Foxconn, an iPhone supplier, falls 3.4% on reports of a government investigation into activities

 Foxconn, an iPhone supplier, falls 3.4% on reports of a government investigation into activities

Following news that the Chinese government has opened investigations into the business, Foxconn's shares dropped 3.4 percent in early trading on Monday, October 23, the most they have dropped in more than three months, according to Bloomberg. 

Foxconn, a Taiwanese company, is known as Hon Hai Precision Industry Co. in China. Millions of devices are produced in its Zhengzhou factory, often known as iPhone city, making it the biggest iPhone assembler in the world.

Beijing has started a number of inquiries into Foxconn's activities in China, especially its facilities in the country's central and southern regions.

investigations were started

According to a source quoted in the state-run Global Times, tax authorities are looking into Hon Hai's subsidiaries in the provinces of Jiangsu and Guangdong, while officials from the Natural Resources department are investigating the use of land at its sites in the provinces of Hubei and Henan. 

There are currently no more information.

The business said in a filing with Taiwan's stock market that it would cooperate with Chinese authorities on investigations. But no details were provided.

Why do these audits?

According to Zhang Wensheng, the deputy dean of the Taiwan Research Institute of Xiamen University, tax audits and land use inquiries are common practices undertaken to businesses accused of breaking laws and regulations.

According to a Reuters story, Zhang underlined how important it is for Foxconn's affiliates to actively participate in these audits and inquiries.

He said, "Foxconn's subsidiaries are required to actively comply with audits and investigations, and if there are any legal or regulatory infractions, they should acknowledge fault, accept punishment, and step up rectification.