MNCs in the News-2018-02-09

China

At its daily press briefing, China's Ministry of Foreign Affairs (MOFA) critiqued Mercedes-Benz, which had used quotes from the Dalai Lama for an advertisement in its Instagram account, by noting foreign companies in China had to "follow basic ground rules." MOFA, though, also lay the ground for redemption by commenting "'correcting one's mistakes is a fundamental basis for one to behave and do business'"-Mercedes had publicly apologized for its action. Of note, the spokesman also commented positively on China's cooperation with foreign businesses ("China Calls on Foreign Enterprises to Follow Basic Ground Rules," China Daily, February 2, 2018, http://www.chinadaily.com.cn/a/201802/08/WS5a7bc345a3106e7dcc13b8b8.html)

The China Banking Regulatory Commission has stated that it will make it easier for foreign banks to enter and operate in the Chinese market. It specifically promised to terminate the requirement that foreign banks had to operate for more than one year before doing renminbi (RMB) business and that they had to be incorporated in China to conduct RMB business. Furthermore, they would be allowed to take smaller RMB deposits from Chinese citizens and play a bigger role in the government bond business (Jiang Xueqing, "Foreign Banks Welcome to Access Local Financial Services Market," China Daily, February 5, 2017, http://www.chinadaily.com.cn/a/201802/05/WS5a779880a3106e7dcc13aaa1_1.html)

As part of its efforts to make friends in China, Google China has been cooperating with Chinese institutions in producing information that can help Chinese companies invest overseas and expand their presence in countries involved in, for example, China's Belt and Road Initiative. It also has been partnering with others to generate information about Chinese brands that have gained traction abroad. Outside of these gestures, Google will be building up a AI center in Beijing and has set up a service office in Shenzhen (Ma Si, "Google to Further Help Chinese Companies Go Global," China Daily, February 8, 2018, http://www.chinadaily.com.cn/a/201802/08/WS5a7c02bda3106e7dcc13b98f.html)

Despite Beijing's long standing and intense interest in gaining advanced technology, China's capital controls have lowered, hindered, or ended investments by some Chinese entities in firms based in Silicon Valley in the United States (US). Some investors, though, have been able to continue participating in early-stage investments by leveraging money they previously moved out of China. Chinese tech investors also face potential escalating barriers to investment due to sensitivities in Washington. Not all firms have been adversely affected, though. Alibaba maintains its ability to invest (Leslie Hook, "Chinese Capital Controls Hit Silicon Valley Tech Investors," Financial Times, February 5, 2018)

Japan

Japanese carmaker Nissan Motor Co. will invest around USD $9.5 billion in China over the next five years with its local joint venture (JV) partner Dongfeng Group. Nissan and Dongfeng plan in order to pursue a "Triple One" strategy investing in electric vehicles (EVs) and a low cost local brand. The JV will also double down on producing EVs and sourcing parts from Chinese suppliers in response to China raising production quotas for environmentally friendly vehicles (Norihiko Shirouzu, "Nissan to pump ¥1.05 trillion into China business, eyeing spot among country's top three carmakers," The Japan Times, February 5, 2018, https://www.japantimes.co.jp/news/2018/02/05/business/corporate-business...)

US casino operator MGM Resorts International plans to set up an integrated resort in Japan's Osaka Prefecture due to the fact that the city of Osaka and Prefecture officials aim to establish tourism facilities at Yumeshima, an island near the city. MGM plans to set up a Japanese led consortium to operate the resort that will feature Japanese ascetics and cultural elements. MGM owns and operates a variety of resorts around the world, but was attracted to Osaka for its food culture and access to tourist destinations ("MGM Resorts sets sights on Osaka," The Japan News, February 7, 2018, http://the-japan-news.com/news/article/0004228442)

South Korea

South Korea's Hyundai Motor is finally on track to receive a Chinese government subsidy for its EVs after switching from batteries produced by a Korean firm to batteries produced by a Chinese firm. As Beijing continues to grant special privileges to Chinese companies, the South Korean battery industry, which includes firms such as LG Chem and Samsung SDI, worry about their future viability. Korean battery companies are moving production out of China, producing energy storage systems, and targeting the western market in response (Jung Min-hee, "Hyundai Motor Receives First Subsidy for EV from Chinese Gov't," BusinessKorea, February 6, 2018, http://www.businesskorea.co.kr/english/news/industry/20468-reluctant-use...)

South Korea's Seoul Semiconductor, a major light-emitting diode (LED) manufacturer, filed suit in Milan, Italy against US distributer Mouser Electronics for dispensing products which infringe upon a patent held by the Korean firm. The Korean manufacturer filed for damages in addition to asking for the destruction of Mouser's remaining stock of infringing products. The latest filing follows two previous filings against Mouser in Germany's Dusseldorf court. While Mouser was forced to withdraw from Germany, it continued its patent infringing practices elsewhere (Bae Hyun-jung, "Leading LED firm files 3rd patent suit against US distributer," The Korean Herald, February 8, 2018, http://www.koreaherald.com/view.php?ud=20180208000752)

Indonesia

Indonesia's investment board (BKPM) cited "frequent and abrupt changes in regulations" as a major cause of foreign investor wariness when investing in Indonesia. Jakarta, under President Joko Widodo, has attempted to shorten the country's "negative investment list" and allow foreign companies to invest in more sectors of the Indonesian economy, but comprehensive changes have not been made. Regarding trade, Indonesia's Trade Minister suggested changes were "in process," though he admitted red tape and complex regulations still hampered it (Tabita Diela, "Indonesia's Haphazard Rules Turn Foreign Investors Away: BKPM Chief," Jakarta Globe, February 2, 2018, http://jakartaglobe.id/business/indonesias-haphazard-rules-turn-foreign-...)

A business delegation from the United Arab Emirates (UAE) met with Indonesia's Industry Minister for preliminary talks for producing compressed natural gas in Indonesia and investing in LED systems for the country's cities. The UAE delegation plans to return soon with investment proposals for Jakarta which further detail the cost and energy saving benefits of compressed natural gas and energy efficient light systems. Indonesia's Industry Minister also proposed the UAE group consider investing in petrochemicals, hydropower, palm oil and ore refining ventures in the country ("UAE investor interested in producing CNG for households," The Jakarta Post, February 7, 2018, http://www.thejakartapost.com/news/2018/02/07/uae-investor-interested-in...)

Thailand

Thailand's parliament recently approved the ruling junta's USD $45 billion Eastern Economic Corridor (EEC) project to stimulate the country's underdeveloped east. The parliamentary action provides tax breaks for foreign investors in hi-tech industries and allows investors to rent land for 99 years. Bangkok will also relax foreign visa restrictions and expedite the investment approval process. Already, the EEC has attracted notable auto manufacturers such as Toyota, Honda and Ford and leading foreign petrochemical and electronics companies ("Thailand approves law for $45 billion Eastern Economic Corridor," Reuters, February 8, 2018, https://af.reuters.com/article/africaTech/idAFL4N1PY2NP)

Japanese carmaker Nissan is working with Mitsubishi Motors and the Thai government to produce electric cars and batteries in the country for export abroad. As Bangkok seeks to transform Thailand into a major exporting hub, it wants to attract more EV production despite the lack of infrastructure at home to support the electrification process. To lay the groundwork for investing, Nissan is asking the government for support in developing the needed supply chains as well as tax incentives for EV consumers (John Reed, "Nissan in talks to make electric cars and batteries in Thailand," Financial Times, February 6, 2018, https://www.ft.com/content/d7fc6652-0aec-11e8-8eb7-42f857ea9f09)

Malaysia

Malaysia expects to see more Chinese investment in its real estate, manufacturing and logistics sectors as China's One Belt One Road (OBOR) Initiative funds find their way into the country. Despite Beijing's capital controls, Chinese firms continue to invest in Malaysia. Illustrating this, Chinese firms recently spent around USD $3.2 billion to finance the Kuala Linggi International Port putatively as part of the OBOR Initiative. Malaysian businesses themselves seek to benefit from technology transfer by Chinese companies ("Malaysia can expect more Chinese investments," The Sun Daily, February 7, 2018, http://www.thesundaily.my/news/2018/02/07/malaysia-can-expect-more-chine...)

State run Saudi Arabian Oil Co. and Malaysia's state-owned Petroliam Nasional Bhd are raising USD $8 billion to begin construction on a planned refinery and petrochemical complex in Malaysia. International lenders like BNP Paribas SA, HSBC Holdings Plc and Bank of Tokyo-Mitsubishi UFJ Ltd. have already agreed to provide financial assistance. Saudi Aramco is financing $7 billion of the initial $8 billion required as part of its global strategy of locking in demand and combatting the threat from US shale oil ("Saudi Aramco, Petronas are said to near US $8b loan deal," The New Straits Times, February 7, 2018, https://www.nst.com.my/business/2018/02/332913/saudi-aramco-petronas-are...)

Vietnam

South Korea's Edge Glass Joint Stock Company recently began construction of a USD $220 million glass factory in Vietnam. The factory will employ more than 1,500 locals when operational and produce glass coverings for products ranging from tablets to cars. Vietnam's Prime Minister helped the investment decision by getting local officials to "create favorable conditions for the investors to implement the project." The Prime Minister asked the South Korean firm to respect the environment and contribute to the development of Yen Bai's Tran Yen District ("Electronic components factory being built in Yen Bai," Vietnam News bizhub, February 5, 2018, http://bizhub.vn/news/electronic-components-factory-being-built-in-yen-b...)

US President Donald Trump's tax reform, which reduces the corporate income tax (CIT) from 35 to 21 percent and a new ruling on foreign profit taxation, have spurred Hanoi to worry about the future of foreign investment in Vietnam. Vietnam's Prime Minister has labeled the tax changes as "challenges" to his country which host lots of foreign investment that targets the US market. Nearby economies such as China have also released new CIT rules in the wake of Trump's announcement, putting additional stress on Hanoi ("Vietnam fears effects of US tax bill on foreign investment," Vietnamnet, February 4, 2018, http://english.vietnamnet.vn/fms/business/195177/vietnam-fears-effects-o...)