IRKED BY TERRY GOU’S PRESIDENTIAL BID
Beijing has made clear that Gou – who stepped down from Foxconn’s board last month but still holds a 12.5 per cent stake – has violated that rule.
His presidential bid has irked the Chinese leadership because it further fragments votes for Taiwan’s opposition and makes a victory for the Democratic Progressive party – which refuses to define the island as part of China – more likely, said a person close to Foxconn.
China claims Taiwan as part of its territory and threatens to annex it militarily if the island resists unification indefinitely.
A person familiar with Foxconn said management was not overly worried about the investigation because China’s frequent tax audits of foreign enterprises regularly hit its affiliates, simply due to the scale of its business. “But the link to the election is concerning because it drags us into politics,” he added.
On Wednesday, the Chinese government’s Taiwan Affairs Office (TAO) said in its first comment on the probe: “While enjoying the dividends of economic growth, Taiwanese companies on the mainland also need to assume appropriate social responsibilities and play a constructive role in promoting peaceful development in cross-strait relations.”
The same phrase appeared in the state media report that publicised the investigation last weekend. This, and the fact that the news was leaked by the Communist party tabloid Global Times citing a Taiwan affairs scholar, pointed to an attempt by the TAO to send a political message, said a senior Taiwanese government official.
China has frequently leaned on Taiwanese businesses to support the Kuomintang, the opposition party that views Taiwan as part of a greater Chinese nation, in past elections. But apart from small-scale tax, labour or environmental audits, Beijing has reserved crackdowns for enterprises viewed as pro-DPP.
The fact that the Chinese leadership is now giving similar treatment to Foxconn and Gou – viewed in Taiwan as the most pro-China on the spectrum – speaks of the dramatic changes under way in Beijing, Taiwanese observers said.
“Such rough treatment of a foreign company would have been unthinkable under Deng Xiaoping, Jiang Zemin or Hu Jintao,” said a senior government official, referring to Chinese leader Xi Jinping’s three predecessors.
Beyond politics, Foxconn executives believe Beijing wants to warn the company not to shift too much production capacity out of China, which could threaten hundreds of thousands of jobs at a time when the country is under growing economic stress.
“Other Taiwanese companies have been moving out gradually, quietly, but Foxconn is an elephant – they are just too big to do that,” the government official said.
Others believe the opposite could be true. “As supply chains split, the goal is to have their own companies take over electronics manufacturing in China,” said Liu, the CIER economist. “The Chinese government may just have concluded that they do not need Foxconn any more the way they did.”
With Taiwan’s election less than three months away, Gou has resorted to a low profile and suspended all campaign activity since the probe was announced. But he will have to reappear in four weeks at the latest, when all presidential hopefuls have to register their candidacy.
“On Nov 24, we will see if Gou keeps his word and cannot be threatened by the Chinese Communist party,” said the Taiwanese government official.