MNCs in the News-2020-01-17

China

The Chinese government has been working to make its tax system easier to use. Measures include reducing “the time required to complete the process of paying corporate taxes and comply with tax obligations,” improving the country’s electronic tax declaration and payment system, and simplifying corporate income, labor, and other taxes. Such steps have boosted China’s World Bank ease of “doing business” ranking. It is expected that its measures coupled with tax, social contribution, and fee cuts will increase China’s attractiveness for foreign direct investment (FDI) (Chen Jia, “Reform of Tax System May Boost FDI,” China Daily, January 13, 2020, http://www.chinadaily.com.cn/a/202001/13/WS5e1bc890a310cf3e3558410b.html)

Motivated by the opening of China’s financial sector, United States (US) Goldman Sachs plans a major expansion of its workforce in China if it can get permission to take “majority control and eventually full ownership of its security brokerage joint venture,” which is called Goldman Sachs Gao Hua Securities. Economic conditions and the continued opening of China’s financial sector also will shape how big Goldman Sachs’s mainland operations eventually become (Chad Bray, “Goldman Sachs Plans to Double Workforce in Mainland China within Five Years as US Bank Seeks Control of Brokerage Venture,” South China Morning Post, January 13, 2020, https://www.scmp.com/business/companies/article/3045802/goldman-sachs-pl...)

JPMorgan Asset Management has a 49 percent stake in China International Fund Management Co., a joint venture (JV), and already has applied to take a majority ownership stake. Ultimately, it wants 100 percent ownership. JPMorgan is motivated by the opening of China’s financial sector and the huge amount of investible assets held by Chinese households. JPMorgan recently became the first US bank to get Chinese government approval to have majority ownership of a securities JV and is looking to take full control of its futures JV (“JPMorgan to Seek Full Control of China Fund Venture,” Caixin, January 16, 2020, https://www.caixinglobal.com/2020-01-16/jpmorgan-to-seek-full-control-of...)

The US has been pressuring the United Kingdom (UK) not to let China’s Huawei play any role, even a small one, in its forthcoming 5G telecommunication system. Indeed, the US has gone so far as to threaten to limit or stop intelligence sharing with the UK pursuant to the “Five Eyes” intelligence sharing arrangement if it does. While acknowledging the value of intelligence sharing, UK Prime Minister Boris Johnson also stated that his country needs to be informed of alternatives for needed telecommunications infrastructure (“UK’s Boris Johnson: Huawei 5G Critics Need to Suggest Alternatives,” Global Times, January 15, 2020, https://www.globaltimes.cn/content/1176871.shtml)

Japan

A lawsuit filed by several US states threatens to throw the proposed merger between two American telecom carriers, Sprint and T-Mobile, into uncertainty. It has important ramifications for Japan’s Softbank, which holds an 84 percent stake in Sprint and already had received conditional approval for the merger from the US Department of Justice. States such as New York and California have filed suit, arguing that the merger would reduce competition and hurt consumers. A trial judge will issue a ruling on the lawsuit in February (Wataru Suzuki, “Spectre of blocked Sprint/T-Mobile merger spooks SoftBank,” Nikkei Asian Review, January 14, https://asia.nikkei.com/Business/SoftBank2/Spectre-of-blocked-Sprint-T-M...)

Softbank recently entered the competition for the development of Indonesia’s new capital by offering an investment between USD $30 to $40 billion. Softbank CEO Masayoshi Son expressed his interest to Indonesian President Widodo, promising to deliver the newest technologies and artificial intelligence. Companies from South Korea, Hong Kong, the US, and the United Arab Emirates also put forward proposals. President Joko Widodo recently announced the plan to move Indonesian capital from Jakarta to Borneo last year, with the financing structure still in development (“SoftBank offers to invest up to $40 bil. in Indonesia’s new capital,” Mainichi Shimbun, January 18, https://mainichi.jp/english/articles/20200118/p2g/00m/0bu/008000c)

South Korea

Korea’s Fair Trade Commission (FTC) announced that US streaming service Netflix would revise several clauses in its term of use, which the FTC, South Korea’s antitrust regulator, previously deemed unfair. Clauses to be changed include changing subscription plans and price without prior approval from users, holding users responsible for accidents such as hacking, and allowing the provider to transfer agreement with users to third parties. Korea’s FTC further indicated that it would continue to scrutinize business activities of other global streaming services (Shim Woo-hyun, “Netflix in Korea ordered to change unfair terms of use,” The Korea Herald, January 15, http://www.koreaherald.com/view.php?ud=20200115000598)

Samsung recently acquired TeleWorld Solutions, a US-based telecom firm providing wireless and consulting services. The South Korean conglomerate did not disclose the cost of the acquisition, which is seen as an effort to establish Samsung as a key player in the market for 5G network equipment. The acquisition is expected to help Samsung bolster its presence in the US market at a time when Huawei, the leading 5G equipment provider, comes under increasing pressure from US authorities over alleged close links with Chinese government (Kim Yoo-chul, “Samsung acquires U.S. firm for progress in 5G,” The Korea Times, January 14, http://www.koreatimes.co.kr/www/tech/2020/01/133_281928.html)