Chinese Authorities Investigate Foxconn
China has initiated an inquiry into Foxconn, an iPhone manufacturer headquartered in Taiwan, according to Chinese state media on Sunday.
Tax Inspections at Foxconn Facilities
According to anonymous sources cited by the Global Times, tax inspections were carried out by authorities at Foxconn facilities situated in two provinces of China.
Foxconn’s Response to the Investigation
Foxconn has declared its intention to assist the investigation.
Being the primary supplier of iPhones to Apple Inc., the company is also one of the world’s largest employers.
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According to the Global Times, China’s natural resources department conducted on-site investigations into the land use practices of significant Foxconn enterprises located in Henan and Hubei provinces.
The company stated in a statement, “Legal compliance is a fundamental principle of Hon Hai Technology Group (Foxconn) wherever we operate in the world.”
“We will actively cooperate with the relevant units on the related work and operations,” the statement stated.
Terry Gou’s Political Aspirations
Terry Gou, the founder of Foxconn, is standing as an independent candidate in the January presidential election in Taiwan.
The election is anticipated to exert a substantial impact on the bilateral relations between Taiwan and China, considering the escalation of tensions that has marked their past year together.
In response to Beijing’s increasingly assertive claims over the self-governing island, presidential candidates have presented divergent responses.
Drawing upon his extensive professional background in China, Mr. Gou has positioned himself as a viable alternative to the Democratic Progressive Party (DPP), an organisation widely regarded as antagonistic towards Beijing.
“However, he stated at the time of his candidature announcement that he was not afraid of China: “If the Chinese Communist Party regime threatened to seize Foxconn’s assets if I did not heed their advice, I would enthusiastically comply.”
September saw his resignation from the board of Foxconn, which followed his declaration that he would be running for president. With the declaration of his initial presidential candidature in 2019, he relinquished control of the organisation while maintaining a 12.5% ownership interest in Foxconn.
His party was the Kuomintang (KMT), a Taiwanese political party known for its ties to Beijing.
“Many people” in Taiwan think Foxconn is under scrutiny because Mr. Gou is running for president, says Global Times.
Nevertheless, Chinese experts told the state-run newspaper that the investigation “is normal and legitimate, as every company undergoes tax inspections.”
Experts were also quoted by The Global Times as saying that the investigation could have an effect on the upcoming elections and that “a triumph for the secessionists who seek ‘Taiwan independence’ in the elections would be a catastrophic event for regional peace and stability; the Chinese people residing on both sides of the Taiwan Straits, including those in the business community, should unite in order to avert such a catastrophe.
Taiwan has minimal diplomatic contacts since Beijing forbids countries from having relations with both China and Taiwan. Despite maintaining diplomatic relations exclusively with China, the United States continues to be Taiwan’s most vital ally.
Speculation and Implications
Some believe China is retaliating for US sanctions by investigating Apple, one of its major companies.
“This does appear to be a possible retaliation for the US sanctions,” Killik & Co investment partner Rachel Winter said.
The United States has implemented numerous sanctions against China in an effort to restrict their technological capabilities, and it believes that by targeting Foxconn, it will negatively impact Apple, one of the most successful companies in the United States.
