MNCs in the News-2018-12-07

China

To improve its business environment, China has intensified efforts to implement policies to ease foreign investment restrictions. An official from the Ministry of Commerce (MOFCOM) stated that by the end of March 2019, “China will lift all barriers to foreign investments not included on the negative list and launch a special inspection to ensure foreign investors are treated fairly in the process of government procurement and financial support.” By the end this month, provincial authorities also will create and improve mechanisms to handle complaints from foreign businesses (“China to further ease foreign investment restrictions,” China Daily, December 6, 2018, http://www.chinadaily.com.cn/a/201812/06/WS5c08e679a310eff30328f898.html)

Although its trade war with the United States (US) remains unresolved, China is advancing its promise to open its financial sector to foreign investors and recently promulgated its first reform measures, which show the internationalization of China’s USD $40 trillion financial market is still a priority for Chinese policymakers. The largely anticipated moves came after the US and other countries pressed China to speed up the process of its financial opening, with Chinese regulators recently approving Swiss UBS Group’s control of a local joint venture (Lucille Liu, “China embraces financial opening away from Xi-Trump glare,” Bloomberg, December 3, 2018, https://www.bloomberg.com/news/articles/2018-12-03/china-embraces-financ...)

Hit by the trade war, American electric vehicle (EV) manufacturer Tesla has opened the bidding to build a “gigafactory” in Shanghai that will enable it to avoid Chinese tariffs on imported US-built cars. China is the world’s biggest EV market and Tesla’s $2 billion plant will be its first in the country as well as the first wholly foreign-owned car factory in China. Shanghai government officials stated that preparation work is almost complete and construction will start soon (Yilei Sun and Adam Jourdan, “Exclusive: Tesla, smarting from trade war, seeks bids for China Gigafactory construction,” Reuters, December 6, 2018, https://in.reuters.com/article/us-tesla-china-exclusive/exclusive-tesla-...)

Sensitive to rising national security concerns, British telecom firm BT Group has blocked Chinese telecommunication firm Huawei from supplying equipment for its core 5G technology. BT confirmed it is in the process of removing Huawei components from its 4G network, but still will maintain some equipment supplied by Huawei in minor areas of its infrastructure. The United Kingdom is the latest in a stream of countries like the US, Australia, and New Zealand that banned Huawei from participation in their 5G networks and other opportunities (Angus McNeice, “BT to reject Huawei 5G network bids,” China Daily, December 6, 2018, http://www.chinadaily.com.cn/a/201812/06/WS5c080481a310eff30328f528.html)

Charting an independent path from other Western countries which have recently banned China’s Huawei, Portugal allowed its major network provider, Altice, to sign a contract with the Chinese company to upgrade its telecom network. Huawei will supply its software solutions for Altice to support commercially applicable 5G standards by 2019. Altice is Huawei’s 23rd 5G network client, and the deal put the Chinese firm in the global leading position as supplier of next-generation telecommunications technology. (Li Tao, “Huawei signs deal to upgrade Portugal’s largest phone network Altice to 5G standard by 2019,” South China Morning Post, December 6, 2018, https://www.scmp.com/tech/enterprises/article/2176597/huawei-signs-deal-...)

Japan

Despite Tokyo’s efforts to boost growth through infrastructure exports, the Japanese government and Mitsubishi Heavy Industries Ltd. are contemplating abandoning a nuclear project in Turkey due to ballooning costs that will likely make the project unprofitable. The project’s costs have swelled to over $44 billion, more than double the original estimate, due in part to “increased safety-related expenses following the 2011 triple core meltdown at the Fukushima No. 1 nuclear power plant.” Major trading house Itochu already withdrew from the project (“Japan government and Mitsubishi Heavy consider pulling out of Turkey nuclear project,” The Japan Times, December 6, 2018, https://www.japantimes.co.jp/news/2018/12/06/business/corporate-business...)

To prevent leaks of sensitive information posing a threat to national security, Japan will issue guidelines for the acquisition of telecommunications equipment by central government ministries and the Self-Defense Forces. Although no companies were explicitly named in the guidelines, it is understood, with the Canadian arrest of Huawei Technologies’ CFO in the background, that the guidelines are directed at Chinese makers such as Huawei. Beijing already expressed concerns and urged Tokyo to ensure a “fair competition environment” when it sets the new guidelines (“Japan to ban government contracts for suppliers posing security risks,” Nikkei Asian Review, December 7, 2018, https://asia.nikkei.com/Economy/Trade-War/Japan-to-ban-government-contra...)

South Korea

South Korea’s Ministry of Trade, Industry and Energy and China’s MOFCOM held an investment promotion meeting in Beijing to seek ways to lower trade barriers and boost investment between the two countries. The two nations discussed ways to create a joint industrial zone and develop investment platforms and agreed to expand exchanges between Chinese and Korean companies. Seoul also asked Beijing to ensure a fair business environment for its electric vehicle battery manufacturers that have been excluded from the list of firms eligible for Chinese subsidies (“Korea, China hold talks to boost investment,” The Korea Herald, December 3, 2018, http://www.koreaherald.com/view.php?ud=20181203000351)

Korea’s Hydro & Nuclear Power CEO and high-ranking Korean Ministry of Trade, Industry and Energy officials made an urgent visit to the United Arab Emirates (UAE) in what is regarded as an “emergency action” plan to dispel worries of Korea’s possible loss of the exclusive right to operate the Barakah nuclear power plant. Korea won the $18.9 billion design-and-build contract and was expected to sign an exclusive long-term maintenance agreement with the UAE’s state-run companies, but the country decided to open the agreement to bidding (Park Jae-hyuk, “Korea scrambling to win management of Barakah plant,” The Korea Times, December 2, 2018, http://www.koreatimes.co.kr/www/tech/2018/12/693_259694.html)