Red faces, raised voices over late hitch in Foxconn's Sharp deal

LOL basically a Japanese company not telling you all the bad points of a deal before you sign on the dotted line and its too late. much of what J inc foundations sit on. basically biting the hand that was going to save you. LMAO

exactly. Sharp is to blame for this mess.

"...have more understanding of Japan’s traditions and way of doing things,"

Hiding losses, inflating profits on paper, lying, etc. I wouldn't be bragging about these kind of things as part of the culture. Aly Rustom is bang on: this mess is of Sharp's doing, not Terry Gou's.

As I have said MANY times on JT accounting in Japan is all too often like a black hole, ESPECIALLY with big companies, the books are usually clear as mud & are often UNRELIABLE as Foxcon is finding out

Sharpe is clearly NOT very sharp!! Foxcon proceed with caution!!!

Japan once again is its own worst enemy!

Well, Kozo, Mr. Gou's trustiworthiness is a matter which one might be able to consider more carefully had Sharp been on the market. Not exactly a 'seller's market' now.

Foxconn is trying almost the impossible; to takeover a major iconic Japanese firm. Forget about it. Japan remains a fortress as far as culture and business practices for an effective foreign takeover of a Japanese giant. It probably cannot be really "very good" if it is available.

simmering distrust

Sounds like a recipe for grenade-lobbing silo activity regardless of whether Honhai or the taxpayer (sorry, INCJ) rescue Sharp.

The list was pulled together by working level officials at Sharp and forwarded, without top officials seeing it, to Foxconn as a goodwill gesture.

A good candidate for break and build, if this is the attitude toward a $3Bn liability.

The list was pulled together by working level officials at Sharp and forwarded, without top officials seeing it, to Foxconn as a goodwill gesture to make the buyer aware of worst-case scenario risks

This sounds as a comedy joke until one realizes that it is coming from a Japanese company.

Anyone who has worked in a Japanese company will know this term Donburikanjo that is all I have to say....

When the Olympus scandal broke, many said that Olympus was not the only one which had been very creative in hiding it's losses. The funny thing about laws in Japan compared to other countries is sometimes they seem specifically written to be subverted. Laws against commercial whaling result in said whaling being renamed "scientific research". The laws which require temporary or part time workers to be made full-time after three years are wiggled out of by creating new contracts starting temporary or part time workers at year one again. Laws setting minimum prices for bus tours don't apply to subcontracted tour companies, so laws intended to improve safety are not effective.

It is hard to imagine that a minor sum like 2.66 billion yen could somehow be overlooked, or that Japanese law didn't require such a large liability to be revealed. If other Japanese companies are sitting on such huge, but unmentioned liabilities (and there is no doubt they are), Japan Inc is in far worse shape than people have realized. I have to applaud the lower level Sharp employees who had the integrity to go around their executives and give this information to Foxconn.

On the other hand, if I were Foxconn, I would walk away from Sharp without a second look, and fall into the bankruptcy they very much deserve. I would also offer the employees who brought forward the information a job.

sounds like sharp employees went rogue and emails the real books to foxconn.

Welcome to common business practice Japanese-style, rest of world.

igloobuyer

I guess you haven't read the article, it states and I quote;

"They were not liabilities that required formal disclosure."

Meaning during negotiations Sharp didn't require to disclose them that is why again I quote,

" Gou shouted at his team for not having discovered these liabilities in the first place. "

The working level officials at Sharp who forwarded the information did it out of good faith and honesty, if that is Japanese-style common business practice then the rest of the world should pick up the habit in which it will make it a better place unlike another East Asia country that won a bid to develop bullet trains in a SEA nation only to be stopped because most of the documents were in Chinese or missing and at the moment lying through their teeth.

Japan - one step forward, two steps back. Such a sad and rather pathetic nation. Oh well.

Oh... you mean THESE debts?? Ah so sorry

They were not liabilities that required formal disclosure. $2.6 billion in contingent liabilities!! holy frack, if I was buying a company any company id want to know all the liabilities both current and possible future liabilities. failure to disclose any should be classified as fraud. but then again this is Japan Inc

A lot of people just do not understand Japan.... it is basically like Italy but with Hi-Tech Glitz and has the ability to fool people into believing they're straight up honest because of its outwardly docile and polite culture.

"We might have not disclosed billions worth of liabilities, but Foxconn is the untrustworthy one here".

if that is Japanese-style common business practice then the rest of the world should pick up the habit in which it will make it a better place.

Oh, but it isn't Japanese-style common business practice. You can bet that these employees will be moved to the rubber room once they are discovered, and spend the rest of their careers at Sharp reading newspapers. Sharp can't fire them, but it can make their future careers look bad enough to make these workers consider changing careers and becoming taxi drivers. Enough foreign investors have acquired stakes in Japanese companies only to find out that though their money was welcome, their foreign presence was not, nor have these foreign stakeholders been given anything resembling authority in the running of the companies they have invested in. Just look at the treatment Cerberus got when they bailed out Seibu. If Foxconn bails out Sharp, they had better get the majority if seats on the board, as well as the top seats, otherwise Sharp will continue as it has.

"They were not liabilities that required formal disclosure"

Perhaps not under Japanese "law", but these liabilities certainly would have had to been disclosed in any other developed country in the world.

"Gou shouted at his team for not having discovered these liabilities in the first place."

I can't fault Gou's team too much, Japanese companies have been able to hide large liabilities from their own accountant firms, like Olympus did with KPMG. When KPMG dared to question Olympus about their accounting practices, they were personally fired by Olympus' chairman (who as later convicted for his part in the accounting fraud, but of course never spent a daily in jail).

Laws in Japan are often secondary to cultural practices. Price fixing is illegal, but as it has a long cultural heritage, cases of price fixing are never investigated. Need proof? Shop around at a few different movie theaters and see which one has the lowest price. You'll find that they all charge the same price, regardless of the company, movies being shown, or location. This is against Japanese law, but the theater owners will never be charged. Were they in America or the UK, the presidents of these theater companies would be sharing cells in federal prison. Certain company activities are also culturally acceptable, even if they are illegal by the letter of the law.

These are all things which foreign investors in Japanese domestic companies keep in mind before doing any business in Japan.