MNCs in the News-2016-01-01

In later December, China’s Central Economic Work Conference issued a statement indicating “China will continue to improve its opening up to the outside world.” It specifically stated that China will “‘give equal treatment to domestic and foreign companies’” and that China would “improve the business environment for foreign firms and pay attention to the protection of their legitimate interests and intellectual property.” The motivation for accommodating foreign investors seems to be to find new sources of growth at a time when the economy is slowing. In addition, China plans to “step up negotiations on free trade areas and investment treaties” (“China Vows to Further Open to the World,” Xinhuanet, December 21, 2015,

In late December, the Standing Committee of China’s National People’s Congress (NPC) approved a counter terrorism law, which follows on the heels of a national security law, passed in July, which requires “all key network infrastructure and information systems to be “‘secure and controllable.’” Many foreign governments and businesses are anxious about the implications of these laws given they might require them to provide China special access to their technologies, encryption codes, and other sensitive information when government agents demand it. The NPC rejected the worries, saying China’s law was no different than other countries and would not undermine IPR (Tom Mitchell, “China Approves Controversial Antiterrorism Law,” Financial Times, December 27, 2015; Ben Blanchard, “China Passes Controversial Counter-Terrorism Law,” Yahoo news, December 27, 2015, Chris Buckley, “China Passes Antiterrorism Law that Critics Fear May Overreach,” The New York Times, December 27, 2015,

China’s State Council has issued a guideline that calls for “stricter IPR protection to create a sound environment for innovators.” Pursuant to the guideline, punishments for the infringement of intellectual property rights will be increased and the Chinese government will work to “build a more effective IPR management system and develop world-class patent review agencies.” The focus will be on better protecting IPR for “new technology and emerging industries” and “promoting mass entrepreneurship and innovation” in order to advance China’s “national strategy of innovation-driven development” (“China Vows Better IPR Protection,”, December 23, 2015,

Late December saw China’s NDRC issue a draft of its first “Anti-Monopoly Guidelines on Abuse of Intellectual Property Rights.” The NDRC currently is soliciting public feedback about the draft until January 20, 2016. The law “aims to establish guiding rules for anti-monopoly scrutiny of abuse of IPRs, improve transparency of enforcement, provide the market with clear and reasonable expectations, and guide business operators to exercise IPRs in a proper way.” The law does not apply to the “proper exercise of IPRs, but does apply to conduct that eliminates or restricts competition and thus impedes innovation” (Lan Lan, “NDRC Opens Consultation on the Anti-Monopoly Guidelines for IPRs,” China, December 31, 2015,

China’s NDRC has imposed fines totaling 407 million yuan on eight international sea freight shipping companies for price fixing. An investigation determined these companies, which include Japan’s NYK Line, Chile’s Compania Sudamericana de Vapores (CSAV), and South Korea’s EUKOR Car Carriers, had manipulated the prices for shipping autos, trucks, and construction machinery on major lines for at least four years by signing agreements to non-compete, raise prices, and divide territory. NDRC fines ranged from 4-9 percent of violator 2014 China revenues. Interestingly, NYK Line did not have to pay a fine because it supported the investigation by providing “major evidence” (“China Fines Shipping Companies for Price Fixing,” China, December 28, 2015,; “Chilean Shipping Firm Agrees to Pay Chinese Fine for Price Fixing,” China, December 29, 2015,

According to various sources, the People’s Bank of China (PBoC), China’s central bank, has suspected three foreign banks, including possibly Germany’s Deutsche Bank, from conducing certain kinds of foreign exchange business relating to cross-border, onshore and offshore businesses. It was not entirely clear why the banks had their business suspended, but it may have been because they were engaged in large scale carry trade operations to take advantage of difference between the onshore and offshore value of China’s currency, the yuan. Carry trade activities complicate the PBoC’s efforts to manage the value of the yuan and prevent dramatically depreciation pressures (Petar Kujundzic, “China Suspends Forex Business for Some Foreign Banks: Sources,” Reuters, December 30, 2015,

China’s M&A activities dropped 20 percent in 2014, but 2015 was a year when Chinese outward FDI (COFDI) recovered, hitting more than USD $100 billion according to Thomson Reuters. Many expect Chinese firms to be acquisitive in sectors like manufacturing, environmental control and waste management, semiconductors, power, finance, and agrochemicals. One driver of COFDI is slower growth at home, but firms also want cutting-edge technology and assets that help them serve needs at home and are grappling with a falling yuan. Unlike past years, state-owned enterprises (SOEs) are less prominent players in M&A, perhaps because of China’s ongoing anti-corruption campaign (Denny Thomas, “After fuelling $1 trillion Asia Deal Spree, China’s M&A Set to Hit New Heights in 2016,” Reuters, December 22,

Leading Chinese nuclear power construction companies such as China General Nuclear Power Corp. (CGN) and China National Nuclear Corporation are looking overseas to sell their technologies and services. One project in which CGN is deeply involved is the 18 billion pound United Kingdom Hinkley Point project in Somerset. China hopes the Hinkley project will be a way for its companies and nuclear technologies to gain credibility abroad and win deals in places like Latin America and South Africa. Some worry the UK is becoming too dependent on China and creating security vulnerabilities by having China involved in its critical infrastructure (Christopher Adams and Lucy Hornby, “Nuclear Energy: Beijing’s Power Play,” Financial Times, December 29, 2015)

China and Pakistan have concluded a financing agreement for a USD $2 billion coal field project in Pakistan’s Sindh province which will entail the development and exploitation of the massive Thar coal field and the building of a 660,000 kilowatt power station adjacent to the mine. The project, which is expected to be completed in 2017, is a component of the China-Pakistan Economic Corridor, which consists of 3,000-km network of road, railway, and energy infrastructure, among other things. Pursuant to the financing agreement, China will provide USD $800 million of financing, while the Pakistani side will provide USD $500 million (“China, Pakistan Sign Agreement on Coal Power Project,”, December 21, 2015,

Iraqi Prime Minister Haider al-Abadi told the China Daily in an interview during his first visit to China that his country was contemplating a tripling of its railway network and that it has been contacting Chinese companies about various possibilities. Al-Abadi said that Chinese companies “‘bring me their technology…I think they can expand the network in Iraq.’” Al-Abadi also stressed Iraq’s potential to play an important role in China’s silk road initiative and said his country welcomed China’s Belt and Road Initiative. As for broader cooperation, Al-Abadi noted Iraq wanted to move beyond trade and to have more Chinese investment (“Iraq Looks to Chinese Companies for Rail Expansion,”, December 24, 2015,

Japan is competing vigorously with China on selling high-speed rail systems abroad in the US, Thailand, Malaysia, Singapore, and the UK despite the fact the economics of urban rail systems may be better for Japanese companies as well as host countries. Japan’s aggressive efforts to compete with China are not surprising given it sees high speed rail (the shikansen) as part of its identity and the battle over high speed rail is “a proxy for the broader competition between Japan and China for industrial supremacy and political influence in Asia.” The battle has seen both countries issue multi-billion preferential loans (Robin Harding and Tom Mitchell, “Rail Battle between China and Japan Rushes Ahead at High Speed,” Financial Times, December 20, 2015).

Korea’s Ministry of Trade, Industry, & Energy reported that inward FDI (IFDI) had totaled $20 billion in 2015, the first time Korea received more than $20 billion of IFDI. Investment from the Middle East and China soared with the former attributable to a large number of Middle Eastern construction and petrochemical projects while the latter was attributable to the popularity of Korean brands in China. American FDI in Korea also soared with companies taking stakes in Korean IT and logistics firms. The service industry proved an especially popular destination for IFDI and the largest type of investment was greenfield investment (Jung Suk-Yee, “New Record FDI in Korea Exceeds US$20 Billion,” Business Korea, December 24, 2015,

According to news reports, the Korean Ministry of Strategy & Finance will start imposing a “Google tax” on foreign multinational corporations at the end of this month. Pursuant to the relevant law to control “base erosion and profit shifting,” companies exceeding a certain size and having a certain amount of transactions with affiliates abroad will have to start providing more detailed reports about international transactions (fines will be imposed on violators). Korea’s move follows efforts by the G-20 and OECD to limit corporate tax evasion (Cho Jin-Young, “Google Tax Imposed on Multinational Companies,” Business Korea, December 24, 2015,

Hyundai Development Company (HDC) just won a USD $85.4 million Vietnam Ministry of Transportation contract to build a 2.1 kilometer bridge and 4.1 kilometer road linking Hung Yen and Ha Nam. This 3-year project, which could be a “bridgehead to win other infrastructure projects” is HDC’s first overseas project in 2015 and the third since it resumed overseas operations in 2014. Korean companies aggressively competed for the project which was financed through the Korea Export-Import Bank’s Economic Development Construction Fund (Marie Kim, “Hyundai Development Company Wins Bridge Construction Deal in Vietnam,” Business Korea, December 23, 2015,

Samsung Engineering has signed a $552 million contract with Pemex Transformacion Industrial, the fuel processing subsidiary of Mexico’s state-owned oil firm Petroleos Mexicanos (PEMEX). The contract would involve the construction of the second phase of a Ultra Low Sulfur Project at the Antonio M. Amor Refinery in Mexico. According to the terms of the new contract, Samsung would be responsible for engineering, construction, procurement, and commissioning. Samsung also had been responsible for Phase II, which was completed in 2014. In total, PEMEX has awarded Samsung Engineering four refinery project contracts (Matthew Wiegand, “Samsung Engineering Wins Major Refinery Contract from PEMEX in Mexico,” Business Korea, December 21, 2015,

In the view of the chairman of the national committee for franchising and licenses at the Indonesian Chamber of Commerce, the development of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) means that the number of franchise businesses in Indonesia could grow by as much as 30 percent with good growth likely to be witnessed in the food and beverage, health and beauty, and education sectors. However, it was not likely these businesses would set up headquarters operations in Indonesia and expansion would be limited because of the unfriendly operating permit acquisition process and a complicated regulatory environment (“Foreign Franchises to Swarm Indonesia after AEC: Expert,” The Jakarta Post, December 21, 2015,

Indonesia’s Ministry of Industry Director General for International Industrial Security and Access Development said he hopes the conclusion of a CEPA with the EU, which covers investment facilitation, among other things, will lead to a major increase in EU FDI in Indonesia, which currently is only 12 percent of total EU investment in ASEAN and far below what one would expect given Indonesia’s share of ASEAN’s total population. Indeed, in 2013, the EU invested almost four times more in Singapore than Indonesia. The EU’s Ambassador to Indonesia said he expected the presence of a stable investment framework really would help (Koirul Amin, “Govt Aims to Boost EU Investment with CEPA,” The Jakarta Post, December 23, 2015,

Indonesia will increase tax allowances and boost other incentives to encourage greater investment in oil refining at a time when investors are concerned about profit margins, project uncertainties, and so on. Energy and Mineral Resources Ministers Sudirman Said specifically said the government’s eight economic policy package will include “fiscal and non-fiscal incentives for oil refinery construction” including tax holidays and perhaps even financing guarantees. Furthermore, the government intended to provide guarantees about future sales as well as lengthen land certification periods. At present, Indonesia can only serve half of its domestic daily fuel demand from oil prepared in domestic refineries (Ayomi Amindoni, “Incentives Announced for Much-Needed Refinery Investment,” The Jakarta Post, December 22, 2015,

Thailand’s Deputy Prime Minister Somkid Jatusripitak said the government was “‘confident that total investment value will reach the target of 450 billion baht’” this year versus 210 billion baht in 2015. Somkid asserted that “clearer investment regulations and privileges will attract investors, especially foreigners, to begin investing in Thailand.” He added that all government bodies including the Foreign Affairs Ministry and the Commerce Ministry would work together to do investment promotion work. The Thai government expects another boost to IFDI to come from a strengthening global economy. The government plans to target FDI in automobiles, electronics, agriculture, biotechnology, and robotics (Lamonphet Apisitniran & Pawee Sirimai, “Investment Value Seen Doubling in New Year,” Bangkok Post, December 22, 2015,

Chinese and Thai officials held a ceremony to officially launch their several hundred billion baht medium-speed rail project, which will connect Nong Khai to Map Ta Phut and Kaeng Koi to Bangkok. The project is anticipated to begin in May, though it is running behind schedule because of disputes over project costs, interest rates (China is offering 2.5 percent but Thailand wants a rate no higher than 2.0 percent), and joint venture share allocations (the Chinese JV partner would be China Railway Corporation). Thailand also is calling for China to increase its investment in civil works, trains, and operating systems (Sunthon Pongpao and Amornrat Mahitthirook, “Thai-Chinese Rail Project Launched,” Bangkok Post, December 19, 2015, “China-Thailand Railway Project Kicks Off,”, December 20, 2015,; “Thailand Asks China to Increase Rail Project Spending,” Bangkok Post, December 25, 2015,

The Malaysian Investment Development Authority (Mida) has encouraged local conglomerates and multinational corporations (MNCs) using Malaysia as a base for their regional and global businesses to utilize the special features of the Principal Hub (PH) scheme. Mida’s Chief Executive Officer said, “‘The PH scheme is not confined to a specific area. Companies can choose to establish their principal hub at any preferred location in Malaysia that best aligns with their strategic objectives.’” The PH scheme also removes many restrictions such as brand distribution restrictions. Malaysia further plans to provide foreign exchange flexibilities tailored to meet the requirements of each PH (“Local conglomerates, MNCs urged to take advantage of PH scheme,” Daily Express, December, 22, 2015, )

A consortium comprised of seven Chinese corporations is in advanced talks with qualified Malaysian public-listed firms and government-linked companies for a future joint bid on the Kuala Lumpur-Singapore high speed rail (HSR). Yang Zhongmin, China Railway’s chairman, said the HSR project would correspond to the Malaysia and Singapore governments’ requirements regarding budget, specification, and timing. Yang hopes that the Malaysian government agency will announce clear criteria during the floating of the tender document so that his consortium can prepare efficiently. Malaysia’s Land Public Transport Commission head said Malaysia and Singapore are paying much attention to safety, reliability, and project cost-effectiveness (Sharen Kaur, “China Group’s HSR plan on Track,” New Straits Times, December 25, 2015,

The Deputy head of the Central Institute of Economic Management in Vietnam said free trade agreements (FTAs) like the Trans Pacific Partnership and Vietnam-EU FTA would encourage FDI flows into Vietnam because Vietnam would be able, pursuant to such FTAs, to serve as a production base for countries wanting to enter other FTA markets such as Australia, Canada, and Japan. Moreover, the reforms Vietnam undertook to meet its commitments would “increased the confidence of investors.” For the period up to November 20, 2015, Vietnam’s IFDI increased 17.9 percent year-over-year. Significant increases in FDI are expected from Japanese and American firms (“VN to Up FDI in 2016: Experts,” Viet Nam News, December 23, 2015,

Vietnam’s Ministry of Planning and Investment Foreign Investment Agency predicts US FDI flows into Vietnam will increase dramatically because of the growing consumer market (rising population and incomes) in Vietnam coupled with its low cost labor, which compared favorably against rising labor costs in China. US companies, who have invested relatively little in Vietnam, also likely would be encouraged to put money in Vietnam because of Vietnam’s involvement in the Trans-Pacific Partnership. American companies have expressed interest in the energy, aviation, information technology, and power sectors, though American firms are deterred by corruption, a lack of transparency, and poor infrastructure (“US Investments in VN Expected to See Big Browth,” Viet Nam News, December 16, 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.