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Tracking Foxconn Chief’s Rise From ‘Dirt City’ to iPhone King

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Foxconn chief Terry Gou at a news conference in New Delhi last year.
Foxconn chief Terry Gou at a news conference in New Delhi last year.

TUCHENG, Taiwan—On a chilly February morning, Terry Gou, the man whose company makes most of Apple Inc.’s iPhones, stood at the entrance of his corporate headquarters in Taiwan clutching a bundle of incense sticks.

The Taiwanese billionaire led his executive team—many dressed in matching navy-blue windbreakers—in a Taoist prayer for good fortune at the beginning of the Lunar New Year. It is an annual tradition, but this year the stakes were higher than usual: Mr. Gou’s Foxconn Technology Group 2354 3.44 % was waiting to see if its ambitious takeover bid for Japanese electronics manufacturer Sharp Corp. SHCAY -10.85 % would be accepted.

“We’ve done our best,” Mr. Gou said, after burning the incense over a table laden with offerings of roast duck, green dates and other delicacies. “Now it’s up to the gods.”

But Foxconn’s chairman rarely leaves much to chance.

The 65-year-old tycoon had in previous weeks used all of his worldly attributes to ambush a rival Japanese bidder for Sharp, waging a bold and passionate campaign that typified his tenacious business style, according to interviews with more than a dozen Foxconn executives, employees and business partners.

The takeover has thrust Mr. Gou and his secretive company into the spotlight. Now the Taiwanese billionaire must prove he made the right bet on a once formidable household brand that needs a strategic overhaul. Turning around the Japanese company—which said on Wednesday it expects an operating loss of ¥170 billion ($1.5 billion) for the fiscal year ended March amid sluggish sales of flat screens and televisions—will be a tall order, analysts say.

Mr. Gou rarely talks to the media, and has said in the past that publicity can alienate customers and aid competitors. Foxconn declined to make him available for this article. The company doesn’t hold investor calls. Its focus on secrecy is such that employees in some departments must submit all their outbound email for screening, employees said.

Longtime associates say Mr. Gou’s unflinching self-belief, attention to detail and militaristic management style are behind Foxconn’s rise.

Mr. Gou is an intuitive entrepreneur and aggressive leader, business partners say, drawing comparisons to Henry Ford with his lifelong pursuit of assembly line efficiency and paternalistic operation of factory towns.

Foxconn operates city-sized production complexes with hundreds of thousands of workers in the Chinese cities of Shenzhen and Zhengzhou, earning salaries above the industry average. Workers live on the campuses, which include everything from their own shopping malls to karaoke parlors. Though Mr. Gou has managed to mostly avoid the spotlight, his company came under sharp scrutiny in 2010 following a string of worker suicides at its campuses.

In the media frenzy that ensued, Mr. Gou pledged better work conditions, hired staff psychologists and made other changes.

Foxconn employees at a rally on the Foxconn campus in the southern Chinese city of Shenzhen on Aug. 19, 2010. The Taiwanese tech company held a morale-boosting, costumed “employee rally” after a string of suicides at its Chinese factories turned a spotlight on working conditions.
Foxconn employees at a rally on the Foxconn campus in the southern Chinese city of...

Mr. Gou built Foxconn into the world’s biggest contract manufacturer, with sales of $139 billion last year, after starting out in 1974 making TV knobs in an industrial neighborhood called Tucheng, or “Dirt City,” a satellite town southwest of Taipei.

Mr. Gou is a “natural salesman,” said Max Fang, the former Asia head of Dell Inc., which first hired Foxconn in the late 1990s to manufacture computer casings. The Foxconn boss had badgered him in 1994 to arrange a visit to Shenzhen for Dell founder Michael Dell, Mr. Fang recalled.

Mr. Gou then took Mr. Dell for an unscheduled detour to his factory while driving him to the airport. He later won Dell orders to make computer casings, Mr. Fang said. “He knows how to approach people and he is very persistent,” said Mr. Fang.

Foxconn’s boss oversees many details of his sprawling company personally, often surprising clients with his knowledge of specifics, said executives familiar with him.

“We could discuss business for days,” said Bin Lin, president of Chinese smartphone maker Xiaomi Corp., a Foxconn client. “It was continuous, 10-hour discussions, 12-hour discussions all the way late at night.”

Mr. Gou’s meetings are famous for lasting all day—or night, business partners say.

“He questioned executives for hours about equipment and technology,” recalled an executive at a Japanese supplier to Foxconn. “The executives were exhausted after his visit.”

Employees follow Mr. Gou’s lead in working six days a week. Managers rattle off his quotes, some of which are posted around Foxconn campuses. One goes: “There’s no difficult task under the heavens, but be afraid of a person with determination.”

The Foxconn boss is known for giving his executives “standing punishment” during meetings and many employees fear his fiery temper, longtime executives said. Those who fall afoul of Mr. Gou’s standards have been castigated as “dogs,” longtime executives say.

“Terry doesn’t take no for an answer,” said one of the executives. One former Foxconn executive, Roland Huang, recalled a colleague on his team once wired $60,000 from his personal bank account to secure manufacturing equipment in an effort to avoid missing his project’s deadline.

Foxconn’s biggest success was winning over Apple, which contributes more than a third of its revenue, according to analysts. Foxconn made major investments to cater to Apple’s fast-changing demands over recent years, including an announcement in November that it will build a new display plant in Zhengzhou, central China. But for all of Mr. Gou’s success in building his own company, his record with acquisitions has been mixed.

Mr. Gou’s last major deal, the $5.3 billion takeover of flat-panel maker Chi Mei Optoelectronics Corp. by Foxconn’s flat-panel subsidiary Innolux Display 3481 -0.88 % in 2010, failed to build a sector leader. Innolux’s shares are down about 80% since the merger. Mr. Gou has also made forays into e-commerce, solar panels and robotics that have yet to generate significant returns.

Through Sharp, Mr. Gou sees a path to supplying iPhone screens, the device’s priciest component, according to people familiar with Foxconn’s plans.

“Terry says, if there is a big enough market in 10 years, go for it,” said Mr. Huang.

—Mayumi Negishi in Tokyo and Sean McLain in New Delhi
contributed to this article.

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Editorial Team
Editorial Team
Keeping a pulse on Asia's aspiring and leading entrepreneurs, Entrepreneurs Asia editorial team brings readers the latest news, interviews, events and other resources that matter.
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