_Hisense says it will not give back Sharp license
Last week we indicated that Sharp (6753.JP) was planning to reduce panel shipments to its largest customer Samsung, and Chinese brand Hisense (600060.CH), as the company’s new owner Hon Hai (2317.TT)/Foxconn (2354.TT) began to focus on re-developing the Sharp brand. In that regard, Sharp has regained the rights to its own brand in Europe by purchasing a controlling interest (56.7%) in Cyprus-based SUMC[i] (pvt) for €85m ($88.9m US), the parent of SUMC in Czechoslovakia, to whom they sold the Sharp European brand rights starting 1/1/2015, allowing Sharp to control its own brand in the European market where SUMC sells ~800k units/year. Hisense, who purchased the rights to the Sharp brand in North America in 2016 for $23.7m was also expected to negotiate with the company to sell back those rights, giving Sharp and its parent, full control over the brand worldwide.
The Japanese press however, is indicating that Hisense CEO Jerry Liu has decided to keep the license, which includes a TV production plant in Mexico and brand rights in both North and South America (Brazil excepted), which is consistent with earlier comments made by Hisense President, Liu Hongxin. The agreement, which is in effect for five years, was made by Sharp when it was facing substantial financial pressure, and is likely far more favorable to Hisense than Foxconn would like it to be. While Sharp, under orders from parent Foxconn, can limit TV panel production to Hisense, the license likely contained purchase and/or supply specifications, which Sharp must abide by, so the refusal by Hisense to give back the license, and the likely ‘bad blood’ it might cause with the new owners, will be mitigated by the license itself, and of course, the alternative sources, particularly from Chinese panel producers, that are available to Hisense.
The Japanese press however, is indicating that Hisense CEO Jerry Liu has decided to keep the license, which includes a TV production plant in Mexico and brand rights in both North and South America (Brazil excepted), which is consistent with earlier comments made by Hisense President, Liu Hongxin. The agreement, which is in effect for five years, was made by Sharp when it was facing substantial financial pressure, and is likely far more favorable to Hisense than Foxconn would like it to be. While Sharp, under orders from parent Foxconn, can limit TV panel production to Hisense, the license likely contained purchase and/or supply specifications, which Sharp must abide by, so the refusal by Hisense to give back the license, and the likely ‘bad blood’ it might cause with the new owners, will be mitigated by the license itself, and of course, the alternative sources, particularly from Chinese panel producers, that are available to Hisense.
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