Apple’s largest iPhone supplier, Foxconn Industrial Internet Co Ltd, had its shares trading in China plunge 10% on Monday after reports that Chinese mainland tax authorities were investigating the Taiwan-based firm. The probe comes weeks after Foxconn founder Terry Gou announced his run for Taiwan’s presidency.
On Sunday, state media Global Times reported China’s natural resources department conducted on-site investigations into land used by Foxconn factories in Henan and Hubei provinces.
“The relevant departments conducting tax inspections and investigating land use situations of domestic enterprises in China are normal market supervision activities, which are reasonable and legal,” GT said.
What remains unclear is whether the tax probe into Foxconn comes after founder Gou recently announced he’s running as an independent candidate in Taiwan’s presidential election early next year. The election could tremendously impact Taiwan’s relationship with China amid rising tensions.
Gou has previously stated he’s not afraid of Beijing: “If the Chinese Communist party regime were to say ‘If you don’t listen to me, I’ll confiscate your assets from Foxconn,’ I would say ‘Yes, please, do it!'”
Shares of Foxconn trading on the Chinese mainland A-share market plunged by its daily limit of 10% to 14.55 yuan on the news.
Foxconn responded to the probe: “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 operation.”
Beijing’s continued crackdown on foreign business operations is troublesome and will continue to force Western companies to ‘friendshore‘ to friendlier countries and or ‘reshore’ to North America.