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Foxconn's Terry Gou bids farewell to shareholders as chairman

Tycoon turns to politics, but his influence over tech empire remains

Foxconn's Terry Gou speaks during a press conference on June 21 in New Taipei, Taiwan. (Photo by Ken Kobayashi)

NEW TAIPEI, Taiwan -- Foxconn's Terry Gou, after 45 years of running the tech empire he founded, said goodbye to shareholders and employees Friday morning in his final official appearance as company chairman.

The Foxconn boss will be succeeded as chairman by semiconductor business chief Young Liu, who was widely expected to take up the post.

As the 69-year-old tycoon handed the company over to the nine-person committee who will run the company in his place, Gou reassured the 3,000 shareholders and employees present at the annual general meeting that they were in good hands. "I have faith in them. They will do better than me," Gou said as he gave the microphone to new board director Lu Fang-ming and left the room.

Gou has declared a bid for the opposition Kuomintang nomination to run in Taiwan's presidential election and he will spend the next few weeks on the campaign trail.

He began almost immediately after handing over on Friday, taking advantage of the crowds who turned up to bid him farewell. Hundreds queued for photographs and many even followed him to the train station.

Employees held up banners reading "Chairman Gou, I love you" and "Go! Go! President Gou!" and shareholders shouted "Dong xuan! Dong xuan!" meaning "Get elected!" in the Taiwanese dialect.

Gou wasted no time in working the crowds with smiles and politically-charged sound bites. He continued to downplay Foxconn's ties with China, deflecting suggestions that the company's business interests there could make him -- and Taiwan -- hostage to the will of Beijing

"Our clients are top 100 companies in the world, if China dares to ban us from shipping things, who else in the world would want to make an investment there?" said Gou.

Apple, his company's biggest customer, should move more of its manufacturing to Taiwan, he said. "I am calling on Apple to come to Taiwan [to invest]... I think that's very possible," Gou said.

While Gou insisted he had nothing more to do with Foxconn's day to day management, his influence will continue to be felt. He remains on the board and is the the biggest shareholder. "It is worth noting that the members of the nine-person committee are all executives that Gou trusted and is close to," said one insider. "He can always call to them to get the latest updates about the company."

While the tech tycoon's imperious style of management may not be missed by some at Foxconn, his association with the company is so strong for most of its employees and senior executives that it is hard to imagine the company without him.

"I don't like our boss, but I want to be there to bid him farewell," said an employee, one of nearly a million Foxconn group workers worldwide.

Gou's military style guided Foxconn through the disruptions of the 1997 Asian financial crisis and the 2008 global panic. A spate of worker suicides in 2010 put an uncomfortable spotlight on the working environment at the company's sprawling factory in Shenzhen, China. Now, his departure to pursue politics comes as Foxconn faces another challenging moment.

Terry Gou greets well-wishers after this year's annual shareholders meeting. (Photo by Ken kobayashi)

Despite logging record high revenue in 2018, Foxconn saw its net profit drop for the second consecutive year because of slowing iPhone sales at Apple, its biggest customer. China's Huawei Technologies, one of the five clients with the fastest growth, was put under a de facto ban by the Trump administration from using American technology amid the protracted U.S.-China trade war.

Gou founded the company in 1974 in suburbs of New Taipei City with $200,000 New Taiwan dollars ($6,465 at current rates) of initial funds from his mother. In his early days as an entrepreneur, Gou often brought only two sticky-rice balls for his daily meal and rode his old scooter to deliver products.

"One day when he rode the scooter he had a car accident," a Foxconn executive told the Nikkei Asian Review. "But instead of going to the hospital, he rushed to deposit money before the bank closed so his checks could be cashed."

"He was covered in wounds and dirt, but he chose not to go home and instead went to his factory to get bandaged and slept there overnight so his wife would not worry about him getting injured," the executive added. "I really don't see anyone who could work that crazily like him."

Over the years, Foxconn, which trades as Hon Hai Precision Industry, has grown into a manufacturing empire, generating annual revenue of NT$5.3 trillion, which operates factories in 16 countries.

The group is one of the world's top five employers by staff numbers and China's largest employer. Its market value has ballooned 100-fold to more than NT$1 trillion since it listed in 1991 on Taiwan Stock Exchange. Gou has become Taiwan's richest person, with a net worth of $7.3 billion according to Forbes.

For 45 years the company was under a virtual one-man rule. Many senior Foxconn executives have the experience of being made to stand quietly for hours before the famously short-tempered Gou for making small mistakes.

"The first rule of working at the chairman's office is to wear a pair of shoes with thicker soles. I had an experience of standing in his office for hours so that my legs went completely numb," an executive said.

"We've got used to asking no questions when he demanded we do something. No one can stop him when he's determined to achieve something," another executive said.

The company last week held its first-ever investors conference to introduce the new board candidates.

"The key message that Foxconn wants to deliver at the investor events is to reassure shareholders, especially foreign investors that hold a big chunk of Foxconn, that the company will be in good hands without Gou being the chairman," Chung Hsi-mei, a business administration professor at I-Shou University, told Nikkei. Foreign investors account for more than 40% of Foxconn's share ownership, stock exchange data shows.

"The introduction of the succession plan and the 9-person operational committee are moves that Foxconn is entering the post-Terry Gou era. But we believe Gou is still the key influencer for the company," said Chiu Shih-fang, a smartphone and supply chain analyst at Taiwan Institute of Economic Research. "The fact that he avoids talking about Foxconn during his campaign but constantly comments on the U.S.-China trade war suggests that he really cares how that development could impact the company," the analyst added.

I-Shou University's Chung said: "There is no way for Terry Gou to step down so quickly... It is more like he is taking a back seat but will still oversee corporate strategy."

"It makes no difference to us whether Young [Liu] is the chairman or what the setup of the operational committee is, because we all know that there is only one BB [big boss], and that is Terry," said a source inside Foxconn.

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