MNCs in the News-2017-05-05

China

A recent Cyberspace Administration of China announcement stated that, beginning June 1, China will start reviewing the technologies of those “providing hardware or services to government agencies, public services, and other ‘critical infrastructure’ as well as Chinese companies in sectors including energy, transportation, and finance. Chinese reviewers will look at the vulnerability of these hardware and services to tampering, customer-information protection, and risks to national security. While national security technology checks are not unusual, the broad application of China’s reviews is (Eva Dou, “China to Start Security Checks on Technology Companies in June,” Wall Street Journal, May 3, 2017, https://www.wsj.com/articles/china-to-start-security-checks-on-technolog...)

Foxconn Technology Group Chairman Terry Gou met with White House officials and United States (US) President Donald Trump in late April. Following his meeting, Gou said his firm, which assembles Apple iPhones, iPads, and other hardware, is “‘engaged in discussions with officials at various levels of government regarding our ongoing plans to significantly increase our investments.’” The company stated “it’s evaluating potential locations for setting up manufacturing in the U.S.” but gave no specifics. As many know, Trump wants to boost US manufacturing employment (Adela Lin, “Foxconn’s Gou Meets with Trump, Mulls U.S. Investment Plans,” Bloomberg, April 29, 2017, https://www.bloomberg.com/news/articles/2017-04-29/foxconn-s-gou-plans-u...)

Japan

Spurred by the upcoming Brexit, Japanese Prime Minister Shinzo Abe has requested the United Kingdom’s (UK) Prime Minister Theresa May to guarantee a “smooth transition for business” where rules and regulations do not change overnight, which may cause confusion. May responded that she wanted to ensure “the UK remains the best place in Europe to run and grow a business.” With Japanese companies having invested over USD $52 billion in the UK, the country is the second favorite destination for Japanese investment (“Japan's Abe cautions against Brexit regulation cliff edge,” The Star Online, April 29, 2017, http://www.thestar.com.my/business/business-news/2017/04/29/japan-abe-ca...)

Tokyo has launched various initiatives to boost foreign investment into the country. These include appointing special advisors and expanding English information services to improve the investment environment for foreign firms. The plans will be implemented by the Japan External Trade Organization (JETRO), with 100 JETRO staff members being assigned to 1,000 foreign firms that have a “high possibility” of investing in the country. The plans will be included in the Japanese government's growth strategy that will be released in June (“Japan steps up push to attract foreign investments,” Nikkei Asia Review, May 3, 2017, http://asia.nikkei.com/Politics-Economy/Policy-Politics/Japan-steps-up-p...)

The Russian Direct Investment Fund (RDIF) and the Japan Bank for International Co-operation (JBIC) have “agreed on key terms and conditions” for launching a joint Russia-Japan Investment Fund (RJIF). The fund, endowed with USD $900 million, supports joint investment projects designed to enhance economic and investment cooperation in a set of sectors identified last year. Sectoral examples include healthcare, the development of clean cities, and energy. Tokyo seeks to use “greater economic co-operation to aid negotiations” with Moscow over the disputed Kuril Islands (Aleya Begum, “Russia and Japan push ahead with joint fund,” Global Trade Review, May 5, 2017, http://www.gtreview.com/russia-and-japan-push-ahead-with-joint-fund)

Korea

The Hyundai Research Institute reports South Korea will experience a USD $7.6 billion loss due to Beijing retaliating against Seoul for deploying the US Terminal High Altitude Area Defense (THAAD) missile system. In contrast, Chinese losses are estimated to run just USD $970 million. Korean businesses have been affected by a travel ban, anti-dumping allegations, safeguard duties, and non-tariff barriers. Concerning investment, cooperation between Chinese and Korean businesses in both countries has been strained by governmental investigations or cancelled due to deteriorating relations (Jung Suk-yee, “Retaliation from China Likely to Significantly Affect S. Korean Economy,” BusinessKorea, May 4, 2017, http://www.businesskorea.co.kr/english/news/national/17992-effect-thadd-...)

Following Korean retail giant Lotte Group, South Korean supermarket and merchandiser E-Mart Inc. will close its outlets in China by the end of this year due to anti-Korean sentiments fostered by South Korea’s installation of the THAAD missile system. It should be noted that E-Mart has had falling sales in China for the past five years, resulting in a USD $150 million loss, but strong Chinese reactions to THAAD have further harmed many E-Mart (Coco Feng, “South Korea’s E-Mart Reportedly to Close Its Six China Stores Amid Missile Spat,” Caixing Global, May 4, 2017, http://www.caixinglobal.com/2017-05-04/101086327.html)

Malaysia

At the 3rd High-Speed Rail Symposium in Malaysia, Japan expressed its interest in a 350 km high-speed rail project connecting Kuala Lumpur with Singapore. According to a Japanese minister, Japan’s bid “will push for a specific proposal involving financing, talent development and collaboration with local companies.” Japan’s move followed an announcement that a land sale arrangement related to the project involving a Chinese consortium “had expired after payment defaults.” France and South Korea have also shown interest in the massive USD $14 billion project (CK Tan, “Japan gears up for Malaysia-Singapore rail tender,” Nikkei Asian Review, May 3, 2017, http://asia.nikkei.com/Politics-Economy/Economy/Japan-gears-up-for-Malay...)

Singapore

Foreign precision engineering companies are increasing their investment in Singapore, driven by “strong semiconductor demand” and “government incentives” seeking to reshape an economy lacking “skilled labor.” The attraction of global chipmakers led Singapore’s technology sector’s output to increase 57 percent from October through February 2017 and may even have prevented an economic recession late 2016. The Singaporean Ministry of Trade and Industry stated it encourages producers to “embrace disruptive technologies” in order “to help ensure the manufacturing sector in Singapore remains globally competitive” (Marius Zaharia, "Singapore's Automation Incentives Draw Tech Firms, Boost Economy,” New York Times, April 28, 2017, https://www.nytimes.com/reuters/2017/04/28/business/28reuters-singapore-...)

Vietnam

A major gas pipeline project in the Kien Giang Mekong Delta region has been approved by government authorities and granted an investment license, making it Vietnam’s second billion-dollar foreign investment project this year. The project totals USD $1.27 billion and will be carried out by Vietnam Oil & Gas Group and PetroVietnam Gas Corporation under the direction of Japan’s Mitsui Oil Exploration Co. According to the Vietnamese Foreign Investment Agency, so far this year the total registered FDI in Vietnam grew to USD $10.95 billion, an increase of 40.5 percent (“Second billion-dollar FDI project licensed,” Vietnamnet, May 4, 2017, http://english.vietnamnet.vn/fms/business/177577/second-billion-dollar-f...)

Vietnamese Deputy Prime Minister Vuong Binh Hue recently met with executives of Japan’s Sumitomo Mitsui Banking Corporation (SMBC) to discuss increasing Japanese investment in infrastructure construction through the expansion of Vietnam’s Export-Import Commercial Joint Stock Bank (Eximbank). SMBC currently owns 15 percent of Vietnam’s Eximbank charter capital and is looking to further develop Eximbank and restructure Vietnam’s state-owned enterprises. The request for additional investment comes at a time when Vietnam is seeking more funding for a massive 700km, USD $8.8 billion expressway (“Sumitomo Mitsui encouraged to invest in VN infrastructure,” Bizhub, May 4, 2017, http://bizhub.vn/news/sumitomo-mitsui-encouraged-to-invest-in-vn-infrast...)

*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.