The Chinese government began multiple investigations into Foxconn, the Taiwanese company that assembles the iPhone, MacBooks and other Apple devices in China.
There are suspicions that the investigations are politically motivated: Foxconn founder Terry Gou is running for president of Taiwan.
Foxconn tax filings under investigation by China
Foxconn is one of Apple’s most important business partners. Important enough that news of the investigations overnight pushed AAPL share prices down in pre-market trading.
Word first came from China’s own Global Times, which said the government is making tax inspections of Foxconn in Guangdong and Jiangsu provinces. China’s natural resources department is also inspecting the company’s land use.
“Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units on the related work and operations,” the company said in an official statement to the BBC.
Putting pressure on Taiwan?
The Chinese media source clearly stated that the investigations are “in accordance with the law,” but other news reports express suspicion that there’s more going on here.
While Terry Gou is no longer chairman of Foxconn, and resigned from its board of directors when announcing his run to be Taiwan’s president, he’s nevertheless inextricably linked with the company. If nothing else, he still owns a significant share of the business.
Taiwan split from mainland China in the 20th century, but China still considered it part of the country. And one it wants back. The relationship between the two is a factor in the election.
As Global Times stated:
“Many within the island suspect that the reason why Foxconn is being investigated is because Gou’s running for the elections, but Chinese mainland experts said the investigation is normal and legitimate, as any company goes through tax inspections.”
Gou is running as an independent. As the BBC points out, Gou is seen as somewhat pro China, but not as friendly as the Kuomintang (KMT) political party, which has its own candidate.
Apple isn’t directly involved
While Foxconn assembles iPhone, iPad, MacBook and AirPods from components made by companies around the world, the giant Taiwanese enterprise also works with many tech giants, including Amazon, Google, Microsoft, Nintendo, Sony and plenty more.
At this point, the investigations by the Chinese government into Foxconn seem to have nothing to do with Apple.