Foxconn in China Investigated by Authorities as Founder Runs for Taiwan Presidency

Observers believe that the sudden investigation may be politically motivated as Taiwan’s presidential elections approach.

A woman walks past the logo of Foxconn outside a company's building in New Taipe City, Taiwan, on Dec. 22, 2022. Annabelle Chih/Reuters

China’s ruling communists have launched tax and land-use probes into Foxconn, one of tech giant Apple’s largest suppliers, as the company’s Taiwanese founder runs as an independent for the presidency of the self-governing island.

Observers believe that the sudden investigations into the company’s affairs may be politically motivated.

Mainland Chinese media reported on Oct. 22 that Chinese authorities have recently audited Foxconn’s key subsidiaries in Guangdong, Jiangsu, and other provinces. Meanwhile, the natural resources department has launched on-site investigations on the land use of a number of Foxconn’s factories.

After the news of the Foxconn audit was made public, the company, also known as Hon Hai Precision Industry, released a statement saying that complying with the law was one of its “basic principles”.

“We will actively cooperate with the relevant units on the related work and operations,” the statement said.

Following news of the probes, Fii, a subsidiary of Foxconn listed on the A-share market, fell 10.02 percent. It was a five-month low since May 24. Parent company Foxconn Technology, which is listed in Taipei, dropped more than 2 percent.

Political Motivation?

Foxconn founder Terry Gou has invested in mainland China since 1988 and has more than 40 industrial parks there, the company’s website says. The largest one is in Zhengzhou, with 300,000 employees, while the industrial park in Shenzhen also has 200,000 employees. The Zhengzhou factory production capacity accounts for about half of Apple’s global supply and is the world’s largest iPhone factory.

Mr. Gou stepped down as Foxconn chief in 2019 but remains a major shareholder.

Chinese workers assemble electronic components at the Taiwanese technology giant Foxconn's factory in Shenzhen City, Guangdong Province, China, on May 26, 2010. AFP/Getty Images

The news of the probes follows Mr. Gou’s announcement on Aug. 28 that he would run as an independent in Taiwan’s presidential election early next year, a move that will split the opposition vote.

Mr Gou initially sought to be the candidate of the KMT (Kuomintang), which instead chose another candidate, leading to the billionaire resigning from the party and going solo.

Soon after his announcement, the All-China Federation of Taiwanese Enterprises, controlled by the ruling Chinese Communist Party (CCP), released a statement on Sept. 5, saying that Mr. Gou’s running for the presidency as an independent would worsen the situation of the opposition [the pro-China blue camp].

The statement called on Mr. Gou to “return to the team” as soon as possible and work together to change Taiwan’s ruling party, which is the “mainstream opinion of Taiwan”.

Terry Gou, Foxconn founder, announces his bid for the Taiwan presidency during a press event in Taipei, Taiwan, on Aug. 28, 2023. Ann Wang/Reuters

Some overseas commentators believe that Beijing is taking action to interfere with Taiwan’s general election next year.

Cai Shenkun, a scholar based in the United States, said on X, formerly Twitter: “With foreign companies withdrawing one after another and the Chinese regime clamoring to keep them, would targeting Foxconn, one of the world’s largest contract manufacturers, scare off foreign companies, especially Taiwanese companies?”

He pointed out that it’s because Foxconn’s founder Mr. Gou “disobeyed [CCP’s] orders and disrupts the situation in Taiwan,” making it more difficult for Taiwan to change its political situation.

“The original arrangement for Terry Gou to run for president was to boost the popularity of the blue camp and unite all possible forces to help the Kuomintang (KMT) to take over from the ruling Democratic Progressive Party,” Mr. Cai said.

Mr. Gou’s move to run as an independent will diminish the opposition’s chances in the poll, he said.

Taiwan's independent presidential candidate and Foxconn founder Terry Gou (right) greets supporters while campaigning at a traditional market in Taipei on Aug. 11, 2023. Sam Yeh/AFP via Getty Images

U.S.-based current affairs commentator Shi Tao said on his YouTube channel that the CCP is forcing Mr. Guo to quit before the official registration for presidential candidacy in November by threatening his huge assets in China, as his running as an independent has split votes from the KMT.

Currently, Lai Ching-te of the ruling Democratic People’s Party (DPP) is leading the poll, Hou Yu-ih of the KMT and Ko Wen-je of the Taiwan People’s Party are trailing behind.

“If the pan-blue camp cannot launch a unified candidate, and Hou Yu-ih, Ko Wen-je, and Terry Gou act separately to challenge the DPP, it will be almost impossible to change Taiwan’s political layout,” Mr. Cai said. “Targeting Foxconn at this time is a clear warning to Terry Gou to turn around and support the KMT, and to scare Ko, who will soon discuss the integration with the KMT,” Mr. Cai said.

An AFP reporter asked at the regular press conference of the CCP’s Ministry of Foreign Affairs on Oct. 23 why the Chinese authorities wanted to probe Foxconn.

The ministry’s spokeswoman, Mao Ning replied: “This is not a question about foreign affairs.”

Fang Xiao contributed to this report.