Foxconn gets “uncomfortable”: It finds itself in the middle of tensions between China and Taiwan

Foxconn, a Taiwanese multinational company known as the world’s largest assembler and contract manufacturer of electronic components, including Apple, was recently subjected to searches by China’s tax authorities. There are still many questions about the investigation.

Doubts about the investigation

Authorities are inspecting production facilities in the southern province of Guangdong and the eastern province of Jiangsu, the Global Times, a Chinese English-language newspaper with a nationalist orientation and ties to the Communist Party, reported. Inspections were made on the company’s lands in the central provinces of Hunan and Hubei. The news was reported yesterday, October 22, by media close to the Communist Party, but the duration of the investigative activity or the alleged crimes was not specified. The Global Times underlines that verifying possible violations of Chinese law is part of “normal market surveillance activities that are reasonable and legal.”

Foxconn, which is among the main suppliers of Apple (and other US technology giants) and has huge investments and factories in Chinese territory, seems to want to cooperate with Chinese authorities. The company commented in its note published last night: “Respect for the law is the fundamental principle of our group worldwide. We will actively cooperate with the relevant authorities for the operations in question.”

Towards the presidential elections

Undoubtedly, the timing of the announcement raises some doubts. In fact, the investigation took place two and a half months after the January 2024 presidential vote in Taiwan, which China considers part of its territory even though it has never governed it. Terry Gou, the founder of Foxconn, who started building the company’s giant facilities in China in 1988, announced last August that he wanted to run as an independent candidate, despite the low probability of success in the polls, after failing to win the support of the Guomindang. It is considered that the party is mostly in dialogue with Beijing. Gou wants to position himself as an alternative to President Tsai Ing-wen, the current candidate of the Democratic Progressive Party (DPP) who is considered hostile to Beijing.

The entrepreneur had stepped back from running the company for some time. He resigned from Foxconn’s board of directors in September after announcing that he would enter the presidential race. He left management of the company in 2019 but retains a 12.5 percent stake in Foxconn.

According to experts interviewed by the Global Times, the investigation could have an impact on the presidential elections. In fact, the opposition front is divided over the choice of a single candidate; this candidate should be between Hou Yu-ih of the Guomindang and Ko Wen-je of the Taiwan People’s Party. Candidates must register by November 24, and the presence of Terry Gou, as well as the three main parties, must be taken into account. The Foxconn founder has presented himself as the person who could unite opposition groups in Taiwan and challenge the current Democratic Progressive Party, which has strengthened relations with the United States and whose current favorite is Lai Ching-te. Beijing is seen as a supporter of Taiwan’s independence.

Foxconn’s weight in terms of US companies

For many, the investigation is a way for China to respond to the United States over restrictions the White House recently initiated on chips and artificial intelligence. Beijing’s action against Foxconn highlights the contradictions that the People’s Republic has been experiencing for several years: Even wealthy tech giants cannot escape the clear lines of Chinese foreign policy.

Source: Today IT