MNCs in the News-2016-08-26

Despite the concerns of various American Congressional representatives and special interest groups, the U.S. Committee on Foreign Investment in the United States (CFIUS) has cleared acquisitive ChemChina, a state-owned enterprise (SOE), to make a $43 billion purchase of Swiss agricultural firm Syngenta, a major player in seeds and agricultural chemicals. Syngenta would not release details about any mitigation agreement it had struck with CFIUS. Although the European Union (EU), the US, and others have to conduct an antitrust review of the purchase before it can be concluded, Syngenta expects the deal to be completed by the end of the year (Michael Shields and Greg Roumeliotis, “U.S. Clearance of ChemChina’s Syngenta Deal Removes Key Hurdle,” Reuters, August 22, 2016, http://www.reuters.com/article/us-syngenta-ag-m-a-chemchina-approval-idU... Chad Bray, “U.S. Regulator Signs Off on ChemChina-Syngenta Deal,” New York Times, August 22, 2016, http://www.nytimes.com/2016/08/23/business/dealbook/us-china-chemchina-s... Chen Na, “U.S. Security Watchdog Clears ChemChina’s Syngenta Purchase,” Caixin Online, August 22, 2016, http://english.caixin.com/2016-08-22/100980419.html)

Indonesia has issued a construction permit for the full length of a USD $5 billion 142-kilometer high-speed rail line connecting Jakarta and Bandung that a Chinese consortium headed by China Railway Corp. will build. The issuance of the construction permit is critical because it means the China Development Bank (CDB) can start to release funding for the project. Moreover, the CDB is financing 75 percent of the high-speed rail project. The project has gone through several major revisions and the Chinese consortium ultimately beat out Japan to win the project, though it still has to procure land for the project (Lu Bingyang and Chen Na, “China’s Rail Project in Indonesia Gets Construction Permit,” Caixin Online, August 22, 2016, http://english.caixin.com/2016-08-22/100980428.html)

There have been tensions between China and Vietnam flowing from their South China Sea disputes. Some Chinese companies feel tensions have hurt their sales in and to Vietnam. They also have been the target of protests such as in 2014 when Vietnamese protestors attacked Chinese factories. On top of this, Chinese firms have to deal with a lack of brand recognition and quality concerns among Vietnamese. Still some believe Vietnam offers an attractive investment destination because of its stability, decent infrastructure, and predictable investment environment and that Chinese firms can profit if they localize, practice good CSR, and so on (Zhang Yiqian, “Vietnam Remains a Ripe Target for Chinese Investors Despite Sea Tensions,” Global Times, August 23, 2016, http://www.globaltimes.cn/content/1002276.shtml)

Huawei recently concluded a Memorandum of Understanding (MOU) with the Nigerian government to “assist the country in nurturing its local talents in information and communication technology” (ICT). During the signing of the MOU, Huawei said it “aims to promote knowledge transfer, improve people’s interest in and understanding of the telecom industry.” The agreement aims to advance the government’s goal of increase the penetration and use of ICT throughout the country and especially among the young. The Nigerian government lauds Huawei for its contribution to job creation and various training initiatives (“Chinese Firm to Help Nurture Local ICT Talents in Nigeria,” China Daily, August 26, 2016, http://europe.chinadaily.com.cn/business/2016-08/26/content_26605006.htm)

Malaysia’s Sarawak is working on creating the right physical ecosystem (e.g., airports, ports, and roads) to ensure it remains one of the favorite investment destinations for foreign investors. According to Sarawak Chief Minister Datuk Patinggi Tan Sri Adenan Satem, Sarawak attracted a total investment of US $2.95 billion dollars in 2015, ranking it second after Johor. Sarawak is the third largest state in Malaysia in terms of GDP and is rich in natural resources such as oil and gas, timber, and palm oil. The Chief Minister touted the state’s opportunities in agriculture, infrastructure, and tourism (Karen Bong, “Sarawak remains top investment destination,” Borneo Post Online, August 25, 2016, http://www.theborneopost.com/2016/08/25/sarawak-remains-top-investment-d...)