sharp.

In the TV field, Sharp has strength and after returning to the Chinese market in 2017, Foxconn launched 8k TVs with Sharp, also in order to enter the To C consumer industry. Recently, Sharp and Ori’s Le Di robots have entered into strategic cooperation and entered the early education market. At the same time, Rich Connect, as a Sharp agent, has also transformed into a Foxconn smart home Internet platform and is gradually moving to the front desk. Foxconn Group Chief Marketing Officer Yuan Xuezhi told 21st Century Business Herald reporter that Rich Connect.com has integrated Foxconn's e-commerce platforms such as Feihu.com, and is now not only responsible for the market operation and promotion of Sharp, Nokia, Infocus and other brands, but also added services. Content, manufacturing and other different sections.

In terms of mobile phones, Foxconn plans to build its own mobile phone brand in the short term and intends to become a consumer-oriented To C business enterprise in the future. In the long run, even if the mobile phone market declines, Foxconn hopes to reach out to consumers in the front line and acquire cutting-edge product capabilities instead of waiting for other To C companies to develop products and hand them over to Foxconn, but Sharp currently holds the mobile phone industry. The rate is still low.

It is not easy to fight in the Chinese mobile phone market. The three most important links in the mobile phone industry are brand, market layout and production capacity in order of importance. Foxconn currently has only strong production capacity. Each company has its own strengths. For example, Xiaomi is very prominent in the brand, through the design of driving products, and relying on the founder Lei Jun personal brand endorsement to obtain low-cost brand promotion; Huawei is very strong in market layout and production capacity Brand power is also at the forefront. Among the three capabilities, the most likely to be overlooked is the market layout, including online access to customers and offline channels, marketing cost control, which requires a professional team to respond quickly. Even Xiaomi, a company that has been very agile to the market, has been stumped in the channels from 2015 to 2017 and has had to quickly change the bow to open an offline experience shop. It is rather ridiculous that the production capacity is the second most important among the three. This is why the OEMs have done the hardest work but have the lowest profit margins.

The exploration of the terminal brand also means that there is a competing relationship between Foxconn and the customer. How to establish a brand barrier at the C-term and a greater profitability breakthrough at the B-end must be broken.

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