China launches an investigation into iPhone maker Foxconn, state media reported

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Chinese state media reported on Sunday that China has begun an investigation into Foxconn, which manufactures iPhones, over taxes and land use.

The Global Times, citing anonymous sources, said tax authorities inspected Foxconn sites in Guangdong and Jiangsu provinces, and natural resources officials also searched sites in Henan and Hubei.

Foxconn said it would cooperate with the investigation. “Compliance with laws and regulations is a fundamental principle of the group worldwide,” Foxconn said in a statement. “We will actively cooperate with the operations of relevant authorities.”

The Global Times article quoted an expert as saying: “Taiwan-funded enterprises, including Foxconn… should also bear corresponding social responsibilities and play a positive role in promoting the peaceful development of cross-Strait relations.”

Terry Gou, founder of Foxconn, is running in Taiwan’s presidential elections as an independent candidate next January, a contest that will have a major impact on Taiwan’s relationship with China and tensions in the Taiwan Strait.

Gu, who handed over management of Foxconn to a successor CEO four years ago, resigned from his seat on the board in early September after announcing his presidential bid, but retains a 12.5 percent stake in the company.

Beijing has in the past targeted local subsidiaries of Taiwanese companies through regulatory investigations and political pressure at sensitive or tense times. Chinese officials often urge Taiwanese companies to help promote “peaceful development” between the two sides.

China claims Taiwan as part of its territory and reserves the option of seizing the island by force if Taipei resists unification. The People’s Liberation Army is constantly strengthening its movements to explore the airspace and waters near Taiwan.

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Joo trails all three other presidential candidates so far with just 7 percent support, according to a poll conducted this week by Formosa, one of Taiwan’s largest pollsters.

The founder insists that despite his decades of doing business in China, which has made Foxconn the country’s largest private employer and exporter, he does not do China’s bidding.

Announcing his appointment, Gu said: “If the Chinese Communist Party regime says: ‘If you don’t listen to me, I will expropriate your assets from Foxconn,’ I will say yes, please, do it!” Running for president on August 28. “I cannot comply with their orders. “I will not be threatened.”

Apple is also trying to deal with an increasingly complex relationship with China at a time of historical tensions between Beijing and Washington. Last week, Apple CEO Tim Cook traveled to China and met with members of Xi Jinping’s leadership team, including Vice Premier Deng Xuexiang and the Chinese ministers of commerce and information technology.

Chinese government departments and state-owned companies have in recent months banned or discouraged employees from using Apple devices. In September, Beijing warned of “security incidents” related to iPhones.

The investigation into the Apple supplier also highlights broader uncertainty among foreign companies in China after Beijing cracked down on the operations of consulting firms and due diligence groups.

The Financial Times reported on Friday that Chinese police raided the offices of WPP-owned media company GroupM in Shanghai.

Additional reporting by Ryan McMorrow and Sun Yu

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