Taiwan’s Foxconn (2317.TW), the primary supplier of Apple (AAPL.O) iPhones, has come under the scrutiny of Chinese authorities who have initiated tax audits and on-site investigations into the land use of some of Foxconn’s key subsidiaries in China. The move comes as a response to allegations of legal violations and has been reported by Chinese state media on Sunday.
China’s national resources department, in collaboration with local authorities, has conducted on-site investigations concerning the land use of Foxconn enterprises located in Henan and Hubei provinces, among other locations. The specifics of these investigations, including the scope and timing, have not been disclosed by the nationalist tabloid, the Global Times.
In response to these allegations, Foxconn, also known as Hon Hai Technology Group, issued a statement emphasizing their commitment to legal compliance. The statement reads, “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,” without directly addressing the allegations.
Zhang Wensheng, deputy dean of the Taiwan Research Institute of Xiamen University, commented on the situation, stating that the audit and land use investigations are standard procedures applied to any enterprise suspected of violating laws and regulations. Zhang added, “Foxconn’s subsidiaries are obliged to actively cooperate with audits and investigations, and if there are indeed violations of laws and regulations, they should admit mistakes and accept penalties and step up rectification.”
The tax audits and land use investigations represent the latest development in a series of regulatory challenges faced by Foxconn in its global operations. The company, responsible for manufacturing a significant portion of Apple‘s iPhones, will be closely monitored as Chinese authorities work to ensure compliance with their laws and regulations.