Taiwan-Based iPhone Maker Foxconn Investigated by Beijing

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Facts

  • According to the Chinese state media outlet Global Times, Chinese authorities are conducting a tax inspection of Taiwanese company Foxconn, the number one maker of Apple iPhones and one of the largest employers in the world. China's natural resources department has reportedly also made on-site investigations into land use by key Foxconn businesses in the provinces of Henan and Hubei.1
  • Foxconn, also known as Hon Hai Precision Industry, has iPhone factories in Guangdong and Henan, including the world’s largest in the city of Zhengzhou. The Global Times also reported that the company's subsidiaries in Guangdong and Jiangsu are where the tax audits took place.2
  • The Taiwanese manufacturing giant, whose shares were down more than 2% on Monday while Apple's shares dropped 1% in pre-market trading, said, 'Legal compliance everywhere we operate around the world is a fundamental principle,' adding that 'We will actively cooperate with the relevant units on the related work and operations.'3
  • This comes as Foxconn's founder, Terry Gou, is running for the Taiwanese presidency next year as an independent candidate. Gou, who stopped managing the company four years ago, announced his candidacy in August, after which he resigned from the board.4
  • Gou is pitting himself against the ruling Democratic Progressive Party (DPP), which is generally perceived as hostile toward the PRC.1
  • Taiwanese Premier Chen Chien-jen said the government has already been in contact with Foxconn, adding that it will continue to monitor the needs of Taiwanese businesses and provide support. This news, as well as the upcoming election set for January, comes amid rising tensions between Beijing and Washington, with China ramping up its military drills around Taiwan in recent months.4

Sources: 1BBC News, 2CNN, 3The Guardian and 4Forbes.

Narratives

  • Anti-China narrative, as provided by Al Jazeera. Despite its continued anti-Western propaganda surrounding a potential military invasion from the US, many Chinese, including military officers, know that the US has shown no signs of declaring war on Beijing. The continued fevered pitch emanating from the PRC is a likely contributing factor to this Foxconn investigation.
  • Pro-China narrative, as provided by Global Times. It's completely normal for one of the largest manufacturing companies in the world to undergo an audit. But nonetheless, Taiwan and its ruling party will use this news to enflame anti-China rhetoric ahead of the island's election. Even Terry Gou, who is far more pro-peace than his counterparts, is likely afraid of the US distancing itself from China-based factories and is using this to his advantage.

Predictions