Chinese authorities have launched a strong tax and land investigation into Foxconn, Apple’s largest partner. Foxconn is a Taiwanese company, but it has several branches and operates large-scale factories in China. Analysis suggests that the intention is to check the founder of Foxconn, who is running in Taiwan’s presidential election (January 13 next year), to prevent a division between pro-Beijing candidates and to deal a blow to Apple.
According to the Chinese state-run Global Times on the 23rd, Chinese tax authorities conducted a tax investigation on Foxconn’s major branches in Guangdong and Jiangsu provinces. The Ministry of Natural Resources also inspected Foxconn’s land in Henan and Hubei provinces. Foxconn is Apple’s largest partner producing iPhones and MacBooks, and its Zhengzhou factory in Henan Province alone produces 80% of the total iPhone production.
Foxconn issued a statement on this day and said, “Compliance with laws and regulations is a basic management principle, and we will actively cooperate with relevant authorities regarding related work and operations.” However, Foxconn’s stock price fell by the largest amount in three months. According to Bloomberg News, Foxconn’s stock price fell by 3.4% at one point during the day on the Taiwanese stock market.
Regarding this investigation, the Global Times called it “a legal and normal market supervision activity,” but a different analysis comes from Taiwan.
Taiwanese media, including the Ziyu Times, are paying attention to the fact that Foxconn founder Kuo Tai-ming (郭台銘, 73) is running for president. Founder Guo, who resigned from the Foxconn board of directors in August this year and announced his candidacy as an independent candidate, is pro-China and has a similar political tone to Hou Yui (66), the main opposition Kuomintang candidate. There are criticisms from the Taiwanese opposition that Candidate Kuo is dispersing pro-China voters and creating an advantageous structure for candidate Lai Ching-de (賴淸德, 64) of the anti-China ruling Democratic Progressive Party.
According to a public opinion poll on the 14th, Democratic Progressive Party candidate Lai had an approval rating of 30.1%, ahead of the second opposition People’s Party candidate Ke Wen-je (64) (24.5%), Kuomintang candidate Hou (17.3%), and Guo (11.3%). If Candidate Guo unifies with Candidate Hou, he could threaten Candidate Lai.
For this reason, the analysis that the Chinese authorities’ Foxconn tax investigation is a means to pressure Candidate Guo for unification is gaining ground. This means that it is a political decision that reflects the Chinese government’s will to ‘select’ Taiwan’s next ruling party.
There is also an interpretation that there is an effect of supporting China’s ‘patriotic consumption’. If Foxconn is hit by this investigation, China’s Huawei, which competes with Apple, could benefit. Recently, after the Chinese authorities effectively imposed a ban on iPhones for government officials, sales of Huawei’s new smartphones are outpacing sales of Apple’s new products.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.