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Hon Hai's Terry Gou forecasts tough times
Publication Date : 24-05-2012
Terry Gou, who controls an electronics manufacturing empire that employs more than one million workers in China, predicted tough times ahead for the world due to economic turmoil.
Gou, chairman of the Hon Hai Group, said that judging by information from the group's European retail chain partner, the situation in Europe is “really bad”, according to a magazine interview published yesterday.
According to the Chinese-language interview, he also predicts that conditions in the United States will definitely be bad in 2013 after the presidential election.
Gou said he thinks that the US government will sooner or later adopt a third round of quantitative easing (QE3) to boost the economy. He said that if US President Barack Obama's contender mounts a strong presidential campaign, the QE3 will come sooner.
The Taiwan-based tycoon also forecast that exports from China will turn even weaker.
Hon Hai's operations accounted for 5.8 per cent of all exports from China in the first quarter of 2011, but this year, its share grew to 6.7 per cent in the first three months, without the group's export value growing much, Gou said.
Gou said it is an indication that China's overall exports have been weaker than Hon Hai's.
Hon Hai, known as Foxconn internationally, is the world's biggest electronics manufacturing service provider with most of its factories in China.
It is the main manufacturer of Apple's iPhones and iPads, and reaped revenues of NT$3.4 trillion (US$115 billion) last year.
Because of the group's global partnerships, Gou is in a strong position, allowing him to know and predict the markets.
Gou said in the interview that Asia, particularly China, is expected to be the driver of growth in the future, as Europe and the United States' manufacturing sectors will remain weak.
He said Hon Hai is also looking to transform its operations, as manufacturing is a sector plagued by worsening conditions.
"You have to worry when there are orders, and you have to worry when there aren't,” he said, describing the woes of manufacturers.
The first step of Hon Hai's transformation is to raise the salaries of its more than one million workers in China, turning them into an important group of consumers in the country.