MNCs in the News-2017-12-15

China

In a statement on its website, the China Banking Regulatory Commission (CBRC) announced that it would ease limits on foreign banks seeking to conduct yuan trading, “removing an eligibility requirement that stipulated foreign banks needed to be operating in-country for one year.” However, the CBRC did not provide any implementation timetable. In January 2015, the CBRC already had shortened the waiting period from 3 to 1 years as a result of foreign financial institution complaints (Maggie Zhang, “No More Waiting, as CBRC Pledges to Remove Barriers on Foreign Banks Seeking Yuan Business,” South China Morning Post, December 13, 2017, http://www.scmp.com/business/banking-finance/article/2124213/no-more-wai...)

Due to putative national security concerns, Beijing says it wants to limit high-resolution cameras and GPS-equipped cars from free access to China’s roads. However, foreign auto firms say they are the only ones facing such restrictions and thus the controls work to favor local firms. China already only allows domestic firms to engage in high-definition mapping and thus any company with an autonomous vehicle must partner with one of a list of licensed Chinese companies. Interestingly, China’s policy also fits with its Made in China 2025 strategy (Charles Clover, “China Impedes Foreign Carmakers’ Autonomous Tests,” Financial Times, December 14, 2017)

As part of its deal to attract Foxconn to build a USD $10 billion, 22-million-square-foot display screen factory in Wisconsin, the state of Wisconsin will undertake USD $140 million of upgrades to its power generation and distribution infrastructure. This is because Foxconn’s plant will need a huge amount of electricity, “up to six times more electricity than the next largest manufacturing facility in the state.” The project should be done in late 2019 or 2020. Pursuant to its deal, Foxconn agreed to hire 13,000 local workers (“Foxconn’s Wisconsin Plant to Get 140mln USD Electricity Project,” Xinhuanet, December 12, 2017, http://news.xinhuanet.com/english/2017-12/14/c_136824177.htm)

In its report entitled “The China Going Global Investment Index 2017,” the Economist Intelligence Unit found the United Kingdom (UK) experienced “the steepest fall of any country in this year’s index” of attractiveness to Chinese businesses, dropping from the 12th position in 2015 to 40th position this year. The drivers seem to be worries about Brexit’s implications for the UK’s future economic growth and the quality of financial services. In 2016, per the Chinese Embassy in the UK, Chinese investors put USD $24 billion into the UK (Angus McNeice, “Investors Find UK Less Appealing,” China Daily.com, December 15, 2017, http://www.chinadaily.com.cn/a/201712/15/WS5a32b2eca3108bc8c6734bf5.html)

Japan

Japan and the European Union (EU) concluded talks on a free trade deal which will be implemented by early 2019. However, issues of investment dispute settlement for businesses which may suffer as a result of the trade agreement remain unresolved. Tokyo insists on the use of existing investor-state dispute systems which allow companies and governments to interface directly on investment disputes. For its part, the EU has proposed a permanent investment court with government appointed mediators, but Tokyo disapproves of the proposal (“Japan, EU finalize trade deal, aim at implementation in early 2019,” Nikkei Asian Review, December 8, 2017, https://asia.nikkei.com/Politics-Economy/International-Relations/Japan-E...)

Japan’s financially troubled Toshiba Corp. and the United States’ (US) Western Digital Corp. have ended their legal battle over Toshiba’s sale of its flash memory unit to a consortium of buyers. Western Digital agreed to drop the court injunction after Toshiba threatened to open its planned Yokkaichi production plant by itself. Despite resolving the legal issues with Western Digital, antitrust screening in “major global markets could still be a major hurdle” to the ultimate conclusion of the sale transaction (“Toshiba and Western Digital reach settlement to end legal battle over chip unit sale,” The Japan Times, December 13, 2017, https://www.japantimes.co.jp/news/2017/12/13/business/toshiba-western-di...)

South Korea

South Korean electronics firms are expanding investment in Vietnam in the wake of Vietnam’s efforts to attract foreign companies through its electronics component industry promotion law. In addition to offering corporate income tax exemption, Hanoi will pay 75 percent of technology transfer fees and provide education, training, tax relief programs, and loans to foreign electronics producers. Korean companies including Samsung and LG are expanding employment as well as increasing investment. LG recently pledged to invest USD $1.5 billion in Vietnam by 2028 (Cho Jin-young, “Samsung and LG Lead Vietnamese Economy,” BusinessKorea, December 13, 2017, http://www.businesskorea.co.kr/english/news/industry/20066-more-hiring-v...)

After South Korean President Moon Jae-in advanced his “New South Policy” to increase cooperation between Korea and Southeast Asian nations, Hyundai established a joint venture (JV) with Indonesia’s Artha Graha Group. The JV will assemble, manage sales and provide after sales service for Southeast Asia. While Hyundai suffers a 30 to 80 percent tariff exporting cars to Southeast Asia, the JV will allow the carmaker to use the Association of Southeast Asian Nations (ASEAN) free trade area (FTA) for cars assembled in Indonesia (Jung Min-hee, “Hyundai Motor to Establish Commercial Vehicle Joint Venture in Indonesia,” BusinessKorea, December 13, 2017, http://www.businesskorea.co.kr/english/news/industry/20077-accelerating-...)

Indonesia

In line with Jakarta’s goal of increasing Indonesia’s steel production capacity to 16.5 million tons by 2025, Indonesia’s Gunung Steel Group and China’s Shenwu Technology Corp will build a steel plant in Batulicin, South Kalimantan. The plant represents a USD $3 billion investment and will be capable of producing three million tons of steel per annum. The two companies will also cooperate on several other plants that will produce basic steel and related products (Rahajeng KH, “Gunung Steel Group and Shenwu to Build $3b Steel Plant in S. Kalimantan,” Jakarta Globe, December 13, 2017, http://jakartaglobe.id/business/gunung-steel-group-shenwu-build-3b-steel...)

Singapore’s APRIL Group has lodged a case against the Indonesian government in Jakarta’s State Administrative Court through its Indonesian unit, Riau Andalan Rulp and Paper (RAPP). RAPP claims Jakarta’s Environment and Forestry Ministry failed to respond to its complaints over Jakarta’s peatland protection laws. The new law has invalidated RAPP’s current business operations, even though the company was granted business permits under old regulations. Officials deny the complaint is valid and are working to address the issue (Dames Alexander Sinaga, “Indonesian Gov’t Confident of Winning Against RAPP’s Legal Action,” Jakarta Globe, December 12, 2017, http://jakartaglobe.id/news/indonesian-govt-confident-winning-rapps-lega...)

Thailand

Thai Beverage, through its Vietnamese subsidiary, BeerCo Ltd, is the only foreign firm to announce an intention to buy a major stake in Vietnam’s national brewing company, Sabeco. Thai Beverage will purchase a 25 percent stake in the state-owned brewing company from the USD $5 billion dollars worth of shares offered. Thai Beverage’s ownership stake is capped at 39 percent due to Vietnam’s foreign ownership rules that limit foreign investors to minority stakes (Mai Nguyen and Anshuman Daga, “Thai Beverage emerges as only bidder for large stake in Vietnam’s Sabeco,” Reuters, December 12, 2017, https://in.reuters.com/article/vietnam-privatisation-sabeco/thai-beverag...)

Malaysia

Dutch Coffee company Jacobs Douwe Egberts (JDE) will buyout one of Malaysia’s largest coffee manufacturers and cafe chain owners, OldTown Bhd, for more than USD $350 million. Nevertheless, Malaysian antitrust authorities still must approve the deal because JDE recently acquired major Singaporean coffee producer Super Group for more than USD $1 billion. The buyout, if successful, will mark JDE’s second push into the growing Southeast Asian market (“OldTown’s shares rise on takeover offer,” The Star Online, December 12, 2017, https://www.thestar.com.my/business/business-news/2017/12/12/oldtowns-sh...)

Vietnam

Vietnam’s BRG Group and Japan’s Sumitomo Corporation are finalizing plans for the first phase of a new USD $4 billion smart city located in Vietnam’s Dong Anh District. Sumitomo and BRG’s JV will begin investing USD $1 billion in early 2018 to develop the necessary infrastructure for the planned city after plans are approved by municipal authorities. The two companies are working closely with Hanoi’s People’s Committee, the local government body, to attract partners for the project and to create “favorable conditions” for the project’s execution (“Hanoi’s $4b smart city project begins in 2018,” Vietnamnet, December 11, 2017, http://english.vietnamnet.vn/fms/business/191879/hanoi-s--4b-smart-city-...)

*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.