MNCs in the News-2015-07-03

China’s National People’s Congress passed a national security law with serious implications for foreign businesses investing in or trading with China. The vague law allows China to take “‘all necessary’ steps to protect China’s sovereignty” and calls for all “key network infrastructure and information systems to be ‘secure and controllable.’” Many foreign businesses fear what the law will mean in terms of the protection of intellectual property, technology sale opportunities, and business planning, especially given the tenor of China’s prospective anti-terrorism and cyber security laws. Of note, the law passed with nary a concession to the concerns of foreign companies (“China Security Law Tightens Control of Cyber Security,” BBC News, July 1, 2015,; Tom Mitchell, “China Passes Sweeping national Security law,” Financial Times, July 1, 2015; Michael Martina, “China Adopts New Security Law to Make Networks, Systems ‘Controllable,’” Reuters, July 1, 2015, Paul Mozur, “Jitters in Tech World Over New Chinese Security Law,” New York Times, July 2, 2015,

OSI (China) Holding Co., Ltd. lost almost US 1 billion due to a July 2014 scandal relating to the safety of meat products handled by Shanghai Husi Food Co., Ltd., its China subsidiary, a major supplier of beef and chicken products to fast food chains such as McDonald’s, KFC, and Pizza Hut. The scandal broke when an investigation revealed Shanghai Husi was relabeling expired meats and supplying dirty meats to customers. OSI China stopped all operations in Shanghai and switched its operations to Henan and to rebuild faith in its brand is establishing an Asian quality control center in Shanghai (“OSI China Loses 6b Yuan over Meat Scandal,” China Daily, July 1, 2015,

Visiting Europe for the 17th China-EU Summit, Chinese Premier Li Keqiang said EU and China investment relations were “‘hardly satisfactory given the big size of the Chinese and EU economies and the huge volume of two-way trade,’” which reaches almost US $1.7 billion a day. Li called for the EU and China to conclude an investment treaty, a subject of great interest to Chinese companies, which are in search of technology and brands that could enhance their competitiveness. As well, China is seeking new trade and investment deals in the face of progress on agreements such as the Trans-Pacific Partnership (James Kynge and Christian Oliver, “Li Keqiang Pushes for China-Europe Investment Treaty,” Financial Times, June 29, 2015)

Analysts expect China to be the world’s largest outward investor by 2020, holding US $20 trillion in assets versus $6.4 trillion now. A large proportion of this is likely to take the form of FDI. One analysis forecasts the amounts could soar from US $744 billion to as much as $2 trillion. Not only will the amounts increase significantly, but Chinese outward FDI will likely move away from the past emphasis on energy and natural resources to the developed world where Chinese firms, leveraging state aid, can acquire European assets in autos, food, and infrastructure (Jamil Anderlini, “China to Become World’s Biggest Overseas Investor by 2020,” Financial Times, June 25, 2015; “China Will Become World’s Biggest Cross-Border Investor,” People’s Daily Online, June 30, 2015,

One outcome of the 4th meeting of the China-Brazil High-Level Coordination and Cooperation Committee (COSBAN) was a China-Brazil agreement to set up a US $20 billion fund to support “bilateral capacity cooperation.” Bilateral trade has long been rapidly expanding, but the two sides have been looking to boost cooperation in other areas such as investment, science and technology, and education to ensure the relationship truly is win-win. “Besides launching the fund, the two sides agreed to match up their lists of priority areas and specific projects in bilateral production capacity cooperation and hammer out a list of early harvest projects” (“Brazil, China Launch US $20bn Fund for Production Capacity Cooperation,”, June 29, 2015,

Private Chinese firms Fosun International, a conglomerate, and Anbang, an insurer, are the leading contenders to acquire Novo Banco, the successor to Banco Espirito Santo (BES), which Portugal’s Bank Resolution Fund, a joint fund owned by Portugal’s banks, is selling. After the Portuguese government took over collapsed BES, it carved out a good bank and bad bank with Novo Banco being given the good assets. While it is unclear who will win the bid, Fosun International already has a significant presence in Portugal, having acquirer an insurer (Fidelidade) and a healthcare entity in the country (Sergio Goncalves, “Portugal Gets Three Bids from China, U.S. for State-Rescued Novo Banco,” Reuters, June 30, 2015,

Vietnam has taken dramatic moves to open its economy to foreign investors in a bid to speed up its privatization program, enliven its growth rate, which seems to be plateauing, and boost its stock market. Government Decree 60 will allow up to 100 percent foreign ownership stakes in certain sectors and open certain sectors that previously were off limits, though other sectors such as banking, consumer industries, and real estate apparently still will have significant foreign ownership limitations. However, implementation deadlines and details were still lacking and it is unclear how government regulators will apply the new policies in practice (“PM Approves Decree Allowing Higher Foreign Stakes in VN Firms,” Vietnam News, July 1, 2015, “Vietnam to End Foreign Investment Limits for Some Companies,” The Jakarta Post, June 28, 2015, Michael Peel and Nguyen Phuong Linh, “Vietnam Scraps Foreign Ownership Limits in Investment Push,” Financial Times, June 29, 2015)

Vietnam’s Ministry of Planning and Investment has drafted a decree that provides for unified state supervision of all investment activities including projects “funded from the state budget, FDI projects, and public-private partnership (PPP) projects.” The draft enumerates provisions pertaining to the supervision and evaluation of the process of elaborating, appraising, and approving investment policies. For FDI, it provides that the government will supervise during the process of granting investment certificates and the process of capital contribution and project implementation, concentrating on the extent to which projects comply with environmental regulations, the use of resources, and the use of investment incentives (“FDI for State Projects to Face Strong Scrutiny,” Vietnam News, June 29, 2015,

Coca-Cola business partner in Burma becomes a potentially problematic tie for the US beverages giant as revelations emerge a director of the Coca-Cola Pinya Beverages Myanmar joint venture is also a director of and shareholder of Xie Family Company which is active in the Myanmar jade business, but barred from exporting to the US under a sanctions regime. There is no specific information about wrongdoing by this individual, Coca-Cola, or the Xie Family, but the association, recently disclosed by Coca-Cola, is somewhat of an embarrassment to Coca-Cola given the Burmese jade industry’s association with smuggling, human rights abuses, and corruption (Michael Peel, “Coke Flags Myanmar Business Partner’s Jade Industry Link,” Financial Times, July 1, 2015)

*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.