A year after Hon Hai takeover, Sharp back in black as staff come to grips with meritocracy

A year after being sold to Hon Hai Precision Industry Co., Sharp Corp. has achieved a sharp recovery in earnings under the meritocracy-based culture of its new Taiwanese parent.

In a message to employees Thursday, Sharp President Tai Jeng-wu, who was sent from Hon Hai following the acquisition, emphasized that what he thought had improved the most over the past year was the employees’ attitude toward reducing costs.

Before the acquisition, Sharp was facing financial difficulties stemming mainly from its sluggish liquid crystal display operations. The led to a group net loss of ¥255.9 billion in fiscal 2015 ended in March 2016, and a negative net worth that saw it demoted from the first section of the Tokyo Stock Exchange to the second.

In fiscal 2016, however, Sharp posted its first operating profit in three years and a net loss that had shrunken to only a tenth of the preceding year’s.

The operating profit, despite a fall in sales, can be traced to cost-cutting efforts under the Taiwanese president’s initiative. He scrutinized individual spending on items of ¥3 million or more by himself.

Tai now aims to expand Sharp’s overseas earnings because he is dissatisfied with its performance abroad. From this month, he will directly oversee its foreign operations.

So far, Tai has led Sharp’s re-entry into the TV market in Europe and visited business bases in Southeast Asia this summer.

Speaking to reporters in Taipei on Friday, the day before the first anniversary of the ownership change, Tai mentioned a goal of raising the ratio of overseas sales to total sales to 80 percent from the current 68 percent, with a target of ¥3.25 trillion in sales for fiscal 2019.

But Sharp’s employees seem to having a difficult time getting used to Hon Hai’s culture, including the emphasis on meritocracy. Depending on the degree of contribution to earnings, their bonuses now range between a month and eight months’ worth of salary.

In a survey Sharp conducted on 11,000 workers, Tai’s management style was highly rated. But 15 percent of the employees voiced discontent with the personnel system and many called for fairness and clarity in personnel evaluations.

A Sharp employee described the president as a “strict person who is thoroughly achievement-oriented.”

Tai plans to put more energy into explaining matters to employees, informed sources said.

In the meantime, as Sharp is accenting its recovery by showing interest in helping others.

Tai has expressed a willingness to provide support to struggling Japan Display Inc., one of its rivals.

In an interview on Thursday, Tai said Sharp cannot form a merger or make direct investments without breaking the antimonopoly law but noted that “there are many ways” to provide support.

He is confident that Japan Display, a major manufacturer of small and midsize liquid crystal panels, will be able to rebuild itself if Sharp helps, emphasizing that his assistance will allow Japan Display to return to the black.

Tai said Sharp and Japan Display should pair up to create a Japanese alliance capable of competing effectively with Chinese and South Korean LCD panel makers. He said what Hon Hai Precision Industry Co., the Taiwanese contract electronics manufacturer that controls Sharp, fears most is that its LCD technologies will fall into the hands of Chinese manufacturers if they invest in Japan Display.

If Sharp leads Japan Display’s restructuring, this will not happen, Tai said.

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