MNCs in the News-2022-January

China

At a briefing, a China Ministry of Commerce representative stated China would implement various measures to ensure China continued to attract foreign direct investment (FDI) in a challenging environment including Covid-19, increased competition, and rising operating costs. For instance, China will “expand items in the industry catalog that encourages foreign investment and further beef up preferential land and tax policies” and “‘implement the 2021 national and (pilot free trade zone) negative lists…and make sure opening-up measures in automobile manufacturing will be carried out’” (Liu Zhihua and Zhang Yue, “Steps to Boost Foreign Direct Investment,” China Daily, January 26, 2022, http://www.chinadaily.com.cn/a/202201/26/WS61f08baea310cdd39bc833ce.html)

The Guangdong Administration for Market Regulation (GAMR) fined Sam’s Club nearly USD $50,000 because the latter used a default five-star rating for products on its app, which the GAMR concluded “would deceive and mislead consumers.” GAMR also ordered Sam’s Club to revamp its app. Sam’s Club has been facing increased consumer scrutiny in China after “having removed certain products from the Xinjiang Uygur Autonomous Region,” an action it denied was done deliberately, and may be investigated over other matters (“Sam’s Club Fined over $47K for Default Five-Star Ratings on App after Removing Xinjiang Products,” Global Times, January 14, 2022, https://www.globaltimes.cn/page/202201/1245967.shtml)

The Beijing municipal government imposed an approximately $25,000 fine on Seven & I Holdings 7-Eleven stores in China after it was found that 7-Eleven had maps on its website that labeled Taiwan an independent country. Municipal authorities also criticized 7-Eleven for showing maps that did not properly label islands in the East China that both China and Japan claim and islands in the South China Seas over which China and others assert sovereignty (“Japan’s 7-Eleven in China Fined for Describing Taiwan as a Country,” The Mainichi, January 8, 2022, https://mainichi.jp/english/articles/20220108/p2g/00m/0bu/008000c)

China is helping Cambodia, an important Southeast Asian Belt and Road Initiative (BRI) partner, to expand its Ream naval base. The United States (US) and others are increasing concerned that China intends to station military assets at the base given the presence of dredgers as well as recent clearing activities on land near the base. Indeed, it already has been reported that Cambodia has signed an agreement giving China the right to use the base for 30 years (“Shaun Turton, “China-Led Upgrade of Cambodian Base Advances as Dredgers Appear,” Nikkei Asia, January 22, 2022, https://asia.nikkei.com/Politics/China-led-upgrade-of-Cambodian-base-adv...)

After a probe, India’s Directorate of Revenue Intelligence has demanded that Xiaomi’s India subsidiary pay slight more than $87 million in unpaid import taxes. According to the Directorate, its probe revealed that Xiaomi India was not including royalty and licensing fees that it was paying to Qualcomm USA and Beijing Xiaomi Mobile Software in the value of goods imported into India by Xiaomi India and its contract manufacturers. This meant it was paying less than its required customs duties (Sumathi Bala, “India Demands Xiaomi Pay Nearly $88 Million in Import Duties after Tax Evasion Probe,” CNBC, January 6, 2022, https://www.cnbc.com/2022/01/06/india-asks-xiaomi-to-pay-nearly-88-milli...)

China has lent billions of dollars to Sri Lanka to fund various infrastructure projects such as an airport, highways, a power plant, and seaports, some of which not only belong to China’s Belt and Road Initiative, but also have questionable economic viability. During a visit by China’s Foreign Minister, Sri Lanka’s President asked China, his country’s fourth biggest lender, “to help restructure debt repayments…to help… [his] country weather a worsening financial crisis.” He also asked for special terms on Sri Lankan exports to China (Uditha Jayasinghe, “Sri Lanka’s President Asks China to Restructure Debt Repayments,” Reuters, January 10, 2022, https://www.reuters.com/markets/rates-bonds/sri-lankas-president-asks-ch...)

Japan

Representatives from Japan’s Liberal Democratic Party (LDP) and Taiwan’s Democratic Progressive Party (DPP) met online in late December 2021 and agreed to have “‘all round cooperation’ on semiconductors and hold regular talks.” “Japanese officials said they had agreed with the Taiwan side that both they as well as the United States needed to cooperate to build resilient supply chains in areas such as semiconductors.” The initial goal is to deal with semiconductor shortages, but, longer term, the parties seek to respond to “‘China’s high-tech investment’” (Ben Blanchard, “Taiwan, Japan Eye ‘All Round Cooperation’ on Chips,” Reuters, December 23, 2021, https://www.reuters.com/markets/deals/taiwan-japan-eye-all-round-coopera...)

A survey by Japan’s Japan External Trade Organization (JETRO) found that 66 percent “of Japanese companies investing in Myanmar will either maintain or expand their operations in the country in a year or two” despite Myanmar’s military coup, economic woes, pandemic problems and their profit pressures. According to the JETRO survey, only approximately 7 percent plan to leave. If sales decline or Myanmar’s growth prospects do not improve then it is possible more companies may reduce operations or leave (“70% of Japanese Firms to Keep or Expand Business in Myanmar Even after Coup,” The Japan Times, January 10, 2022, https://www.japantimes.co.jp/news/2022/01/10/business/myanmar-japan-busi...)

Korea

The chair of Korea’s Fair Trade Commission (KFTC) said the KFTC has been working hard to “foster a fair, competitive digital economy” but needs to do more. She stated the basis for moving forward is further research to understand what is going on and what are the consequences of firm practices. In addition, the KFTC will review constantly its policies to ensure they are cutting edge while supporting innovation. The aim is to prevent problems from emerging in the first place (Joh Sung-Wook, “KFTC Chief Vows to Fight Anti-Competitive Practices by Platform Giants,” The Korea Times, January 3, 2022, https://www.koreatimes.co.kr/www/tech/2022/01/419_321125.html)

As a result of Korea’s new law, effective September 2021, that limited app store companies like Apple and Google from demanding developers use their in-app payment systems, Apple has submitted a compliance plan that not only allows alternative payment systems, but reduces service charges. Even so, Apple has not provided “the exact date of when the policy will take effect or the service fee to be applied.” The Korea Communications Commission said it will fine those that do not comply with the new law (“Apple to Allow App Developers to Use Alternative Payment Systems,” The Korea Times, January 11, https://www.koreatimes.co.kr/www/tech/2022/01/133_322064.html)