MNCs in the News-2016-02-19

At a meeting presided over by Chinese Premier Li Keqiang, the State Council decided it would move to open up the service market and expand the service trade by “increasing accessibility for overseas companies and providing tax cuts for technology providers.” The motivation was a sense that developing the service trade could aid China in producing “new GDP growth and employment” at an economically “challenging” and “complex” time. To move forward the State Council said the country would launch pilot programs in 10 cities such as Shanghai, Shenzhen, Hainan, Hangzhou, and Chengdu as well as “five national-level new investment areas” (Zhang Yue, “Tax Reductions Aim to Boost Service Trade,” China Daily, February 15, 2016,

Xing Houyuan, Deputy Director of the Chinese Academy of International Trade and Economic Cooperation, a Chinese Ministry of Commerce think tank, reacting to recent multi-billion dollar deals by Chinese companies said “‘the worldwide economic slowdown and change of landscape in the global industry chain offers a great opportunity for Chinese companies to purchase overseas assets that they deem valuable’” and given the fact “‘any industry could be a target for Chinese companies” many records will be broken. Already in the two months of 2016, Chinese firms have undertaken M&A deals of USD $55 billion. In 2015, they topped $110 billion (“Outbound M&A Expected to Set New Record,”, February 16, 2016,

Regulatory issues at home and abroad seem to be impacting the ability of Chinese firms to conclude deals. As far as “home” is concerned, the fact Fosun Chairman Guo Guangchan was placed under a probe putatively lead to the termination of a deal to buy Phoenix Holdings, an insurance company, allegedly because regulators wanted assurances, which could not be given, Guo was no longer under investigation. Fairchild Semiconductor turned down a bid from a Chinese consortium including Chinese state-owned enterprise China Resources and Hua Capital due to doubts the Committee on Foreign Investments in the US would approve a deal (James Fontanella-Khan, “Fairchild Rejects $2.6bn Chinese Offer,” Financial Times, February 16, 2016; Don Weinland, Arash Massoudi, and James Fontanella-Khan, ‘China Deals Collapse Amid Regulatory Fears,” Financial Times, February 17, 2016; Patti Waldmeir, “Fosun Abandons Purchase of Israeli Insurer Phoenix,” Financial Times, February 17, 2016)

Spanish media reported the Spanish police recently searched the Madrid branch of Industrial and Commercial Bank of China/ICBC (Europe) and arrested five directors in connection with a probe about the suspected money laundering of USD $44.5 million earned through “alleged smuggling, tax fraud, and labor exploitation.” ICBC (Europe) said “‘we have always been sticking to the basic management principles of enforcing anti-money laundering regulations strictly and insisting on legal compliance management.’” The Chinese Embassy in Spain said it was not aware of any misdoings, adding it “‘always demands Chinese companies abroad strictly abide by laws…of…the country they were working in’” (Jiang Xueqing, “Money Laundering Claim Sends ICBC Directors,” China, February 18, 2016,; “Chinese Embassy Expresses Concern over Raid of Madrid Offices, China Daily, February 18, 2016,

The Hellenic Republic Asset Development Fund (HRADF), Greece’s privatization fund, announced “China’s COSCO was formally declared the preferred investor for the privatization” of Piraeus,” Greece’s largest port. COSCO made a bid of more than USD $410 million for a 67 percent stake in the Piraeus Port Authority. The deal still needs to clear several legal and regulatory hurdles, for example, Greece’s Court of Audit. The way was cleared for COSCO’s bid by Greece’s Council of State (its highest court) rejection of appeals to the sale of stakes in Piraeus and Thessalonki. The deal will upgrade Piraeus and create 125,000 jobs (“COSCO Declared Preferred Investor for Greek Piraeus Port Privatization,” China Daily, February 18, 2016,

Korean Trade Minister Joo Hyung-hwan expressed his support for business-to-consumer (B2C) e-commerce to accelerate exports when he visited eBay Korea’s overseas logistics center in Incheon. eBay Korea, the largest e-commerce operator in South Korea, pledged it would further assist small-scale domestic businesses to enter the global market: “‘we will help small sellers in Korea with unlimited potential to enter the global markets.’” Because of the impact of free trade agreements Korea has signed and the spread of Hallyu (Korean wave), there is a great potential for developing exports. eBay Korea is one of the leading companies seeking exports through e-commerce (Bae Ji-sook, “eBay Korea Ups Support for Cross-border Trade,” The Korea Herald, February 15, 2016,

In November, the Korean Environment Ministry ordered Volkswagen Korea to recall vehicles with emissions manipulated by defeat devices and to provide data relating to maintaining fuel efficiency after removing the device. In January, the Ministry sued Volkswagen Korea’s head for not providing enough data on recalled cars. Last Friday, Korean prosecutors searched the company’s offices in southern Seoul and confiscated computer hard drives, documents, and letters related to the case. According to South Korean law, those who who do not comply with recall order could be jailed for up to five years or fined as much as 30 million won (“Prosecutors Raid Volkswagen Korea over Recall Plan,” Yonhap News Agency, February 19, 2016,

South Korea’s Ministry of Strategy & Finance said Korea’s outward FDI hit USD $40.23 billion in 2015, an increase of 15 percent year-over-year (YOY) and a five-year high. Prospects did not look good at the beginning of 2015, but improved over the the year. There was an especially strong jump in outward FDI in the financial and insurance sector with a more than 65 percent increase YOY and an increase of nearly 20 percent YOY in the mining sector. Geographically speaking, Asia saw a greater than 51 percent increase YOY with a strong increase in FDI flowing to Latin America (Jung Suk-Yee, “Korea’s ODI Hit Five-year High in 2015,” Business Korea, February 15, 2016,

In the wake of Seoul’s dramatic shutdown of the Kaesong Industrial Complex (KIC), where clothes, textiles, car parts, and semiconductors were made by North Korean workers for Korean firms, to punish North Korea for its continuing missile and nuclear tests, Seoul charged that Pyongyang seized 70 percent of the wages earned by workers at the KIC to fund its military initiatives and buy luxury goods for the elite. In retaliation for the shutdown, Pyongyang froze all South Korean assets in the KIC and expelled all South Koreans. South Korea estimates KIC-related payments to North Korea have totaled USD $550 million (Jun Ji-Hye, “Dispute Arises over operation of Complex Despite Knowledge of Funds Diversion,” Korea Times, February 14, 2016,; “South Korea Says North Used Kaesong Wages for Weapons Programmes,” BBC News, February 15, 2016,

The Korean Ministry of Science will invest four billion won this year to launch the Global Startup Korea project that aims to attract and facilitate foreigners working in Korean startups. In tandem, the National IT Industry Promotion Agency (NIPA) will provide internship or job opportunities for foreigners. The goal of this initiative is not only to assist Korean businesses better engage in global market, but also to encourage foreigners to start and run their businesses in Korea. The Ministry said that even though Korea has a plenty of startups, the country is still lack of super startups with global vision (Cho Jin-young, “Korean Government to Nurture Born-global Startups,” Business Korea, February 17, 2016,

Indonesia’s e-commerce industry welcomes the government’s plan to open the e-commerce sector to FDI. Indonesia e-commerce Association chairman Daniel Tumiwa said e-commerce should never have been on the negative investment list and that the government’s policy changes show it is making serious efforts to open the door to foreign investment which will boost the industry by bringing in “smart money” or investors who know how to “run fast and do things effectively and differently.” Of note, foreign investment in e-commerce companies will be only be permitted to set up companies larger than Rp 100 billion, which will protect smaller firms (Dylan Amirio,“Foreign investment expected to boost business growth” The Jakarta Post, February 16 2016,

At the US-ASEAN Business Council Conference, Indonesia’s President Jokowi “Joko” Widodo urged more American businesspeople to invest in Indonesia. He noted that the country recently revised its negative investment list and opened up around 30 sectors to foreign investors. He said the changes are just a beginning and there will be more changes to permits, licenses and other restrictions. During the summit, US President Barack Obama announced the establishment of a US-ASEAN trade workshop as well as the US-ASEAN Connect initiative. These efforts aim to introduce the Trans-Pacific Partnership to American companies and help them connect with the Asian market (Tassia Sipahutar, “‘Hasta la vista’ restrictions, Jokowi tells US investors,” The Jakarta Post, February 19 2016,

Thai experts are optimistic about the Thai-China medium-speed railway project, which has been under negotiation for three years. During the latest round of talks between the two countries’ officials, the Thai side suggested reducing the total construction cost and setting up a financial vehicle with the Chinese holding 60 percent of the shares. This railway project is significant to both countries. For Thailand, it can “upgrade the country’s logistic capability and shorten the transportation time for Thai exports to Europe.” For China, it can facilitate other overseas railway project and advance its Silk Road initiative (Nophakhun Limsamarnphun, “Experts back Thai-China Medium-Speed Railway,” The Nation, February 15, 2016,

Various Vietnamese and American companies reached investment deals during the ASEAN-United States summit in California, with some signings taking place in the presence of Vietnamese Prime Minister Nguyen Tan Dung. One deal relates to developing the Park Hyatt brand in Vietnam. Another deal was an agreement between American-based BIDV Metlife and BIDV in Vietnam to expand the life insurance business in Vietnam that entailed the two companies exchanging experience and information about finance and life insurance. Finally, Vietnam’s Bien Dong Seafood signed contracts for the supply and development of fishery products with an American company (“US, VN firms sign investment deals,” Vietnam News, February 17 2016,

Vietnam’s southern Binh Dinh Province has declared its plan to attract more investments from foreign countries, especially in the tourism sector. Some of key planned projects include the Thi Nai complex, Tan Phung tourism complex, Tra O Lagoon project, and a five-star hotel. In 2016, the Province already has attracted nearly USD $1.8 billion dollars in FDI, mostly in industry and construction. This is a dramatic improvement since the Province only received USD $43 million dollars in 2015. The province also plans to implement some new measures to attract greater investment and more talented people (“Binh Dinh seeks investment,” Vietnam News, February 16, 2016,

*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.