MNCs in the News-2017-12-08

China

Chinese Vice Premier Wang Yang stated at a recent business forum in Guangzhou that China would “‘significantly’ widen market access for foreign investors,’” with Wang observing that “‘China’s development in the past has benefited from opening and it’s more necessary to expand openness.” Not only would China notably open its market, but it also would “‘speed up drafting a timetable and roadmap for opening key sectors’” and “‘actively and effectively’…protect legal rights and interests of foreign investors and create an environment for fair competition” (“China Pledges ‘Significant’ Market Opening for Foreign Investors,” The New York Times, December 6, 2017, https://www.nytimes.com/reuters/2017/12/06/business/06reuters-china-econ...)

Danish toymaker Lego won its first copyright case in China. The ruling went against copycat products sold by two Chinese companies under the name Bela and “followed a previous ruling that Lego’s name and logo are well-known trademarks in China.” A Lego representative spoke glowingly about the ruling and opined it was a “‘strong indication of [China’s] continued focus on proper intellectual property protection and enforcement.’” Given Lego’s hopes about boosting its fortunes through expansion in Asia, the ruling was an important one for the firm (“Lego Wins First Copyright Case against China Copies,” BBC News, December 8, 2017, http://www.bbc.com/news/business-42275566)

Sinopec USA, has sued Venezuela’s state oil company PDVSA for USD $23.7 million for because the latter allegedly did not pay it fully for some steel rebar it purchased. Although the amount of the suit is not large, this action by a subsidiary of China’s state-owned enterprise (SOE) Sinopec, an energy giant, is symbolically important because China and Venezuela have been close economic partners over the last decade or so and the former has lent the latter more than $50 billion whose repayment is questionable(Tracy Rucinski, “China’s Sinopec Sues Venezuela in Sign of Fraying Relations,” Reuters, December 6, 2017, https://www.reuters.com/article/us-sinopec-pdvsa-lawsuit/chinas-sinopec-...)

Reacting to the aforementioned lawsuit by Sinopec USA, Chinese Foreign Ministry spokesman Geng Shuang said “‘this is an ordinary commercial dispute and there is no need to read too much into it. Indeed, the two sides putatively are trying to resolve their dispute through friendly negotiations. Geng added “China attaches great importance to the development of China-Venezuela relations and believes the Venezuelan government and people are capable of handling their debt issue properly.” Furthermore, China wants to maintain its “‘pragmatic cooperation with Venezuela in various fields’” (“China Believes Venezuela Capable of Handling Debt: FM Spokesperson,” Xinhuanet, December 11, 2017, http://news.xinhuanet.com/english/2017-12/08/c_136811748.htm)

Japan

Japanese carmaker Nissan Motor Co. has filed charges in an international arbitration court against the Indian government for reneging on promised tax breaks. In 2008, Nissan agreed to build a factory in India’s Tamil Nadu state as part of Indian Prime Minister Narendra Modi’s “Made in India” program. Pursuant to its promise, Nissan invested nearly USD $1 billion in its Indian plant. But it has not gotten its tax breaks and wants USD $770 million in damages and tax breaks as compensation (“Nissan prods India for $770 million in redress over broken tax-break promise,” Japan Times, December 2, 2017, https://www.japantimes.co.jp/news/2017/12/02/business/corporate-business...)

Following Japan’s recent legalization of casinos and gambling, Hong Kong based Melco Resorts & Entertainment vowed to build its headquarters in Japan if it were to be approved for a casino license. Melco has also pledged to invest more than USD $10 billion, outspending its United States (US) rivals MGM Resorts and Las Vegas Sands Corp, to build resorts and casinos in Japan. Tokyo is currently finalizing casino location details as well as the related regulations it will release early next year (Thomas Wilson, “Melco pledges headquarters in Japan if it wins casino license,” Japan Today, December 2, 2017, https://japantoday.com/category/business/Melco-pledges-headquarters-in-J...)

South Korea

Improving political relations between South Korea and China are giving hope to South Korea’s LG Display that its planned Chinese production facility will finally be approved by Seoul. LG Display has been waiting for the national industrial technology protection committee to give the final word on its planned USD $4.6 billion organic light-emitting diode (OLED) panel production plant after officials began to fear the potential risks of losing one of South Korea’s “key technologies.” However, warming bilateral relations are easing Seoul’s anxieties about technology spillover (Kang Seung-woo, “LG Display still feels THAAD retaliation,” The Korea Times, December 6, 2017, http://www.koreatimes.co.kr/www/tech/2017/12/133_240475.html)

South Korea’s SK Engineering & Construction (SK E&C) has acquired an 89 percent stake in Pakistan’s USD $1.44 billion Kaigah Hydropower project. SK E&C will partner with Pakistani infrastructure development firm Associated Technologies to build and run the hydropower station for 30 years before returning it to Islamabad. SK E&C is the first South Korean company to undertake a hydropower project in Pakistan and is eyeing other projects in the region (Shim Woo-hyun, “SK E&C to build 545 MW hydropower plant in Pakistan,” The Korea Herald, December 4, 2017, http://www.koreaherald.com/view.php?ud=20171204000763)

Indonesia

Japan’s Mitsubishi UFJ Financial Group (MUFG) is expected to invest at least USD $1.8 billion to take a minority stake in Indonesia’s PT Bank Danamon Indonesia. MUFG is also considering a majority share in the Indonesian bank and will work closely with Jakarta’s foreign bank regulatory body to gain approval and meet standards. Though foreign banks are restricted from owning more than 40 percent of a local bank, MUFG’s strong international position may help it gain special privileges from Jakarta (Fathiya Dahrul, “Japanese MUFG expected to begin buying Danamon stake early next year,” The Jakarta Post, December 7, 2017, http://www.thejakartapost.com/news/2017/12/07/japanese-mufg-expected-to-...)

Jakarta will buy Australian-British mining firm Rio Tinto’s 40 percent stake in the Freeport-McMoRan operated Grasberg mine as part of its efforts to gain control of the country’s natural resources. Jakarta’s state-owned enterprise ministry and other governmental agencies aim to complete the acquisition, valued between USD $6 billion to $7 billion, and enact new mining rules for Grasberg by early 2018. Rio Tinto became willing to sell its stake after proposed changes to Grasberg created concerns over future operations (Wilda Asmarini and Fergus Jensen, “Indonesia plans to buy out Rio’s share of Grasberg copper mine,” Reuters, December 5, 2017, https://uk.reuters.com/article/uk-indonesia-freeport-rio-tinto/indonesia...)

Thailand

Bangkok is considering new non-tariff barriers for electric vehicles (EVs) in anticipation of increased imports of EVs from China as a result of the Association of Southeast Asian Nations (ASEAN)-China free trade agreement. Thailand aims to promote domestic EV production by developing charging stations and increasing EV quality standards. Already, Thailand’s Board of Investments has approved tax breaks for companies producing hybrid and EV and related parts including batteries as well as promulgated additional tax incentives for companies building factories in Thailand’s Eastern Economic Corridor (EEC) (Chatrudee Theparat, “Government mulls non-tariff EV import rules,” Bangkok Post, December 7, 2017, https://www.bangkokpost.com/business/news/1373727/government-mulls-non-t...)

Thailand’s CT Bright, the investment arm of Charoen Pokphand Group, has joined with China’s HNA Group to set up an investment fund for Thailand’s EEC. The investment fund, which is expected to reach up to USD $5 billion over the next few years, will focus exclusively on the EEC as part of China’s “Belt and Road Initiative.” HNA seeks to reduce Beijing’s scrutiny of its extravagant foreign expenditures by committing to infrastructure projects including in China’s Maritime Silk Road plan and fitting into Thailand’s new EEC initiative (“Chinese link with CP on EEC fund,” The Nation, December 7, 2017, http://www.nationmultimedia.com/detail/Corporate/30333352)

Malaysia

Kuala Lumpur is taking new efforts to promote investment in automation and smart manufacturing which has been deemed as “Industry 4.0” by the government. Kuala Lumpur will spend heavily on infrastructure projects, such as the Pan Borneo Highway, as a means to attract quality foreign investments into Malaysia’s eastern regions and promote the country’s petroleum, chemical, oil, food production and agriculture industries. Malaysia’s Investment Development Authority will also expand its “Automation Capital Allowance” which provides funding for companies to automate their manufacturing operations (Ayisy Yusof, “Government assists industry players to embrace Industry 4.0,” New Straits Times, December 7, 2017, https://www.nst.com.my/business/2017/12/311823/government-assists-indust...)

At a recent business forum in Malaysia, Malaysia’s Prime Minister called on foreign businesses to renew investment in the country, citing international statistics showing Malaysia’s importance to. Against the backdrop of the 60^th anniversary of Malaysian-Japanese diplomatic relations, Japan was cited as having initiated investment proposals worth USD $146 million in 2017 and bringing more than USD $27.8 billion in investment projects to Malaysia in recent years as the country moves to incorporate high-technology and digital industries into its economy (CK Tan, “Prime minister makes the case for setting up shop in Malaysia,” Nikkei Asian Review, December 7, 2017, https://asia.nikkei.com/magazine/20171207/Politics-Economy/Prime-ministe...)

Vietnam

Hanoi has granted an investment certificate to Japan’s Sumitomo Corporation for its USD $2.58 billion thermal power plant in Vietnam’s Van Phong Economic Zone. The project, to be completed on a build-operate-transfer (BOT) scheme, has been delayed for over ten years because Hanoi and Sumitomo Corporation could not reach an agreement on BOT conditions and ongoing investigations into environmental and economic impacts. As part of Vietnam’s national power planning vision, 16 new thermal power projects will begin operation by 2030 to meet Vietnam’s energy needs (“Japanese firm gets nod to build US$2.58-billion thermal power plant,” Vietnamnet, December 4, 2017, http://english.vietnamnet.vn/fms/business/191494/japanese-firm-gets-nod-...)