MNCs in the News-2015-06-26

Following the 7th China-US Strategic and Economic Dialogue (S&ED), China and the US agreed to present revised negative lists in early September pursuant to their negotiations on a BIT. China’s vice finance minister Zhu Guangyao stated that while both sides concurred the exchange of lists was a “‘milestone event’” they recognized “‘there’s room for improvement.’” Both sides will meet two more times before September to facilitate progress prior to Chinese President Xi Jinping’s state visit to the US. Separately, Zhang Xiangchen, a Ministry of Commerce deputy trade minister, prodded the US to eliminate barriers to investment for national security rationales (“China, US to Exchange Offers of Negative Lists in Early September,” China Daily, June 25, 2015, http://www.chinadaily.com.cn/world/7thcused/2015-06/25/content_21104044.... “China, US to Exchange Second Offers of Negative Lists in Early September,” WantChinaTimes.com, June 26, 2015, http://www.wantchinatimes.com/news-print-cnt.aspx?id=20150626000118&cid=... Anna Yukhananov, “China’s Zhang Hopes U.S. Removes Barriers to Investment,” Reuters, June 23, 2015, http://www.reuters.com/article/2015/06/23/us-usa-china-zhang-idUSKBN0P32...)

China’s Ministry of Industry and Information Technology (MIIT) announced it would give foreign investors in the e-commerce sector greater freedom by allowing them to own wholly foreign owned e-commerce companies. MIIT, which believes greater competition will elevate the abilities of local firms, further said it would liberalize the online data processing and transaction processing business. In tandem with its moves to spur the domestic e-commerce sector, the Chinese government has moved to support Chinese companies overseas activities with the government offering “state support on international projects,” establishing various credit insurance services, and simplifying customs procedures such as declaration and clearance (“E-Commerce Investor Rules for Foreigners Set to Be Relaxed in China,” WantchinaTimes.com, June 20, 2015, http://www.wantchinatimes.com/news-print-cnt.aspx?cid=1201&MainCatID=12&... “China to Promote Cross-Border E-Commerce as Incomes Rise,” China Daily, June 23, 2015, http://www.chinadaily.com.cn/business/2015-06/23/content_21075018.htm)

Chinese steel companies are looking contemplating markets such as Indonesia as potential future investment destinations. This is not only because of expected demand growth in such destination’s steel using sectors like autos, shipbuilding, and machinery, but also because environmental and labor laws are not as strict as those found in South America. Provincial governments such as Hebei Province, which has the “highest concentration of steel plants in China,” are encouraging outward investment, too. Southeast Asian host countries are not necessarily a panacea given their infrastructure deficiencies and insufficient energy supplies (“Steel Companies from China Expanding Production Overseas,” WantChinaTimes.com, June 21, 2015, http://www.wantchinatimes.com/news-print-cnt.aspx?id=20150621000032&cid=...)

Taiwan’s Hon Hai Precision Industry Company, “the World’s largest contract electronics manufacturer” whose major customers include Amazon, Apple, and Xiaomi and a major employer in China, will develop a vertically integrated supply chain in India,” meaning a chain that involves assembly, parts manufacturing, marketing, and customer service, in order to cater to Indian Prime Minister Narendra Modi’s “Make in India” initiative, which seeks to make India a leading manufacturing hub. Hon Hai, known better outside Taiwan as Foxconn Technology Group, could build 10-12 factories and employ more than 10,000 people (“Hon Hai Eyes Vertical Integration for ‘Make in India’ Initiative,” WantChinaTimes.com, June 26, 2015, http://www.wantchinatimes.com/news-print-cnt.aspx?id=20150626000071&cid=...)

The Japan International Cooperation Agency, a Japanese aid agency, will lead an initiative involving Sumitomo and JR East that will train Myanmar how to do track maintenance and repair as well as bridge maintenance. The two companies will supply technicians and other staff. The motivation for the training initiative seems to be a desire to gain an upper hand in supplying train cars and other materials if and when Myanmar expands its railway network in tandem with its economic development (Yuki Hanai, “JR East, Sumitomo to Provide Railway Training in Myanmar,” Nikkei Asian Review, June 27, 2015, http://asia.nikkei.com/Business/Companies/JR-East-Sumitomo-to-provide-ra...)

Indonesia’s Investment Coordinating Board (BKPM) recently has visited Chinese and Japanese companies in order to learn what successes they have had as well as what challenges they have been facing. The BKPM commentated that it “‘fully support investment efforts by both lots of investors as their industries are labor-intensive ones that absorb a lot of workers [in the tens of thousands] and are export-oriented,’” sending auto parts, seafood products, and other goods as far as Europe. In line with this, it will be visiting the offices of invested Chinese and Japanese companies in China and Japan to encourage further investment (Grace D. Amianti, “BKPM Aims to Lure More Japanese, Chinese Firms,” The Jakarta Post, June 25, 2015, http://www.thejakartapost.com/news/2015/06/25/bkpm-aims-lure-more-japane...)

Outward foreign investment from Singapore plummeted by 78.1 percent year-over-year during the first half of 2015. The total for the first half of 2015 was the “lowest first half period…since 2009,” with the total values of deals in the first half of 2015 running about USD $6 billion. A large proportion of outward investment was in the Media & Entertainment sector ($1.4 billion) while Energy & Power investment totaled around $1.1 billion. The largest amount of investment, in terms of value, went to the United Kingdom, followed by the U.S. (“Outbound M&A Deal Value Crashes to 6-year Low as Firms Pull the Breaks on Overseas Acquisitions,” Singapore Business Review, June 25, 2015, http://sbr.com.sg/economy/news/outbound-ma-deal-value-crashes-6-year-low...)

*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.