MNCs in the News-2017-09-01

China

An official with China’s Ministry of Commerce (MOFCOM) stated that Chinese ministries are working together to come up with a document that protects the intellectual property rights (IPR) of foreign firms in China. According to the MOFCOM official, who opined that “‘China has attached great importance to IPR protection,’” “the document will intensify the crackdown on malicious trademark registration, online IPR infringement and stealing business secrets.” Earlier, China’s State Council announced the country would launch various campaigns and increase judicial and administrative protections of IPR (“China Drafts Rules on Protecting IPRs of Foreign Companies,” China Daily, August 26, 2017, http://www.chinadaily.com.cn/business/2017-08/26/content_31140204.htm)

Irish business associations such as the Dublin Chamber of Commerce and Irish investment representatives report there has been a dramatic increase in the number of Chinese delegations going to Ireland to probe investment opportunity and they attribute this to Brexit. The increase in Chinese delegations mirrors increasing interest show by firms from Korea, Indonesia, Singapore, and Belgium which are trying to think how to manage their European strategy with the United Kingdom (UK) leaving the European Union (EU) (Wang Mingjie, “Chinese Investors Flock to Ireland in the Wake of UK’s Vote to Leave EU,” China Daily, August 25, 2017, http://www.chinadaily.com.cn/business/2017-08/25/content_31105569.htm)

India has asked around 30 smartphone makers, most Chinese firms, to provide information it could use to investigate whether or not “the data they have on Indian users is secure.” Many firms do not report where user data is stored or if it is transported elsewhere. India’s move may have something to do with the recent India-China border standoff. Moreover, while legitimate security issues may be at stake, some believe Indian protectionism and feelings China is not manufacturing enough in India are involved (Louise Lucas and Jyotsna Singh, “India Challenges Chinese Companies on Data Security,” Financial Times, August 25, 2017)

The United States (US) Securities and Exchange Commission and Justice Department are probing if outside lawyers acting as middlemen for China Petroleum & Chemical Corp. (Sinopec) funneled bribes of roughly USD $100 million from Sinopec’s Swiss Unit Addax Petroleum to Nigeria officials to resolve a USD $4 billion payment dispute between Sinopec’s Addax Petroleum unit and Nigeria over drilling and other capital costs, tax breaks, and the division of royalties between Addax and the Nigerian National Petroleum Corporation (Hugo Miller and Tom Schoenberg, “Chinese Oil Giant Sinopec Probed by the U.S. over Nigeria Bribery Allegations,” Bloomberg, August 30, 2017, https://www.bloomberg.com/news/articles/2017-08-30/sinopec-is-said-to-be...)

Japan

British luxury carmaker Aston Martin is planning an investment deal in Japan worth nearly USD $600 million. As Brexit looms closer, Aston Martin is attempting to safeguard its domestic production by expanding abroad in a move deemed “vital” by Britain’s Prime Minister Theresa May. The investment deal includes sourcing parts from new Japanese suppliers such as Mitsubishi and Bridgestone, as well as opening new offices, stores, and showrooms across Japan. May says the deal could open “new possibilities for future deals with Japan” (“Aston Martin announces £500m UK-Japan deal,” BBC News, August 30, 2017, http://www.bbc.com/news/uk-wales-41093121)

Japanese carmaker Nissan Motor Co. is teaming up with French carmaker Renault SA and Chinese carmaker Dongfeng Motor Group Co. to design and introduce new electric vehicles (EVs) to the Chinese market. Strict vehicle emissions rules, which will be implemented by the Chinese government in 2019, dictated the shift to EVs. The three carmakers’ joint-venture aims to produce lower cost EVs by taking advantage of Dongfeng’s domestic production plant in Hubei province and sourcing lower cost batteries from a former Nissan subsidiary now under Chinese ownership (“Renault-Nissan expands China EV foray via Dongfeng alliance,” Japan Times, August 30, 2017, https://www.japantimes.co.jp/news/2017/08/30/business/corporate-business...)

South Korea

South Korean carmaker Hyundai was forced to suspend operations at three of its Chinese manufacturing plants after local suppliers stopped sending parts due to delayed payments by Hyundai. Chinese consumer backlash over the Terminal High Altitude Area Defense (THAAD) missile system installed in South Korea has caused decreased sales of Hyundai cars in China and cash flow issues. Decreased production will now cause Hyundai to struggle to reach its already reduced sales target of 800,000 vehicles (Michael Herh, “Disrupted Parts Supply Brings Halt to Hyundai Motor’s Factories in China,” Business Korea, August 30, 2017, http://www.businesskorea.co.kr/english/news/industry/19118-due-sluggish-...)

South Korean NAND memory chipmaker Samsung Electronics is in talks with China for a USD $7 billion expansion project of its Xi’an production plant. Samsung has identified high growth potential for its chips to service data storage centers, smart vehicles, and artificial intelligence operations in China and wants to ramp up production to meet demand. Beyond the massive investment, Samsung has pledged an additional USD $32.9 billion for further expansion in chip and display technology by 2021 (Kang Seung-woo, “Samsung to invest $7 billion in Chinese chip plant, The Korea Times, August 29, 2017, http://www.koreatimes.co.kr/www/tech/2017/09/133_235592.html)

Indonesia

Indonesia’s government is in the process of finalizing 215 deregulation measures aimed at creating a more competitive investment environment. The Indonesian government will now provide investment assistance institutions in its Special Economic Zones, which will feature tax breaks, income allowances, and VAT/luxury good tax exemption. Foreign firms may now own 100 percent equity in business ventures in select industries. New fast track business licensing offices are now available for foreign firms investing more than USD $7.5 million or employing more than 1,000 local workers (“Policy reforms to make business easy and boost growth,” The Jakarta Post, August 30, 2017, http://www.thejakartapost.com/adv/2017/08/30/policy-reforms-to-make-busi...)

American mining firm Freeport-McMoRan Inc. is reducing its ownership stake in its Indonesian Grasberg copper and gold mine from 90 to 49 percent to resolve a dispute with Indonesia’s central government. Indonesia’s Energy Minister revealed Freeport-McMoRan also will build ore smelters as part of the dispute resolution agreement, an initiative in line with Indonesia’s plan to increase revenues from its mineral resources. Freeport-McMoRan may now press ahead with new investments unburdened by the dispute (Anita Rachman, “Freeport to Give Up Majority Stake in Grasberg Mine Under Deal With Indonesia,” Fox Business, August 29, 2017, http://www.foxbusiness.com/features/2017/08/29/freeport-to-give-up-major...)

Thailand

Thailand has become a battleground for the world's three largest bicycle-sharing service providers. China's Mobike and Ofo and Singapore's oBike are striving to win the Thai market. The companies are in talks with the Thai government seeking approval to start operating in the country and are requesting the construction of more bike lanes. According to Ofo, one of the biggest challenges is “how to balance business growth with existing infrastructure.” Ofo is cooperating with the government to ensure the result is “mutually favorable to riders and operators” (“Mobike, oBike, Ofo grind gears for Thais,” Bangkok Post, August 31, 2017, http://www.bangkokpost.com/business/news/1316067/mobike-obike-ofo-grind-...)

Malaysia

Nazir Razak, a prominent industry figure and the younger brother of Malaysia’s Prime Minster, recently stated that Malaysia’s “robust economic recovery” is drawing foreign investors back to its markets. However, investment activity may only gain momentum “after the general election.” Foreign investors are holding off because of uncertainties the impending election creates, as they “generally don’t like uncertainty.” Nazir stated “I’m sure after elections, there will be greater momentum on deal front.” For the moment it remains unclear when the election will be held (Praveen Menon, “Nazir: Foreign investors like Malaysia's robust economy,” New Straits Times, August 30, 2017, https://www.nst.com.my/business/2017/08/274804/nazir-foreign-investors-m...)

Vietnam

Vietnam’s leaders recently concluded state visits to Indonesia, Myanmar, and Thailand resulting in USD $13.45 billion of newly registered investment capital. Notable deals include a USD $600 million pledge by Thailand’s Superblock PCL for investment in renewable energy, a build-operate-transfer thermal power plant agreement between Vietnam’s General Department of Energy and Thailand’s’ EGAT International Co., and a memorandum of understanding between PetroVietnam and Thailand’s SCG Co. regarding joint research and development of petrochemical projects in Vietnam. Continuing government efforts to improve the business environment make Vietnam attractive to foreign investors (“Large-scale investments promise FDI breakthrough, Vietnamnet, September 1, 2017, http://english.vietnamnet.vn/fms/business/185585/large-scale-investments...)

Vietnam’s Hanoi General Export Import JSC and Hong Kong United Investors Holding have joined together to bid for infrastructure project contracts from the Vietnamese government. Facing fierce international competition for bids, the two companies are expected to invest an estimated USD $50 billion to build an international airport, an expressway, a highway, and a railway if the government approves project proposals. The airport and supporting infrastructure are expected to make Vietnam a regional international cargo and travel center (“Foreign investors swarm Long Thanh airport project,” Vietnamnet, August 28, 2017, http://english.vietnamnet.vn/fms/business/185450/foreign-investors-swarm...)

*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.