MNCs in the News-2015-07-17

A local District Court in Shanghai sentenced three employees of Shanghai Youzilang Industrial Co., Ltd. to three years of jail for “forging more than 2,000 “‘hygiene certificates’” on imported products over the past two years.” Youzilang had purchased imported foods, pasted fake certificates on the products (imports need the certificates to be sold in China), and then supplied them to Germany-based Metro Group’s Shanghai branch and 80 other China branches of the chain. While Metro’s exact involvement in the scam is unclear, it does seem like China branches did not fully use the meticulous internal management systems available to them (“Metro Group Involved in Imported Goods Forgery Case,” China.org.cn, July 15, 2015, http://www.china.org.cn/business/2015-07/15/content_36068161.htm)

China’s Tsinghua Unigroup Ltd. reportedly is aiming to bid US $23 billion for U.S. chipmaker Micron Technology Inc., which would be China’s largest purchase of a US company and largest M&A deal ever. If successful, the deal would give China the world’s fifth-largest chipmaker by revenue and one with global manufacturing capabilities and help it move towards it goal of having indigenous semiconductor technologies. Many expect the acquisition would undergo a very strict national security review by the U.S. Committee on Foreign Investments, though some believe a deal, with conditions, remains a possibility given Micron does not possess unique technologies (Tom Schoenberg, David McLaughlin, and Ian King, “Micron Takeover Seen Facing Tough U.S. Review over China Ties,” Bloomberg Business, July 14, 2015, http://www.bloomberg.com/news/articles/2015-07-14/micron-takeover-seen-f... Eva Dou and Don Clark, “State-Owned Chinese Chip Maker Tsinghua Unigroup Makes $23 Billion Bid for Micron,” The Wall Street Journal, July 14, 2015, http://www.wsj.com/articles/state-owned-chinese-chip-maker-tsinghua-unig... Diane Bartz, Noel Randewich, and Andrea Shalal, “Reported Chinese Offer for Micron Faces Hurdles,” Reuters, July 14, 2015, http://www.reuters.com/article/2015/07/15/us-micron-tech-m-a-tsinghuauni...)

The European Union (EU) plans to bolster its economy through a major infrastructure fund, the European Fund for Strategic Investments (EFSI). China has expressed its interest in contributing up to the EFSI, but has not given specific amounts. Moreover, it has confused things by raising discussions of a joint China-EU Investment Fund. China seems reluctant to provide moneys to the EFSI because its contribution would not give it the right to decide the kind of projects in which Chinese firms could participate and it could lose its contribution, which would be used as guarantees, and be required to replenish it (Robin Emmott, “China’s Bid to Extend Economic Diplomacy Entangled by EU Fund Rules,” Reuters, July 12, 2015, http://www.reuters.com/article/2015/07/12/us-eu-china-idUSKCN0PM13920150712)

Bloomberg New Energy Finance reports that by the end of 2015 Chinese companies such as JA Solar, Trina Solar, and JinkoSolar Holdings, will have built up overseas solar panel factors with capacity of 5.3 gigawatts and cell plants with a capacity of 4.7 gigawatts. Chinese firms have invested so substantially in capacity in countries such as Malaysia, Singapore, and Thailand in order to escape American, Canadian, and EU trade barriers in the form of duties, price floors, and volume limits. The investment, though, also serves the purpose of diversification as producing in multiple locations can reduce risk and cut costs (“China Dodging Trade Barriers with Overseas Solar Plants,” Bloomberg Business, July 14, 2015, http://www.bloomberg.com/news/articles/2015-07-15/china-dodging-trade-ba...)

The EU has a project termed the 5G Public Private Partnership (5G-PPP) project, which is designed to enhance Europe’s 5G research and global cooperation capabilities so that the EU can modernize its communications infrastructure, increase capacity and reliability, reduce energy usage, and limit cost. Chinese telecommunications giant Huawei, which is a Board Member of the 5G Infrastructure Association, will participate in the project and “lead work packages in four of the five projects of the initiative.” Pursuant to the 5G-PPP Huawei is working to support diverse R&D initiatives in Europe. In line with this, it has partnered with various universities (“China’s Huawei, European Partners Join Forces as EU 5G Research Levels Up,” China Daily, July 15, 2015, http://www.chinadaily.com.cn/business/tech/2015-07/15/content_21286658.htm)

India has given Huawei permission to set up a manufacturing unit in the country. Huawei has been in India since 1999, but has encountered problems in expanding its presence. For instance, in 2003, the government rejected Huawei’s proposal to expand its Bangalore R&D facility because of the latter’s alleged links to a Chinese military project. However, India’s desire to boost jobs and reduce its trade deficit, coupled with security conditions (e.g., key technical positions must be given to Indian nations and foreign equipment imports audits) resulted in the government’s acceptance of an expanded Bangalore facility and a Huawei manufacturing facility (Ambika Behal, “After Modi’s China Visit, Huawei Gets a Green Light in India,” Forbes Blog, July 16, 2015, http://www.forbes.com/sites/abehal/2015/07/16/after-modis-china-visit-hu...)

The Malaysian Investment Development Authority (Mida) touted Foreign Policy magazine’s ranking of foreign investment destinations, called the “Baseline Profitability Index” (BPI), showed it jumping from 11th position in 2014 to 6th position in 2015. Malaysia was one of two Association of Southeast Asian Nations among the top 10 spots in a ranking system that takes into account variables such as economic growth, financial stability, physical security, corruption, expropriation risk, and so on. Mida Chief Executive officer Datuk Azman Mahmud stressed the “endorsement had “‘dissolved lingering misperceptions and attested…the government’s prudent, proactive, and pragmatic policies to restructure and diversify the economy” (“Malaysia Climbs to 6th Spot as Attractive Profit Centre,” The Star Online, July 14, 2015, http://www.thestar.com.my/Business/Business-News/2015/07/14/Malaysia-cli...).

At the opening of the “One Belt and One Road” China-Malaysian Business Dialogue, Malaysian Ambassador to China Datuk Zainuddin Yahya encouraged Chinese investors to consider investment in non-construction sectors. He lauded Malaysia’s political stability, good infrastructure, skilled workforce, and business-friendly government. He observed Malaysia-China trade relations have been exploding and there were many opportunities for cooperation. At the same Dialogue, Malaysian Transport Minister Datuk Seri Liow Tiong Lai called for China to help Malaysia build up its internal transportation network and noted the country had built up its ports and was “willing to share its marine industry expertise with China” (“Chinese Investors Encouraged to Tap Malaysian Market,” The Star Online, July 15, 2015, http://www.thestar.com.my/Business/Business-News/2015/07/15/Chinese-inve... Malaysia Welcomes China to Jointly Build Transport Channel, Says Liow,” The Star Online, July 15, 2015, http://www.thestar.com.my/Business/Business-News/2015/07/15/Malaysia-wel...)

Vietnam held a consultative meeting in Hanoi to solicit expert views on draft government policies to boost foreign investment in the agricultural sector. At the forum, participants discussed issues relating to land, infrastructure, taxation, and administration procedures. Sub-issues raised in regards to these macro issues including land clearance and compensation procedures, contract violations, ambiguities about the meaning of high-tech agricultural investment, tax exemptions, food hygiene and safety procedures, and Vietnam’s free trade agreements, which were essential for the export of agricultural goods. At present, foreign direct investment in FDI is very small as a percentage of total FDI in Vietnam (“Forum Tackles Foreign Investment Struggles,” VietNam News, July 14, 2015, http://vietnamnews.vn/economy/273003/forum-tackles-foreign-investment-st...)

Vietnamese state-owned software company FPT won a coveted license from Myanmar’s Communication and Technology Ministry that will allow it “to provide fixed telecoms and internet services in Myanmar” including network facilities, online games, e-news, domains and hosting, and websites. FPT’s achievement will make it the “first 100-per cent foreign-owned firm to operate telecoms” in Myanmar (all the other business licensees are Burmese). A FPT executive said the company won a license because of its experience in developing countries coupled with its “long-term commitment to investment” (“FPT Myanmar Gets Telecoms Permit,” Vietnam News, July 11, 2015, http://vietnamnews.vn/economy/272927/fpt-myanmar-gets-telecom-permit.html)

A critical Filipino petition led Google to adjust Google Maps so that it shows a reef disputed by China and the Philippines as Scarborough Shoal (the shoal’s international name) rather than Huangyan islands (China’s preference) or Panatag Shoal (the Philippines’ preference). The change adjusts an area Google Maps previously designated as part of Zhongsha islands. Explaining its action, Google said “‘we understand that geographic names can raise deep emotions which is why we worked quickly once this was brought to our attention.” Google’s policy towards disputed areas is to consider “‘guidance from authoritative references, local laws, and local market expectations’” (“Google Maps Alters Disputed South China Sea Shoal Name,” BBC News, July 14, 2015, http://www.bbc.com/news/world-asia-33518673, http://www.bbc.com/news/world-asia-33518673; Austin Ramzy, “Google Maps Changes Name on Dispute South China Sea Shoal,” The New York Times, July 15, 2015, http://sinosphere.blogs.nytimes.com/2015/07/15/google-maps-changes-name-...)

*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.