MNCs in the News-2014-03-28

Several days ago, China Mobile, China’s largest mobile operator with more than 750 million subscribers, and Alcatel-Lucent, a French telecommunications firm, signed a €750 million 1-year deal. The agreement will enable Alcatel, which has long done business in China, to sell China Mobile all kinds of IP networking, fixed ultra-broadband access, and wireless ultra-broadband access technology (hardware, software, and services) that will aid China Mobile in deploying its 4G network. The contract between the two firms coincided with Chinese president Xi Jinping’s visit to France and the EU Trade Commissioner’s termination of an anti-dumping investigation against certain Chinese telecommunications firms (“China Mobile Selects Alcatel-Lucent for strategic transformation to all-IP ultra-broadband network,” Press Release on Wall Street Journal, March 27, 2014, http://online.wsj.com/article/PR-CO-20140327-904817.html)

The All China Federation of Trade Unions (ACFTU), which was essentially silent during a strike an IBM server factory in Shenzhen related to IBM’s sale of its low-end server division to Lenovo, seems to be taking am active role in strikes occurring at three Walmart China stores as a result of Walmart’s restructuring of its China businesses and associated store closures. Worker strikes and protests over wages, severance packages, and other benefit issues seem to be occurring with greater frequency due to various demographic factors, but the ACFTU often plays no role in shaping the dynamics of what actually occurs (Tom Mitchell and Barney Jopson, “Official China Union Raises Stakes in Walmart Closure Programme,” Financial Times, March 23, 2014)

Toyota Motor Corporation (India) announced that it restarted partial operations after an employee strike. Unionized workers had have an ongoing wage dispute with Toyota for about ten months and also have claimed that Toyota had hired non-union members to make cars. Toyota has rejected worker complaints and imposed an eight-day lockout. As for wages, Toyota offered workers 5200 yen (about US $50) a month while union members have asked Toyota for a wage hike of 6800 yen (about US $66). Toyota has asked the state government for help while unionized workers have asked the government to defend the union’s interests (“Strike-hit Toyota India resumes ‘limited’ operations,” Japan Times, March 26, 2014, http://www.japantimes.co.jp/news/2014/03/26/business/strike-hit-toyota-i...)

In an environment of increasing questioning of bilateral investment treaty (BIT) provisions that allow foreign investors to seek compensation for losses in international tribunals, the Indonesian government announced it would terminate nearly 70 BITs with countries such as China, France, the Netherlands, Singapore, and the UK when they come up for renewal. Jakarta’s decision linked to a billion-dollar claim from a UK-listed mining company and threats of litigation from other mining firms displeased with Indonesia’s new mining law. Indonesian officials said that many of the BITs it planned to terminate did not reflect contemporary local and international laws and regulations (Ben Bland and Shawn Donnan, “Indonesia to Terminate More than 60 Bilateral Investment Treaties,” Financial Times, March 26, 2014)

Beijing has permitted Citic Pacific to purchase its parent, Citic Group, major state-owned enterprise (SOE), in a deal worth US $36.5 billion. As a firm founded thirty-five years ago with special permission from Deng Xiaoping to help attract foreign investment to the mainland, this decision required approval by top Chinese leaders and symbolizes a growing trend of government-led reform of inefficiently managed and corruption-plagued SOEs. Hong Kong hopes this deal will attract more state firms to move their headquarters to Hong Kong and also contribute to Hong Kong’s development as a major global financial center (George Chen, “Citic's mega takeover deal comes as win-win for Beijing and Hong Kong,” South China Morning Post, March 28, 2014, http://www.scmp.com/business/banking-finance/article/1458753/citic-takeo...)