MNCs in the News-2017-03-24

China

The Information Technology & Innovation Foundation (ITIF), an American technology body, has issued a paper critiquing Beijing’s “Made in China 2025” plan. It highlighted risks to the intellectual property (IP) and competitive position of American firms. It said Washington had to “assemble an international coalition to pressure China to stop rigging markets and start competing” fairly. Premier Li Keqiang has emphasized foreign firms had nothing to fear and would enjoy access to the same preferential policies as domestic firms under Made in China 2025 (Michael Martina, “U.S. Tech Group Urges Global Action against Chinese ‘Mercantilism,’” Reuters, March 16, 2017, https://www.nytimes.com/reuters/2017/03/16/technology/16reuters-china-us...)

Facing complaints from foreign businesses which fear the competitive implications of China’s “Made in China 2025” plan designed to support the growth of numerous higher value added sectors and Chinese firms dominance in them, Miao Wei, the head of China’s Ministry of Industry and Information Technology (MIIT), said the policy was justified given the West’s dominance of a number of high-tech sectors and its restriction of certain high-tech good exports to China. Even so, China might adjust its policy and “welcomed foreign companies” (Keith Bradsher, “China Defends Plan to Bolster Its High-Tech Industries,” New York Times, March 19, 2017, https://www.nytimes.com/2017/03/19/business/china-trade-manufacturing-mi...)

China’s Food and Drug Administration has issued a draft report which would give foreign companies the ability to conduct clinical trials of new drugs in China even though those drugs had not yet been licensed or completed later stage trials in the country where they were developed. The policy goal is to increase timely access to medicines and reduce their cost in a country where delayed access has led some to access new foreign products through questionable gray markets (Wu Jing and Li Rongde, “China Looks at Ways to Speed Up Approval for Foreign Drugs,” Caixin, March 20, 2017, http://www.caixinglobal.com/2017-03-20/101068099.html)

Participating in the 2017 China Development Forum, Apple CEO Tim Cook said Apple “expects its business and social initiatives to go further and deeper in China.” Aside from working with local iOS developers, Apple invested USD $1 billion in Didi Chunxing and has been active in supporting environmental activities in China like backing a large sustainable forest in China that will provide packaging paper. During his visit, Apple announced it would open R&D centers in Shanghai and Suzhou to supplement its centers in Beijing and Shenzhen (“Apple to Further Tap Chinese Market Amid Growing Competition,” Xinhua, March 21, 2017, http://news.xinhuanet.com/english/2017-03/21/c_136146362.htm)

Alain Crozier, Microsoft Greater China CEO, said his company, working with China Electronics Group, a state-owned enterprise (SOE), in a joint venture called C&M Information Technologies, had “developed the first version of a China-customized Windows 10 operating system and is now in a good position to serve local governments and SOEs.” The specially tailored system reportedly is “equipped with tailor-made security features,” with Crozier noting it is “‘secure and controllable.’” Foreign firms must address government concerns given how important the latter is for IT infrastructure spending (Ma Si, “New Windows 10 Courts Government Deals,” China Daily, March 21, 2017, http://www.chinadaily.com.cn/business/tech/2017-03/21/content_28621478.htm)

A Chinese state-run publication announced the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC) were working on rules to limit outward foreign direct investment (FDI) that would specify those sectors where outward FDI (OFDI) “was encouraged and those where it was restricted.” Moreover, the government intended to monitor more closely “irrational investments” and to encourage “‘overseas investments that produce social and economic benefits, that are in line with the country’s ‘One Belt, One Road,’ and global industrial capacity cooperation strategies’” (“China ‘Drawing up Rules to Control Overseas Investment,’” South China Morning Post, March 21, 2017, http://www.scmp.com/news/china/economy/article/2080796/chinadrawingrules...)

Japan

The Japanese government said it was “not considering steps” to support embattled Toshiba Corp. and that it “will share information with Washington” on developments concerning the company and its United States (US) nuclear division Westinghouse.” Nonetheless, Japan’s Chief Cabinet Secretary Yoshihide Suga said his government “would closely monitor the sale of Toshiba’s chips business.” Regarding reports the (US) White House opposed Westinghouse filing for Chapter 11 protection, Suga said he did not know if that was the White House’s stance (Kaori Kaneko and Hitoshi Ishida, “Japan not considering support for Toshiba, sharing information with U.S.,” Reuters, March 17, 2017, http://www.reuters.com/article/us-toshiba-accounting-idUSKBN16O17Q)

Senior Japanese and Russian officials met last week “to discuss ways of jointly developing four Russia-held islands off Hokkaido claimed by Japan.” Earlier, both countries’ leaders said “that building mutual trust through joint economic activities could be ‘an important step’ in resolving the territorial row and signing a peace treaty.” More recently, a group of lawmakers from the ruling Japanese Liberal Democratic Party released a report on potential projects for both countries and “proposed the creation of a new economic zone on and around the islands” (“Japan, Russia open talks on isle development projects,” Japan Times, March 18, 2017, http://www.japantimes.co.jp/news/2017/03/18/national/politics-diplomacy/...)

Korea

South Korea has asked the World Trade Organization (WTO) to determine “if the Chinese government is treating South Korean companies unfairly.” After South Korea decided to deploy the Terminal High Altitude Area Defense (THAAD) system, China imposed various economic sanctions. These have included closing down dozens of stores owned by South Korea Lotte Group, a travel ban, which has resulted in a decrease in the number of Chinese tourists to South Korea by 70 percent, and suspending nearly all shows and concerts featuring Korean artists (“S Korea complains to WTO about China over Thaad,” BBC News, March 20, 2017, http://www.bbc.com/news/business-39324536)

In collaboration with Turkish energy giant UNIT International S.A., SK Engineering & Construction (SK E&C) has won a USD $4.2 billion Iranian project to construct five combined gas-fired power plants. Earlier this month, SK E&C purchased a 30 percent stake in UNIT International “to secure the right for the Iran project and carry out the project jointly.” Commenting on the deal, South Korea’s Land, Infrastructure and Transport Minister Kang Ho-in said his government “shall support the project to be implemented successfully” (Jung Min-hee, “SK E&C Participates in Building Iran Power Plants Worth 3.4B Euro,” Business Korea, March 20, 2017, http://www.businesskorea.co.kr/english/news/industry/17573-energy-projec...)

Indonesia

The Indonesian government’s new policies in the oil and gas sector are expected “to also consider investment competitiveness in the upstream and downstream oil and gas sectors.” Hilmi Panigoro, President Director of PT Medco Energi Internasional, suggested that the Indonesian government “should be more flexible and take into account Indonesia’s investment competitiveness if the government wants to attract more foreign investors.” Hilmi also mentioned that foreign investors generally prefer locations with a high return on investment, geological convenience, infrastructure soundness, fiscal requirement, and political stability (“Oil and Gas Investors Urge Gov't to Formulate Flexible Policies,” Tempo.Co, March 25, 2017, https://en.tempo.co/read/news/2017/03/25/056859456/Oil-and-Gas-Investors...)

Thailand

Lamonphet Apisitniran, “Japanese skittish on EEC outlays,” Bangkok Post, March 24, 2017, http://www.bangkokpost.com/business/news/1220125/japanese-skittish-on-ee...

Malaysia

“Iskandar Malaysia attracted RM32.15b in investments in 2016, says CEO,” Malay Mail Online, March 22, 2017, http://www.themalaymailonline.com/money/article/iskandar-malaysia-attrac...

Beh Yuen Hui, “Wee: Solid fundamentals have led to growth in foreign investment,” The Star Online, March 23, 2017, http://www.thestar.com.my/news/nation/2017/03/23/wee-ka-siong-strong-fun...

Vietnam

“Japanese, Thai and Chinese investors dominating Vietnamese retail market,” Vietnam Net, March 23, 2017, http://english.vietnamnet.vn/fms/business/175154/japanese--thai-and-chin...

“Cement industry remains attractive to foreign investors,” Vietnam Net, March 22, 2017, http://english.vietnamnet.vn/fms/business/175004/cement-industry-remains...