MNCs in the News-2014-11-14

The extensive changes to China’s “Catalog for the Guidance of Foreign Investment” are drawing growing attention. China is now permitting wholly foreign-owned enterprises in traditional Chinese medicine, oil field exploration and development, and automobile parts, allowing foreign investors to be the controlling shareholder in the manufacture of ground-based aircraft, the design and manufacture of civil satellites, and international sea transportation, and lifting many restrictions in the mining, manufacturing, and finance, real estate, and entertainment sectors. There are still ownership restrictions in areas like banking as well as auto and hospital JVs, where the Chinese partner must have a majority share (Rainy Yao and Steven Elsinga, “With Revised Guidance Catalogue, China Introduces Sweeping FDI Reforms,” China Briefing, November 7, 2014,

China’s Silk Road initiative, which the Chinese government plans to support with US $40 billion of financing for transportation, power, and other infrastructure better connecting China with Europe and so on, has drawn the attention of multinational corporations (MNCs) such as Caterpillar, which is suffering some difficulties as a result of the slowing of the China market. Still, Caterpillar intends to maintain its focus on China given the country’s growth and infrastructure development needs. Caterpillar also is supporting the Trans-Pacific Partnership and the Free Trade Area of the Asia-Pacific because of the benefits of liberalization (Li Xiang, “Caterpillar scents big opportunity in Silk Road Initiative,” China Daily, November 10, 2014,

The increasingly challenging regulatory environment for foreign MNCs in China has entered a quiet period due to more pressing domestic and external political issues/events. Changes of key personnel at the National Development and Reform Commission (NDRC) also may be relevant. The broad sense that China is singling out foreign businesses persists and American businesses want the government to take a more aggressive role on their behalf. Another problem for overseas companies is that townships have been maintaining an aggressive investigator stance, taking advantage of older laws (as they have no authority to enforce antitrust laws), to seize confidential corporate information (Keith Bradsher, “No Longer Business as Usual in China,” New York Times, November 9, 2014,

Legal and regulatory infrastructure issues are the top infrastructure priority for Asia-Pacific Economic Cooperation (APEC) forum CEOs according to a PricewaterhouseCoopers (PWC) International survey. PWC Chairman Dennis Nally believes China’s plethora of anti-monopoly investigations is not ultimately weighing on MNC investment plans, arguing plunging FDI figures relate to the shift from manufacturing to service FDI. Indeed, the aforementioned survey finds 72% of surveyed APEC CEO’s plan to increase investments in China over the next 12 months. On the other hand, other data indicates US companies “are scaling back their expectations and business plans” due in part to “increased regulatory scrutiny” (Zheng Yangpeng, “Clearer Rules Can Spur Investment,” China Daily, November 10, 2014,; Matthew Miller, “U.S. Firms Lower China Expectations as Growth Slows, Scrunity Rises,” Reuters, November 12, 2014,

Previous MNCs in the News digests reported on Chinese companies’ successful winning of a multi-billion dollar high-speed rail contract in Mexico. The Mexican government revoked the bid in the face of charges by Mexican opposition politicians that favoritism had been shown to the Chinese consortium. China said all bidding procedures had been properly followed. Later, Chinese Premier Li Keqiang “expressed his regret over the Mexican government’s scrapping of the deal,” asking the “Mexican government to ‘fairly’ treat Chinese enterprises.” Nevertheless, Li said China “decided to continue to encourage Chinese enterprises to participate in infrastructure projects” (“China Expresses Surprise at Mexico’s Scrapping of Rail Deal,” Reuters, November 8, 2014,; “Li Keqiang ‘Regrets’ Mexico’s Scrapping of Rail Deal,”, November 12, 2014,

China-Japan relations have been tense over the past two to four years. Even so, Chinese investors, most from Hong Kong, have been pouring increasing sums of money into Japanese commercial and residential real estate. There are many reasons for the investments including a desire to earn money, to support their children’s education, or to enjoy a Japanese lifestyle. Commercial real estate investors seem to be seeking to diversify beyond Australia, Canada, and the United States (“Chinese Investment in Japanese Property Climbs Sharply,”, November 9, 2014,

CJ Smart Cargo Group, a Shanghai-based shipping company, has expanded globally, especially into African countries such as Tanzania, Zimbabwe, and South Africa. It has directed money into trucks, drivers, and distribution centers in order to build up the hard and soft infrastructure that it badly needs, but is lacking. CJ Smart Cargo Group has benefitted from the presence of Chinese state-owned enterprises (SOEs) such as Baosteel, which use the Group for local logistics operations. The Group opted to invest first in southeast Africa because of the region’s “political stability and friendly diplomatic relations with China.” Aside from the usual issue of ignorance of the local market, Chinese firms in Africa have also had to deal with severe red tape and public security issues (Pu Zhendong, “Chinese Logistics Company Weaves Fine Web in Africa,” China Daily, November 10, 2014,

This week, Japan’s Ministry of Foreign Affairs will host a Japan-Africa Forum for Japanese firms to promote investment in the Sahel, the southern part of the Sahara desert. The forum expects attendance by over 100 Japanese firms including trading houses and manufacturers and will provide information concerning Ebola and the expansion of Islamic guerrillas. Africa has abundant natural resources, and its economy has been growing about five percent per annum on average. A stronger economic relationship with Africa is very important for Japan’s growth. Last year, the Japanese government announced various measures to promote Japan’s public-private collaborative investment in Sahel (JETRO, “Seminar: Japan-Africa Investment Forum in Sahel area; Public safety and security measures,”; “Strengthened investment to West Africa: The Ministry of Japan to hold a forum on the 12th for Japanese firms,” Nikkei, November 11, 2014,

Mitsui Sumitomo Bank and Tokyo University of Agriculture and Technology (TUAT) will support human resources development in agriculture for the United Arab Emirates (UAE). They have been running a marketing research program for agricultural crops in UAE since October and will begin a training program in Japan to introduce a plant factory that is suitable for the Middle Eastern agriculture. They will invite universities as well as UAE government officials to participate. Mitsui Sumitomo and TUAT hope to garner financing business opportunities by supporting the development of Middle East agriculture (“Mitsui Sumitomo Bank to support fostering human resources in Abu Dhabi’s agriculture field,” Nikkei, November 11, 2014,

Honda Motor Co. has disclosed another Takaka air bag related fatality accident, this time in Malaysia, the first such reported accident outside the US, where 4 similar accidents already were reported. Honda added 170,000 vehicles to its recall, with about 10 million vehicles with the potentially defective air bags recalled globally. The recall is being undertaken because there is a risk that the air bag could explode in an accident and eject shrapnel that hits the driver. Honda CEO Takanobu Ito has been under fire from US government regulators and politicians about this massive recall (“Honda discloses fifth Takata air bag linked fatality, widens recall,” The Japan Times, November 13, 2014,

During a summit involving top business organizations and the chambers of commerce from the US and Indonesia, US business leaders committed to work with the new Indonesian government to help it reach its investment goals. Investment from the US is expected to boost economic development, job creation, and infrastructure building as well as give birth to new domestic enterprises. Indonesia’s new president’s seeks to achieve 7% annual economic growth by 2018, mostly by attracting more FDI, which is expected to grow by 10% next year (Grace D. Amianti, “RI-US Partnership in Investment is Expected to Gain Momentum,” The Jakarta Post, November 13, 2014,

At the opening of the 2014 APEC CEO Summit, Chinese President Xi Jinping said that APEC plans to enhance regional economic integration, promote economic reform, and strengthen infrastructure and comprehensive connectivity. He called for a more open regional economy through initiatives such as the Free Trade Area of the Asia-Pacific. He stressed that “‘connectivity and infrastructure building in the Asia-Pacific is not only a necessity for achieving regional economic integration but more importantly it bears on the long-term development of all countries.’” He called for APEC members to connect through infrastructure development, institutional (laws and regulations) connectivity, and human connectivity (APEC Secretariat, “Xi: Asia-Pacific Stands at a Crossroads,” November 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.