MNCs in the News-2015-10-09

Responding to Shanghai’s move to clarify regulations relating to ride-sharing/hailing services, Didi Kuaidi and Uber Technologies are moving to apply for legal status. Didi Kuaidi, which is backed by Alibaba Group and Tencent Holdings said it had received a license to handle private-registered car bookings in Shanghai and was moving to get authorization elsewhere. Uber China stated it also was getting ready to apply for a license. Uber added it is opening a subsidiary in the Shanghai Free Trade Zone and will invest almost US $1 billion in China. Didi Kuaidi reportedly controls about 80 percent of the China market (“Uber, Didi Kuaidi Seek Lawful Status in China,” China Daily, October 8, 2015, http://www.chinadaily.com.cn/business/2015-10/08/content_22133196.htm)

News media report that the US has determined that three Chinese state-owned enterprises (SOEs) benefitted from a high profile Chinese military hack on US businesses including Alcoa, Westinghouse Electric, US Steel, and Allegheny Technologies. The SOEs are Chinalco, Baosteel, and SNPTC, a nuclear power firm. The US has threatened in the past to impose economic sanctions on entities benefitting from Chinese government commercial espionage, though it has not yet done so. Both Chinalco and Baosteel denied any illegal activity or awareness of such and professed their respect for intellectual property and/or responsible behavior. SNPTC did not respond to media queries (Hannah Kuchler, Geoff Dyer, and Gina Chon, “US Targets Chinese Groups in Cyber Feud,” Financial Times, October 7, 2015).

Korea Trade-Investment Promotion Agency data show that “nearly 70 percent of inbound foreign investment has been concentrated in Seoul and the surrounding area over the past five years.” According to opposition political party members, this is creating a situation where “most rural free economic zones (FEZ)…[have] hardly developed.” The trend seems to be headed in a positive direction, though in the first half of this year about 60 percent of inward foreign investment flowed to Seoul and its surrounding areas. Still, opposition members cajoled the government to do more to make it attractive to invest elsewhere in FEZs around Korea (Park Si-soo, “Foreign Investment Concentrated in Seoul,” The Korea Times, October 2, 2015, http://www.koreatimes.co.kr/www/news/biz/2015/10/123_187881.html)

Korea’s Ministry of Strategy and Finance announced that it was considering introducing a so-called “Google Tax” which would be imposed on transactions made with mobile and other electronic devices pertaining to the purchase of content and applications. The Ministry announced the plan after the Organization for Economic Cooperation and Development met, though the Ministry did not give any details on when and how the tax would be implemented. Domestic wireless content and application market sales have been soaring so it is not surprising their tax potential has caught the attention of the Park Geun-hye government (Choi Kyong-ae, “Korea Mulls ‘Google Tax’ Next Year,” The Korea Times, October 7, 2015, http://www.koreatimes.co.kr/www/news/biz/2015/10/123_188174.html)

Korean news sources report that Volkswagen Korea will issue an apology in the form of letters it will send to almost one million customers who purchased diesel vehicles believed to contain software that falsified emissions data during smog testing. Volkswagen’s scandal was revealed almost 20 days ago, with the former CEO of the parent company Volkswagen AG apologizing for the company’s deceptive behavior. Audi, an affiliate of Volkswagen Group, reportedly will make an apology to its almost 30,000 Korean customers (“Volkswagen Korea to Issue Apology,” The Korea Times, October 7, 2015, http://www.koreatimes.co.kr/www/news/biz/2015/10/123_188159.html)

To jump American tariff barriers, Korean clothes manufacturer Hansae, one of the world’s largest apparel makers with almost 60,000 employees and a slew of major retail clients such as Nike and Uniqlo will build a factory in Haiti whose goods can be exported tariff free to the US. It recently signed an agreement with Haiti’s state-run Sonapi Industrial Park pursuant to which it will build a plant that employs close to 5,000 people. Hansae executives believe the new plant will significantly boost the company’s competitiveness (Park Si-Soo, “Hansae to Build Apparel Factory in Haiti,” Korea Times, October 7, 2015, http://www.koreatimes.co.kr/www/news/biz/2015/10/123_188215.html)

Reacting to Indonesia’s decision to select China for the Jakarta-Bandung medium-speed rail project, some Japanese investors have said they will relocate their plants and reconsider their investment plans. The Chairman of Indonesia’s House of Representatives said Japan’s response was excessive, but still argued Indonesia should approach Japan again given its importance to Indonesia. Other politicians and analysts criticized the government for alienating Japan while the government defending its preference for China as a logical decision given China’s financial package. Indonesia’s Investment Coordinating Board said the country was still attractive to Japanese investors and noted that Japanese investment continues to grow (“Japan’s Response Excessive, but Understandable,” The Jakarta Post, October 7, 2015, http://www.thejakartapost.com/news/2015/10/07/japan-s-response-excessive... “Indonesia Still Attractive for Japan, Says BKPM,” The Jakarta Post, October 2, 2015, http://www.thejakartapost.com/news/2015/10/02/indonesia-still-attractive...)

Khazanah Nasional Bhd Managing Director Tan Sri Azman Mokhtar stated that Malaysia’s government linked companies (GLCs) have matured and can face external challenges such as those that will flow from the conclusion of the Transpacific Partnership Agreement, whose specific details are of yet unknown. In line with this the government is less focused on protecting GLCs and government-owned firms than seeing they “are a commercial unit that practices good governance” and meet their development role (“GLCs Ready to Face TPPA Challenge: Azman,” Daily Express, October 8, 2015, http://www.dailyexpress.com.my/print.cfm?NewsID=103651)

The Singaporean government has put pressure on major retailers in the country not to use or sell materials from firms linked to major fires in Indonesia, which have led to a blanket of dangerous pollutants across Singapore. Fair Price, a state-owned supermarket giant, said it was “removing all paper products sourced from Asia Pulp and Paper Group (APP), given suspicions APP has something to do with the fires. The Singapore Environmental Council observed that “retailers were a ‘good starting point” for firms to show their commitment to sustainable procurement processes” (“Singapore Retailers Grilled over Products Linked to Haze,” BBC News, October 7, 2015, http://www.bbc.com/news/business-34461949)

Taiwan environmental protection agency (EPA) will “withdraw the emission qualification certificates for problematic cars belong to German automaker Volkswagen.” It further asked Volkswagen to compensate Volkswagen car owners. Statistics indicate that around 18,000 Audi, Volkswagen, and Skoda cars sold in Taiwan have the software that cheats emissions tests. Taiwan’s EPA has called upon Volkswagen to recall the cars and make all needed modifications within 90 days. Taiwan’s EPA is also considering imposing fines on Volkswagen (“Taiwan Urges VW to Recall 17,000 cards Amid Emission Scandal,” China.Org.Cn, October 6, 2015, http://www.china.org.cn/business/2015-10/06/content_36749420.htm)

*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.