The joint investigation of Foxconn by multiple departments in various places has three major highlights

Executive Summary:

On Sunday, the Global Times reported that relevant departments conducted tax audits and land use investigations on Foxconn's enterprises in accordance with the law, which detonated public opinion and the Internet at home and abroad. Why suddenly check Foxconn? How much impact does Foxconn have on our jobs and economy? Can you find out the problem with Foxconn?

1. On October 22, "Cha Foxconn" became the biggest hot search event that overwhelmed the war in Kazakhstan and the Russian-Ukrainian war

In the early morning of October 22, a news article in the Global Times entitled "Exclusive: Relevant departments conduct tax inspections and land use investigations on Foxconn's enterprises in accordance with the law" exploded public opinion and the Internet at home and abroad.

According to the report, the tax department recently conducted tax audits of Foxconn Group's key enterprises in Guangdong, Jiangsu and other places in accordance with the law, and the natural resources department conducted on-site investigations on the land use of Foxconn's key enterprises in Henan, Hubei and other places.

On the same day, a number of terms about Foxconn rushed to Weibo hot search, and the attention once exceeded the Israeli-Kazakh war and the Russian-Ukrainian war.

Foxconn is not only famous in Chinese mainland, but also in the world. A news report in the Global Times of just over 400 words is not many words, but the content is very powerful.

First, not only the tax department, but also the natural resources department participated in the investigation. This means that it is necessary to strictly check not only the taxation of mainland Foxconn-affiliated enterprises, but also the use of their land.

Second, it is not to check an enterprise, but to check Foxconn's enterprises in various parts of the mainland. The Global Times named Guangdong, Jiangsu, Henan and Hubei in the report, but added "other places" with very Chinese characteristics, indicating that there are too many to investigate, and it must be more than Foxconn's companies in these four places.

Third, official intentions are passed down from generation to generation. In the report, the Global Times did not directly quote any official statement or explanation, and in the context of repeatedly emphasizing the continuation of opening up to the outside world, attracting foreign investment, and encouraging the development of the private economy, the Global Times used the phrase "learned from sources" to disclose that multiple departments conducted a multi-target investigation into one of the most influential enterprises in China in Hong Kong, Macao and Taiwan investing in the mainland. This must have been a deliberate arrangement above.

What is even more interesting is that the Global Times devoted most of its 400-word report to publishing two paragraphs of comments by Zhang Wensheng, vice president of the Institute of Taiwan Studies at Xiamen University, on the investigation of Foxconn. He ended the news with Zhang Wensheng's sentence that "while Taiwan-funded enterprises, including Foxconn, share the dividends of development and achieve rapid development in the mainland, they should also assume corresponding social responsibilities and play an active role in promoting the peaceful development of cross-strait relations." Is this the personal meaning of Zhang Wensheng, who is engaged in academic research?

Second, Foxconn's layout and economic influence in the mainland

National securities big data according to the "Securities Times" October 22 "Foxconn, rush to the hot search! The news of the article, as well as the relevant information on Foxconn's official website, as well as some other official media reports, sorted out the basic situation of Foxconn and the impact on the mainland economy.

First, who is Foxconn?

Foxconn is the abbreviation of Foxconn Technology Group, also known as Hon Hai Technology Group. In Taiwan, China is mostly called Hon Hai, because the Chinese name registered in Taiwan is Hon Hai Technology Group; In the mainland, it is mostly called Foxconn, which comes from the pronunciation of its English abbreviation FOXCONN.

Foxconn is a technology products manufacturing company in Taiwan, China, and the world's largest technology products OEM manufacturer. Almost all of the world's well-known mobile phones, computers and other electronic products have some of them produced by Foxconn's subsidiaries to varying degrees.

On June 21, 2019, Gou, who was preparing to enter Taiwanese politics, resigned as chairman of Hon Hai (Foxconn) Group, and the Hon Hai shareholders' meeting elected 63-year-old chip expert Liu Yangwei to replace Gou as chairman, ranking first in the nine-member management committee.

But Gou remains a director of Hon Hai. Perhaps with a keen sense of smell, on September 2, 2023, Foxconn founder Terry Gou issued a statement through Hon Hai Technology Group on the evening of the same day, saying that due to personal factors, he announced his resignation as a director of Hon Hai Technology Group.

Gou handed over the management of the Foxconn industrial empire he founded to others after announcing his candidacy for the 2020 leadership election in Taiwan, China, in April 2019. After losing the election, he still did not admit defeat, and on August 28, 2023, he announced his participation in the 2024 Taiwan leadership election.

Some people believe that his refusal to cooperate with the flood camp in the second election, and his expression to run independently, may distract the votes of the blue camp and lead to the profit of the green camp fishermen who are at odds with the unified will. The announcement of his resignation as director of Hon Hai Technology Group a month ago may be to mitigate the impact of his political actions on the company's operations.

Second, who is it that many places and departments suddenly join forces to investigate?

This time, the enterprises that will be deeply investigated in many places and departments on taxation, land and other issues are not Hon Hai Group, but a number of enterprises that have invested in the mainland.

According to the official website of Continental Foxconn, which represents the unified image of mainland Foxconn, managed by Futaihua Industry (Shenzhen) Co., Ltd., a wholly-owned subsidiary of Hon Hai Group, Hon Hai Group began to invest and set up factories in Chinese mainland in 1988.

As of 2022, Foxconn has more than 40 parks in mainland China, with one million employees at its peak, and its product range covers consumer electronics, cloud network products, computer terminal products, components and other four major fields, making it the world's largest electronic technology intelligent manufacturing service provider.

According to Foxconn's official website, at present, the group's main industrial parks in Chinese mainland are distributed in Shenzhen, Zhengzhou, Chengdu, Taiyuan, Kunshan and Yantai.

According to a report by the Securities Times on October 22, Foxconn's industrial layout in the mainland is as follows:

Pearl River Delta region: layout Guangzhou, Shenzhen, Foshan, Dongguan, Huizhou, Zhongshan and other places. Shenzhen headquarters focuses on building a science and technology research and development base and e-commerce, electronic module large-scale trade, new product introduction, talent training center.

Yangtze River Delta region: layout Shanghai, Nanjing, Hangzhou, Ningbo, Wuxi, Kunshan, Huai'an, Jiashan and Anqing and other places, forming precision connectors, liquid crystal displays, wireless communication components, network communication equipment components, semiconductor equipment and software technology development and other industrial chain and supply chain aggregation system.

Bohai Rim area: layout in Beijing, Tianjin, Shenyang, Yantai, Heze, Langfang, Qinhuangdao and other places, with cloud computing, nanotechnology, wireless communication, consumer electronics, computer components, servo motors, precision machine tools, environmental technology, etc. as the backbone industries.

Central and western regions: layout Chongqing, Chengdu, Guiyang, Nanning, Wuhan, Changsha, Zhengzhou, Taiyuan, Jincheng, Jiyuan, Hebi, Puyang, Lankao, Zhoukou, Hengyang and other places, focusing on the development of magnesium aluminum alloy, auto parts, precision molds, automation equipment, optomechanical and electrical modules, smart phones, tablet computers, etc.

Third, how much impact do Foxconn's enterprises have on the mainland economy?

In 2022, the revenue of mainland Foxconn enterprises will be about 1.49 trillion yuan, an increase of about 10% over the previous year, accounting for 1.23% of the national GDP of 121 trillion yuan in that year; It is close to 60% of State Grid, the largest enterprise in terms of turnover, and 232% of Huawei's turnover.

The total import volume of mainland Foxconn enterprises in 2022 will be about 540 billion yuan, accounting for 3.0% of the mainland's total imports, ranking first among non-energy enterprises; The total export volume is about 849 billion yuan, accounting for 3.5% of China's total exports, which is the No. 1 in mainland commodity exports for many years.

According to the calculation of multi-channel data, in 2022, mainland Foxconn-affiliated enterprises will employ about 1.1 million laborers during peak periods, about 850,000 during troughs, and provide an average of 975,000 jobs throughout the year, accounting for 4.1% of the labor employed by foreign-funded and Hong Kong, Macao and Taiwan enterprises, and 0.34% of the total employment labor force of all units and enterprises in cities and towns across the country.

The above are the labor positions directly provided by mainland Foxconn enterprises. From the actual situation, each Foxconn factory has a group of service enterprises or self-employed and freelancers to provide tertiary industry services. According to the calculation that a manufacturing job needs at least 1.5 service industry jobs, mainland Foxconn enterprises will bring at least 1.463 million service industry job demand. If the supporting service industry jobs are included, about 2.438 million jobs created by mainland Foxconn-affiliated enterprises, accounting for 1.07% of the labor employed by non-state-owned units and state-owned enterprises nationwide.

In addition, as one of the largest foundry enterprises, mainland Foxconn also affects many upstream and downstream enterprises, including more than 100 superior companies.

Foxconn Group ranked 20th in the Fortune Global 500 in 2022.

Third, can Foxconn's enterprise department in the mainland withstand the strict investigation of multiple departments and places?

To answer this question, it is both easy to answer and difficult to answer.

First of all, without a little spectrum, there are not enough clues, and the above will not do anything to an iconic Taiwan-funded enterprise.

Although our administrative power is relatively large, and the power of officials to interpret the provisions of laws and regulations is also very large, there are often examples of local officials randomly investigating and punishing enterprises. However, everyone should pay attention to the treatment of such an iconic Hong Kong, Macao and Taiwan enterprise as Foxconn, an enterprise with great international influence, no matter what the purpose, there is no spectrum, there are not enough clues, and the above will definitely not do it.

Secondly, mainland Foxconn enterprises may have the "original sin of attracting investment".

For more than 30 years, Foxconn has been a sought-after product and a sweet potato in all parts of the mainland. In order to complete the task of attracting investment and benefiting the first term of office, all localities are dispatching the most important officials and giving the most favorable conditions to attract Foxconn's attention and favor. On the one hand, most localities have given preferential conditions other than national policies for the introduction of Foxconn, on the other hand, Foxconn has indeed promoted the take-off of the local economy after local investment, and the benefits have long been hundred, thousand, or even ten thousand times that of the original preferential treatment. However, according to the strict examination of policies and legal letters, there will certainly be many problems.

For example, in 2008, the Chongqing Municipal Government planned to establish a complete notebook industry foundation, and after successfully signing a contract with HP's 4 million notebook production base project, it introduced Foxconn with the following preferential policies:

(1) Order acquisition: help enterprises obtain notebook OEM orders and increase market share;

(2) Preferential land price: subsidize the land transfer fee according to the volume of the project;

(3) Tax exemptions: "two exemptions and three halves" for foreign enterprises;

(4) Preferential tax rate: corporate income tax reduced from 25% to 15%;

(5) Other support: including a series of support such as project loans, employee social security, and enterprise finance.

After Foxconn's entry, the number of employees in Chongqing's communication equipment, computer and other electronic equipment manufacturing enterprises increased from 320,000 five years ago to 11.47 million in 2012, an increase of 35 times. The value-added tax of enterprises increased by 7.5 times; the gross industrial output value increased by 26 times.

Third, it is not excluded that mainland Foxconn enterprises still have problems in changing land use and evading taxes.

Mainland Foxconn enterprises, scattered in 37 large and small cities across the country, employ millions of laborers and involve a large amount of industrial land. To manage such a huge enterprise system that occupies hundreds of thousands of acres of land and generates more than one trillion yuan of revenue a year, who can guarantee that there is not a single omission or violation in it?

Finally, Saburo wanted to say:

We must draw lessons from the strict investigation of education and training and network platform enterprises in previous years. How to investigate Foxconn-affiliated enterprises on the mainland, how to distinguish between negligence and intentional violations of laws and regulations, how to distinguish between historical legacy and practical problems, how to distinguish between local illegal preferential treatment and enterprise violations of law and discipline, how to deal with them later, and how to control the impact of the handling results on our labor and employment, economic recovery, investment promotion, Taiwan policy, international public opinion, and many other factors are testing the investigators' political experience and overall situation.

【Author:Xu Saburō】