MNCs in the News-2014-04-18

Johnson & Johnson (J&J), a major American pharmaceutical company, will build a US $300 billion bio-pharmaceutical factory in Xi’an, China. The plant, which will be run by Xi’an Janssen, a J&J subsidiary, will represent a major expansion of J&J production capabilities in China and help meet J&J’s demands in China and the wider Asian region. On top of the market rationales for building the plan, J&J was attracted by the investment environment created by the Xi’an City High-Tech Development Zone (HTDZ) as well as the HTDZ’s plans to foster research institutions and establish a registration center for foreign biomedical projects (Lu Hongyan and Ma Lie, “J&J Builds World’s Largest Supply Chain Base,” China Daily, April 18, 2014, http://www.chinadaily.com.cn/business/2014-04/18/content_17443463.htm)

In mid-April, Chinese Vice-Premier Wang Yang met with a delegation of Japanese business leaders, the first meeting between a Chinese Vice-Premier and Japanese elites since the cooling in relations following Japanese Prime Minister Abe Shinzo’s December 2013 visit to the Yasukuni Shrine. Wang “called on prominent entrepreneurs in Japan to repair the nations’ strained relationship, saying “‘China and Japan are major economic and trade partners and the deepening of economic trade and cooperation serves the interest of both.’” The expectation they might play a role links to the fact that “‘China is still a major market for Japanese business giants’” (“Japan Businesses Encouraged to Repair Ties,” China Daily, April 16, 2014, http://www.chinadaily.com.cn/china/2014-04/16/content_17436569.htm)

As previously noted in the Wong MNC News digest, the Japanese government recently issued new principles for arms exports that eased past restrictions. In line with this, Mitsubishi Heavy Industries, Ltd. intends to begin selling missile part to the US through a licensing agreement with Raytheon Company, a US company. Mitsubishi specifically plans to export a high performance sensor for the PAC2 anti-missile system. Procedurally, the Japanese government will wait for a formal request from the US government after which time it will commence an official evaluation of the request and debate its acceptability at a National Security Council meeting (“Mitsubishi Heavy to start exporting missile parts to the U.S. after new three principles for defense equipment,” Nikkei, April 17, 2014, http://www.nikkei.com/article/DGXNASFS1601H_W4A410C1MM8000/)

Since February 2014, Chinese wartime laborers and the family members of deceased wartime laborers have been filing an increasing number of lawsuits against Japanese firms for unpaid compensation and damages. Recently, the first court filing involving a Chinese-based affiliate of a Japanese company took place when four litigants, putatively representing 700 individuals, filed a lawsuit against two Mitsubishi group firms—Yanai Mitsubishi Cement Co. (then a unit of Mitsubishi Mining Co.) and Mitsubishi Corp—for compensation and damages totaling US $160,687 (1 million Chinese yuan) per person. The case also is “novel” in terms of the size of its claim (“Forced labor suit target Mitsubishi,” The Japan Times, April 16, 2014, http://www.japantimes.co.jp/news/2014/04/16/national/mitsubishi-group-lo...)

The Queensland (Australia) Department of Environment and Heritage Protection (DEHP) has charged Singapore’s Linc Energy for allegedly causing serious environmental harm at an Underground Coal Gasification (UCG) research and development facility near Chinchilla. The charges follow a nine-month investigation of Linc’s activities at this facility and the DEHP says it will continue to investigate whether groundwater contaminant risks are being properly assessed and monitored. Linc has denied the DEHP’s allegations, claiming the DEHP did not provide specific details about the nature or magnitude of the alleged damag, and that Linc has no knowledge of any unlawful harm to the environment (“Linc Energy rejects environmental harm charges,” Today Online, 4/18/2014, http://www.todayonline.com/business/linc-energy-rejects-environmental-ha...)