Manufacturing News

Foxconn in new distribution drive

Hon Hai Precision Industry Co Ltd, also known as Foxconn, plans to drive a renewed push into distribution via a new headquarters in Shanghai where construction started on Thursday.

Terry Guo, chief of Foxconn, Apple Inc's main manufacturer, said that the business model of the company's new e-commerce services will be unprecedented, providing clients with "one-stop" services. He didn't give specifics on the plan but accused existing e-commerce business models in China of "burning money".

Speaking at a news conference in Shanghai, where he also answered questions on the controversial issue of labor treatment and Apple Inc's upcoming iTV, Guo said the move underscores Foxconn's determination to extend its business from manufacturing into distribution.

Foxconn has long wanted to enter the distribution sector, where margins are typically higher than in manufacturing, but has so far achieved little success. In 2009, Foxconn invested 90 million yuan and set up e-commerce website e-feihu.com. Three years later the site still lags a long way behind industry leaders such as 360buy.com and taobao.com. In September 2009, Guo formulated a blueprint aimed at establishing its own distribution network in mainland China by setting up 10,000 chain stores. The plan is little mentioned now.

Guo admitted that the former push "failed" and added that "failure is the mother of success".

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