MNCs in the News-2014-10-10

Intel announced at the end of September that it would take stakes in two Chinese mobile chipmakers for a total of US$1.5 billion via a holding company under Tsinghua Unigroup, a subsidiary of state-owned Tsinghua Holdings Co. run by Tsinghua University. For Intel, the investment represents a way to gain market share in the mobile chip market through sales by inter alia Spreadtrum, one of China’s leading fabless chip companies. For China, the partnership will help to build an industry that has become a “national priority.” Aside from cash and technology, Tsinghua Unigroup expects help with product development and marketing (“Intel to Invest $1.5 billion in China Mobile Chipmakers,” China Daily, September 27, 2014,

A Financial Times column dealing with the issue of alleged bias in National Development and Reform Commission (NDRC) actions against foreign companies argues the matter is not so straightforward. First, some of the foreign companies that were investigated/penalized were “ratted out by other multinationals.” Second, some of the beneficiaries of NDRC actions against violators—e.g., car companies—have been foreign businesses. Third, in some instances, the NDRC and the SAIC seem to follow American and European anti-trust authorities in their selection of targets, which suggests mimicking more than anti-foreign behaviors (Tom Mitchell, “Picture mixed over Anti-Foreigner Bias of Chinese Regulator,” Financial Times, October 7, 2014).

Microsoft (MSFT) CEO’s Satya Nadella’s recent visit to China included a meeting with State Administration for Industry and Commerce (SAIC) officials. The SAIC characterized the meeting as “conciliatory” and said SAIC head Zhang Mao had pledge to carry out a fair and open investigation while MSFT CEO Nadella had “promised full cooperation.” While MSFT did not offer any reports on the meeting, it did say it was “‘committed to complying with China’s laws and addressing SAIC’s questions and concerns.’” Previous MNCs in the News digests indicated the SAIC is looking into problems relating to MSFT operating system and Office software (Charles Hutzler, “China and Microsoft Agree to Fair and Cooperative Antitrust Investigation,” Wall Street Journal, September 28, 2014,

At the end of September, MSFT launched, in partnership with Chinese Internet television company BesTV, its Xbox One in China. MSFT already has a joint venture (JV) with BesTV, called E-Home Co., through which it manufactures the Xbox in the Shanghai Free Trade Zone. The sale of the Xbox reverses a 14-year old policy that banned the manufacture and sale of all game consoles in China, though many games will remain banned and video services are not allowed. Other companies such as Sony are building partnerships with Chinese firms that will allow them to set up JVs and sell consoles (“Microsoft Launches Xbox One in China,” China Daily, September 29, 2014,; Dave Lee, “Microsoft Pips Sony to Launch Xbox One in China,” BBC News, September 29, 2014,; Shi Jing, “Microsoft Gets its Game on with long awaited Xbox One Launch,” China Daily, September 30, 2014,

Several weeks ago, Apple Computers announced that its iPhone 6 and iPhone 6 Plus would be released in China in the middle of October. Apple announced the release date after China’s Ministry of Industry and Information Technology (MIIT) gave Apple a network access license, which followed a China Compulsory Certification (CCC) certification and approval from the State Radio Regulation. MIIT said it granted the license after Apple gave reassurances and promises relating to three background service programs and the protection of data security and privacy (“iPhone 6 and 6 Plus to Land in China on October 17,” China Daily, September 30, 2014,

Labor shortages and rising labor costs to the tune of 15-20% this year are putting extreme pressure on the bottom line of contract manufacturers in southern China’s Pearl River Delta areas such as Dongguang. This is leading such manufacturers to shut down factories, reduce headcount, raise product prices, enhance automation and equipment quality, and even shift factories outside China. End buyers, which also are suffering from the pressure of excess inventories, are looking to compensatory measures such as more outlets that would enable them to boost revenues through greater sales (“Rapid Trends for Fast Fashion: Brands in China Seek Price Rises,” WantChinaTimes,com, October 16, 2014,

China and the European Union (EU) may be close to striking a deal that would end a long running dispute relating to the telecommunications sector. According to sources, the EU will drop its investigation of illegal subsidies to Chinese telecommunications equipment makers while China will limit export credits to Chinese firms such as Huawei and ZTE and will allow foreign firms greater access to the China telecoms sector. Pursuant to a deal, China and the EU also will monitor market shares of Chinese telecoms firms in Europe and European companies in China and there will be research and standardization cooperation (Robin Emmott and Francesco Guarascio, “Exclusive: China, EU Close to Deal on Telecoms Trade Dispute-Sources,” Reuters, October 8, 2014,

Chinese Prime Minister Li Keqiang’s visit to Germany has led to the conclusion of US $2.5 billion of cooperation and investment deals with German firms such as Volkswagen and Daimler. The agreement between China and Germany also calls for rapid progress on a China-EU investment pact as well as collaboration in areas such as health, education, climate change, energy, and technology. While Germany and China are major trade partners, observers note intense competition between Chinese and German firms in areas like mechanical tools and industrial parts and human rights disagreements have the potential to limit the growth of Sino-German cooperation (Melissa Eddy, “Germany and China Seal Meeting with Business Deals,” New York Times, October 10, 2014,

JA Group, which includes Norinchukin Bank, and Mizuho Bank will set up a 50 billion yen (US $455 million) fund to expand Japanese agricultural exports to the Middle East. Gulf Investment Fund Corp., established by 6 Middle Eastern countries, also will participate in this fund. The Japanese government aims to increase agricultural, marine, and food product exports and hopes to boost such exports from 550 billion yen in 2013 to 5 trillion by 2030. The main purpose of the fund is to build infrastructure and agricultural facilities and it will help Japanese companies set up agricultural business in the region (“JA and Mizuho Bank to set up a 50 billion yen fund for the Middle East,” Sankei Newspapers, October 6, 2014,; “Japanese farm group launching fund to boost Mideast sales,” Nikkei Asian Review, October 6, 2014,

The government of Myanmar has issued licenses to 9 foreign banks, including Japan’s 3 mega banks, to operate businesses in Myanmar. Japan’s 3 largest banks, including the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui and Mizuho Bank, will open branches in Myanmar and offer remittance and other financial services to Japanese firms there. In the late 1960s, the socialist regime nationalized all domestic and foreign banks and banned foreign banks from operating in Myanmar. However, Myanmar’s years of international isolation ended when a democratic transition took place in 2011 and many Japanese firms have started to invest in Myanmar since then (“Japan’s 3 biggest banks to start operations in Myanmar,” Mainichi Newspapers, October 1, 2014, “Myanmar to issue banking licenses to 9 foreign banks including Japan’s 3 mega banks,” Reuters, October 1, 2014,

Japanese firms, especially auto makers and related industries, have been increasingly entering the Mexican market in recent years. Japanese financial institutions are following them in order to provide financial services. To illustrate, Mitsubishi Tokyo UFJ is expanding its workforces in its South American branches, increasing the number of its staff in Mexico to 120 people (a 70 per cent increase in 3 years) and in Brazil to 270 people (a 30 per cent increase in 3 years). UFJ also will partner with a Mexican government-affiliated bank to provide a long-term peso denominated fund for Japanese firms investing in Mexican infrastructure (“Mitsubishi Tokyo UFJ expands in Mid-South Americas,” Nikkei, October 8, 2014,

Japan and Brazil will collaborate to bring the Japanese-style police station system to Central America. Brazil already has adopted the system with the aid of the Japanese government and Japan will expand the system to other Central American countries such as El Salvador and Costa Rica by 2015 in order to improve public safety and to create a more secure investment environment for Japanese firms. Tokyo wants to support Japanese businesses entering Central American countries, especially Mexico and Brazil, where growth is promising, but public security remains a big problem (“Exporting Japanese ‘Koban’ to Central America to support Japanese firms,” Nikkei, October 7, 2014,

Increasing Chinese FDI inflows into Korea have raised concerns regarding the country’s growing reliance on Chinese capital. Chinese FDI in Korea reached $1 billion dollar during the January-September period, an increase of 230 per cent over the same period last year. There specifically are worries the influx of Chinese investment could lead to growing Chinese influence and Korean political and economic dependency on China. Researchers from the Korea Center for International Finance expect Chinese investment will continue to flow into Korea over the next few years and that China’s currency and foreign investment policies will greatly affect local financial markets (Shin Ji-hye, “Concerns Rise Over Capital Inflow from China,” Korea Herald, October 6, 2014,

On September 29, the Indonesian embassy hosted “The Way Forward” business forum in Seoul to promote Korean investment in Indonesia. Indonesian Ambassador John Prasetio guaranteed a friendly investment environment under the leadership of President-elect Jokowi, observing that “President-elect Jokowi is going to be pro-business” while protecting the environment. The forum provided insight on Indonesian policy directions regarding business and economic opportunities and revealed that Jakarta planned to boost infrastructure such as roads, airports, and dams (Park Ji-Won, “Indonesia Pledges Investor-Friendly Environment,” Korea Times, September 29, 2014,

The Taiwanese Financial Supervisory Commission (FSC) is promoting overseas investment by the country’s life insurance sector and plans to ease capital requirements to facilitate this. The FSC also will ease the use of a NT $200 billion fund for overseas investment, reflecting the government’s interest in boosting overseas investment by domestic insurers. In addition, the FSC will allow more life insurance companies greater flexibility in foreign real-estate investments. The FSC is urging companies in the sector which are able to meet capital requirements to develop into regional players thorough M&A (Crystal Hsu, “FSC Urges Overseas Investment,” Taipei Times, October 6, 2014,

Letters of intent were signed between Taiwan’s Ministry of Economic Affairs and 23 foreign companies at a Taiwan Business Alliance conference in Taipei. The companies have pledged to invest a total of US $3.18 billion in the country over the next three years. These firms and 38 other interested companies are likely to add NT $148 billion into the Taiwanese economy, creating approximately 15,000 jobs. Among the companies, seven are from the service sector (tourism, banking, wholesale and retail stores) (Lauly Li, “Alliance Breaks Investment Pledge Record,” Taipei Times, October 9, 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.