MNCs in the News-2014-03-14
A strike at IBMs x86 server factory in Shenzhen continued into its second week. Workers who had launched the strike after failing to obtain the help they desired from the official All China Federal of Trade Unions, are demanding that IBM, which is selling its selling its low-end server business to Lenovo in a multi-billion deal, offer better severance or retention pay and benefits. Reportedly half of the factory’s workers have accepted IBM’s proposed severance packages and Lenovo, which has been silent about the dispute, has guaranteed that it will not cut salary or benefits for workers that join it (Tom Mitchell, “Lenovo to Inherit Half-Empty IBM Factory as Workers Quit,” Financial Times, March 11, 2014).
Panasonic Corporation, a Japanese electronics company, will be the first company to pay its China-based employees a premium to compensate for air pollution hazards. During the recent Chinese National People’s Congress, Chinese Premier Li Keqiang announced a “war on pollution” and the government has put forth plans to close thousands of furnaces, clean up major power plants, and eliminate 6 million polluting cars. Top Chinese environmental officials have said that the level of air pollution has remained far above national standards. According to Vice Minister of Environmental Protection Wu Xiaoping, only 3 out of 74 cities met the national standard (“Panasonic China staff get pay for pollution,” The Japan Times, March 13, 2014, http://www.japantimes.co.jp/news/2014/03/13/business/panasonic-china-sta...
The Japanese government will support insurance and medical companies that target low-income families in developing countries. As an example, Secom Medical System Co., Ltd. will start a business in India to provide a Japanese medical check-up, with JICA absorbing associated research and accompanying costs, up to 50 million yen (about US $491,000) per company in order to help them find new clients and increase local employment. Secom has already participated in the establishment of a hospital in India in 2013 with Toyota Tsusho Corporation and an Indian firm, making it the first Japanese-Indian joint venture (Toyota Tsusho Home Page, http://www.toyota-tsusho.com/about/project/02/ ; and ”Government will pay the research cost to support medical business in developing countries,” Nikkei, March 12, 2014, http://www.nikkei.com/article/DGXNASFS08002_S4A310C1MM0000/)
Korean financial regulators are investigating a number of major Korean banks in Japan. This is because it suspects the Japanese branches of major Korean banks such as Shinhan, Hana, and the Korea Development Bank have created slush funds after receiving bribes from borrowers. At the same time, some banks in Tokyo may have extended illegal loans. The government worries that this corruption could hurt the government’s plans for the global expansion of Korean banks. Recently, the government has been trying to foster such expansion by easing regulations for the overseas branches of Korean financial firms (Na Jeong-ju, “Units of Shinhan, Hana, KDB in Japan under probe,” The Korea Times, March 12, 2014, http://www.koreatimes.co.kr/www/news/biz/2014/03/488_153263.html)
On March 11, the Korean Finance Ministry announced that it will lift, partially, economic sanctions on Iran. The lifting of sanctions will only occur in some service industries, including construction, telecommunications, medicines & medical service management, and automobiles. Its decision followed Washington’s temporary easing of regulations on Iran. According to the Finance Ministry, Iran has requested for humanitarian reasons goods such as food and medicines (Kim Yon-se, “Korea to partially lift Iran sanctions,” The Korea Herald, March 11, 2014, http://www.koreaherald.com/view.php?ud=20140311001263)
Activities in offshore Yuan markets have gained considerable momentum, with Singapore playing a big role in the internationalization of the Chinese currency. ICBC, a Singaporean bank, has already cleared a volume of 4.2 trillion Yuan (US $683 billion) in 2014. Changes in Chinese regulations last year, which allowed multinational companies in China to store excess Yuan holdings offshore have spurred Singapore’s growing role, with Yuan deposits in Singapore increasing 70 percent between April and December 2013. Singapore’s central bank plans to focus on broadening infrastructure, particularly bond market infrastructure, for Yuan financing and investment needs (Wong Wei Han, “S'pore making strides as offshore yuan hub,” Today, March 14, 2014, http://www.todayonline.com/business/spore-making-strides-offshore-yuan-hub)