In a significant turn of events, the Industrial Fortune Union, a subsidiary of Foxconn Group, has faced a drastic reduction in market value, plummeting by 48 billion yuan in just two days. This steep decline comes amid ongoing investigations into the company's tax practices and land use in key locations across China, leading to heightened scrutiny and concern from investors and stakeholders alike.
The global giant, Foxconn, widely known for its electronics manufacturing prowess, has found itself at the center of tax audits conducted by authorities in Guangdong and Jiangsu. Moreover, the Ministry of Natural Resources has initiated land use inspections in Henan and Hubei, targeting key Foxconn enterprises. This dual investigation has triggered a sharp fall in the stock prices of Industrial Fortune Union, which has seen its market value evaporate significantly.
As Foxconn Group, colloquially known as Hon Hai Group in mainland China, indirectly controls more than 61% of Industrial Fortune Union's shares, the impact of these investigations is profound. The Group has pledged full cooperation with the relevant authorities and emphasized its commitment to legal and regulatory compliance worldwide. Yet, the precise nature of the investigated enterprises and the relationship between them and Industrial Fortune Union remains unclear, adding to the uncertainty and speculation surrounding the situation.
This development is particularly striking given Foxconn's extensive investment and employment footprint in mainland China, where it operates over 40 parks and, at its peak, employed millions of workers. The company's significant contributions to China's imports and exports have made it a cornerstone of the nation's industrial landscape. However, the mismatch between Industrial Fortune Union's profits and tax expenses, as reported by Interface News, raises questions about the company's financial and operational practices.
As the market reacts to these developments, Industrial Fortune Union's stock performance has become a focal point. Despite being a leader in communication network equipment and cloud computing equipment manufacturing since its listing, the company's post-listing performance has not been as robust as expected. The recent decline in stock price, following a period of impressive growth earlier in the year fueled by AI and 5G concepts, has resulted in significant losses for many funds holding the company's shares.
This downturn in fortunes for Industrial Fortune Union and the broader implications for Foxconn Group highlight the vulnerabilities and challenges even the largest and most influential companies face. As the investigations unfold, the industry and investors are closely watching to understand the full impact and the potential repercussions for Foxconn's global operations and reputation.
