MNCs in the News-2014-07-04

Two Chinese companies (Qingdao Ruichang Cotton Industrial Co. and Qingdao Fuhui Textile Co.) and the China-Africa Development Fund are partners in a joint venture (JV) called China-Africa Development Ltd.  The JV operates according to the contemporary model of buying cotton from locals, rather than growing it, and does not own or rent land.  The JV has links to the famous Tazara Railway and a donation of textile plants to Zambia in the 1970s, but access to lower cost cotton and the opportunity to sell inputs to farmers, not politics, are the key drivers of Chinese interest in African cotton farmers (“Chinese Cotton Firm Harvests a Bumper Crop in Africa,” China Daily, June 30, 2014, http://www.chinadaily.com.cn/business/2014-06/30/content_17623137.htm)

In September 2012, an independent audit revealed problems at a number of Samsung Electronics’ Chinese suppliers.  The company had promised to eliminate these legal and safety violations by the end of 2012, but a more recent audit found that many of its suppliers still failed to provide adequate safety equipment or supervision.  There also were problems in regards to using fines or penalties to discipline workers, in hiring discrimination, illegal overtime, and employment contracts.  While the company received some accolades for its transparency and honesty, labor groups such as China Labor Watch found the company had much room for progress (Simon Mundy, “Samsung Fails to Eliminate Chinese Labour Violations,” Financial Times, June 30, 2014)

One of the more visible companies in Mozambique is Sogecoa, a Chinese company which hails from Anhui, the province that the Chinese government designated to go to Mozambique to establish consulting centers (both in terms of space and staff) for Chinese investors during the early dates of China’s Go Global movement.  However, Sogecoa has been left to its own devices and has branched into supermarkets, commercial real estate development, and other sectors in order to thrive.  It also has been involved in Chinese government aid projects such as the construction of buildings for Mozambique’s Ministry of Foreign Affairs and Congress.  Mozambique’s political stability is one factor keeping Sogecoa there (Wang Chao and Andrew Moody, “Willingness to Diversify Pays Dividends,” China Daily, June 30, 2014, http://www.chinadaily.com.cn/business/2014-06/30/content_17623621.htm)

Chinese government interference with Google services in China (e.g., email, search, and mobile games), especially since the 25th anniversary of the 1989 Tiananmen crackdown this June, is not just affecting foreigners and foreign companies in China, but a wide range of Chinese individuals and companies such as Gmail users, third-party payment service providers, Uber (a taxi cab hailing ap), and real estate search engines.  It is not unusual for Beijing to interfere with Google, but the duration of this round of interference has surprised observers (Charles Clover, “China’s Month-Long Google Clampdown Hits Businesses,” Financial Times, July 1, 2014)

According to various news reports, the Chinese government recently has been blocking an enlarged range of online services, including Line (Naver), Flickr (Yahoo Inc.), KakaoTalk (Kakao Crop), OneDrive (Microsoft), DropBox, and so on, in order, it is believed, to limit those on the Chinese mainland from obtaining information and images relating to massive pro-democracy protests that took place in Hong Kong in early July.  It also was reported that some Weibo Corp. users found their accounts blocked or removed.  As a condition of operating in China, many of these companies have to agree that the Chinese government can censor content (“New Swathe of Online Services Disrupted in China; Activists see HK Protest Link,” Reuters, July 3, 2014, http://www.reuters.com/assets/print?aid=USL4N0PE20820140703)

The first week of July, Cambodian Prime Minister Hun Sen and Japanese Foreign Minister Fumio Kishida participated in the official inauguration ceremony of a giant Japanese shopping center, Aeon Mall, that is under construction in Phnom Penh, Cambodia.  Since the mall partially opened on June 20th, 50,000 people have visited every day.  The four-story mall, totaling about 100,000 square meters, has a skating rink, Cambodia’s biggest cinema complex, and Cambodia’s largest food court.  Intriguingly, at the aforementioned ceremony, Prime Minister Hun said Cambodia will do whatever it takes to bring in more investment from Japan (“Aeon mall pulls Cambodia into modernity,” The Japan Times, June 29, 2014, http://www.japantimes.co.jp/news/2014/06/29/national/aeon-mall-pulls-cambodia-retail-modernity/#.U7JMgrGcDSg; and Hul Reaksmey and Joshua Wilwohl, “A bullish opening for Aeon mall,” The Cambodia Daily, July 1, 2014, http://www.cambodiadaily.com/news/a-bullish-opening-for-aeon-mall-62839/)

A Japanese construction joint-venture group, including Kajima and Taisei, is asking an international arbitrator in France to help settle a dispute with the Algerian government over highway construction payments.  The two firms specifically are seeking to collect about 100 billion yen ($975 million) they claim they are owed.  In 2006, the Algerian government tendered a project to build 400 km highways, which was estimated to cost about 540 billion yen.  However, construction stagnated because of the poor local security situation, difficulties procuring materials, and the government’s failure to make payments.  Algeria has refused to make payments due to construction delays (“Algerian highway construction: Kajima and Taisei to go to arbitration,” Nikkei, June 30, 2014, http://www.nikkei.com/article/DGXNASDZ2901A_Z20C14A6TJC000/)

A symposium sponsored by a Japanese non-governmental organization brought Chinese wartime laborers and their relatives to Odate, Akita prefecture in Japan to promote Japan-China friendship.  Odate was the location of the Hanaoka copper mine where 986 Chinese laborers were forced to work for Kajima Gumi, now Kajima Corp., a giant general contractor, between 1944 to 1945.  More than 400 workers were believed to have died during this period and an uprising by laborers on June 30, 1945 led to several deaths via torture and abuse.  At the symposium, an 86-year-old man described the life of a forced laborer as hell (“Wartime laborers who survived Hanaoka mine urge Japan-China friendship,” The Japan Times, June 30, 2014, http://www.japantimes.co.jp/news/2014/06/30/national/wartime-laborers-survived-hanaoka-mine-urge-japan-china-friendship/)