Apple has already found itself impacted by a diplomatic row between the US and China, and now faces the prospect of being caught up in politics between China and Taiwan. A Chinese investigation of Foxconn has been announced by state media.
Update: China has today described the investigation as a routine police matter, but has not directly addressed the widespread belief that it is attempting to apply political pressure – more at the bottom …
Apple is massively dependent on Foxconn, with a single plant in China estimated to be responsible for as much as 80% of global iPhone production …
A quick background: China versus Taiwan
The Chinese government views the island as a territory of its own country. Taiwan, in turn, still technically claims control of mainland China as the exiled legitimate government, but makes no practical moves to exert power, being content to view itself as an independent nation.
Taiwan has its own constitution, elections, passport, currency, and armed forces.
However, China refuses diplomatic relations with any country that recognizes Taiwan’s independence, so most Western countries play an uneasy game of pretending not to, by having “representative offices” on the island – which are embassies in all but name.
The past couple of years have seen increasing concern over the possibility of China invading Taiwan.
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China investigates Foxconn
Arstechnica cites Chinese state media announcing investigations into Foxconn.
China has launched an investigation into Apple iPhone-maker Foxconn over tax and land use, Chinese state media reported […]
The Global Times, citing anonymous sources, said tax authorities inspected Foxconn’s sites in the provinces of Guangdong and Jiangsu, and natural resources officials had inspected sites in Henan and Hubei.
Notably, the provinces named include Henan, which contains the city of Zhengzhou, aka iPhone City.
Likely intended as political intimidation
The nature of the alleged offences is unclear, but one element of the report does appear to offer a very strong hint that the motivation is political.
The Global Times article quoted an expert, saying, “Taiwan-funded enterprises, including Foxconn… should also assume corresponding social responsibilities and play a positive role in promoting the peaceful development of cross-strait relations.” [Our emphasis]
The reason? Foxconn founder and major shareholder Terry Gou is running as an independent candidate in Taiwan’s presidential elections in January. He is known to be a strong supporter of Taiwan’s independence from China.
The implication here appears to be that unless Gou toes the political line, his business interests in China are at risk. Gou, however, is unlikely to allow himself to be pressured in this way.
“If the Chinese Communist party regime were to say ‘If you don’t listen to me, I’ll confiscate your assets from Foxconn,’ I would say ‘Yes, please, do it!’” Gou said at the announcement of his presidential run on August 28. “I cannot comply with their orders. I won’t be threatened.”
Once again, Apple could find its own operations disrupted by events over which it has no control.
Apple CEO Tim Cook is doing his best to promote positive relations with China. He is (or has been) on an extended tour of the country. His visit included meeting a senior Communist Party official to announce a donation to a rural development program (aka “have some money, please be nice to us”).
Update: China issues non-denial
Bloomberg reports a brief statement by the Chinese government, in which it says that the investigation is lawful, but does not address the claims of political motivation.
“The probes into whether companies are abiding by laws are normal law-enforcement activities, and in line with laws and regulations,” said Zhu Fenglian, spokeswoman for the government department in Beijing that handles ties with Taiwan.