MNCs in the News*
October 7th, 2019
China’s Financial Stability and Development Committee recently emphasized that the country will take further steps to promote “two-way financial opening.” Despite China’s general and targeted efforts to bring in more foreign investors, investors are holding back on investments partly because of China’s capital controls. It appears that Chinese venture capital (VC) flows into the US for 2019 will run even lower than 2015, a particularly abysmal year for VC investment. Iraq has said that it will sign on to China’s Belt and Road Initiative. The Japanese government has submitted a bill to the Diet pursuant to which the threshold for reviewing foreign direct investment (FDI) in sensitive sectors will plunge from 10 to 1 percent. Japan-Korea parliamentary unions work to facilitate the resolution of Japan-Korea economic and political tensions, though their actual influence seems limited. Automobile production by foreign firms in Korea is plunging to post-Great Financial Crisis levels due in part to labor problems. US President Donald Trump tweets for joy about Hyundai Motor Group’s joint venture with Aptiv.
September 30th, 2019
At an event in the United States (US), Chinese Foreign Minister Wang Yi stressed China’s opening, the value of its new foreign investment law, and its improving negative list. Chinese analysts criticized a European Chamber of Commerce in China report for blaming the woes of European firms in China on China’s state-owned enterprises (SOEs) rather than the highly competitive business environment in China. The joint investment fund between China’s China Investment Corporation and US bank Goldman Sachs has only recently made its first investment due to problematic the problematic political environment. China Power International Holdings concludes memorandum of understanding (MoU) with Norway’s SOE energy producer Equinor for cooperation in renewable energy. Japan concludes MoU with European Union calling for cooperation on infrastructure, transport, and digital project and the need for projects to be environmentally and fiscally sustainable. Japan and Indonesia sign a deal for a more than USD $4.2 billion medium speed train project which is partially politically motivated. Korea’s trade war with Japan is fueling the development of domestic supply chains and the reshoring of Korean firms. Concurrent with Korean President Moon Jae-In’s visit to the US many Korean companies announced their investments in the US.
September 23rd, 2019
Despite falling global foreign direct investment (FDI), China continues to show strength in attracting inward FDI (IFDI). Shanghai continues to be a magnet not only for IFDI, but also for regional headquarters and research and development facilities. The United States (US) has issued a regulation that will give the Committee on Foreign Investment in the United States new powers to scrutinize FDI which many believe are directed at China. US Senators send Federal Communications Commission a letter asking it to review the operating licenses of Chinese telecommunications providers in the US. Japan’s Fair Trade Commission (FTC) pushes Internet companies “to create a system to eliminate fake news and discriminatory postings.” Regarding Korea’s recent filing of a World Trade Organization complaint related to Japanese export controls, Japan has agreed to consultations. Korea FTC to decide if it will accept Apple Korea’s pledge to fix its alleged illegal collection of advertising fees from mobile carriers. Korea Electric Power Corp.’s coal mine development project in New South Wales rejected by Australia’s Independent Evaluation Committee.
September 16th, 2019
Despite the United States (US)-China trade war, renowned economist highlights that US firms continue to remain in China because of the attractiveness of China as well as limits associated with the alternatives. During a meeting with a Japanese business delegation, Chinese Premier Li Keqiang welcomes more Japanese foreign direct investment (FDI) in China. Although it decreased compared to 2017, Chinese outward FDI in 2018 was the second highest globally after Japan. China is moving to expand “internet plus healthcare” cooperation with BRI countries generally and BRI countries specifically. Japan’s Fair Trade Commission (FTC) is investigating whether BMW’s Japan subsidiary abused its market power to punish dealers that failed to meet sales quotas. Japan’s trade minister notes South Korea’s filing of a World Trade Organization (WTO) complaint will not affect Japan’s export control measures and that it will decide later if it wants consultations. Korean employer and business groups express worries about government plan to ratify parts of International Labor Organization (ILO) convention which they fear will make Korean labor unions more powerful. Head of LG Chem opines that his company’s lawsuit against SK Innovation in the US does not undermine the national interest.
September 9th, 2019
On the eve of German Chancellor Angela Merkel’s visit to China, China’s Ministry of Commerce (MOFCOM) reports German foreign direct investment (FDI) in China grew more than 60 percent over the first seven months of 2019 year-over-year. Chinese media delivered some packaged criticisms against FedEx for the latter’s alleged shipments of controlled goods and rerouting of packages destined for Huawei. Relatively small-scale protests took place in three Kazakhstan cities against potentially questionable Chinese factory FDI. The United States (US) concludes declaration with Poland for the rigorous evaluation of foreign suppliers involved in 5G networks which some see as directed at China and Huawei. Nissan considers leaving Korea as Korea-Japan frictions make its challenging situation there even worse. Uniqlo partners with the International Labor Organization (ILO) to support research on labor markets and social security systems in some of its production hubs in South and Southeast Asia. Korean economic difficulties due to frictions with Japan encourages Hyundai union to settle with management without a strike. Korean government official meets with LG Group and SK Group executives to try to get them to resolve trade secrets dispute that LG Chem has brought to the US International Trade Commission.
September 2nd, 2019
China’s plan to apply its social-credit system to foreign companies is raising concerns about possible abuses. China’s State Council announces it will establish pilot free trade zones (FTZs) in Shandong, Jiangsu, Guangxi Zhuang, Yunnan, Hebei, and Heilongjiang. United States (US) companies likely to stay in China despite trade war, a problematic regulatory environment, and US President Donald Trump’s call for them to leave. Although frictions over maritime issues remain unsettled, Chinese President Xi Jinping proposes joint oil & gas development in Reed Bank area to visiting Philippines’ President Rodrigo Duterte. Japan is paying more attention to tax shifting activities by high-tech companies and has recently forced Facebook to pay more in taxes for some questionable tax shifting activities. After the 7th Tokyo International Conference on African Development (TICAD), Japan and 53 African countries signed the Yokohama declaration which stressed “‘quality infrastructure investment.’” South Korea’s new policy for network fees has led to frictions with Facebook and service problems that led to fines which Facebook fought successfully in court. The Korea Startup Forum, the Korea Internet Corporations Association, and local and foreign content providers have called upon the South Korean government “to completely overhaul its network fee calculation structure.”
August 27th, 2019
Exploiting the opening of China’s financial sector, Goldman Sachs moves to increase its ownership stake in its China securities joint venture (JV). The city of Beijing launches a plan to allow foreign direct investment (FDI) in VPN services in a trial zone by the end of 2019. Moody’s Investors Service sees the growth of China’s outward FDI slowing or even declining because of increasing global geopolitical and economic risks. To garner Chinese support over the Kashmir issue, Pakistan announces it will set up the China-Pakistan Economic Corridor Authority to fast-track Belt and Road Initiative (BRI) projects. Survey shows significant number of polled Japanese firms generally back Prime Minister Abe Shinzo’s creation of a stricter export trade regime for goods going to South Korea and feel Japan would prevail in a World Trade Organization case if Seoul filed one. Report shows that Japan became a less important source of materials and components for Korea over the first five months of 2019, though trade deficit patterns remain unchanged. Korean research institute survey reveals many surveyed Korean firms feel Japan’s trade restrictions will affect not just their sales, but also their profits. Korea’s Ministry of the Environment finds Audi Volkswagen Korea and Porsche Korea illegally manipulated vehicle exhaust emissions and penalizes and reports the firms for prosecution.
August 19th, 2019
China’s Ministry of Commerce (MOFCOM) announced inward foreign direct investment (FDI) over the first seven months of 2019 grew 7.3 percent over the same period last year. The city of Beijing intends to relax controls over FDI in cultural and entertainment businesses. Chinese FDI into Europe has slowed as a result of economic uncertainties and trade frictions. A survey suggests Vietnam, Singapore, and Indonesia are the top three Asian countries presenting the best opportunities for participating in China’s Belt and Road Initiative (BRI). Japanese firms in Hong Kong are becoming cautious given tumultuous situation there. Japan alerts new Andhra Pradesh Chief Minister that talk of renegotiating power purchase agreements raises risks. Korean lawmakers contemplate limiting Korea Investment Corp.’s ability to invest in Japanese companies with ties to wartime forced labor. Korean consumer boycott of Japanese goods and services produces decline in imports of Japanese goods of 14 percent over the same period the prior year.
August 12th, 2019
To cope with United States (US) tariffs on Chinese goods, several prominent Japanese firms operating in China are planning to relocate some of their manufacturing to other Asian countries. China’s State Council has expanded the Shanghai Free Trade Zone (FTZ), adding an area called Lingang area which is supposed to become a business cluster for international businesses and cross-border financial services. The China-US trade war has driven two large Chinese consumer health care companies to seek to cooperate with/invest in Malaysia’s largest generic drug maker to grow their manufacturing base in Malaysia. China’s Zhong Ji Mining froze operations at its gold mine in Kyrgyzstan after 20 people were hurt in clashes between local protesters and Chinese workers. Tokyo touts that it had approved the export of a sensitive chemical to Korea, the first since it intensified export controls in July. Malaysia’s International Trade and Industry Minister reports Japan’s Daihastu Motor “would provide ‘advanced technological support’” for Malaysia’s third national car company. A Korean National Labor Relations Commission decision to freeze the ongoing arbitration between GM Korea and its labor union means the labor union now has the legal right to strike. Due to Seoul’s decision in 2018 to have all public enterprises sell their overseas assets,” Korea Resources Corp. has been pursuing the sale of its Cobre Panama copper mine, albeit unsuccessfully.
August 5th, 2019
China has opened the upstream exploration of its oil and natural gas resources by foreign investors by scrapping joint venture (JV) restrictions. In the first half of the year, the top geographic destination for Chinese inward foreign direct investment (FDI) continued to be Jiangsu, which attracted large amounts of inward FDI (FDI) in emerging industries from countries like Great Britain. Cross-border investments between China and the United States (US) totaled $13 billion in the first half of 2019, dropping to a five-year low due to the trade war and other factors. In 2018, Chinese investors poured money into Indian start-ups due to the latter’s more affordable labor market and fast economic growth. Japan’s Cabinet approves removal of South Korea from its so-called white list with Seoul promising retaliation. Fears of a more stringent review process flowing from current tensions lead Hyundai Heavy Industries to delay filing for an antitrust review in regard to its planned takeover of Daewoo Shipbuilding & Marine Engineering. Seoul organizes information events for Korean companies that might be affected by Tokyo’s decision to remove Korea from its “whitelist,” with Korean firms complaining the initiatives are “‘unhelpful and belated.’” SK Innovation contemplates supplying electric vehicle (EV) battery separators to its Korean competitors because this could aid Korean businesses confronting Japanese export restrictions on EV battery separators.