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Foxconn Under Investigation in China as Taiwan’s Elections Loom

Picture: “Fortune Global Forum 2017”, by FORTUNE Global Forum, licensed under CC BY-NC-ND 2.0 Deed, Cropped from original, added title

What is happening?

Chinese authorities launched a tax probe into the operations of Foxconn, a Taiwanese company which is a major Apple supplier and was established by Terry Gou (郭台銘), one of the four presidential candidates in the 2024 race. Chinese tax and natural resources authorities in Henan and Hebei provinces searched Foxconn’s facilities on October 22, as first reported by China’s state-owned Global Times. The ongoing investigation is a likely form of Chinese authorities’ interference in the upcoming presidential and legislative elections in Taiwan, which the People’s Republic of China claims as a part of its territory despite never having ruled the island. Beijing continues to reaffirm the threat of military force to annex Taiwan.

 

What is the broader picture?

Foxconn is one of the world’s largest contract manufacturers and technology service providers, does not produce goods under its own name but is a contractor from everything from iPhones through Xbox to Macbook computers. The company was founded by Terry Gou (郭台銘), who is currently running as an independent presidential candidate in the 2024 electoral race in Taiwan. Gou previously sought to secure the nomination for the Kuomintang (KMT; 中國國民黨) presidential candidacy in 2020 and 2024, albeit with no success. Within Taiwan’s two-party system, the pan-Blue camp surrounding the KMT remains deeply divided as it witnesses the competition between three candidates: Hou Yu-ih (侯友宜) of the KMT itself, Ko Wen-je (柯文哲) of the Taiwan People’s Party (TPP), and Gou. 

In Gou’s case, it proves difficult to divorce politics from business. While Gou officially officially handed over the leadership over Foxconn to Young Liu (劉揚偉) in 2019 and resigned from the board of directors of Foxconn in 2023, his reputation is still strongly connected to his business career. As he sought to pose himself as a pragmatic leader who would be capable of ironing out the difficult cross-Strait relations, he asserted, “I have never been under the control of the People’s Republic of China. I don’t follow their instructions.”

The company pledged to comply with all legal proceedings in China. “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 operations,” the company stated. 

At the same time, it is noteworthy that Foxconn clearly continues to seek to “de-risk” its relationship with China by diversifying its operations. A notable example is India. Foxconn’s plant in Sriperumbudur, an industrial town in Tamil Nadu state, is one of Apple’s most important iPhone assembly hubs outside of China.

 

Why does it matter?

The ongoing investigation against Foxconn, established by Terry Gou, can be interpreted as a form of Chinese electoral interference in the democratic process in Taiwan. And as Gabriel Wildau, the managing director at Teneo Holdings, a New York-based advisory firm, told Bloomberg, “The actions against Foxconn have all the hallmarks of a political crackdown. This kind of concerted action in multiple provinces would almost certainly need to be approved by top party leaders.” This clearly illustrates that the political process in Taiwan remains highly susceptible to external malign influence from authoritarian actors, including Beijing and pro-Chinese groups based in Taiwan.