MNCs in the News-2015-05-08

Foreign media reported China’s SAIC had investigated Siemens AG health care unit for possible “commercial bribery” involving the sale of medical device inputs. Specifically, SAIC charged Siemens and its dealers with “donating medical devices in return to agreements to buy the chemical reagents needed to run its machines.” Analysts commented such practices were relatively common and that the probe took place in an environment where the Chinese government trying to promote the use of locally made devices. It also was reported SAIC had investigated the Chinese health-care units of GE and Royal Philips. Later, however, SAIC denied any such investigation (Adam Jourdan and Engen Tham, “Exclusive: Siemens Healthcare Unit Probed by Chinese Regulator for Bribery,” Reuters, May 2, 2015, http://www.reuters.com/article/2015/05/03/us-china-corruption-siemens-id... “China Said to Probe Medical Device Firms on Bribe Suspicions,” Bloomberg Business, May 4, 2015, http://www.bloomberg.com/news/articles/2015-05-04/china-said-to-probe-me... “China Regulator Denies Siemens Bribery Probe,” China Daily, May 5, 2015, http://www.chinadaily.com.cn/business/2015-05/05/content_20621522.htm)

Guangzhou Intermediate Court ruled Xinbailun Trade (China) Co., the sales company for US shoe maker New Balance in China, must pay compensation of around US $16 million to Shanghai Xinbailun Co. whose trademark it allegedly had infringed in its advertisements and shoe sales. Xinbailun Co. successfully challenged New Balance’s defense that it had begun to use Xinbailun in 2003 and that Xinbailun Co. was the one infringing on its trademark, arguing that it long had rights to the trademarks Xinbailun and Bailun, that New Balance only had objected in 2007, and that Xinbailun Trade had caused damage to its marketing (“New Balance Loses its Battle over Trademark,” China Daily, May 6, 2015, http://www.chinadaily.com.cn/business/2015-05/06/content_20633286.htm)

Various factors like economic problems, geopolitical tensions, and international sanctions have diminished Russia’s attractiveness to foreign investors in terms of numbers of projects and investment size. However, Chinese investors have massively expanded their investments in Russia, with the top five investors in greenfield projects in Russia in 2014 all coming from China. Planned projects include a car production plant and a new engine factory, among others. Russia is moving to encourage more Chinese investment in its energy sector, but disagreements over prices, ownership stakes, and other matters have limited the growth of Chinese investment despite China and Russia’s warm relationship (Courtney Fingar, “FDI to Russia Slumps but Chinese Investors Step in as Others Pull Back,” Financial Times, May 6, 2015; Jack Farchy and Kathrin Hille, “Moscow Offers Bigger Stakes in Energy Projects to Lure Chinese,” Financial Times, May 5, 2015)

The U.S.-China Economic Security Commission published a report charging that Chinese companies are using Chinese law to escape “the jurisdiction of U.S. courts and regulatory agencies.” Specifically, it charged Chinese companies have used complicated legal structures and Chinese secrecy and banking laws to avoid turning over evidence required by US courts which, in turn, requires American firms to pursue complicated procedures in China that often fail or take excessive time. American lawyers have questioned the fairness of the contemporary status quo. The Commission has called on Congress to pass laws “establishing Chinese companies fall under the jurisdiction of U.S. courts” (“Report: ‘Legal firewall’ Shields Chinese Firms from Lawsuits,” The Japan Times, May 6, 2015, http://www.japantimes.co.jp/news/2015/05/06/business/report-legal-firewa...)

After a recent meeting, China’s State Council said it would promote greater “industrial and equipment manufacturing cooperation with other countries,” especially those involved in the Silk Economic Belt and Maritime Silk Road infrastructure and trade networks. Part of this entailed the movement of Chinese factories overseas to in order to promote a “‘an industrial cooperation chain’” that could help to promote exports of goods in inter alia the railway, power, and telecommunication sectors. Such investment not only could facilitate exports, but also foster job creation and growth in host countries (“China Pledges Deeper Intl Industrial Cooperation,” China Daily, May 7, 2015, http://www.chinadaily.com.cn/business/2015-05/07/content_20647562.htm)

Huawei, a major Chinese telecommunications firm, has been steadily enhancing its presence in Brazil since it entered the country in 1996. Aside from hiring a large number of staff locally, Huawei has been trying to bolster its research and development activities as well as partnerships with local R&D entities. In this vein it has set up research and development and training centers, built joint laboratories with the University of San Paulo and University of Brasilia and has donated cloud computing systems for online education and information sharing. Huawei’s efforts have drawn praise from Brazil’s Ministry of Science, Technology, and Innovation (“From Manufacturer to Innovator, Huawei Upgrades Brand Image in Brazil,” China Daily, May 6, 2015, http://www.chinadaily.com.cn/business/tech/2015-05/06/content_20633790.htm)

In 2014, Bob Ruginis petitioned the US National Highway Transportation Safety Administration (NHTSA) to conduct an investigation of 1.7 million Toyota (Japan) 2006-2010 Corolla model cars. He argued the model’s brakes were defective and led to unwanted accelerations, which, in turn, produced other dangers. The NHTSA rejected the notion, however, that the model’s brakes were defective or that there were other problems, as specified by Ruginis, leading to unexpected acceleration. The NHTSA’s decision was welcome news to Toyota which, since 2009, has had to deal with extensive investigations, recalls, lawsuits, and multi-billion dollar fines relating to complaints of unwarranted acceleration (“U.S. Nixes Corolla Acceleration Probe Request,” The Japan Times, May 3, 2015, http://www.japantimes.co.jp/news/2015/05/03/business/corporate-business/...).

Vietnam and Korea have recently concluded a free-trade agreement (FTA) that, not surprisingly, will open the two countries’ markets to the other and thus increase bilateral exports. Some observers stress that the FTA, which addresses trade, investment, intellectual property, rules of origin, technical barriers in trade, legal regulations, and a slew of other matters, also should boost Korea investment into Vietnam because it increases transparency and improves the legal environment in Vietnam. The 200-plus article FTA is expected to deliver a number of benefits to Vietnam including technology transfer, advanced management capacity, access to third markets, job, and development support (“Viet Nam, RoK Sign Free Trade Pact,” Viet Nam News, May 6, 2015, http://vietnamnews.vn/economy/269892/viet-nam-rok-sign-free-trade-pact.html)

*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.