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Foxconn shares slide after report says China probing taxes, land use

Shares in Taiwan’s Foxconn, a major supplier of Apple’s iPhones, dropped by as much as 3 percent on Monday after a report the company is the subject of tax audits and land use probes in China just months ahead of a Taiwanese election.

China’s state-backed Global Times said some of Foxconn’s key subsidiaries in China were the subject of tax audits and that China’s natural resources department had also conducted on-site investigations on the land use of Foxconn enterprises in Henan and Hubei provinces and elsewhere.

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The Global Times did not give details of the tax or land use probes, which have not been officially announced by any Chinese government department.

Foxconn said in a statement on Sunday that legal compliance was a “fundamental principle” of its operations everywhere and that it would “actively cooperate with the relevant units on the related work and operations”.

It declined further comment on Monday. Foxconn, formally called Hon Hai Precision Industry Co Ltd, makes most iPhones at the Zhengzhou plant in Henan province where it employs about 200,000 people, though it has other smaller production sites in India and southern China.

The Chinese state media report comes less than three months before Taiwan votes in presidential and parliamentary elections.

Foxconn’s billionaire founder Terry Gou, who no longer has a role in the company’s day-to-day operations and stepped down as company chief in 2019, is running as an independent candidate though he is at the bottom of polls.

He has accused Taiwan’s ruling Democratic Progressive Party (DPP) of taking the island to the brink of war with China through its hostile policies and said that only he, with his extensive business and personal contacts in China and the United States, can maintain peace.

Gou’s campaign spokesman Huang Shih-hsiu referred questions on the Foxconn probe to the company, saying Gou had four years ago handed over running the company, no longer sat on the board and was now only a shareholder.

Speaking at a campaign rally on Sunday, Taiwanese Vice President Lai Ching-te, the DPP’s presidential candidate who is leading the polls, said the Chinese report on the investigation was “unexpected” and “regretful”.

“So I hope all our people can support Hon Hai, support Taiwanese companies,” he said, in comments carried by Taiwanese television stations.

Source: Reuters

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