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Sharp still wonders if its Taiwanese CEO has a vision

Sharp President Tai Jeng-wu responds to reporters in Tokyo.

TOKYO -- Tai Jeng-wu, the hard-charging president of Sharp, is leading a heroic, cost-cutting reform effort to turn around the beleaguered electronics maker. But he has yet to inspire his charges with a vision of a prosperous future.

During the afternoon of Nov. 1, when Sharp announced its earnings results for the April-September period, Tai sent a message to all employees setting an ambitious -- possibly too ambitious -- goal.

"Making our business profitable earlier than the original target time is a challenging goal," he said. "But there is no excuse for our failure to achieve the goal."

The new target is a net profit of 3.6 billion yen ($35.3 million) for the period from October through this coming March.

With the message, Tai has put his company and himself in a do-or-die situation. The move has also created a decisive leadership test for the Taiwanese executive, who has been preaching the "walk the talk everyday" gospel since taking over the company's rudder in August.

Even Terry Gou, the go-getting chairman of Taiwanese contract manufacturer Hon Hai Precision Industry, the owner of Sharp, has settled for much slower progress in returning the Japanese company to profitability. Gou has given Sharp two years to post a net profit.

But Tai, the No. 2 man at Hon Hai, better known as Foxconn, has made a net profit in the first half year of his leadership a "must achieve" target.

He has told employees that Sharp will have no future if it fails to strike this target and gets stigmatized as an untrustworthy company. "Each and every employee must be determined and committed [to achieving the goal]," he said.

Five years since it tumbled into a serious financial crisis as its liquid crystal display business fell on its face, Sharp is now striving to regain profitability. Foxconn sent Tai to oversee the Japanese icon and injected 388.8 billion yen into it.

Tai had done business with Japanese companies for years. A fluent Japanese speaker, he is probably better equipped for the job than anybody else at Foxconn, where his nickname is "Japan Sensei," or "Master of Japan."

Tai is also known as a workaholic, regularly putting in 17 hours a day.

On Aug. 21, a Sunday, when he started working at Sharp in earnest, Tai showed a roughly 40-page document he had drafted himself to some 100 executives during a meeting held in the company's headquarters in Sakai, Osaka Prefecture.

The document, entitled "Management Policy," described his plan to overhaul the money-losing company. It includes detailed reforms he intends to push through in such areas as personnel affairs and procurement. The document will "grow to 100 pages long," he said.

The turnaround plan has already been revised and expanded and is now longer than 50 pages.

Calling it a "bible," Tai is using the document as a whip to spur employees to step up their efforts. "We will achieve the reform goals one after another," he has told Sharp's workforce.

"Tai does everything himself," one senior Sharp executive said. "He is completely different from his predecessors. The mindset of employees is beginning to change."

The minimum amount of expenditures that must be approved by the chief executive has been sharply reduced to 3 million yen from several hundreds of millions.

That means Tai has to examine a huge number of spending proposals before they get the green light. Or the red: He often, for example, shoots down plans for TV commercials for products of questionable effectiveness.

Before the acquisition, Tai said Sharp was like "the son of rich parents."

He has been loyal to his message of frugality. He stays in the company's corporate dormitory near its Osaka headquarters. He tells people around him that he can save about 100 million yen a year simply by economizing on his own business travels.

Where does his itinerary take him? To suppliers and other companies. On Nov. 1, while announcing earnings results, he pledged to review Sharp's "unequal contracts" with its business partners.

Sharp has signed many deals under unfavorable terms in desperate efforts to cut costs and secure necessary funds.

But canceling long-term parts procurement contracts would cost Sharp dearly; breaching contracts usually entails massive damage payments.

Tai is especially keen to undo a deal in which Sharp sold its TV business along with its brand in North America to Hisense, a Chinese maker of household appliances.

He has proposed buying back the business, but the top Hisense executives who have heard him out went on to reject the proposal.

Tai has not given up, saying there is room for reviewing the contract because Hon Hai has some clout with the Chinese company.

Meanwhile, Tai has criticized former President Kozo Takahashi, other members of Sharp's old management team and the company's leading creditors for certain management decisions they either made or approved.

Tai believes he has to take full responsibility for reviving Sharp and find his own answers to the raft of challenges facing the long-stumbling company.

The CEO likes to visit the company's factories to check out how things are on the shop floor.

After graduating from university, Tai joined Tatung, a major Taiwanese maker of electric products, and served a stint in Japan.

In the 1970s, he learned about Japanese-style production management at a semiconductor line of a Japanese company on Sado Island, Niigata Prefecture.

Tai joined Hon Hai in 1986, then went on to become Gou's right-hand man as he pulled off some large supply contracts with Sony and other companies. His production management skills also helped him climb Hon Hai's ladder.

Along the way, he picked up a cost-cutting and restructuring ethos that he is now trying to impart on Sharp employees.

Tai says Sharp's past is marked by empty promises and wasted opportunities. The company failed to carry out most of the reform plans it developed in the past, he points out, saying, "I will change this."

Because of his strong commitment to carry out his promises, however, Tai decided against announcing the new medium-term business plan slated to be unveiled this autumn. He did not want to announce a management target he lacked confidence in.

But the decision has dispirited some employees. "We don't see a vision for future growth," one employee lamented. "I'm not sure whether the president has one."

A senior executive says Tai is good at cutting costs but is incapable of dreaming big, inspiring employees or giving them hope.

Perhaps, though, this is because Tai is fighting an uphill battle to eliminate the massive waste left over from years of mismanagement and strategic mistakes.


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