Shanghai municipal government investment measures appear to have enabled the city to maintain strong foreign investment growth despite a challenging environment. BIStel says it will expand its investment in China despite the China-United States trade war because China is its biggest target market. Saudi Arabia’s Aramco signs Memorandum of Understanding (MoU) for investment in major refining and petrochemical investments in Liaoning that may substantially boost energy exports to China. According to China’s Ministry of Commerce (MOFCOM), Chinese non-financial outbound FDI in 47 countries participating in the Belt and Road Initiative (BRI) increased 8.1 percent year-over-year. Despite uncertainties over Brexit, Chinese companies remain interested in investing in the United Kingdom. Tokyo considers backing Russia’s Novatek’s Arctic liquefied natural gas project in the hopes of bolstering Japan’s negotiating position in territorial talks with Moscow. An increasing number of Japanese automakers are leaving or reconsidering their position in the UK as Brexit fast approaches. Seoul expects the second US-North Korea summit to facilitate inter-Korean investment projects including a Korea peninsula rail link. India and South Korea agreed to enhance cooperation in diverse economic areas, including many pertaining to investment.
Hot Topics for MNCs, Cool Analysis*
February 27th, 2019
February 22nd, 2019
Per China’s Ministry of Commerce (MOFCOM), inward foreign direct investment (FDI) flows in January increased 4.8 percent versus the prior period in 2018. Despite United States (US)-China trade dispute, in January, China’s IFDI from the US increased 126.8 percent compared to the same period in 2018. European Parliament revamps European Union (EU) investment screening mechanism to give European Commission power to review deals, though ultimate decision making remains with EU states. U.S.-China Economic and Security Review Commission highlights personal and national security risks from Chinese investors taking stakes in American biotech companies. Israel will create an interagency body to oversee sensitive commercial deals partly to ensure foreign investments, above all by China, do not damage its ties with the US. Japanese and South Korean businesses fret about the impact of heightened tensions between the two governments relating to history and recent naval encounters. Per reports, following Malaysian Prime Minister Dr. Mahathir Mohamed’s visit to Tokyo last year, major Japanese companies invested hundreds of millions in Malaysia. Russia will take more steps to support Koreans firms doing business in Russia’s Far East. South Korea and Austria move to expand cooperation as Austria seeks Korean help to become a 5G leader in Europe.
February 3rd, 2019
A German Chamber of Commerce in China (AHK) survey makes clear German companies are concerned by China’s slow progress in resolving persistent problems facing foreign direct investment (FDI). European Commission considering taking action to prevent EU businesses from using 5G mobile networks provided by any country or company suspected of using its equipment for spying or sabotage. In 2018, Chinese firms were the biggest buyers of overseas mining assets, especially minerals needed for clean energy technologies and electric car batteries. French President Emmanuel Macron tells Japanese Prime Minister Shinzo Abe he is worried about Carlos Ghosn’s jail conditions and suggests Tokyo intervene in the selection of Nissan’s new chairman. Japanese lawmakers call for Japanese government to take a stronger stance against South Korea on historical disputes pertaining to Japanese companies. Seoul will focus on attracting foreign companies with high-end technologies by offering better incentives and fewer regulations. Rising trade barriers and a poor local economic situation are pushing an increasing number of Korean manufacturers abroad.
January 28th, 2019
Sinochem’s chairman predicts Chinese foreign direct investment (FDI) abroad will decrease due to trade tensions with the United States (US) and China’s domestic economic slowdown. Former China Securities Regulatory Commission (CSRC) chairman says China should make sure that its investment and financing projects meet international standards to quieten overseas criticism of the Belt and Road Initiative (BRI). The chairman of DP World warns other countries to be careful of China because of the latter’s predatory practices. Former People’s Bank of China official opines restrictions imposed by Western governments on Huawei could lead to it significantly reduce investments in Silicon Valley. Japanese firms cautious about boosting investment given China-US trade war and uncertainty about the global economy. Sony to move its European headquarters from the United Kingdom (UK) to the Netherlands to avoid disruptions that might result from “Brexit.” South Korea will offer support for overseas construction and plant orders to offset weakening exports caused by the global trade disputes and China’s economic slowdown. South Korea’s major business associations and the Presidential Committee on New Southern Policy form alliance to help Korean entrepreneurs seek better opportunities in the Association of Southeast Asian (ASEAN) market.
January 22nd, 2019
China Ministry of Commerce report shows anemic increase in inward foreign direct investment (FDI) flows in 2018 year-over-year (YOY), though strong growth in manufacturing inward FDI (IFDI) in 2018 YOY. Foreign automaker optimism about the China market increases due to the calming of the United States (US)-China trade war. JPMorgan Chase & Co.’s 2019 global M&A outlook report predicts Chinese companies will continue to look for overseas mergers and acquisitions (M&As), partly because of readily-available capital. Paitron Services and the China Overseas Development Association report Chinese outward FDI (OFDI) now riskier because of growing tensions with the US and threats posed by terrorist groups. During a recent visit to Israel, US Deputy Secretary warned Jerusalem bilateral intelligence sharing could be at risk if the latter did not implement tougher screening of Chinese investments. Hitachi Ltd. board decision to suspend plans to build two nuclear reactors in the United Kingdom (UK) flow from financial issues not the political turmoil flowing from Brexit. South Korea will pursue closer ties with United Arab Emirates in the energy sector. Seoul High Court upholds ruling ordering Japanese machinery maker Nachi-Fujikoshi Corp. to pay compensation to Korean forced laborers.
January 16th, 2019
During a meeting with Tesla CEO Elon Musk, Chinese Premier Li Keqiang stated his country welcomes investments from foreign firms and is open to deepening cooperation with them. An official from the Beijing Central Business District (CBD), which is undertaking steps to attract higher quality firms, touts foreign direct investment (FDI)’s contribution to CBD. Chinese merger & acquisition (M&A) activity in the US in 2018 plummets. Rising Committee on Foreign Investment in the United States (CFIUS) scrutiny of foreign attempts to purchase minority stakes in American companies has fueled a major drop in Chinese venture funding of United States (US) start-ups. Chinese FDI pours into Latin America as US presence wanes and Latin American technology firms thirst for funding. South Korea President Moon Jae-in accuses Tokyo of politicizing recent court decisions over wartime labor. Meeting with his British counterpart, Japanese Prime Minister Abe Shinzo urges the United Kingdom (UK) to avoid a no-deal Brexit. During his New Year Press conference last week, South Korean President Moon reiterated his support for economic cooperation between the two Koreas and called for a lifting of economic sanctions. State-run Korea National Oil Corp. (KNOC) moves to liquidate overseas resources development projects that generated huge losses for the firm in 2017.
January 8th, 2019
Foreign companies remain cautious about increasing their foreign direct investment (FDI) in China because of the risk of trade war escalation. Multinational corporations (MNCs) in China worry not only about trade war’s impact on sales, but pressures to relocate their factories. China’s National People’s Congress reviews draft law than seems to more aggressively protect foreign investor interests than a previous version. Survey reveals US businesses finding trade war leading them to face increased Chinese non-tariff barriers. China’s State-owned Assets Supervision and Administration Commission and the Chinese Academy of Social Science have produced a report that central State-owned enterprises (SOEs) are delivering equal employment benefits to Chinese and locals. Attorneys representing former South Korean forced laborers for Nippon Steel & Sumitomo Metal file for the seizure of Nippon Steel assets in Korea. South Korean government will tighten rules on the acquisition of Korean companies by foreign firms to limit technology leaks. Seoul to designate OLED equipment and chemical sector as “national core technologies” to gain influence over their sale and export.
December 18th, 2018
Inward foreign direct investment (FDI) into China for the first 11 months of 2018 year-over-year relatively stable. Beijing stops requiring its local governments to support the Made in China 2025 policy. European Union Ambassador to China calls on China to stop requiring companies to transfer technology for market access. Apple considers moving some production out of China due to possibility of increased tariffs on its China-produced smartphones and laptops. 2018 proves a tough year for Chinese outward FDI (OFDI) in the oil sector. Huawei accepts various UK technical requirements “to address risks in its equipment and software.” Following a Japanese government’s decision that effectively excluded China’s Huawei Technologies Co. and ZTE Corp. from public procurement, Japan’s three major mobile phone carriers Softbank Corp., NTT Docomo Inc., and KDDI Corp. plan to stop using various products from these companies. Japanese expert panel calls on Tokyo to take measures to protect the usage of consumer data. Korea Electric Power Corp. report on Northeast Asia power grid notes it would face serious challenges because of sanctions on North Korea. Beginning July 2019, Korea will impose a value-added tax on a wider range of services provided by global technology giants to level the playing field for Korean firms.
December 9th, 2018
China says will lift all barriers to foreign direct investment (FDI) not included on the negative list and launch a special inspection to ensure foreign investors are treated fairly. China is advancing its promise to open its financial sector as evidenced by its approval of Swiss UBS Group’s control of a local joint venture (JV). Tesla has opened the bidding to build its “gigafactory” in Shanghai that will help it avoid Chinese tariffs on imported US-built cars. Sensitive to rising national security concerns, British telecom firm BT Group has blocked Huawei from supplying equipment for its core 5G technology. Diverging from other countries, Portugal allowed its major network provider to sign a contract with Huawei. Japan and Mitsubishi Heavy Industries Ltd. are contemplating abandoning a nuclear project in Turkey due to ballooning costs. Tokyo will issue guidelines for the acquisition of telecommunications equipment by central government ministries and the Self-Defense Forces that implicitly relate to Chinese makers. South Korean and Chinese officials hold investment promotion meeting in Beijing to seek ways to lower trade barriers and boost bilateral investment. Korean delegations makes urgent visit to the United Arab Emirates to dispel worries of Korea’s possible loss of the exclusive right to operate the Barakah nuclear power plant.
December 1st, 2018
China moving to improve the business environment for foreign companies, especially in Free Trade Zones (FTZs). China’s National Development and Reform Commission (NDRC) announces that it will permit foreign banks in China to apply for approval for a quota increase in their medium to long-term foreign debt for 2019. Per Donald Trump, the United States may take a bite out of Apple products coming from China which previously have escaped a special 10 percent tariffs on Chinese goods. China’ Huawei finds Kiwis not so soft after New Zealand’s intelligence agency blocks it supplying 5G mobile network equipment to the major domestic telecom provider. Maldives’ new finance minister criticizes true price of Chinese projects, which has led to the Maldives returning to an “India First” policy. Japan’s Mitsubishi Heavy Industries ordered by South Korea’s Supreme Court to pay USD $365,500 in damages to two groups of South Koreans for forced wartime labor. In post-Carlos Ghosn arrest meeting, France suggests to Japanese official “the head of the Renault-Nissan alliance should be from the French automaker.” European firms with business in South Korea push Seoul to upgrade the country’s business regulations to reach international standards. At the 6th Association of Southeast Asian Nations (ASEAN) Connectivity Forum, South Korea’s secretary-general of the ASEAN-Korea Centre states Korea is looking to improve relations with ASEAN countries especially in infrastructure area.