MNCs in the News-2014-06-13

The UN Global Compact is a well-known corporate social responsibility initiative that seeks to advance principles relating to anti-corruption, the environment, human rights, labor, and, more recently, food and agricultural. Guangxi Penshibao Co, a fertilizer company, recently became the first Chinese company to sign the Compact, thereby committing itself to inter alia advancing food security, transferring knowledge, skills, and technology, and creating decent work. Penshibao Chairman Wang Xianglin explained that “‘he wanted to do something for agriculture and the world’” while other executives noted the signing was a way for the firm to align itself formally with its current standards (Elizabeth Wu, “Company Signs UN Business Principles,” China Daily, June 6, 2014, http://usa.chinadaily.com.cn/2014-06/06/content_17567746.htm)

Taizhou Fuling Plastic Co., a plastic tableware and kitchenware maker that supplies leading foodservice industry companies and supermarkets, recently announced plans to set up a more than $20 million factory in the Lehigh Valley region of Pennsylvania. The firm opted for the investment in the US in order to lower shipping costs and enhance its footprint in the US. According to Fuling Plastic Co.’s CEO, the efforts of Lehigh Valley Economic Development Corporation officials and State of Pennsylvania officials were instrumental in attracting the firm, which also had considered Maryland, New Jersey, and Virginia (among other locales), to the region (Jack Freifelder, “Chinese Plastics Maker to Build US Factory,” China Daily, June 11, 2014, http://usa.chinadaily.com.cn/2014-06/11/content_17577375.htm)

Leaders of an Indian services delegation (involving government, business, and industry associations) to the 3^rd China International Fair for Trade in Services Beijing, which also participated in an India-China roundtable on the sidelines, voiced a desire for a “single window clearance” concept that would make it easier for Indian IT firms to enter the China market. Indian Ambassador to China Ashok Kantha pointed out that “like Chinese companies…which are doing well in India, expectations are that Indian IT firms also do well in China” and highlighted possibilities for Indian IT firms and Chinese state-owned enterprises to cooperate in third countries (“India Aims for Single Window Clearance for IT Firms in China,” The Financial Express, June 1, 2014, www.financialexpress.com/story-print/1256169)

Foreign law firms are finding it as critical as ever to invest in China because of the growing global reach of Chinese regulations and anti-monopoly laws. They also find it essential because Chinese firms want legal advisors to help them with their outward investment activities. On top of this, the newfound activism of Chinese regulators regarding bribery, price fixing, and other issues has intensified the need for legal advice. A presence in China also helps with the fact that there seems to be increasing co-ordination among local regulators which makes the ability to provide service in multiple locales more crucial (Caroline Binham, “Partnerships Aid Global Investigations,” Financial Times, June 11, 2014).

In the first case of its kind, a labor dispute arbitration panel in Xiamen ruled that Coactive Technologies, a foreign-funded company, illegally terminated the employment contracts of certain workers. The roots of the case trace back to several hundreds of workers striking to protest what they felt was an inadequate compensation offer from the company for costs associated with the relocation of the firm’s offices. Retaliating, the company fired about 40 workers, saying they did not have a valid reason to be absent from work. The panel ruled the workers had not done anything harmful and could not be fired (Sun Li, and He Dan, “Workers Laid Off Illegally after Two-Week Strike, Arbitrators Rule,” China Daily, June 11, 2014, http://www.chinadaily.com.cn/china/2014-06/11/content_17577509.htm)

Japanese firms not only confront forced wartime labor issues regarding China, but also with respect to South Korea. South Korea recently established a foundation to support forced wartime laborers and their bereaved families. Millions of Koreans are believed to have worked for the Japanese government and companies and this foundation will press Tokyo and Japanese companies like Mitsubishi Heavy Industries, Sumitomo Heavy Industries Ltd., and Showa Denko KK to pay compensation. This year, the South Korean government has given the foundation 3 billion won and steel maker Posco says it will invest 10 billion won over the next 3 years (“New S. Korean foundation to fight for laborers forced to toil for Japanese overloads,” Japan Times, June 8, 2014, http://www.japantimes.co.jp/news/2014/06/08/national/politics-diplomacy/...)

JETRO and Massachusetts have signed a Memorandum of Understanding (MOU), JETRO’s first MOU with a state government in the US. Massachusetts has renowned universities and many research institutions and the state government has eagerly supported bio-technology and renewable energy industries. Takeda pharmaceutical company and Sekisui Chemical Co Ltd. have bases in Massachusetts and the government plans to support more Japanese corporate activities in the state. Per the MOU, JETRO will support Massachusetts–based American firms trying to enter Japan. JETRO later plans to conclude MOUs with California, Illinois, and Texas (“JETRO and Massachusetts to sign a memorandum for strengthening collaboration of trade and investment,” Nikkei, June 12, 2014, http://www.nikkei.com/article/DGXNASGM1200U_S4A610C1000000/?n_cid=TPRN0003)

Korean steel producers Hyundai Steel and Dongkuk Steel Mill filed an anti-dumping petition against Chinese H-shaped steel producers, claiming that these firms’ exports to Korea are priced at a 20% discount to that of the domestic price in China. The Korea Trade Commission (KTC) will undertake an investigation, to be concluded by early 2015. to determine if these Chinese firms, which make up roughly 22% of the H-shaped steel market in Korea, indeed are violating Korean anti-dumping regulations. Dongkuk claims Chinese dumping contributed to its US $1.3 million first quarter operating loss, though it registered US $1.5 billion in sales (Park Si-soo, “Korea files anti-dumping claim against China steelmakers,” The Korea Times, June 9, 2014, http://www.koreatimes.co.kr/www/news/biz/2014/06/123_158784.html)

The vice mayor of Vienna, Austria, is making a push to bring creative Korean start-ups to the city, touting shared traditional and contemporary values with Seoul and a rich cultural heritage. Backed by municipal funds, the Vienna Business Agency will provide foreign start-ups with business consulting, recruiting, and up to 500,000 euros of funding. Vienna also recently hosted a competition for start-ups in Seoul, with two teams selected to participate in the Pioneers Festival, the largest start-up festival in Europe (Shin Ji-hye, “Vienna seeks to attract Korean start-ups,” The Korea Herald, June 11, 2014, http://www.koreaherald.com/view.php?ud=20140611001157)

Directives by the National Council for Peace and Order (NCPO), Thailand’s highest military organization, have led to the suspension of US $6.1 billion in Thai water projects undertaken by Korean state-run firm Korea Water Resources Corp. (K-water). The NCPO has ordered a temporary halt in operations as it reassesses the plans promoted by former Prime Minister Shinawatra and aims to increase the efficiency and transparency of these projects. Project subcontractors including Hyundai Engineering and Construction, GS E&C, and Daewoo E&C have warned that delays will lead to potential investment losses (Kim Joo-hyun, “Thai water projects in jeopardy,” The Korea Herald, June 12, 2014, http://www.koreaherald.com/view.php?ud=20140610001231)

Approximately twenty Japanese companies—mostly in the food and beverage industry—will invest up to US $100 million in Indonesia this year. Insiders cite a stagnant market and recent 3% increase in sales tax as reasons for the outward expansion of Japanese companies. Furthermore, the Indonesian government has offered these companies investment incentives, including tax allowances and tax holidays. In addition, they will rely on more competitive local raw materials for their products, which will be exported back to Japan (“20 Japanese F&B firms to open plants,” The Jakarta Post, June 10, 2014, http://www.thejakartapost.com/news/2014/06/10/20-japanese-fb-firms-open-...)

Gap, a huge American clothing retailer, has announced plans to start producing clothing in Myanmar. It will be the first American retailer to enter Myanmar since the country starting its democratization process. The attractiveness of Myanmar to European and US firms has increased with the easing of sanctions. Gap stated that it would work with a number of US government agencies and non-governmental organizations to enhance the technical and skill levels of workers. Skills shortages are one of the soft infrastructure problems facing foreign investors in Myanmar, who also encounter challenges in regards to hard infrastructure like roads and power (“Gap to Be First U.S. Retailer to Enter Myanmar,” The Street.Com, June 7, 2014, http://www.thestreet.com/print/story/12736711.html)