China’s Foxconn probe to worry foreign manufacturers

Significance

His campaign ground to a halt soon after the Chinese government in late October launched tax and land use audits against the electronics manufacturing company best known for being Apple’s leading subcontractor. The audit reveals growing tension between Beijing’s desire to extend its control over the domestic economy and preserving China’s centrality in global supply chains.

Impacts

• Multinational businesses will face greater fiscal scrutiny from local governments in China as their financial pressures rise.
• While China will remain essential to Apple’s supply chain for the foreseeable future, political risks to the company’s operations will rise.
• Beijing’s assurances on being friendly to foreign businesses will be received with growing scepticism.