MNC in the News-2019-02-01

China

A German Chamber of Commerce in China (AHK) survey makes clear German companies in China are concerned by the latter’s slow progress in resolving persistent problems facing foreign direct investment (FDI) in China such as inadequate intellectual property (IP) protection and market access restrictions. Jens Hildebrandt, head of the AHK, acknowledged Beijing efforts, but said that the Chinese government needs to do more to convince European investors that it is serious about their concerns (Keegan Elmer, “Warning to China: reforms are taking too long and Germany may be about to get tough,” South China Morning Post, January 26, 2019, https://www.scmp.com/news/china/diplomacy/article/2183709/warning-china-...)

Four senior officials of the European Union (EU) said that the European Commission is 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. The move would represent a change in the EU’s stance amid growing security concerns in the West about China, as the proposed measures would effectively ban Chinese tech giant Huawei, the world’s largest telecom gear maker (Robin Emmott, Foo Yun Chee, Joanna Plucinska, “Exclusive: EU considers proposals to exclude Chinese firms from 5G networks,” Reuters, January 30, 2019, https://www.reuters.com/article/us-usa-china-huawei-tech-europe-exclusiv...)

In 2018, Chinese companies were the biggest buyers of overseas mining assets, driven by the need to secure the metals and minerals required for the energy transition away from fossil fuels. Chinese groups targeted minerals needed for clean energy technologies and electric car batteries. As sales of electric vehicles (EV) increase, the demand for critical metals is expected to rise over the next decade, and China’s huge spending on these natural resources could have great implications for who controls their future supply (Henry Sanderson, “China’s mining M&A spree driven by fossil fuel transition,” The Financial Times, January 25, 2019, https://www.nytimes.com/2019/01/22/business/china-foreign-policy.html)

Japan

French President Emmanuel Macron risked meddling in Japan’s justice system by telling Prime Minister Shinzo Abe he was worried about Carlos Ghosn’s jail conditions. In response, Chief Cabinet Secretary Yoshihide Suga stressed due process is being followed. Suga pushed back against Macron’s suggestion that Tokyo intervene in the selection of Nissan’s new chairman. Macron’s involvement in the affairs of the Nissan-Renault alliance flows from the French state’s partial ownership of Renault (“France’s Macron tells Shinzo Abe he feels Ghosn’s detention in Japan is ‘too long and too hard,’” The Japan Times, January 28, 2019, https://www.japantimes.co.jp/news/2019/01/28/business/macron-tells-abe-w...)

Japanese lawmakers intensified calls for Tokyo to take action against South Korea as the two countries are locked in fierce disputes relating to history issues involving Japanese companies. When Japan’s ambassador to South Korea, Yasumasa Nagamine, opined it is important for Tokyo to keep communicating with Seoul, some lawmakers demanded Tokyo “show its resolute stance by recalling Mr. Nagamine.” However, a senior Foreign Ministry official assured them that the ambassador needs to stay in South Korea to protect the interests of Japanese companies (“Japanese gov’t urged by lawmakers to take action against S Korea,” Japan Today, January 31, 2019, https://japantoday.com/category/politics/Japanese-gov%27t-urged-by-lawma...)

South Korea

Seoul will focus on attracting foreign companies with high-end technologies by offering better incentives and fewer regulations. For example, to lure investments in research and development in areas like electric and self-driving cars, health care, smart homes, energy efficiency, and so on, the government will shift incentives toward business-friendly cash rewards. It will also eliminate redundant and inefficient regulations for foreign companies in Korea and step up efforts to attract customized investment and projects to strengthen its regional industrial ecosystem (Shin Ji-hye, “Korea vows better incentives to attract foreign companies with high-end technologies,” The Korea Herald, January 29, 2019, http://www.koreaherald.com/view.php?ud=20190129000676)

An increasing number of Korean manufacturers are leaving their home country because trade barriers are rising in tandem with a deteriorating local business environment. Korean manufacturers’ overseas FDI totaled USD $12.45 billion for the first three quarters of 2018, a significant increase over the annual total of $7.89 billion in 2017. In tandem with the surge in outward FDI (OFDI), the manufacturing sector’s dependence on overseas production is rising. In contrast, inward FDI into South Korea remains relatively small despite the economy’s size (Jung Suk-yee, “Overseas Direct Investment from South Korea Showing Significant Increase,” Business Korea, January 28, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=28700)