MNCs in the News-2015-12-11

China’s national security law, adopted in July, requires “all key network infrastructure and information systems to be ‘secure and controllable.’” Foreign companies have been grappling how to address China’s law, which they find vague and threatening to their intellectual property, without giving up too much. Speaking to reporters, Cisco Executive Chairman John Chambers said that while his company would “give our source code to no one” it would work with China to “‘find a way to make it a win-win situation.’” He added “‘there are legitimate needs of all government in terms of the issues of terrorism and national security’” (Matt Smith, “Cisco Chairman Promises ‘Win-Win’ Deal with China over Network Control,” Reuters, December 7, 2015,

Chinese media recently reported the existence of a shell company, called Pengji, that Google Inc. registered in the Shanghai Free Trade Zone about a year ago. According to the Shanghai Administration for Industry and Commerce, Google Ireland Holdings is Pengji’s sole shareholder. Observers are unsure of Pengji’s exact purposes, but believe it could function as a platform for Google to return to the mainland which it left in 2010. In October, as previously noted in “MNCs in the News,” Google invested in a Chinese artificial intelligence startup called Mobvoi. Many also expect Google to establish an ap store in China (“Google Set for Return to Mainland,”, December 9, 2015,

At a conference held in early December, Chinese MOFCOM Department of Outward Investment and Economic Cooperation Vice Director Zhou Zhencheng said the government intended to “introduce more favorable policies to help domestic enterprises go global.” In addition, the government would “partner with other ministries to push policies for outbound investment, cooperation among countries participating in the Belt and Road Initiative, encouraging high value-added investments, and improving information services and risk-control measures for overseas businesses.” Zhou predicted continued rapid growth in outward foreign direct investment (OFDI) despite many challenges. For the first 10 months of 2015, Chinese OFDI hit $92.2 billion (“China Considers Policies to Encourage Overseas Business,” China Daily, December 7, 2015,

The General Manager of China National Nuclear Corporation Qian Zhimin underlined “the implementation of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative will add more fuel to China’s nuclear industry.” He noted 40 of the 60 countries within the configuration of OBOR have plans to develop their nuclear power industry. If China could win 20 percent of the business, this would mean over 1 trillion yuan in manufacturing deals. Recently CNNC won an almost $5 billion deal with Argentina while China General Nuclear Power Corp. is working with French partners to build British nuclear facilities (Zhao Tingting, “Belt and Road Initiative a Boost to Nuclear Industry,” China Daily, December 9, 2015,

Taiwan considers its semiconductor firms a national security asset because the industry is critical to its electronics sector, which generates over 40 percent of its exports. Thus, it has limited mainland Chinese investment in the sector, specifically chip designers. The worry is that such investment will cause a loss of valuable intellectual property. The view of some Taiwanese firms like MediaTek is that it is better to partner with mainland China which is spending furiously to build up its own capabilities. Reflecting China’s ambitions, Tsinghua Unigroup just invested more than $2 billion in two Taiwanese chip packaging and testing firms (Simon Mundy, “Taiwan’s Chipmakers Push for China Thaw,” Financial Times, December 6, 2015; Gao Yuan, “Unigroup Spends $2.1b For Stakes in Taiwan Firms,” China, December 12, 2015,

China has been spending billions to develop Genetically Modified Organism (GMO) crops. Yet the government has not approved any major GMO crops for cultivation. As a result, Chinese firms in the GMO crop space are looking to test and sell their products abroad. An example is China National Chemical Corp which tried to buy a GMO pipeline by launching a $40+ billion bid for Swiss Syngenta and Chinese Origin Agritech which has applied to test its products in the U.S. and might set up a unit there. Beijing Daberinong Technology Group has already won permission to test products in Argentina (Dominque Patton, “With China’s GMO Sector in Limbo, Local Seed Firm Targets U.S.,” Reuters, December 12, 2015,

China Communications Construction Co. (CCCC) has signed an agreement with Kenya to build two more sections of the Mombasa-Malaba Standard Gauge Railway.” In September, it won a $1.5 billion dollar contract to extend the Mombasa-Nairobi line to Naivasha. Earlier this month, it signed a framework deal to build the rest of the section linking Navasha and Malaba. The contract followed Chinese President Xi Jinping’s recent visit to Africa for the China-Africa Cooperation Summit where he pledged loans of $60 billion to support infrastructure. CCCC has touted the jobs its projects will create and its intent to source locally when possible (Hou Liqiang, “Chinese Company to Complete Cross-Kenya Railway,” China, December 9, 2015,; “Chinese Company to Complete Cross-Kenya Railway,”, December 9, 2015,

Japanese and Indian officials announced Japanese Prime Minister Abe Shinzo and Indian Prime Minister Narendra Modi soon will sign an agreement for Japan to build and finance a large percentage of a 505 kilometer high-speed train connecting Ahmedabad and Mumbai and eventually New Delhi. The deal was sealed by Japan’s willingness to provide a 50-year loan at a very low interest rate to finance the $15 billion deal, partly to compete with China. The project has a number of prospective benefits including strengthening the two countries’ relations, boosting the economic fortunes of Japan, and enhancing other aspects of the relationship (“Japan to Win Contract for India’s First High-Speed Railway,” The Japan Times, December 8, 2015, “India Opts for Japan Bullet Trains for Mumbai-Ahmedabad Line,” Nikkei Asian Review, December 8, 2015, Robin Harding and Victor Mallet, “India Close to $15bn High-Speed Rail Deal with Japan,” Financial Times, December 10, 2015; Nigam Prusty, “India Clears Japan’s Bid for First Bullet Train Ahead of Abe Trip,” The Japan Times, December 10, 2015, “Indian Government ‘Clears Japan Rail Plan,’” BBC News, December 10, 2015,

Japan’s Mitsui & Co., Brazil’s Odebrecht, West Japan Railway, and Japan Overseas Infrastructure Investment Corp. will work together to support various Brazilian urban transportation projects under the auspices of a Japanese public-private partnership fund. The projects include the extant rail system for the state of Rio de Janeiro as well as a subway for Sao Paolo that is under construction and will be finished in 2021. Japan’s transport ministry will dispatch engineers and train personnel (“Public-Private Fund to Take Part In Brazilian Rail Projects,” Nikkei Asian Review, December 9, 2015,

This past week, Korea’s Ministry of Finance and Planning announced it would draw upon the resources of the Korea Development Bank and the Korea Investment Corporation to raise a three trillion won war chest to “assist in Korean enterprises’ business in the Chinese market.” The fund would be used to support, among other initiatives, “the M&A of domestic Chinese firms” and the “establishment of local production and distribution networks.” The fund would complement the opening created by the recently passed Korea-China Free Trade Agreement and support the government’s effort to focus on “Made by Korea” rather than “Made in Korea” (Jung Suk-Yee, “Korean Government Raises Fund for Chinese Domestic Market Penetration,” BusinessKorea, December 11, 2015,

Samsung Engineering recently won a major construction contract from Malaysia’s giant state-owned oil company Petronas Chemicals Group. Pursuant to the project it will construct a USD $300 million plant to produce linear low density polyethylene and a $580 million plant to produce ethylene glycol. The contracts charge Samsung, which is supposed to complete the projects, part of a Refinery and Petrochemical Integrated Development project, by 2019, with engineering, procurement, and construction responsibilities. A Samsung Engineering official waxed positively about how the deal might lead to other deals down the road (Marie Kim, “Samsung Engineering Wins US$800 Million Plant Order in Malaysia,” BusinessKorea, December 7, 2015,

Nestle, under pressure from lawsuits and possible government action, recently admitted “its Thai seafood operations were supplied by companies that use practices commonly described as modern-day slavery.” Many of the individuals staffing the crews serving Thailand’s seafood industry, an important source of Thai exports, are migrants from Bangladesh, Cambodia, and Myanmar. Official reports from the United Nations and non-governmental organizations like Verite, media stories, and the statements of the individuals themselves indicate these individuals are “subject to beatings, extortion, and even murder.” These individuals, some of whom are sold, may be deprived of food and forced to work long hours (Michael Peel, “FT Seasonal Appeal: Thailand’s Slave Ships on the Retreat,” Financial Times, December 10, 2015)

Malaysia’s Former Sabah Chief Minister Harris Salleh believes a long mooted bridge connecting Laduan with the Sabah mainland has the potential to be realized because of interest by a Chinese firm. Harris’s aide Raden Kakung explained the Chinese firm is interested in building the bridge in return for being paid with land, where it would build commercial and residential properties and retirement havens for people. Raden added, “to facilitate the bridge project and the related investments, the Federal Government must consider permanent residence permits for foreigners who can come in as investors.” Harris hoped Labuan could become a “Little Singapore” (John Joseph, “Harris: Labuan not a bridge too Far,” Free Malaysia Today, December, 9, 2015,

China Railway Engineering Corp. is joining with Malaysian tycoon Lim Kang Hoo’s Iskandar Waterfront Holdings to place a binding offer for a 60% property stake sold by 1Malaysia Development Bhd. (1MDB). A successful bid would mark the second time in recent weeks that a Chinese company has helped 1MDB, which has begun to sell assets to cut its massive debts. The deal also might give China Railway Engineering Corp. a more favorable position for bidding for a high-speed rail link between Kuala Lumpur and Singapore (P.R. Venkat and Yantoultra Ngui, “Chinese Railway Builder, Malaysian Tycoon Join in Bid for 1MDB Land,” The Wall Street Journal, December, 8, 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.