Nothing is certain except death and tax reviews
Is Beijing shooting itself in the foot?
On Sunday, state media outlet Global Times broke the news that authorities are investigating several of Foxconn’s China subsidiaries.
The official reason: Random tax and land use reviews.
We’re not buying it. Multiple probes are happening across multiple jurisdictions at the same time.
- That tells us the decision to investigate Foxconn was made at the central government level.
Why now? We're struggling to come up with a convincing theory, but in a separate article, Global Times hinted that it may be about the upcoming Taiwanese presidential election in January:
- Global Times noted that Foxconn founder Terry Gou’s presidential bid will help the independence-leaning Democratic Progressive Party win the election, suggesting that Beijing would like to see Gou drop out of the race.
Get smart: If that is indeed the reason for the investigations, Beijing's strategy will fail.
- High-profile meddling with Taiwanese elections will only stoke more anti-mainland sentiment in Taiwan.
Plus: Given that Foxconn is a crucial player in the global manufacturing supply chain, the investigations will further spook already-spooked foreign companies and investors.
The bottom line: We need more information before we're confident that this probe is election-related.
- We'll be keeping our ears open for further clues.