Chinese authorities have initiated an investigation into Foxconn, the world’s leading contract electronics manufacturer, prompting concerns about the potential repercussions for U.S. companies and the Biden administration.
Foxconn plays a critical role in assembling approximately 70% of Apple’s iPhones, making it a linchpin in the global tech supply chain. However, recent disruptions caused by COVID-related lockdowns and a massive protest at one of its key facilities last year have led to significant delays in iPhone deliveries.
Experts view this investigation as a warning shot, aimed not only at Foxconn but also at its clientele, highlighting the potential financial burdens if Sino-U.S. relations deteriorate further. Chris Miller, an associate professor of international history at Tufts University, emphasized that Beijing’s hope is that these companies would influence their respective governments to improve diplomatic relations.
This development coincides with the U.S. imposing additional restrictions on technology exports to China. Moreover, it comes just a month before the anticipated meeting between President Biden and Chinese President Xi Jinping in San Francisco for the Asia-Pacific Economic Cooperation (APEC) summit. The Chinese state-backed media outlet, Global Times, asserted that these investigations are standard market supervision activities, carried out within the bounds of legality. Foxconn, in response, has expressed its willingness to cooperate with the authorities.
The investigation is still seen as politically motivated, given that any such investigation of a major foreign company in China would require political approval to proceed. This action could be a signal to foreign firms reliant on Foxconn, impacting their operational strategies.
Notably, Foxconn founder Terry Gou’s presidential bid in Taiwan adds another layer of complexity, with the investigations possibly intended to exert pressure on Gou and Taiwan’s political system. As Taiwan’s status remains a contentious issue in Sino-Taiwanese relations, Gou’s candidacy has the potential to affect cross-strait dynamics.
The sources for this piece include an article in Axios.