MNCs in the News-2014-05-16

In summer 2013, China announced that it was investigating GlaxoSmithKline, a leading British pharmaceutical multinational corporation (MNC), for engaging in bribery to enhance sales of GSK products and drugs. It has accused GSK’s China units and subsidiaries, at all levels, not only of bribing, through intermediaries, hospital administrators, doctors, and staff, but also bribing individuals in order to cover up its activities. Recently, the Ministry of Public Security passed the case to prosecutors. Some view the episode as a sign that foreign MNCs’ conventional ways of doing business in China and establishing critical government connections have gone by the wayside (“UK Executive Accused in GlaxoSmithKline China Probe,” BBC News, May 14, 2014, http://www.bbc.com/news/world-asia-china-27403914; Tom Mitchell and Jamil Anderlini, “China Regulators Flex Muscles with Spotlight on Multinationals,” Financial Times, May 14, 2014; and Jamil Anderlini, “China Prescribes a New Way of Working for Multinationals,” Financial Times, May 15, 2014)

Following a recent, successful lawsuit over Chinese ships seized during the Second World War, which resulted in compensation being paid by a Japanese firm to a Chinese family, Chinese (forced) laborers and/or their descendants have become hopeful that they finally may receive redress. At present, 940 plaintiffs have launched cases against Japanese firms, seeking average compensation of $160,100. Defendant Japanese firms include Mitsubishi Corp Ltd., a subsidiary of Mitsubishi Corp., Yantai Misubishi Cement Co, a joint venture between Mitsubishi Corp and construction firm Mitsubishi Materials Corp, Nippon Coke and Engineering Industry Co (formerly Mitsui Mining Co), and Nippon Yakin Kogyo (Sui-Lee Wee and Li Hui, “Hundreds of Chinese families seeking wartime compensation from Japan,” Reuters, May 13, 2014, http://in.reuters.com/article/2014/05/13/uk-china-japan-reparations-idIN...)

Mass demonstrations in Vietnam in mid-May resulted in damage to Japanese businesses by participants who mistakenly believed such companies were Chinese. Other Japanese companies suffered losses as a result of their factories’ proximity to Chinese ones. The demonstrations occurred after the China National Offshore Oil Corporation announced on May 3 that it would undertake large-scale oil exploitation around the Paracel Islands, which both China and Vietnam claim, and Chinese and Vietnamese ships clashed (though there were no military incidents). In response, thousands of protestors marched against and targeted “Chinese” businesses to vent their nationalist fury (“Will there be a large-scale military confrontation?” JBpress, May 14, 2014, http://jbpress.ismedia.jp/articles/-/40673; “Stoning at Chinese factory by Vietnamese protesters, partial damage to Japanese firms,” Nikkei, May 14, 2014, http://www.nikkei.com/article/DGXNASGM1303P_T10C14A5FF2000/)

Citing a business-positive outlook in Asia’s fourth-largest economy, Mileage Communications, Singapore’s largest public relations agency, will open a joint venture, entitled “Mileage Communications Korea” in Seoul, Korea. Along with helping foreign companies open businesses in Korea and assisting Korean companies with their marketing communications needs in Asia, this new venture seeks to assist and support Korean government agencies in strengthening relations and carry out collaborative efforts with Southeast Asia states (Yoon Sung-won, “Top Singaporean PR firm opens in Korea,” The Korea Times, May 15, 2014, http://www.koreatimes.co.kr/www/news/biz/2014/05/123_157248.html)

Anti-China protests and riots in Vietnam led to more than 100 Taiwanese companies being attacked by angry mobs. More than 1,000 Taiwanese companies in Vietnam affected with some putting potential losses at several billion US dollars. Dozens of Taiwanese companies in South Vietnam, including Uni-President Group, Far Eastern New Century Corp, China Steel Corp., and Kenda Rubber Industrial Co., have halted production out of safety concerns. Other companies in North Vietnam like Hon Hai Precision Industry Co have not been affected by the riots in the south and production lines continue to operate as normal (Lisa Wang, “Factories in Vietnam attacked in riots,” The Taipei Times, May 15, 2014, http://www.taipeitimes.com/News/biz/archives/2014/05/15/2003590347)

The forthcoming ratification of the European Union-Singapore free trade agreement as well as Europe’s ongoing recovery from its debt crisis are pushing business leaders from Singapore to look to Portugal and Switzerland for investment opportunities. Aside from having a strong talent pool, Portugal presents a gateway into other promising Portuguese-speaking emerging markets like Brazil, Angola and Mozambique. Singapore’s business leaders view Switzerland as an attractive destination because of business managerial expertise, its potential as a start-up hub for Europe, and Swiss government assistance in turning academic research into commercial products (Yasmine Yahya, “S'pore firms discover business potential in Portugal, Switzerland,” Business Asia One, May 16, 2014, http://business.asiaone.com/news/spore-firms-discover-business-potential...)

As a consequence of the Indonesian government’s prohibition of raw ore exports in January, the country expects to see nine nickel-processing plants completed in 2014. Nickel prices have jumped forty-eight percent this year, in part because of the ban, but also because of concerns that Russia, a major nickel producer, will face tougher economic sanctions as a result of its annexation of Crimea. One example of such a processing plant is Sulawesi Mining Investment, a joint venture between Chinese and Indonesian companies, which confirmed that it plans to start output at a 300,000-ton ferronickel smelter in Central Sulawesi next year (“Nickel smelters surge in Indonesia after ore export ban,” The Taipei Times, May 13, 2014 http://www.taipeitimes.com/News/biz/archives/2014/05/13/2003590204)

In mid-May, Myanmar’s Minister of Industry went to Vietnam to discuss bilateral economic cooperation. Vietnam expressed an interest in expanding the two countries’ economic interactions, including Vietnamese investment in Myanmar. The two countries agreed that they would examine ways to facilitate Vietnamese investment, especially banking investment, in Myanmar. The meeting built upon a summit between Vietnam’s President and Myanmar’s Vice President in 2013 that addressed matters such as investment, tourism, and resource exploitation. Myanmar’s efforts to boost Vietnamese investment parallel its efforts to increase investment from other countries which links, in part, to its steps to diversify away from China (“Vietnam and Myanmar to Boost Bilateral Cooperation after ASEAN Summit,” Vietnam Briefing, May 14, 2014, http://www.vietnam-briefing.com/news/vietnam-myanmar-boost-bilateral-coo...)