MNCs in the News-2017-05-26

China

China’s Ministry of Commerce (MOFCOM) reported the 35th meeting of the Central Leading Group for Deepening Overall Reform had adopted a shorter negative list for inward foreign investment (FDI) reducing the number of off-limit and/or restricted industries from 93 to 62. Among other things, the new list would “relax restrictions on foreign ownership in automotive electronics, new energy vehicle batteries, motorcycles, and other industries.” China touted the changes supplemented other reforms simplifying or speeding up approval procedures and its promises to give foreign firms national treatment (“Economic Watch: China Introduces Fewer Restrictions on Foreign Investment,” Xinhuanet, May 25, 2017, http://news.xinhuanet.com/english/2017-05/25/c_136315178.htm)

Commenting about statements by German Minister of Economic Affairs and Energy Brigitte Zypries that China’s market is not truly free “especially in the auto industry where German carmakers were forced into joint ventures (JV) to access the China market,” a MOFCOM spokesman noted the country intended to reduce limits on foreign investors in areas like automobile manufacturing. The spokesman added that “most sectors in China were completely open to foreign investors” and that Germany had gained “‘substantial returns’” from China’s opening (Chen Mengfan and Song Shiqing, “China to Ease Foreign Investment Restrictions on Automobile Sector,” Caixin, May 26, 2017, http://www.caixinglobal.com/2017-05-26/101095270.html)

With China’s new Cybersecurity Law, which was recently modified after the law’s passage, soon going into effect, foreign companies have been scrambling to ensure they can meet its requirements; e.g., they have been “‘making moves to ensure that the majority of the data they collect in China is stored on servers situated within China.’” The law has provisions relating to data transfer and hardware and software security reviews, too. The need to pass China’s security reviews also is causing some state-owned firms to purchase domestic technology (“Foreign Firms Fret as China Implements New Cybersecurity Law,” Bloomberg, May 24, 2017, https://www.bloomberg.com/news/articles/2017-05-24/foreign-firms-fret-as...)

MOFCOM reported “in the first four months of the year, the country’s non-financial ODI declined 56.1 percent year over year” (YOY). April OFDI, which came in at USD $5.83 billion, showed almost a 71 percent decline YOY. Areas drawing Chinese OFDI (COFDI) included commercial services, manufacturing, and software and IT. China’s One Belt, One Road Initiative accounted for 15.1 percent of total COFDI over the 4 month period, up 6.9 percent from the prior period YOY. Chinese investment in Africa over the period showed a 25.3 percent jump (“China ODI Down 70.8 pct in April,” Xinhuanet, May 27, 2017, http://news.xinhuanet.com/english/2017-05/27/c_136320780.htm)

Japan

Japanese defense firms Mitsubishi Electric and Fujitsu Ltd. are partnering with Raytheon and Lockheed Martin, two US firms, to develop advanced missile detection and targeting systems in response to North Korean missile tests. Following Prime Minister Shinzo Abe’s cancellation of Japan’s weapons export ban, Japanese defense corporations have been trying to enter the arms market, but lack competitiveness from the weapons ban. Mitsubishi and Fujitsu hope the partnership will allow them to develop their own missile defense systems for export (Tim Kelly and Nobuhiro Kubo, “U.S., Japanese firms collaborating on new missile defense radar,” Japan Today, May 24, 2017, https://japantoday.com/category/politics/U.S.-Japanese-firms-collaborati...)

A Reuter’s survey (for Nikkei Research) of 527 large and mid-sized Japanese firms (220 repondents) found that only 5 percent had plans to participate in China’s OBOR venture and 6 percent saw OBOR yielding opportunities. They said better business opportunities flowing from a free trade agreement between the United States and Japan, a post-Trans Pacific Partnership (TPP) accord, or increased economic dealing with Russia. Like their Western counterparts, Japanese officials have “expressed concern about transparency and access for foreign companies to the ‘Belt and road’ projects (Tetsushi Kajimoto, “Japan Inc. Sees Better Opportunities beyond China’s ‘Belt and Road,’” Reuters, http://www.reuters.com/article/us-japan-companies-silkroad-idUSKBN18K347)

Japanese multinational firms that have invested heavily in the continent following Prime Minister Shinzo Abe’s 2016 pledge for a USD $30 billion investment in energy projects are worried about Africa’s economic slump. Among other things, an economic slowdown, political strife, and stiff Chinese competition are stifling Japanese firms who want to capture the growing African auto and infrastructure markets. To diminish growing difficulties, Tokyo has asked African countries to create “Japan desks,” with officials tasked with easing Afro-Japanese business relations and promoting investment opportunities (Duncan Bartlett, “How Will Slowdown In Africa Affect Japanese Investments?” Japan Forward, May 19, 2017, https://japan-forward.com/how-will-slowdown-in-africa-affect-japanese-in...)

South Korea

The head of SK Group, the third largest multinational in South Korea, recently left for Beijing to meet with Chinese government officials and business leaders in hopes of mitigating damage to his company flowing from Korea’s installation of the Terminal High Altitude Area Defense (THAAD) system. The need to visit China arose after activity at SK Innovation’s Chinese vehicle battery plant was suspended and a deal to become a stakeholder in Shanghai SECCO Petrochemical was blocked by China (“SK head leaves for Beijing with aim to normalize Chinese business,” Korea Herald, May 24, 2017, http://www.koreaherald.com/view.php?ud=20170524000708)

South Korea’s state-run Trade Insurance Corp. (K-Sure) guaranteed USD $3 billion in financing for South Korean companies taking part in Kuwait’s Clean Fuels Project. Kuwait National Petroleum Company is spearheading the country’s USD $14.6 billion initiative, which aims to connect and streamline high value added oil refineries in the country. K-Sure believes that supporting South Korean construction firms and small- and medium-enterprises (SMEs) will increase the competitiveness of Korean multinationals (Jung Suk-yee, “K-Sure Signs 3.3 Trillion Won Deal to Finance Clean Fuels Project in Kuwait,” BusinessKorea, May 26, 2017, http://www.businesskorea.co.kr/english/news/industry/18185-project-finan...)

Malaysia

Geely, the owner of Sweden's Volvo Car Group, announced that it would acquire a share of 49.9 percent in troubled Malaysian automaker Proton from conglomerate DRB-HICOM Bhd, providing access to the Southeast Asian market. It will also buy 51 percent of Proton's stake in British automaker Lotus. The investment is the latest of recent deals between China and Malaysia, but “stands out” as formerly state-owned Proton is often considered “an emblem of post-independence industrialization and economic growth” (Rozanna Latiff, and Norihiko Shirouzu, "China's Geely Buys 49.9 Percent Of Malaysian Automaker Proton," Reuters, May 24 2017, https://www.reuters.com/article/us-proton-m-a-geely-idUSKBN18K0HE)

Malaysia’s Prime Minister Datuk Seri Najib Tun Razak announced that despite the “challenging economic climate” the value of this year’s foreign direct investment in Malaysia is estimated to exceed last year’s value of USD $9.59 billion. The government’s transformation programs that attracted FDI and a foreign policy that led to strategic partnerships drove this progress. At the annual Asia-Pacific Roundtable Welcoming Dinner, the Prime Minister pledged that Malaysia “will continue to adapt and adjust in keeping with our national needs and the external environment” (“Malaysia’s 2016 FDI Inflows to Surpass RM41b, Says PM,” Malay Mail Online, May 22, 2017, http://www.themalaymailonline.com/malaysia/article/malaysias-2016-fdi-in...)

Vietnam

Vietnam plans to set up three special economic zones (SEZs) offering foreign investors “greater incentives” and “fewer restrictions.” Planning and Investment Minister Nguyen Chi Dung declared Vietnam now prioritizes investment in “high tech and clean sectors.” FDI in Vietnam reached USD $15.8 billion last year, and is expected to reach at least USD $10 billion in each of the following five years. Approval of the lawmakers of the new SEZs is expected by the end of 2017 (Mai Nguyen, and Matthew Tostevin, “Vietnam Plans to Open 'Outstanding' Special Economic Zones,” Reuters, May 25, 2017, https://www.reuters.com/article/us-vietnam-investment-idUSKBN18K1BH?il=0)

At the recent Vietnam-Spain business forum Deputy Prime Minister and Finance Minister Phạm Bình Minh reiterated Vietnam’s dedication to welcoming foreign investors “with all possible support.” He highlighted Vietnam as a “bright spot” because of its investment attraction policies and tourism and added the country had so far attracted almost USD $300 billion in FDI. A Spanish representative called Vietnam “a priority market,” especially in the fields of infrastructure, agriculture and tourism, and promisd “to facilitate collaboration” between both countries’ companies ("Deputy PM Chairs Việt Nam-Spain Business Forum," Viet Nam News, May 25 2017, http://vietnamnews.vn/economy/377088/deputy-pm-chairs-viet-nam-spain-bus...)

*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.