MNCs in the News-2019-03-22

China

China Ministry of Commerce (MOFCOM) data shows that in the first two months of 2019 foreign direct investment (FDI) into China reached 147.11 billion yuan, up 5.5 percent year-over-year (YOY). February inward FDI (IFDI) grew 6.6 percent compared to the prior period YOY, amounting to 62.94 billion yuan. FDI from the United States (US), the European Union (EU), and South Korea increased by 44.3 percent, 39.1 percent, and 35.6 percent YOY. China’s high-tech service sector IFDI surged 92.9 percent YOY (Zhong Nan, “FDI rises 5.5% to 147b yuan in first two months of 2019,” China Daily, March 15, 2019, www.chinadaily.com.cn/a/201903/15/WS5c8b25caa3106c65c34eed3b.html)

Last week, China’s State Administration of Foreign Exchange (SAFE) issued new rules “simplifying the registration process for multinational companies borrowing from overseas or lending money abroad, and making it easier for them to manage cross-border capital.” Moreover, foreign firms have the ability to “combine quotas of foreign loans enjoyed by their subsidiaries registered across China and conduct foreign loan business according to commercial practices.” In October last year, SAFE already eliminated nearly one and a half dozen regulations on foreign exchange management in order to facilitate trade and investment (“SAFE Relaxes Cross-Border Flows for Multinationals,” ECNS.CN, March 19, 2019, http://www.ecns.cn/news/economy/2019-03-19/detail-ifzfmzhu2193164.shtml)

Despite concerns that Italy joining the Belt and Road Initiative (BRI) might be a “Trojan horse” for China to enter the Italian economy, Italy will likely open up four of its ports to Chinese FDI in hopes of boosting exports. Italian Prime Minister Giuseppe Conte said his government will not ignore European frameworks or principles of transparency and national security and that joining the BRI does not call into question Italy’s euro-Atlantic alliance (Stuart Liu, “Italy may be ready to open up four ports to Chinese investment under ‘Belt and Road Initiative,’” South China Morning Post, March 19, 2019, https://www.scmp.com/news/china/diplomacy/article/3002305/italy-may-be-r...)

German government sources announced that the country is working on creating a state-owned fund to protect key companies from takeovers by foreign companies, especially Chinese ones. The Chinese takeover of robotics maker Kuka in 2016 served as a wake-up call for the government to take a more active role in defending Germany’s national interests and protecting German companies. The new legislation, which could pass by the end of the year, is “a response to China’s state-driven metamorphosis from customer to competitor” (Michael Nienaber, “Exclusive: Germany to create fund to foil foreign takeovers after China moves,” Reuters, March 20, 2019, https://www.reuters.com/article/us-germany-industry-exclusive/exclusive-...)

Japan

Koreans forced to work for Japanese corporations without compensation during World War II are rushing to file lawsuits before the statute of limitations runs out. The same attorneys that won the lawsuit against Mitsubishi Heavy Industries announced they will file a new suit next month. This follows a similar announcement in January by another group of lawyers representing wartime laborers that will file suit against Nippon Steel & Sumitomo Metal. Tokyo and Seoul have not resolved their tensions over the issue (Yosuke Onchi, “South Koreans ready more wartime labor suits as clock ticks,” Nikkei Asian Review, March 20, 2019, https://asia.nikkei.com/Politics/International-relations/South-Koreans-r...)

In a demonstration of “’Toyota’s trust’” in the local workforce, Toyota announced that it will build a new hybrid car in Britain for its Japanese peer Suzuki despite Brexit uncertainties. Just two weeks ago, Toyota Europe’s CEO warned Britain that the firm could end production in the country by 2023 should the country exit the EU without a deal. Still, Toyota’s head of operations repeated its worries about Brexit, calling for “‘continued free and frictionless trade and common automotive technical standards’” (“Toyota to build new hybrid cars for Suzuki in U.K., despite Brexit,” The Japan Times, March 21, 2019, https://www.japantimes.co.jp/news/2019/03/21/business/toyota-build-new-h...)

South Korea

Gyeonggi Province is considering a bill that requires schools to put “’war criminal tags’” on products manufactured by Japanese firms such as Nikon, Panasonic, Mitsubishi and Yamaha. Representatives of the bill claim, “the move was not about boycotting Japanese products,’” but a way to inform their students of “’what some Japanese companies did in the past’” and failed to apologize for. Seoul city is also expected to soon vote on a bill that restricts the city from signing non-competitive contracts with Japan’s “war criminal” corporations (Kim Tae-gyu, “War criminal tags on Japanese products,” Korea News Plus, March 21, 2019, https://newsarticleinsiders.com/war-criminal-tags-on-japanese-products)

Two Korean energy companies, S-Oil and Hyundai Oilbank, have pleaded guilty and will pay USD $127 million in criminal and civil fines to the United States (US) Justice Department for fixing fuel prices at US military bases in Korea. Three other South Korean energy companies have also pleaded guilty and were fined $236 million in November for their part in bid rigging. This case is “‘both the largest-ever False Claims Act antitrust recovery and the largest False Claims Act settlement involving bid-rigging’” (Jung Min-ho, “S-Oil, Hyundai Oilbank plead guilty to overcharging US military,” The Korea Times, March 21, 2019, http://www.koreatimes.co.kr/www/tech/2019/03/693_265757.html)