MNCs in the News-2016-05-06

Recently, China’s State Administration of Press, Publication, Radio, Film, and Television ordered Apple to shut down its iBooks Store and iTunes Movies. Some saw it as a sign Apple’s “good relations in the country may be turning” with more pressure by Beijing on Apple, bad news given the latter’s dependence on China. One consultant argued China was taking these movies to censor content, “police national security, and favor indigenous giants.” To date Apple has had a good ride in China despite being labeled a “guardian warrior” or foreign firm having excessive penetration in the country’s energy, communications, education, and military (Paul Mozur and Jane Perlez, “Apple Services Shut Dow in China in Startling About-Face,” New York Times, April 21, 2016, http://www.nytimes.com/2016/04/22/technology/apple-no-longer-immune-to-c... Julia Love, “China Ban on Apple Services is a Challenge for Key Growth Area,” Reuters, April 22, 2016, http://www.reuters.com/article/us-apple-china-blocking-idUSKCN0XJ2Q6)

The Beijing Municipal High People’s Court has ruled Xintong Tiandi Technology can continue to sell leather goods (e.g., handbags, mobile phone cases) with the name “IPHONE,” which Xintong Tiandi trademarked in China in 2010 (3 years after its initial application) without any problems because Apple was not a well-known brand in China before 2007. Apple moved to trademark its electronic goods in 2002, but this was not approved until 2013. Apple said it was disappointed at the Court’s ruling given it had won other cases against Xintong and said “‘we intend to request a retrial with the Supreme People’s Court” (“Apple Loses Trademark Fight over ‘iPhone’ Name in China,” BBC News, May 4, 2016, http://www.bbc.com/news/business-36200481)

In a statement, China’s General Administration of Quality Supervision, Inspection, and Quarantine announced that Chinese automaker Dongfeng Automobile and its joint-venture partner Nissan Motors will recall almost 58,000 vehicles because of software problems that might led to airbag malfunctions. Dongfeng’s recalled vehicles include approximately 26,000 Infiniti Q50L models manufactured between 2014 and 2016 and around 11,000 Infinity QX50 models produced over roughly the same prior. Nissan’s roughly recalled vehicles include close to 12,400 imported QX60s. Per reports, the companies will undertake all repair work on the recalled vehicles for free (“Dongfeng, Nissan to Recall 57,648 Vehicles,” China.Org.cn, April 30, 2016, http://www.china.org.cn/business/2016-04/30/content_38357762.htm)

Australia has rejected a proposed investment by a consortium involving Dakang Australia Holdings and China’s Shanghai Pengxin Group in Australia’s S. Kidman & Co. It also rejected a proposal by another consortium involving Hunan Dakang Pasture Farming and Shanghai CRED Real Estate Stock Co. The purchase of Kidman would have given the winning buyer acreage roughly equal to 2.5% of Australia’s farmland. Some see the rejection as motivated by general elections and “public anxiety about Chinese interests buying farms and businesses.” The rejection did not mean a deal was dead with the 2nd consortium pondering revisions to revise its proposal (“Australian Govt to Closely Scrutinize Sale of Cattle Empire to Chinese Firm,” China Daily, April 20, 2016, http://www.chinadaily.com.cn/business/2016-04/20/content_24687524.htm; Kaori Takahashi, “Australia Rejects Massive Kidman Farmland Sale to China,” Nikkei Asian Review, April 30, 2016, http://asia.nikkei.com/Politics-Economy/Policy-Politics/Australia-reject... Colin Packham, “China Group Withdraws Bid for Australia’s S. Kidman, Set to Make New Offer,” Reuters, May 3, 2016, http://www.reuters.com/article/australia-china-landsale-dakang-pf-idUSL3... “News Analysis: Australian Gov ’t Sends Mixed Message with Blockage of Kidman Sales,” China.Org.cn, April 30, 2016, http://www.china.org.cn/world/Off_the_Wire/2016-04/30/content_38357254.htm; “Chinese Consortium Withdraws Big for Australia’s Largest Landholder,” China Daily, May 3, 2016, http://www.chinadaily.com.cn/business/2016-05/03/content_25032467.htm)

During a visit to the United Kingdom (UK), Japanese Prime Minister Abe Shinzo told British Prime Minister David Cameron that “‘a vote to leave [the European Union/EU] would make the U.K. less attractive as a destination for Japanese investment,’” adding that “‘Japan very clearly would prefer Britain to remain within the EU” with many Japanese companies having established operations in the U.K. because it is a gateway to the EU. At present, there are 1000 Japanese firms in the UK with around US $55 billion of investment. These firms employ 140,000 workers in the U.K. (“Abe Meets Cameron, Says Brexit would Make U.K. Less Attractive for Japanese Investors,” Japan Times, May 5, 2016, http://www.japantimes.co.jp/news/2016/05/05/national/politics-diplomacy/...)

South Korea and Iran signed 66 memorandums of understanding (MOUs), including 30 infrastructure and energy projects worth more than US $37 billion during Korean President Park Geun-hye’s visit to Iran. Bilateral infrastructure projects entail railways and freeways, oil refineries, hospitals, and medical equipment manufacturing facilities. In conjunction with these projects, the Korean government will provide US$ 25 billion worth of financial assistance to Korean enterprises. For investment settlement, the two countries will maintain a Korean won-based system, but will discuss the establishment of a euro-based one. The two countries also signed a shipping agreement, long delayed due to sanctions on Iran (Jung Suk-yee, “66 MOUs Signed at S. Korea-Iran Summit Meeting,” Business Korea, May 3, 2016, http://www.businesskorea.co.kr/english/news/politics/14577-sales-diploma...)

Saudi Arabia’s financial difficulties flowing from a prolonged decline in the price of oil has resulted in the freezing of the construction of a stock exchange center, a state-level project worth $332 million, in the oil Kingdom’s King Abdullah Financial District (KAFD). The project is led by Samsung C & T Corp. and when halted was nearly 70 percent complete. Saudi Arabia’s construction company Bin Laden Group and developer Al Ra’idah who have co-headed the KAFD project for the Saudi Public Pension Agency (PPA) stopped the work because of delayed payments from the PPA (Lee Ji-yong, “Samsung C&T’s $332 mn Construction Project in Saudi Arabia Put on Hold for 7 Months,” Pulse, April 24, 2016, http://pulsenews.co.kr/view.php?sc=30800021&year=2016&no=296939)

Indonesia’s Investment Coordinating Board (BKPM) reported foreign investment inflows in the first quarter of 2016 declined to IDR 96.1 trillion versus IDR 99.2 trillion in the fourth quarter of last year. This was the first quarter-to-quarter decline since 2011. According to BKPM’s Deputy for Investment Activity Supervision, one reason for the decline is that foreign investors were waiting for the government to put forth policy changes including its deregulation package. The decline in foreign investment was offset by an increase in domestic investment and more jobs were created compared with the same period last year (Donyang Wahyu, “Foreign Investment in Indonesia Declines for First Time in Five Years” KATADATA, April 26 2016, http://en.katadata.co.id/news/2016/04/26/foreign-investment-in-indonesia...)

Thailand will host the ITU Telecom World Forum 2016 in Bangkok in November. The government hope this event will help it to draw foreign direct investment from global tech companies. In this vein, it has assigned the Information and Communication Technology (ICT) Ministry to organize the forum, which is expected to benefit Thai ICT-related industries and boost domestic start-up industry. The forum will bring together government representatives, operators, and industry partners, and should attract investors and innovators given Thailand and Indonesia are considered as transitional digital societies needing digital service (Komsan Tortermvasana, “ICT Forum Eyed As FDI Springboard,” Bangkok Post, May 4, 2016, http://www.bangkokpost.com/business/news/958525/ict-forum-eyed-as-fdi-sp...)

The Japan International Cooperation Agency, a key lender for the Thai-Japanese double track railway project, has asked the government if it can develop land along the railway route for commercial purposes. The Thai Transport Minister said the state, according to the current expropriation law, did not have the right to reclaim land for commercial purposes. The Ministry of Transport is considering invoking Section 44 to fast-track land expropriation while the Council of State is reviewing an amendment to the expropriation law. Once the bill altering the law and applying Section 44 is enforced, it will apply to other state projects (Amornrat Mahitthirook, “Govt Looks Set to Fast-Track Thai-Japanese Rail Project,” Bangkok Post, April 29, 2016, http://www.bangkokpost.com/business/news/952033/govt-looks-set-to-fast-t...)

Last year, Thailand and Japan signed a MOU to invest jointly in a 635 km high-speed rail line and a meter-gauge double-track line. The development has not yet started which has led Thailand to call upon Japan to speed up the investments. The Thai Deputy Prime Minister said the projects would be crucial for Association of Southeast Asian logistics services. The Thai Transport Minister said preliminary studies for both projects are expected in June, with a full study be completed by the end of the year, and is undertaking a study on the economic rate of return for land development (Chatrudee Theparat, “Somkid Nudges Japan on Faster Rail,” Bangkok Post, May 3, 2016, http://www.bangkokpost.com/business/news/956905/somkid-nudges-japan-on-f...)

FDI disbursement in Vietnam increased to around US $4.7 billion over the first four months of 2016. Total FDI registered in the country over the same period reached US $6.88 billion, a dramatic increase of 85 percent over the same period last year. The manufacturing and processing sector attracted FDI exceeding US $5.2 billion while the science and technology sector came in second with US $335 million. Among 41 localities, the northern port city of Hai Phong was the most attractive destination for foreign investors. 45 countries and territories invested in Vietnam with South Korea retain the top investor spot (“Vn sees 12% rise in FDI spending,” Vietnam News, April 29, 2016, http://vietnamnews.vn/economy/296088/vn-sees-12-rise-in-fdi-spending.html)

The amount of FDI pouring into industrial zones has increased rapidly recently, bringing large profits for infrastructure development companies. HCM City has received a large volume in FDI capital as have neighboring provinces Bing Duong and Dong Nai. In HCM City, investors have an ambitious plan to develop a Silicon Valley-style high-tech zone with total capital of $1.5 billion. Industry insiders have predicted that fierce competition between companies will prompt them to offer new incentives to attract foreign enterprises into their zones. Those companies will take advantages of spending their money to build warehouses, offices retail space and high-rise apartments (“FDI helps boost industrial infrastructure,” Vietnam News, May 5, 2016, http://vietnamnews.vn/economy/296295/fdi-helps-boost-industrial-infrastr...)

*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.