MNCs in the News-2015-10-16

China’s Ministry of Commerce (MOFCOM) reported inward FDI (IFDI) hit US $9.56 billion in September, a 7.1 percent increase year-over-year (YOY). While the amount of inflows was nowhere as high as the percentage in August, it still represented an improvement over the July figure of 5.2 percent. Per MOFCOM, high-tech investment represented a considerable amount of the overall IFDI percentage. For the first nine months of 2015, IFDI totaled $94.9 billion. This consisted of inter alia $58 billion in services, $29.8 billion in manufacturing, and $6.16 billion in high-tech services investment. During the period, mergers & acquisitions became more prevalent (“FDI Rises 7.1% in Sept.,” China.Org.Cn, October 12, 2015,

China’s National Development and Reform Commission (NDRC) noted recently that it expected to complete a first draft of an antitrust guideline for the automobile sector by the end of October. The draft, which needs to be reviewed by the State Council’s Anti-Monopoly Commission, a task which is expected to be completed by June 2016, will not only cover monopoly violations but also will “cover price-fixing violations by car makers selling products online.” The online retailing of cars has become more popular over time and thus regulation has become increasingly important (“Beijing to Draft Antitrust Guideline for Auto Sector,”, October 13, 2015,

China’s State Administration of Taxation stated that a draft government proposal designed to address the issue of tax avoidance by multinational corporations most likely will be issued by the end of the year. The proposal already has gone through its official comment period. One of the key facets of the proposal is that it will give detailed guidance about transfer pricing, specifying what is reasonable and what is not in regards, among other things, the pricing of intangible assets and interest deductions. The document makes use of the OECD’s 2015 global Base Erosion and Profit Shifting or BEPS Action Plan (Zheng Yangpeng, “Proposal for Fool-Proof Corporate Tax Regime by Year End,” China, October 13, 2015,

Echoing news stories over the past few weeks, Chinese media report, “Google Inc. is quietly putting back its services in China.” While Google continues to direct online searches to its Hong Kong server, it has again made its map products available on the mainland. Specifically, it is claimed the “browser version of Google Maps and Google Earth software were partially accessible in Beijing.” It is possible, though, that Google does not have a license needed to provide such services. It also is claimed Google had moved some servers to Beijing, Shanghai, and Guangzhou as evidenced by the server’s IP addresses (“Google Starts Reappearing in Mainland,”, October 15, 2015,

Steven Mills, Senior Vice-President of IBM’s software and systems unit, said the company had “agreed to let the Ministry of Industry and Information Technology and its certified [SIC] institutions” examine IBM products in a ‘cleanroom’ to make sure they fit [the country’s] information security policies.” IBM reportedly is the “first overseas tech major to publicly announce such a move.” Mills noted IBM’s move was a way to address China’s concerns about technology being secure and controllable. One observer argued IBM was “‘under pressure to sustain its business growth’” and needed to assuage official concerns to access the government procurement market (“IBM Allows Govt to Access its Software Codes,” China, October 16, 2015,; “IBM Allows Gov’t to Access its Software Codes,” China.Org.Cn, October 16, 2015,

Through September 2015, Chinese non-financial outward FDI (OFDI) hit $87.3 billion, an increase of 16.5 percent YOY. Foreign contracted projects hit $137.6 billion for the January-September period. MOFCOM observed, “the fast growth was led by the Belt and Road Initiative” (OBOR) with OFDI along OBOR rising 66.2 percent to $12.03 billion or about 15.3 percent of total OFDI. Zhou Liujun, the head of MOFCOM’s Department of Outward Investment and Economic Cooperation, said the increase in OFDI also had something to do with the search for new sources of profits, reduced administrative approval requirements, and “progress in international production capacity cooperation” (“China Jan-Sept Outbound Direct Investment Surges”, October 15, 2015,

The 2nd annual China-Russia Expo was recently held in Harbin, Heilongjiang Province, China. It was attended by “dozens of representatives from states of the Russian Federation” which “introduced their states’ geographical and industrial advantages and explained their business-policies.” While Sino-Russian trade has been under pressure as a result of various factors, the prospects for Chinese investment in Russia still look promising and there are expectations that substantial amounts of Chinese investment will flow into the Russian Far East. At present, there are over 60 large-scale projects between China and Russia (Guo Yiming, “Russia Woos Investment at China-Russia Expo,”, October 14, 2015,

Dakang New Zealand Farm Group, which is majority owned by China’s Shanghai Pengxin, had entered into a sale and purchase agreement to buy seven dairy farms and three support farms, involving 3,300 hectares of land and 3,900 cows, from a New Zealand company named Pinny Farms. In the end. Dakang New Zealand pulled out of the deal “citing frustration at the regulatory process [which began in April when the deal was submitted for government approval] and the government’s rejection of another large purchase” in September (“Chinese Firm Pulls out of New Zealand Farm Purchase Deal,”, October 13, 2015,

China’s Central Commission for Discipline Inspection has detained Sam Pa, the head of Queensway Group and a businessman linked to Sinopec, in connection with an investigation into Su Shunlin, the governor of Fujian Province, who was the general manager and party secretary of Sinopec when it struck various deals in Angola. Profiting from his high level connections in Africa and China (allegedly including the intelligence services), Pa has arranged numerous deals between Angola and Sinopec since 2003 and has a firm that has been involved in brokering loans from China to Africa and major resource transactions with Guinea and Zimbabwe (Yu Ning, Huang Kaixi, and Yang Yanwen, “Businessman Linked to Sinopec’s Angola Deals Said to Face Probe,” Caixin, October 14, 2015,; Tom Burgis, Jamil Anderlini, and Lucy Hornby, “Queensway Tycoon Sam Pa is Detained in Communist Probe,” Financial Times, October 14, 2015;

In Iran, Japanese Foreign Minister Fumio Kishida met with his counterpart Mohammad Javad Zarif, a meeting that witnessed the conclusion of a bilateral investment pact. The two foreign ministers stressed the two countries will “accelerate procedures to have the pact become effective at an early date” and announced the two countries will set up a “council for Japan-Iran cooperation to discuss a variety of issues ranging from economic cooperation to the environment and medial care” and will Commenting on the July Iranian nuclear deal, Kishida said, “‘we are looking at what we can do to capitalize on the nuclear deal’” (“Japan, Iran Ministers Agree on Bilateral Investment Pact During Tehran Talks,” The Japan Times, October 13, 2015,

103 foreign companies including Facebook, Procter & Gamble, and 3M will participate in a job fair—the “Job Fair for Foreign Invested Companies”—to be held in Seoul that is organized by the Korea Trade-Investment Promotion Agency (KOTRA). The CEO of KOTRA Kim Jae-Hong said “‘I hope it [the fair] will serve as a meeting place where young talents are matched with competitive global companies, relieving the youth employment issue.’” The fair, which is being held for the 10th year, also aims to help young jobseekers identify work opportunities overseas (Park Jin-Hai, “103 Companies to Attend KOTRA-Sponsored Job Fair,” The Korea Times, October 11, 2015,

Mark Ring, the Senior Vice President and General Manager of Starbucks Coffee China and Asia-Pacific, told the Korea Times in an interview that the company was looking to do more to “fulfill its corporate social responsibilities in Korea.” Specifically, the company plans to expand its scholarship and empowerment programs which build on other existing Starbuck’s CSR programs such as a Youth leadership program, hosting workshops and seminars that discuss solutions to community problems, monthly volunteer activities, and programs dedicated to hiring returning mothers and youth (Lee Hyo-Sik, “Starbucks Committed to Youth Empowerment,” The Korea Times, October 15, 2015,

Five Korean construction firms, including Daewoo E&C, Hanwha E&C, and Hyundai E&C, have signed deals, singly or in participation with other firms, with the Kuwait National Petroleum Company, that will involve participation in the construction of a US $13 billion oil refinery which would be the world’s largest. Korean firms won four out of five packages, getting almost $5 billion in contracts. Daewoo E&C garnered the largest portion among the local builders, winning a total of $2 billion in contracts (Park Jin-Hai, “Local Builders Sign Oil Refinery Contracts in Kuwait,” The Korea Times, October 14, 2015,

The Indonesian government and Freeport Indonesia both own stakes in PT Freeport Indonesia, with the former holding a 9.36 percent stake and the latter holding a 90.64 percent stake. Indonesia has requested Freeport Indonesia divest up to 30 percent of its shares to Indonesian shareholders as part of a renegotiation of an agreement was required by Indonesia’s 2009 Mining Law. In terms of selling shares, priority is given to the central government, provincial government, and then municipal administrations. State-owned enterprises and national entities have lower priority. The government is moving to allow IPOs, which Freeport favors, as a divestment method (Raras Cahyafitri, “Freeport Prefers IPO Mechanism in Mandatory Divestment,” The Jakarta Post, October 12, 2015,

*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.