When Foxconn positioned Sharp in the low-end market, the sales of tens of millions turned out to be a poison to quench thirst

After committing itself to Foxconn, Sharp seemed to see the dawn of revival in 2017.

In the context of the overall contraction of the color TV market this year, as the only brand that achieved sales growth in Q1, Sharp is full of confidence in the future and even raised its already difficult-to-achieve annual shipment target of 10 million to 14 million.

However, under the management of Foxconn, whose fundamental guiding principle is "cost down", what will happen to Sharp after its upward trend?

Overdrawing brand value: The halo of "Father of LCD" is fading

Time will ruthlessly crush countless extraordinary memories.

Motorola, the father of mobile phones, has now become an unknown mobile phone brand under Lenovo.

On this point, Sharp, known as the father of LCD, and MOTO share the same bone-eating pain.

Sharp now belongs to Foxconn, a large contract manufacturing company from Taiwan Province of China, a large contract manufacturing company that installs isolation nets in dormitories to prevent employees from jumping off buildings.

Cost reduction is the DNA of Foxconn. As the world's largest foundry, it can earn $4 for every iPhone it manufactures. With its huge volume advantage, Foxconn has reached the pinnacle of cost control for its products.

This is an extremely natural choice. The first step after Foxconn took over Sharp was to give up the brand premium and directly choose price competition. As a TV brand that once competed with Sony, Sharp's 70-inch high-end products are now only priced at 8,999 yuan, and the price of more popular 40-inch products has dropped all the way to the 1,600 yuan range.

At least in terms of price, Sharp is no different from traditional domestic brands. If this is the case, why did Terry Gou acquire Sharp in the first place, and why did he bother to argue with Hisense to take back Sharp's North American rights? Wouldn't it be easier to just find a brand or even create one himself?

Frankly speaking, this is a strategic choice that goes against common sense. When Li Shufu swallowed up Volvo, he did not sell Volvo at Geely prices for the sake of sales. This is not in line with common sense, and the cost is not in line with it.

If one day Volvo is sold at Geely's price, the only explanation is that Geely Automobile has put Volvo's logo on it.

The same is true for Sharp TV, which has fallen from the altar of the father of LCD.

In order to increase sales, Sharp's promotional methods in China are crazy. Buy a 70-inch TV and get a 60-inch TV for free. The price is basically calculated by kilogram. "Japanese big brand, Taiwan rural price" has also become a joke for Foxconn Sharp by some industry insiders.

The brand halo is still there, supplemented by the price. Because the gap between brand positioning and low prices has effectively transformed into a stimulus for consumers, the sales volume of Sharp TVs has been soaring throughout the Q1 market.

However, a crisis worth vigilance has gradually emerged. Foxconn, which has long been a foundry, has been consuming the Sharp "brand" so unrestrainedly. Will Sharp, which has adopted a low-price strategy, gradually transform into a real low-end brand as its brand influence fades?

In fact, the long-term low-price strategy of blindly increasing sales has begun to shake the market's inherent perception of the Sharp brand. Ever since the controversy over "Sharp TVs do not use original imported screens from Japan" circulated on the Internet, consumers have been questioning Sharp.

Sharp officials also made it clear not long ago that "not all Sharp TVs will use original Japanese screens."

In addition, in terms of product pricing, according to data from relevant industry organizations in July this year, the average prices of Sharp's 45-inch, 50-inch and 60-inch TVs in the domestic color TV market were 1,933 yuan, 2,652 yuan and 4,671 yuan respectively, all lower than the industry's average prices of 2,122 yuan, 3,540 yuan and 6,151 yuan during the year. If it were not for the SHARP trademark on the front of the product, it would be difficult for anyone to associate these low-priced products with the brand connotation of the "Father of LCD". Sharp's past high-end brand setting is already on the verge of extinction.

To make an inappropriate analogy, today's Sharp is similar to the Pierre Cardin that is flooding the clothing wholesale market. Students think it looks old-fashioned, young people think it looks tacky, and finally only the price-sensitive elderly people wear it.

The recovery of Sharp's sales is inseparable from the combined effect of "Japanese big brand" and "Taiwanese rural price", but the low-price positioning will inevitably overdraw the value of the brand itself. Over time, when the brand value is overdrawn to the critical point of market recognition, consumers may no longer give Sharp more room for sales growth.

Sharp 8K is both a trump card and a trump card, mainly a trump card

There is no doubt that low-price sales momentum is by no means a good development strategy for the TV industry. Especially for Sharp, which once was known for its high technological strength and high-end brand image, how to stabilize its brand position has naturally become a top priority after choosing a low-price strategy.

The proactive measure taken by Sharp was to release the world's first consumer-grade 8K LCD TV, priced at nearly 70,000 yuan. Although Sharp launched 8K resolution TV products as early as the CES in 2013, considering that 8K is still a blank in the TV field, Sharp still attracted a lot of attention.

For Sharp, 8K is obviously the best choice to enhance its brand image. Not only does it have a solid foundation in LCD technology, but combined with Foxconn's complete industrial chain advantages, 8K TVs can meet the requirements for mass production, demonstrating its strong brand strength in the LCD TV product line.

But for the TV industry, new technologies such as OLED and laser TV are emerging in an endless stream and are becoming increasingly popular, making it difficult for Sharp to keep up with the trend of technological transformation and upgrading in the industry.

Sharp has maintained its product attitude of "LCD after LCD" and has not changed since it joined Foxconn. Increasing the display resolution of LCD TVs to 8K is, in a sense, the only choice for Sharp to gain attention in its high-end product line at this stage.

The LCD technology trump card in Sharp's hand is too good, but Sharp has too few good cards in its hand. Bringing the 8K technology that was demonstrated several years ago but not recognized by the market to the table again is actually both Sharp's trump card and Sharp's trump card. In addition, from the analysis of external factors such as the popularity of 8K content resources, the current layout of 8K lacks practical significance, making Sharp's old 8K offensive full of gimmicks.

"Sharp of technology" has not prepared new technologies to cope with the new changes in the development of the TV industry. After the advent of consumer-grade 8K LCD TVs, this conclusion seems even more convincing. What else can Sharp do in the future to balance its excessive efforts in the low-price market? It seems that this is definitely a question that can make Terry Gou toss and turn.

There is no possibility that Foxconn will pay for "taking losses in exchange for sales" in the long term

It can be seen that the dilemma Sharp is facing today is that after fully committing to the low-price market, it cannot find a long-term and effective way to return to its high-end brand status, which directly leads to it being stuck in the low-price quagmire on the road ahead and unable to escape.

What is more noteworthy is that the sales brought by Sharp's low prices did not bring profits to Foxconn.

Just as Sharp TVs generally cut prices by 20%-30% at the beginning of this year, the TV industry's average profit margin of less than 1 percentage point was completely shattered, and the TV industry's common strategy of "losing money on each unit sold" was used to seize the market. Supporting Sharp's losses behind the scenes has become a huge financial burden for Foxconn.

Recently, Foxconn's parent company Hon Hai released its Q2 financial report showing that its net profit fell 36% from the previous quarter. Among them, Foxconn's operating costs increased by 9.1% in the second quarter. Analysts pointed out that "this is largely because Foxconn Group bears part of the operating costs of Sharp TVs."

So, is Foxconn still willing to continue "transfusing blood" to Sharp?

On this issue, we first need to see whether there is any beneficial side to Sharp's "loss-making deal".

From the perspective of why Foxconn acquired Sharp, the original purpose was obviously to transform, to transform into brand manufacturing. The business of making a mobile phone with only $4 profit is indeed full of sadness, and it also carries more risks, such as workers jumping off buildings due to depression caused by long working hours.

"In the past, Foxconn was a terminal OEM, but in the future, we have a brand and we want to build it." After acquiring Sharp, Foxconn Vice President Chen Zhenguo once said this confidently.

Now, constrained by the current pressure to seize market share with low prices, the current false prosperity is gradually moving away from the original intention of Foxconn's acquisition of Sharp's TV business to prompt some of the companies to transform into brand manufacturing, and is going in the opposite direction.

From the perspective of Foxconn, Foxconn, whose main business is OEM, has always had a slim profit margin. Affected by the low-price momentum of Sharp TV, if Foxconn's profit margin continues to decline and the pressure of blood transfusion increases, it is not impossible that Sharp TV's low-price strategy will be terminated early.

The high-end brand is doomed to become a loser. Sharp, which has been drinking poison to quench its thirst, can no longer turn around.

Backed by Foxconn, after the reborn Sharp has shown strong sales, the following questions and tests have emerged one after another: Can the brand value be maintained, can the high-end market be opened up, and can the strategy of increasing sales at a loss be continued? These three aspects of the brand's internal and external development factors all face problems and tests.

The fundamental reason for this dilemma is that Foxconn did not make a reasonable judgment on the importance of the brand value of its Sharp subsidiary. In order to achieve short-term sales targets, it selectively ignored measures to maintain brand value, such as enhancing technology and product strength. Instead, it put all its advantages on accelerating the low-endization of high-end brands.

Fight the Landlord, throw all the bombs right away. This is what Sharp is talking about now.

Today, Sharp has gone from being a technology leader in the TV industry to a disruptor in the red ocean of TV price wars that is willing to lower its own prices.

A top actress who could have shown off her talent on the big screen went to rural weddings and funerals to offer warmth and condolences. This is indeed a move to be close to the people, but if she indulges in this for a long time and is complacent, it is certain that she will never be able to return to the big screen.

Of course, all this may not be important. After all, for Taiwan's richest man, Terry Gou, the US$3.6 billion to acquire Sharp is not a lot.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.