MNCs in the News-2017-04-14

China

China released a draft rule requiring foreign enterprises with business operations in China—more specifically that want to move more than one terabyte of data out of China, or that have data on more than 500,000 people—to “apply for permission to transfer data out of the country.” This permission would have to be obtained from both customers and the government and China could block the data transfer if it believed the transfer “would hurt China’s political system, economy, or security” (Eva Dou, “China Moves to Further Tighten Regulation of Digital Information,” The Wall Street Journal, April 11, 2017, https://www.wsj.com/articles/china-moves-to-further-tighten-regulation-o...)

In an email sent to Xinhua, Apple announced that “three more suppliers in China will use 100 percent renewable energy in manufacturing its products by the end of 2018” and that it was happy to “‘advance China’s green future.’” To fulfill this commitment, Apple suppliers Sunwoda, Compal, and Biel, based in, respectively, Nanjing, Kunshan, Shenzhen, and Guangdong are building solar panels, creating solar farms, and so on. Of late, Apple has been active in trying to improve its environmental footprint in China as well as globally (“Apple Suppliers in China to Use more Renewable Energy,” Xinhua, April 14, 2017, http://news.xinhuanet.com/english/2017-04/14/c_136209372.htm)

The Chinese Academy of Social Sciences (CASS) and China Bond Rating Co. Ltd. report “the manufacturing sector and information technology [above all in Europe and North America] are replacing natural resources as favorite overseas investment targets for Chinese state-owned and private companies.” Of China’s $170 billion of outward foreign direct investment (OFDI) in 2016, $31 billion went into manufacturing versus $20 billion in 2015. A key reason for the shift includes China’s efforts to shift to an economy stressing high-tech services and manufacturing (Sun Wenjing and Coco Feng, “China’s Foreign Investment Focus Shifts to Manufacturing,” Caixin, April 14, 2017, http://www.caixinglobal.com/2017-04-14/101078109.html)

At a recent event in New York, Patric Foye, Executive Director of the Port Authority of New York and New Jersey said “‘we are open for business and welcome Chinese companies to participate and bid for’” infrastructure projects. Attendees noted China’s massive reserves, expertise, and past investment in the United States (US) suggest it can play a big role in US infrastructure plans. China Construction America Inc. already has played such a role and ranks as one of the largest US bridge contractors (“Chinese Companies to Play More Active Role in U.S. Infrastructure Building: Experts,” Xinhua, April 13, 2017, http://news.xinhuanet.com/english/2017-04/13/c_136205185.htm)

Despite the existence of many other troubled projects, China and Myanmar finally agreed to open a cross-border oil pipeline running from Myanmar’s Kyaukpyu port to Yunnan, China. China and Myanmar, though, could not make progress in other infrastructure and energy areas with Myanmar wanting China to invest more in agriculture and light manufacturing. The two countries still have not figured out how to handle the Myitsone dam situation. The pipelines are not just about China’s energy independence, but China National Petroleum Corp. gaining independence from Sinopec (Lucy Hornby, “China and Myanmar Open Long-Delayed Oil Pipeline,” Financial Times, April 11, 2017)

Japan

Toshiba may reject the highest bid of USD $27 billion for its semiconductor business from Taiwan’s Hon Hai Precision Industry Co. because of “likely opposition from the Japanese and American governments” given Hon Hai’s “ties to China.” Instead, it may consider lower bids, including one from US chipmaker Broadcom Ltd. valued at USD $18 billion. Toshiba’s board would rather keep the business within Japan. However, if the business must be sold, a US bidder is preferred (Takahiko Hyuga,Takako Taniguchi, and Peter Elstrom, “Toshiba sees long odds for Hon Hai’s ¥3 trillion chip bid,” The Japan Times, April 12, 2017, http://www.japantimes.co.jp/news/2017/04/12/business/corporate-business/...)

Korea

Numerous South Korean companies will be involved in Saudi Arabia’s Vision 2030 project, which aims to promote new growth and create jobs outside the oil sector. Notably, Hyundai Heavy Industries, Ssangyong Motor, and SK Global Chemical already have engaged in projects totaling USD $10 billion. Saudi Arabia is considering relaxing foreign employment and investment restrictions and has pledged to support South Korea’s proposed free trade agreement with the Gulf Cooperation Council following its selection of South Korea’s as a “strategic partner country” (Jung Suk-yee, “S. Korean Companies to Participate in Saudi Arabia’s Vision 2030 Project,” BusinessKorea, April 7, 2017, http://www.businesskorea.co.kr/english/news/national/17770-saudi-arabia%...)

Global investors have taken an interest in South Korea’s burgeoning IT, fashion, cosmetics, and entertainment startups hoping to take advantage of Korea’s immense cultural influence in the Asian region and beyond. Louis Vuitton Moet Hennessy Group’s investment arm, L Capital Asia, has invested USD $200 million in promising South Korea fashion and entertainment firms Snoopby, YG Entertainment, and Clio. Goldman Sachs has put money into innovative service firms and healthcare startups, such as Carver Korea and Woowa Bros., that combine IT with existing consumer demands (Cho Jin-young, “Global Investors Expanding Their Investment in Korean Startups,” BusinessKorea, April 12, 2017, http://www.businesskorea.co.kr/english/news/smestartups/17801-interest-k...)

Malaysia

A North Korean defector revealed that Han Hun Il, a North Korean who established Malaysia Korea Partners (MKP) in Malaysia, has “funneled money to the leadership in Pyongyang” for over two decades. He added Han has important connections with the Central Committee, which operates its nuclear programs. MKP's bank subsidiary in Pyongyang is under investigation by the United Nations (UN), as foreign joint ventures are not allowed to have a financial subsidiary in North Korea (James Pearson, Tom Allard and Rozanna Latiff, “Exclusive–‘Dollars and euros’: How a Malaysian firm helped fund North Korea's leadership,” Reuters, April 10, 2017, http://www.reuters.com/article/us-northkorea-malaysia-business-idUSKBN17...)

During the recent Global Transformation Forum (GTF) 2017, the Digital Free Trade Zone (DFTZ), jointly created by China’s Alibaba Group and the Malaysia Digital Economy Corporation (MDEC), was launched. It is “the world’s first digital global trade platform outside China” and will be a “future one-stop digital hub of logistics, payment gateway, clearance and data standardisation.” The DFTZ reflects the 2010 launched National Transformation Programme (NTP). The digital trade platform is estimated to support USD $65 billion worth of goods (Dr Irwan Shah Zainal Abidin, “Another leap forward,” New Straits Times, 22 Apr, 2017, http://www.nst.com.my/node/229642)

Vietnam

Vietnam’s lower labor costs, less stringent legal structure, and stronger intellectual property right protections are driving Italian companies out of China and into neighboring Vietnam. Italian investment to Vietnam totaled USD $360 million in 2016 and is expected to rise when the EU-Vietnam Free Trade Agreement is enacted next year and will “reduce tariffs bilaterally on select imports and exports.” Notable Italian firms already investing in the area include Piaggio, Datalogic, and Ariston. In Vietnam, the most attractive industries for Italian firms remain manufacturing, agriculture,k and sustainable energy (“Italian business pivot from China to Vietnam,” Vietnamnet, April 11, 2017, http://english.vietnamnet.vn/fms/business/176349/italian-businesses-pivo...)

Local officials in Can Tho continue to court French investment. Among others they highlighted “Can Tho’s potential of agricultural production such as rice, fisheries and fruit, along with hi-tech agricultural projects that need investment.” A delegation of French businesses recently concluded a relationship building work session with Vietnamese firms with the intent of developing new ties in the city. Currently, there are six French sponsored projects worth USD $6 billion underway in Can Tho and exports to France generated USD $31 million for the city in 2016 (“Can Tho city seeks French investment in agriculture,” Bizhub, April 11, 2017, http://bizhub.vn/news/can-tho-city-seeks-french-investment-in-agricultur...)

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.