MNCs in the News-2019-04-12

China

A recent report estimated that China’s inbound mergers and acquisitions (M&As) could potentially reach USD $1.5 trillion from 2020 to 2029, more than triple the total amount between 2009 and 2018. The forecast has to do with China’s publication of a shorter negative investment list and passage of a new Foreign Investment Law. These are China’s latest steps to facilitate inward foreign direct investment (FDI) and if Beijing continues to liberalize inward FDI (IFDI) and protect investors’ rights investment into China should continue to grow steadily (Shuiyu Jing, “Inbound mergers, acquisitions poised for growth,” China Daily, April 9, 2019, http://www.chinadaily.com.cn/a/201904/09/WS5cac0013a3104842260b521d.html)

In last week’s trade talks with the United States (US), Chinese officials met with representatives from leading American cloud service providers such as Microsoft and Amazon and revised an earlier offer to open up China’s cloud computing market. Specifically, China is considering eliminating entrance barriers to its cloud computing market such as requiring overseas companies to form joint ventures (JVs) with Chinese firms. Such restrictions previously have deterred many companies from entering the Chinese market for fear of technology theft (“China talking with US about opening its cloud market,” Asia Times, April 11, 2019, https://www.asiatimes.com/2019/04/article/china-talking-with-us-about-op...)

During a recent meeting in Brussels, leaders from China and the European Union (EU) committed to conclude a bilateral investment treaty (BIT) by next year. In an effort to develop a win-win relationship, China and the EU pledged to establish a balanced investment protection framework for foreign investors as well as widen market access. The two sides are working on “building an economic relationship based on openness, nondiscrimination and fair competition, ensuring a level playing field, transparency and mutual benefit” (Weihua Chen and Desheng Cao, “Sino-EU talks help pave way for agreement on investment,” China Daily, April 11, 2019, http://global.chinadaily.com.cn/a/201904/11/WS5cae5032a3104842260b57a6.html)

At the opening of the fifth summit of Central and Eastern European countries and China in Dubrovnik (CEEC-China Summit), Greek Prime Minister Alexis Tsipras announced that Greece will join China’s 16+1 Initiative, which will be renamed the 17+1 Initiative. The initiative, designed to complement the BRI, is currently made up of 16 European countries and was launched by China in 2012 to “strengthen and expand cooperation with countries in Eastern, Southeastern and Central Europe in the fields of investments, transport, finance, science, education and culture” (“Greece joins China's 16+1 initiative,” Ekathimerini, April 12, 2019, http://www.ekathimerini.com/239502/article/ekathimerini/news/greece-join...)

Japan

Following news that the EU and British leaders agreed to delay Brexit by six months, Chief Cabinet Secretary Yoshihide Suga assured Japanese companies that “‘to minimize negative effects on Japanese companies’ economic activity, we’ll maintain calls for avoiding a no-deal Brexit.’” Prime Minister Shinzo Abe added Japan would coordinate closely with other nations and instructed Finance Minister Taro Aso to continue cooperating with Bank of Japan Governor Haruhiko Kuroda to closely monitor further developments and take appropriate measures (“Japan government to monitor markets after Brexit delayed, Abe says,” The Japan Times, April 11, 2019, https://www.japantimes.co.jp/news/2019/04/11/business/japan-monitor-mark...)

Despite former Nissan Motor Chairman Carlos Ghosn’s plead to Paris to “‘defend me and to preserve my rights as a citizen,’” French Foreign Minister Jean-Yves Le Drian stressed in a meeting with his Japanese counterpart that France respects the sovereignty of Japan’s judicial system. Le Drian also said, though, that France will continue to uphold the principle of the presumption of innocence and provide consular protection to Ghosn. Japan’s Taro Kono commented that the meeting “’had absolutely no impact on the Japan-France relationship’” (Togo Shiraishi, “France respects Japan ‘sovereignty’ in Ghosn case: minister,” Nikkei Asian Review, April 7, 2019, https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/France-respects-J...)

South Korea

According to South Korea’s Ministry of Trade, Industry and Energy (MOTIE), FDI flowing into Korea hit a 7-year low in the first quarter of 2019 due to its tax policies and the international economic and political situation, which have made it “unattractive to foreign investors.” Experts and MOTIE have highlighted factors such as worsening South Korea-Japan relations, the prolonged US-China trade dispute, and the gap in interest rates between the US and South Korea as the cause of plunging IFDI (Jung Suk-yee, “FDI in S. Korea Hits 7-year Low in First Quarter of 2019,” Business Korea, April 12, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=30826)

Korean companies have called upon Seoul to take steps to deal with the EU’s growing pressure on South Korea to ratify key International Labor Organization (ILO) conventions, contending the EU is infringing on the country’s sovereignty. Last week, the European Commission warned it will review Korea’s compliance with the Korea-EU Free Trade Agreement if Seoul fails to ratify fundamental ILO conventions. Korean businesses argue that ratifying the convention will strengthen “militant unions” and hinder Korea’s economic competitiveness by raising costs and lowering efficiency (Kwak Yeon-see, “Companies upset over EU pressure for ILO ratification,” The Korea Times, April 10, 2019, http://www.koreatimes.co.kr/www/tech/2019/04/693_266974.html)