MNcs in the News-2014-09-19

Chinese Ministry of Commerce (MOFCOM) statistics showed inward foreign direct investment (IFDI) hit $7.2 billion in August, 14 percent lower year-over-year (YOY). For the first eight months of 2014, inward FDI was 1.8 percent lower YOY, with service IFDI showing strength and manufacturing IFDI weakness. In terms of origins, South Korea was a bright spot while Japanese IFDI plummeted and US and European Union IFDI dropped somewhat. MOFCOM noted IFDI might reach $120 billion in 2014, topping the 2013 record of $118 billion. MOFCOM rejected the notion declines had to do with the country’s anti-trust investigations. While less sure, commentators recognized IFDI declines also linked to China’s slowing economy (Xiaoyi Shao and Koh Gui Qing, “China August FDI at Two-And-Half-Year Low as Factory Investment Slows,” Reuters, September 16, 2014,; Jamil Anderlini, “Foreign Investment into China Slumps,” Financial Times, September 16, 2014).

Foreign business associations and representatives are increasingly criticizing what they view as China’s discriminatory and coercive antimonopoly tactics, the latter including threatening lawyers and corporate executives, and unrestrained evidence gathering procedures. Foreign governments are jumping into the fray, too. Recently, US Treasury Secretary Jack Lew wrote to Chinese Vice Premier Wang Yang suggesting that China’s actions were devaluing the intellectual property of foreign firms. Already in July, the US called on China to enforce its competition law in a fairer and non-discriminatory way. In contrast, ABB Ltd.’s CEO recently lavished praise on China’s efforts to make its markets more competitive (Krista Hughes, “Treasury’s Lew Warned China on Antitrust Probes of Foreign Firms: WSJ,” Wall Street Journal, September 14, 2014,; Michael Martina and Matthew Miller, “‘Mr. Confession’ and His Boss Drive China’s Antitrust Crusade,” Reuters, September 15, 2014,; and Zhang Chunyan, “ABB Supports Nation’s Antitrust Drive, Top Executive Says,” China Daily, September 18, 2014,

Qualcomm, an American chip company with a dominant position in the China telecommunications chip market, is the subject of an antimonopoly investigation by China’s National Development and Reform Commission (NDRC), with many expecting the NDRC shortly will impose a major fine against the company. Recently, the NDRC charged that Qualcomm had paid a US $1.4 million bribe to a senior Chinese State Council antitrust consultant committee who had written a report that spoke favorably about Qualcomm’s pricing practices in China (Kao Hsing, “Qualcomm Accussed of Briging Official to Clear Antitrust Probe,”, September 16, 2014,

As if the toughening government environment for foreign investors was not enough, anti-foreign business sentiments seem strong and growing. Recently a Chinese scholar penned a piece charging foreign companies control too much of the market in China, own too much of the technology used in industries in China (accounting for over half in certain industries), and have abused the privileges they received. A Pew Research Center survey evidenced similar negative sentiments among the Chinese populace with only 39 percent of those surveyed approving of foreign firms buying Chinese companies, though more than 50 percent welcomed foreign firms building new factories (“Nationalistic Assessment of Foreign Firms in China,” WantChinaTimes, September 17, 2014, Paul Welitzkin, “Chinese Like Trade, FDI, Not Acquisitions: Survey,” China Daily, September 18, 2014,

In recent months, there have been diverse reports of labor abuses of various kinds at Chinese companies supplying Korean, American, and other companies. MNCs in the News digest, for instance, have recounted reports that Samsung suppliers used and underpaid underage workers. More recently, a British publication charged Foxconn, a major Apple supplier, of causing some of its workers to suffer leukemia by exposing them to benzene, a chemical used for cleaning among other things. Foxconn strongly refuted the claims, saying there was no evidence of a link between its factory conditions and the reported cancers (“Apple Supplier Denies Hazardous Conditions,” China Daily, September 16, 2014,

MOFCOM forecasts Chinese outward foreign direct investment (OFDI) will soon exceed inward FDI. Chinese OFDI, shows considerable vibrancy with investment by non-financial firms surging 15.3% to US $65.17 billion during the January to August period. As noted in past MNCs in the News digest, one cause of surging COFDI was a supportive policy environment. Two other important factors were financial conditions and “Chinese firms’ increasing competitiveness in…light industry, machinery equipment, ship-building, chemical engineering, and so on.” Statistics were skewed by China National Offshore Oil Company’s US $15.1 billion acquisition of Nexen, but even excluding this deal COFDI still surged dramatically (“China’s Outbound Investment Expected to Exceed FDI in 2015,” WantChinaTimes, September 15, 2014,

Russia’s First Deputy Prime Minister Igor Shuvalov reported that during the first meeting of the Cooperation Council for Investment China had pledged to invest US $20 billion in Russia. This would be a major increase over China’s current US $32 billion investment in the country, which makes it Russia’s fourth largest foreign investor. According to reports, though, China has made clear that investment will flow only after Russia opens strategic sectors such as aviation, mining, and telecommunications. Chinese investment in Russian energy already is on a path of continuous expansion (“China to Up Its Investment in Russia by US $20bn,”, September 18, 2014,

As is widely known, Chinese investment in Africa has been expanding in amount, geographic location, sectoral distribution for various reasons including a few unusual ones like the personal invitation of top political leaders. For example, the late Ethiopian Prime Minister Meles Zenawi, welcomed Huajian Group, a major Chinese producer of shoes for top US and European brands like Guess, to set up a labor-intensive factory in Ethiopia. Huajian Group found the offer attractive because of Ethiopia’s lower labor costs, tax breaks, and easy availability of leather. Huajian’s operation is creating jobs, enhancing worker training, and expanding the local management pool (Chen Weihua, “Putting its Best Foot Forward in Africa,” China Daily, September 15, 2014,

Two years ago, Japan nationalized the Diaoyu/Senkaku islands. This had numerous repercussions for Sino-Japanese bilateral relations, but also led to widespread anti-Japan protests in China, economic sanctions, and anti-Japan consumer boycotts (albeit of modest intensity). Regardless of form, the tensions hurt Japanese product sales in China and discouraged Japanese companies from investing in China (indeed, in the first 6 months of 2014, Japanese investment in China plunged 48.8 percent year-over-year). Based on stabilizing political relations and, of course, the lure of the China market, Japanese firms, encouraged by Chinese state-owned firms, seem to be intensifying their sales and investment activities (Toru Sugawara, “Japanese Companies Returning to Expansion Mode in China, Nikkei Asian Review, September 13, 2014;; “2 years after Anti-Japan demo, relationship towards improvement?” Nikkei, September 13, 2014,

Reports indicate Japan’s Toyota has met with NDRC officials to discuss its pricing policies and practices for spare and replacement parts for its high-end Lexus cars. This follows an indirect investigation of Toyota through the China Automobile Dealers Association (CADA). China already has fined a large number of Japanese auto-parts and bearing companies and fined 11 Japanese companies including Mitsubishi Electric and Furukawa Electric for fixing the prices of electrical devices. A Toyota spokesman, not surprisingly, said Toyota would cooperate with any NDRC probe while Toyota officials said they already had provided the CADA with a large amount of information (“Toyota Officials Appearing on NDRC’s Radar,” China Daily, September 17, 2014, “11 Japanese Firms Fined for Antitrust Violations,” China Daily, September 18, 2014,;

Internet Initiative Japan Inc. (IIJ Inc.) will start selling a data center, known for its power-saving features, in Asia, with the first customer to be the Laotian government. The system’s special trait is that it costs only half as much as a conventional data center and reduces energy consumption by 40 percent. The internet penetration rate in Asian emerging economies has soared and IT infrastructure development has become imperative. However, the price of electricity has risen sharply due to delays in the construction of power grids. IIJ aims at expanding into Asia and building 50 data centers in 5 years (“IIJ will first build an energy-saving data center in Laos,” Nikkei, September 18,

Reports indicate South Korean companies reduced crude oil import from Iraq in July as internal conflict in the latter escalated to new heights. According to data from the state-run Korea National Oil Corp., average crude oil import from Iraq for July 2014 fell by 40 percent YOY. South Korea-based SK Energy co Ltd. suspended oil imports from Iraq last April. To deal with the new situation, South Korean companies have been increasing crude imports from other Middle Eastern countries such as Saudi Arabia and Qatar (“Korea Cuts Crude Imports from Conflict-Ridden Iraq in July,” Korea Herald, September 18, 2014,

As a result of the food oil scandal involving Taiwanese cooking oil manufacturer, Chang Guann, which caused serious reputation and image problems for Taiwanese companies overseas and especially in Hong Kong and China, Taiwan’s Financial Supervisory Commission (FSC) has announced listed companies in the food, chemicals and financial sectors must issue corporate social responsibility (CSR) reports. The FSC hopes that CSR reports will better educate the public about Taiwanese companies’ products and their impact on the society and environment. The requirement applies to companies with a capitalization exceeding $10 billion (Crystal Hsu, “FSC demands CSR reports from top listed companies,” Taipei Times, September 19, 2014,

Taiwan’s Vice Economics Minister Shen Jong-Chin, on a visit to France relating to “Internet of Things” (IoT) cooperation, announced that Taiwan and France had agreed to work together on the IoT. Under the aegis of the meeting, the (Taiwan) Institute for Information Industry concluded an agreement with the French Institute for Research in Computer Science and Automation and the University Pierre and Marie Curie about IoT cooperation. Taiwan aims to use the agreement to promote its technology in France and to draw upon French technological knowledge. The Taiwanese delegation also met with French companies and government officials during the visit (“Taiwan, France to Cooperate on Internet of Things,” WantChinaTimes, September 13, 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.