China has launched an investigation into Taiwan-based iPhone-maker Foxconn, Chinese state media reported on Sunday. The Global Times, citing anonymous sources, says officials conducted tax inspections at Foxconn businesses in two Chinese provinces.
Foxconn says it will co-operate with the investigation. The company is the biggest maker of iPhones for US tech giant Apple and is one of the largest employers in the world. The Global Times also said China’s natural resources department made on-site investigations into land use by key Foxconn businesses in the provinces of Henan and Hubei, reports BBC.
“Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn),” the company said in a statement.
“We will actively cooperate with the relevant units on the related work and operations,” it added.
Foxconn’s founder Terry Gou is running as an independent candidate in Taiwan’s presidential election that is due to take place in January. The election is expected to have a significant influence on Taiwan’s relationship with China given tensions between them have ratcheted up in the past year.
As Beijing’s claims over the self-governed island have grown more assertive, presidential candidates have pitched their differing visions on how to respond. Mr Gou has positioned himself, based on his years of experience working in China, as an alternative to the incumbent Democratic Progressive Party (DPP), which is seen as hostile to Beijing.
But he said he was not scared of China when he announced his candidacy: “If the Chinese Communist party regime were to say ‘If you don’t listen to me, I’ll confiscate your assets from Foxconn,’ I would say ‘Yes, please, do it!’
He resigned his seat on Foxconn’s board in September after announcing that he was entering the presidential race. He handed over the management of the company in 2019 when he announced his first run for the presidency but retains a 12.5% stake in Foxconn.
At that time, he was a member of the Kuomintang (KMT), a major political party in Taiwan which is seen as Beijing-friendly. The Global Times reported that “many people” in Taiwan suspect Foxconn is being investigated because Mr Gou is running for the presidency.
However, the state-run paper added that Chinese experts said the investigation “is normal and legitimate, as any company goes through tax inspections”.
The Global Times also cited experts as saying the investigation may impact the elections and that “if the secessionists who seek ‘Taiwan independence’ win the elections, that would be a huge disaster to the peace and stability of the region, and the Chinese people of both sides of the Taiwan Straits, including the ones in the business circle, should work together to prevent disaster from happening.”
Beijing insists that nations cannot have official relations with both China and Taiwan, with the result that Taiwan has formal diplomatic ties with only a few countries. Although the the US maintains diplomatic relations only with China, it remains Taiwan’s most important ally.
Meanwhile, some are suggesting that the investigation is a way of China hitting back at the US over its sanctions by targeting one of its biggest companies, Apple.
“It does feel like this might be a bit of a retaliation to the US sanctions,” Rachel Winter, investment partner at Killik & Co, told the BBC’s Today programme.
“The US has imposed a lot of sanctions on China to try and limit their technological capabilities and it does feel that by going after Foxconn they will be harming Apple which is one of the US’s most successful companies.”
