Shares of Foxconn, fell 3.4 percent in early trade on Monday, October 23, the most it has moved downwards in over three months, following reports that the Chinese government has initiated probes against the company, Bloomberg reported.
A Taiwanese firm, Foxconn is known domestically as Hon Hai Precision Industry Co. in China. It is the largest assembler of Apple’s iPhone worldwide, producing millions of units from its Zhengzhou facility, also known as iPhone city.
Beijing has launched a series of investigations into Foxconn’s operations in China, particularly its facilities in central and southern China.
Investigations launched
Tax authorities are looking into Hon Hai’s subsidiaries in Jiangsu and Guangdong provinces; while officials from the Natural Resources department are conducting checks into land use at its Hubei and Henan province facilities, as per a source-based report in state-run Global Times.
Other details are not yet available.
In a filing with Taiwan’s stock exchange, the company said it will collaborate with Chinese authorities on investigations. However, no specifics were mentioned.
Why the audits?
The tax audits and land use investigations are standard procedures applied to enterprises suspected of violating rules and regulations, Zhang Wensheng, the deputy dean of the Taiwan Research Institute of Xiamen University told the Global Times.
Zhang emphasized that it is essential for Foxconn’s subsidiaries to cooperate actively with these audits and investigations, as per a Reuters report.
“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,” he added.
Source: Mint
