by Yimou Lee and Ben Blanchard
TAIPEI (Reuters) – Foxconn, one of Apple’s main suppliers, is the subject of a tax investigation in China, two sources close to the Taiwanese group confirmed on Monday, estimating that the information, disclosed earlier by a official Chinese newspaper, was for political reasons linked to the upcoming elections in Taiwan.
On Sunday, Chinese newspaper Global Times reported that some of Foxconn’s main subsidiaries in China were facing tax audits. According to the newspaper, China’s natural resources department has conducted on-site investigations into land use by Foxconn companies in Henan and Hubei provinces in particular.
According to the two sources, who declined to be identified, several other companies have been audited by Chinese authorities in recent months. The investigation into Foxconn was made public for political reasons, they believe.
The audit on Foxconn comes less than three months before the presidential election in Taiwan, the sources point out, and as Foxconn is currently seeking to diversify its production outside China.
The government of Taiwan, which China claims as its own territory, frequently accuses Beijing of seeking to exert pressure, whether military or economic, to influence the outcome of elections on the island.
Foxconn founder Terry Gou, who stepped down from his leadership role in 2019, is running as an independent candidate for president.
Chinese authorities in Henan, Hubei, Guangdong and Jiangsu did not immediately respond to a request for comment. China’s Taiwan Affairs Office also did not respond to a request for comment.
For their part, Taiwanese Prime Minister Chen Chien-jen offered his government’s assistance to Foxconn, and Economy Minister Wang Mei-hua said her ministry was in contact with the group. .
Foxconn, formerly known as Hon Hai Precision Industry, employs hundreds of thousands of people in China and is a major investor there.
However, the company has moved some of its production lines, notably those of iPhones for Apple, from China to India. One of the sources told Reuters they viewed Beijing’s audit as a “warning” to Foxconn.
The second source said the audit was “unexpected” and relatively “unusual.”
In a statement, Foxconn said Sunday that compliance with the law was a “fundamental principle” of its operations around the world and that it would “actively cooperate with relevant units on relevant works and operations.”
On the Taiwan Stock Exchange, Foxconn shares fell 2.9% on Monday.
(Reporting by Yimou Lee and Ben Blanchard; with contributions from the Shanghai bureau; Blandine Hénault for the French version, editing by Kate Entringer)
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