China rattles foreign firms again with arrests, Foxconn probe
Foxconn Technology Group, Apple Inc.’s most important partner and one of the largest employers in China.
Over the weekend, state media said that regulators are conducting tax audits and reviewing land use by Foxconn, the Taiwanese company that makes the vast majority of iPhones at factories in China. Hon Hai Precision Industry Co., Foxconn’s public arm, said it will collaborate with authorities.
Meanwhile, an executive and two former employees of WPP Plc, one of the world’s biggest advertising companies, have been arrested in China, people familiar with the matter said.
The government detained a local employee of a Japanese metals trading company in March, the Nikkei newspaper reported Sunday. And this month, a court formally charged an Astellas Pharma Inc.
on suspicion of espionage.
Hon Hai, Foxconn’s main listed arm, fell the most in more than three months Monday. Foxconn Industrial Internet Co., a major Shanghai-listed subsidiary, plunged its 10% daily limit — its biggest loss on record.
China often does not explain the actions taken by its regulators publicly, leaving companies with operations in the country guessing at the ultimate goals of the government.
Given the Communist Party’s immense power, that opaque approach to oversight of the economy has unsettled foreign executives. The Japanese trading company worker was detained in March and there is still no public acknowledgment of or clarity about the specific charges.
“My sense is that the core of the leadership really worries about foreign influence as dissent, among elites, is growing,” said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis SA.
“It is not a signal for foreigners. It is a signal for the elites: don’t follow that path.”
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