MNCs in the News-2014-09-12

Warm Sino-Russian political ties continue to be reflected on the investment front. Recently, Chinese mining company Shenhua announced a US $10 billion deal with Russian state-owned Rostec to develop coal and gold deposits in the Russian Far East and Siberia. The deal involves the exploitation of coal mines and the construction of a coal terminal and infrastructure like railways, power plants, and high-voltage transmission lines. The projects will export coal to Asia Pacific customers and deliver electric power to China. Shortly after the deal, China and Russia agreed at the first China-Russia Investment Cooperation Committee meeting to boost joint investments (Lyu Chang, “Project Seeks Rewards in Russian Mines,” China Daily, September 5, 2014,; “China’s Shenhua Group Joins Russia’s US $10bn Coal Mine Project,”, September 9, 2014, “Russia and China to Increase Reciprocal Investment,”, September 10, 2014,

Lu Wei, Minister of China’s Cyberspace Administration, stated at the World Economic Forum in Tianjin that Facebook would not win access to China any time soon and stressed that companies operating in China had to follow local rules and refrain from hurting China’s interests. Around the same time, Facebook Vice-President Vaughan Smith, also at the Conference, stated many individuals in China ask him when Facebook is coming to China. Though Facebook is blocked in China, it services Chinese companies that want to reach markets outside China, has leased office space in Beijing, and has held meetings with Chinese internet regulators (Edmond Lococo, “Facebook Says Chinese Wants its Site as Regulator Says No,” Bloomberg, September 11, 2014,

In 2013, Chinese outward foreign direct investment (OFDI) hit US $108 billion, a new record. This annual amount made China the world’s third largest source of OFDI for the 2nd consecutive year while China’s total OFDI stock of US $660 billion made China the 11th largest outward investor globally. The vast majority of Chinese OFDI involved investment in lending & business services, finance, mining, wholesale, and retail and manufacturing. China continues to lend support for increased Chinese OFDI by liberalizing approval thresholds. For example, the Ministry of Commerce now only has to approve investments in sensitive countries, regions, and industries (“China’s Outbound Investment Reaches ‘Record High,’” BBC News, September 9, 2014,; “China Unveils New Rules on Overseas Investment,”, September 8, 2014, “China’s 2013 Outbound Investment Hit Record High,”, September 10, 2014,

In Tanzania, work is beginning on a large logistics hub, situated close to the major port of Dar es Salaam, for which China will provide US $412.5 million in financing. China is a major trade partner of and investor in Tanzania and, following a visit by Chinese President Xi Jinping in 2013, has sought to allay concerns that China only is interested in exporting to the country and exploiting its resources. The logistics hub, in concept, should boost Tanzanian exports to China. China also is a major investor in Tanzanian infrastructure such as a natural gas pipeline and power station (Bree Feng, “China Expands Investments in Tanzania,” New York Times, September 12, 2014,

China’s National Development and Reform Commission (NDRC) has fined Volkswagen’s Audi and Fiat’s Chrysler, a total of US $46 million, for fixing the price of cars and replacement auto parts and, in Chrysler’s case, punishing dealers that did not comply. For some, these and similar measures are nothing more than a way for the Chinese government to protect its auto companies from foreign competition at a time when they are losing share to foreign firms. It is also a way for the government to deflect blame for the high price of cars, which link, in part, to multiple, high taxes (Lucy Hornby and Charles Clover, “China Fines Audi and Chrysler for Price-Fixing,” Financial Times, September 11, 2014; Keith Bradsher and Chris Buckley, “China Fines Volkswagen and Chrysler for Antitrust Violations,” New York Times, September 11, 2014, Lan Lan, “FAW-VW and Chrysler Fined for Monopoly Violation,” China Daily, September 11, 2014, “Chrysler, VW Fined $46 million for Unfair Pricing,” China Daily, September 12, 2014)

There does seem to be some evidence that foreign companies, albeit in limited numbers, are increasingly considering locations outside mainland China, such as Singapore, for regional operations centers, regional headquarters, and regional R&D Centers. The drivers seem to be concerns about intellectual property and the fairness of the playing field in China, a desire to put operations outside the reach of Chinese regulators, and difficulties recruiting talent that finds Beijing and Shanghai unattractive because of pollution and difficulties accessing schooling. As well, foreign companies are attracted to new economic opportunities in Southeast Asia which have been growing in recent years (Keith Bradsher, “Looking Beyond China, Some Companies Shift Personnel,” New York Times, September 9, 2014,

The U.S. Chamber of Commerce has jumped into the fray relating to China’s use of its Anti-Monopoly Law or AML against foreign firms, noting in a recent report that China’s regulators often seem to make findings that are “‘designed to advance industrial policy and boost national champions’” and that the findings are not based on “‘sound economic analysis’” and that antitrust processes “‘suffer from procedural and due process shortcomings.’” The Chamber’s report also raised the possibility that China may be violating its World Trade Organization commitments by applying the AML in a discriminatory fashion (Neil Gough, “China’s Antitrust Campaign Seen as Possible Breach of W.T.O. Rules,” New York Times, September 8, 2014,

The ability of Chinese banks to operate the UK banking market has been an issue for some time. An issue has been the requirement that Chinese banks in China operate as subsidiaries, which have stricter capital requirements that constrain lending and financing activities. Chinese banks pressed the British government, the City of London, and Bank of England regulators to allow them to operate as branches where lending and financial abilities link to the parent company’s balance sheet. Apparently heading the concerns of Chinese banks, the Bank of England granted a wholesale-branch license to the Industrial and Commercial Bank of China (“ICBC Receives UK Branch License since Regulation Change,” China Daily, September 9, 2014,

The EU may remove three Japan Railway companies from a list that is governed by the Government Procurement Agreement, a plurilateral agreement between select WTO members. JR East, JR Tokai and JR West had been prioritized in 2006, yet the EU has refused to remove these firms from their GPA status, charging that Japan has been using questionable safety concerns to bar Western railcars and components from entering the Japanese market, which, in effect, closes Japan’s railways to foreign competition. Japan has decided to meet EU requirements and now the EU feels it will open itself to the international market (“EU may remove 3 Japan Railway firms from a list which is subject to a Global Government Procurement Pact,” Nikkei, September 10, 2014,

Nissan Motor Co. has started selling its Venucia brand electric vehicle in China, making it the first Japanese automaker to sell an environmentally-friendly car in China. Nissan intends to gain 20% of the electric car share in China by 2018. The Chinese government is eager to increase the number of electric vehicles due to severe air pollution and thus it is exempting cars from sales taxes and building more charging facilities. In Shanghai, the government and the city office will provide subsidies of 87,500 yuan for electric vehicles. The Venucia can be charged in four hours and can travel 175km (“Nissan becomes first Japanese automaker to sell electric cars in China,” September 11, 2014,

JETRO, the Ceylon Chamber of Commerce, and Nikkei Inc. held a business forum in Colombo, Sri Lanka. The heads of Mitsubishi Inc., Hitachi, and Itochu are all eager to participate in the infrastructure market there. Sri Lanka’s vice finance minister emphasized that Sri Lanka is located along critical sea transportation lanes and situated close to huge and growing Indian market. An executive board member of JETRO said, a “stable political situation, skilled workforce, potential to growth and strategic location are all strengths of Sri Lanka, and Japanese Prime Minister Shinzo Abe stressed that Japan’s technology can contribute to its growth (Takafumi Hotta, “Sri Lankan infrastructure opportunities beckon Japan. Inc.,” Nikkei Asian Review, September 9, 2014,

At the Japan-Bangladesh business forum in Dhaka, Japanese Prime Minister Shinzo Abe stressed the importance of Bangladesh for Japanese trade and investment. He thanked Bangladeshi Prime Minister Sheikh Hasina for supporting Japan to become a nonpermanent member of the U.N. Security Council as she withdrew Bangladesh’s candidacy for the post, with Abe promising financial assistance worth 600 billion yen (US $5.63 billion). Abe invited top executives of 20 Japanese companies including Heavy machinery makers IHI and Mitsubishi Heavy Industries and Shimizu, a large construction firm, to support Bangladesh’s industrial development (Shotaro Miyasaka, “Abe pushes Japanese interests in Bangladesh,” Nikkei Asian Review, September 8, 2014,

The Korea Electric Power Corp (KEPCO), a state run power company, showed its interest in a UK government plan to build ten 18-gigawatt nuclear plants in England by 2015. The Korean Ministry of Trade, Industry and Energy (MOTIE) gave a presentation this week on Korea’s technological advantages to British bureaucrats and politicians in the hope of securing KEPCO’s ultimate involvement in the project. Last November, MOTIE and its UK counterpart signed a memorandum of understanding providing for mutual cooperation in nuclear power. The British government is expected to select a preferred bidder in three years (Park Si-soo, “Korea’s Nuclear Prowess Promoted in UK,” Korea Times, September 11, 2014,

Korean Finance Minister Choi Kyung-Hwan stated at a policymakers gathering in Seoul that the South Korean government intended to offer increased help for Korean companies trying to access China’s consumer market in an effort to bolster South Korea’s slowing exports to China. The sense was that government support, which would encompass infrastructure, financial assistance, and the promotion of cultural, medical, and service sectors, would help Korean firms surmount Chinese and foreign competition and market barriers (“S. Korea to Expand Support for Firms Seeking to Enter China: Minister,” Korea Times, September 5, 2014,

In early September, Taiwanese authorities discovered cooking oil producer Chang Guann had purchased several hundred tons of tainted oil, which it subsequently processed into lard and then sold to food producers. In Shanghai, authorities removed about 8,700 suspected products from store shelves. Philippines authorities called businesses to pull questionable product and said they would work with Taiwan to expedite the signing of a memorandum of understanding related to food safety. For its part, Taiwan halted Chang Guann’s exports to China, Hong Kong and Macao. Taiwan Premier Jiang Yi-huah said the scandal has damaged Taiwan’s image as a “Kingdom of Delicacies” (Austin Ramzy, “Taiwan Reels from Gutter Oil Scandal,” New York Times, September 8, 2014, “8,700 Items Removed in Shanghai after Oil Scandal,” China Daily, September 10, 2014,; “Philippines Wants Tainted Taiwanese Products Recalled,”, September 10, 2014, Stacy Hsu, “Hong Kong Edible Oil Imports Halted”, Taipei Times, September 12, 2014,

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.