The News
Beijing has launched a tax probe into Foxconn, a Taiwanese tech company that is the largest producer of iPhones in the world.
According to state-tabloid The Global Times, tax authorities in Henan and Hubei provinces conducted on-site inspections into the land use of some of Foxconn’s key properties.
The investigation comes as Foxconn’s founder, Terry Gou, ramps up his presidential campaign on the island, raising concerns about Beijing’s intentions.
SIGNALS
Taiwanese leaders have accused Beijing of political interference in its elections. While Gou is running as an independent candidate, he is widely considered to align with the Kuomintang Party’s (KMT) “pan-blue” ideologies that promote closer ties to Beijing. This sets up three pan-blue candidates against current Vice President William Lai, the Democratic Progressive Party (DPP) candidate, who advocates for Taiwanese nationalism. Beijing is worried that Gou “is expected to siphon votes away from the KMT candidate, Hou Yu-ih,” which would favor Lai and possibly heighten cross-strait tensions, writes China Project editor Anthony Tao. But Gou seems undeterred by the investigation, saying he is unafraid of China confiscating any assets. China denies any political motivation for the probe, the Global Times reports.
The probe comes as Beijing continues cracking down on foreign businesses. Executives from several companies, including WPP — one of the world’s largest advertising companies — and Astellas Pharma are reported to have been detained, arrested, or charged in espionage cases in recent weeks. The Chinese Communist Party “really worries about foreign influence as dissent,” one economist told Bloomberg. “It is not a signal for foreigners. It is a signal for the elites: don’t follow that path.”
Foxconn is eyeing India as mainland scrutiny intensifies. India currently accounts for about 4.6% of the company’s total revenue, operating nine campuses and over 30 factories across the country. Those figures are expected to rise, as Foxconn officials from several Indian states bid to host the next Foxconn expansion, the Financial Times reports. It is “the beginning of the Bharat era,” one Indian Foxconn executive recently posted on LinkedIn, using the alternative name for India. Still, the relationship between Foxconn and Delhi faces some hurdles, with the company pulling out of a joint-venture deal with an Indian conglomerate in July, citing “challenging gaps,” Reuters reported. For the foreseeable future, China will likely remain Foxconn’s biggest production hub, analysts told the FT.