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The real face of Terry Gou

Foxconn Chairman Terry Gou answers press questions following a meeting at the Sharp head office on Feb. 5, 2016.

TAIPEI -- There are several ways you could describe Terry Gou. Some call him "dynamic," some say he is "driven." But there are two Chinese words that really encapsulate the character of Hon Hai Precision Industry, or Foxconn, founder and chairman. One is "baqi," meaning "driven" or "eager", the other is "qinglian," or "cleanliness," which describes someone who is financially principled, uncorrupt and renounced all forms of nepotism.

     Gou's motto is "Effort, effort and more effort. Appreciate the work in hand not for material gain and fame, and rise to the challenge." And there is a lot more to the man than a lot of people imagine.

Charming receptionists

Many wonder just how Foxconn managed to expand its product line. The answer is a simple one: It was Gou's hunger.

     As a young man, Gou found a job in a shipping company after studying ship operations management at vocational school. When he set up Foxconn in 1974, he did not limit operations to his area of expertise. Instead he went for businesses that he believed would succeed, starting with plastic rotary switches and buttons for TV sets and games consoles.

     The oil crises of 1970s and the recessions brought the early venture to its knees. One friend who had invested startup capital left the management team completely. At the lowest point, Gou's wife could barely afford rice to feed their children. Her parents had to lend Gou money to get by.

     At that point, he became acutely aware that metal-molding technology would be a direct path to product differentiation and set about looking for products that could help him improve the technology while also turning a profit.

     Then he came across connectors for parts and input-output devices on printed substrates for personal computers. After entering the market around 1983, he initially struggled to control the defect rate. In order to better spot and resolve problems, he moved his desk next to the plant's automation controls. When Japanese connector maker Toyo Tanshi -- now Sumiko Tec -- began to experience financial problems, Gou brought a number of Taiwanese employees on board.

     Showing nothing in the way of ego or self-importance, he would often approach total strangers, such as employees of his competitors and suppliers, to "humbly asked for advice," said a Foxconn insider. Befriending the receptionists at his competitors came naturally to him, but he was not seducing them with his good looks. "He knew he wouldn't get any help if he just tried to take advantage of them. He did little things, like bringing tea when they were busy, talked with them about what he wanted and got the necessary information, such as who the key people were and when they would show up," said the source.

     How he talked and what he said is a bit of a mystery, but it seems he has changed little since his beginnings. He gives his all when a gap in communication needs bridging, giving him a certain aura which people are drawn to. He raises his voice, laughs occasionally and talks about what he believes, leaving nothing untouched, even if that means going off on a tangent from time to time. When he speaks, he captivates his audiences.

The bare bones

Once his company reached a certain level, Gou began expanding abroad. Making sales calls in 32 U.S. states, staying in cheap motels, he won a significant order from Compaq Computer -- now HP Inc. His new customer also made a passing inquiry about metal cases for desktop computers.

     Jumping at the opportunity, Gou bought machine tooling systems from Japan. But his lack of knowledge in the field showed. The tooling was more expensive than what Compaq was prepared to pay and he found himself faced with the prospect of failing to recoup the investment.

     The risk was eliminated with a new business model. By reducing overall costs for computer parts, not just the cases, he wrestled manufacturing allocations away from competitors. Specifically, he invented the "bare-bones" module for desktop computers, and supplied Compaq.

     The bare-bones module lacks expensive parts, like the microprocessor and hard disk drive. It made sense for Compaq for two reasons. First, it could postpone the purchase of expensive parts until the very last minute. At the time, parts were getting cheaper by the day with the spread of personal computers, meaning it could reduce costs for expensive parts.

     Secondly, the waste in shipping empty cases could be eliminated by filling them with basic systems.

     The model brought on what the industry called the "Compaq shock," which quickly eroded prices for personal computers and broke the de facto monopoly that NEC had on the Japanese personal computer market.

Apple's Power Mac G5 debuted in 2003.

     Apple saw Gou's hunger, and put their faith in him. Around 2002 Apple was in a bind, unable to find a reliable supplier of aluminum-alloy cases for its Power Mac G5. No machine could process the aluminum alloy suitable for tower-style personal computers.

     While other case-makers hesitated, Gou "forced a doubling of the company's use of auto-body metal-processing machines for computers to meet Apple's needs. He was involved in the development work full time for two months," said the Foxconn source.

Scandal-free

The second keyword that best describes Gou is "cleanliness," and refers to his seemingly uncorruptable nature. Some people might assume a tycoon of his standing could only be a bad guy. Nothing could be further from the truth.

     In 2005 Gou went through a period of great sadness after losing his first wife, to whom he entrusted everything. When he eventually remarried, to a choreographer in 2008, the couple decided to give 90% of his personal wealth to charity.

     Gou has been making large public donations for about 20 years, including 15 billion New Taiwan dollars ($462 million) for cancer research at the National Taiwan University. He also made two donations of NT$ 100 million to the relief effort for the earthquake and tsunami that hit northeast Japan in March 2011 -- one from Foxconn and one from his own pocket.

The main building of the Ci-Hui Temple in New Taipei City, where Gou lived till he finished middle school.

     Gou's employees are paid generously, but he spends relatively little on his own private life. When dining out, for example, he eschews high-end restaurants in favor of his favorite dishes -- grilled beef on rice or a humble bowl of soba buckwheat noodles, a fancy he puts down to his father's roots in Shanxi, China's buckwheat capital.

The names of Gou and his family members are carved into a dragon ornament at the Ci-Hui Temple.

     Gou is notoriously strict with members of his family. When he caught his younger brother, a Foxconn employee, leaning against a machine tool asleep, he reportedly woke him up with a few gentle slaps to the face.

     Neither of his children from his first marriage have much interest in working at Foxconn head office. His son works in the group's film-production and real-estate operations, while his daughter took over the charitable organization her mother ran.

Lessons from hardship

Gou's hunger and principles are products of his upbringing. His parents were immigrants from mainland China. His father never moved from his tiny home, even when his children became the richest people in Taiwan. 

As a high school student Gou lived in police lodgings his father received with his promotion and relocation.

     Gou's parents and sister left Shandong Province for Taiwan in 1949 after the Chinese Civil War and Gou was born a year later. His father was a police officer, but his housing was not provided for and the family was crammed into the corner of a Taoist temple next to the station. 

     Growing up as an outsider meant he picked up several languages. Gou's mother-tongue was the Shandong dialect. At primary school he learned Taiwanese Mandarin and spoke the Heluo dialect of Taiwan while playing with friends. Often finding himself singled out by native Taiwanese peers, Gou learned to stand up for himself from an early age. Since he first entered the U.S. market he has spoken English with customers and business associates.  

Tomohiro Otsuki is president of Taiwan-based consultancy Techno Market Research. As a writer for Nikkei Electronics, he began following Foxconn nearly a decade ago and has interviewed Terry Gou many times.

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