Graham Rankin writes: Walk down the High Street and the choice of products seems overwhelming. Should you buy a Nokia, Sony-Ericsson, or a Motorola phone? An iPhone or a Palm Pre? Or what about an X-Box 360, a Wii, a Playstation, a PSP, a DSlite? Or a Sony Vaio laptop? Well, you might think it is a freedom of choice, except that all this stuff is made… by one company, Taiwanese giant Hon Hai, mostly in its factories in Shenzhen, China (although it has factories all over the world, including sites on the US/Mexico border).Now, let us walk down that street again. Imagine removing all the confusing branding and putting a huge Hon Hai logo on the front of every Apple store. We go into mobile phone shops and re-label every phone of the above makes with a Hon Hai sticker. And everything I have mentioned also gets a Chinese flag next to it for country of origin, if we can insist on it being displayed for once. Now everything becomes much clearer. The choice consumers think they have is actually an illusion. All games consoles made by the same company – some even in the same building. More than half of the phones in phone shops – the same company.
Terry Gou, the multi-billionaire founder of Hon Hai, likes a challenge. Currently he has even gone against Warren Buffet’s favourite Chinese car builder, BYD, over intellectual property rights in a Chinese court. Some people even think Steve Jobs of Apple owes his reputation to Mr Gou because he continued to deal with China after Tiananmen Square and paved the way for Apple’s huge outsourcing project to source almost everything it sells from Hon Hai in China (and a few others like Quanta). The low costs and pacified labour built the goods that Mac and iPhone devotees associate with a certain freedom and independence. Keeping the image of Hon Hai and Apple separate is essential to this project, which so far has been a brilliant marketing success. The launch of the new iPhone 3G S came only days after the Tiananmen Square anniversary, but very few people connected the two events. Especially the people stood in the queues outside Apple stores.
When people think of Steve Jobs and Bill Gates perhaps they should also think of Terry Gou. He is not quite as rich (worth only $2bn) but unlike the other two he does actually make things. It is not all plain sailing to world domination though. To cut costs in a recession, he’s had to lay off a seventh of his workforce and consider outsourcing some Chinese production to Vietnam (now there’s an irony).
So, let us put things straight with our changed signs and brands. The X-box should be renamed the H-box, the iPhone renamed the HaiPhone, Nokia and Motorola phones become Hokia and Hotorola, the Playstation the Haystation, the Wii the Hii and the Viao the Haio, and so on. The High Street will become the Hon Hai Street. And to round it all off nicely, Steve Jobs could appear at Apple events as the warm-up act for Terry Gou.
Graham Rankin © 2009.For StirringTroubleInternationally