MNCs in the News-2016-06-17

According to China’s Ministry of Commerce (MOFCOM), IFDI in May declined 1 percent YOY. In contrast, in April, China’s IFDI grew by 6 percent YOY. For the first five months of 2016, non-financial IFDI, which totaled USD $54.2 billion, rose 3.8 percent YOY. The service sector attracted IFDI worth $38.2 billion, 70.4 percent of the total. IFDI in manufacturing declined by 3.2 percent. In terms of IFDI sources, FDI from the U.S. and Great Britain soared over the same five-month period YOY. There also was a small increase in investment from countries involved in China’s One Belt, One Road initiative (“China’s FDI Inflows down 1% in May,”, June 12, 2016,

At a recent meeting of the China-German Economic Advisory Committee, at which German chancellor Angela Merkel was present, Chinese Premier Li Keqiang stated “‘in the future, China will continue to ease market access and take more measures to provide more and greater opportunities for investors.” He added that “China will continue to improve the intellectual property rights protection system, enhance law enforcement efforts and better protect the rights of enterprises, researchers and the public.” Chinese and German attendees at the meeting also exchanged views on how the two sides might cooperate in intelligent manufacturing, trade and investment, and so on (“China to Provide More Opportunities for Investors: Premier Li,” China Daily, June 15, 2016,

On her ninth trip to China, German Chancellor Angela Merkel raised the issue of the importance of China having an independent judiciary and establishing a “level playing field for foreign firms.” In regards to the former, Merkel stressed the importance of transparency. Connecting the issues of an independent judiciary and level playing field, Merkel stated, “‘As we see it, a legal framework for companies also has to be designed in such a way that foreign companies enjoy the same rights and privileges as domestic companies, for example as regards public tenders, the effective protection of brands and patents and data’” (Ben Blanchard, “Germany’s Merkel Pushes Rule of Law, Market Access in China,” Reuters, June 12, 2016,

XpressWest, a private American firm, unilaterally terminated its partnership with China Railway International (CRI), a consortium involving China Railway Construction Corp., China Railway Rolling Stock Corp. and others, to build a high-speed rail line connecting Las Vegas and Los Angeles. The two sides planned to start the line this fall with an initial investment of US $100 million. CRI, which views the action as a violation of its cooperation framework agreement as well as a bad faith gesture given the two sides ongoing negotiations, said it was awaiting an explanation. CRI also charged XPressWest with added new demands during negotiations (“US Firms Terminates High-Speed Rail Contract with China,”, June 9, 2016,; “China Railway Calls XpressWest Breech of Contract ‘Mistake,’”, June 11, 2016,; Zhong Nan, “High-Speed Trail Deal in US Derailed,” China Daily, June 11, 2016,

China National Chemical Corp. (ChemChina) and Syngenta AG, a Swiss agrochemicals company, have resubmitted their US $43 billion deal, pursuant to which ChemChina will buy Syngenta, to the American Committee on Foreign Investment in the U.S (CFIUS). The new submission to CFIUS not only restarts the review process but, according to one interviewed attorney, likely means that “‘there are ongoing mitigation discussions’” pursuant to which the terms of the deal will likely have to be modified. Still it is not entirely clear what is the reason for the refiling or when the refiling took place (“ChemChina Seeks More Time for US Review,” China Daily, June 16, 2016,

200 South Korean investigators descended on the headquarters of Lotte Group, a “South Korean-Japanese retail titan,” as well as locations such as the home of group Chairman Shin Dong-bin to search for materials pertaining to an alleged multi-billion won slush fund created through intragroup transactions. The fund putatively was used, among other things, to bribe government officials for construction permits and special policies. Lotte Korea said it was cooperating fully with prosecutors. The raid led Lotte Chemical to terminate a takeover bid for US chemicals maker Axiall and may cause a delay in the initial public offering of Hotel Lotte (Koichi Kato, “Lotte Group Raided over Slush Fund Claims,” Nikkei Asian Review, June 11, 2016,

In conjunction with talks in Seoul, South Korea’s Ministry of Trade, Industry, and Infrastructure said South Korea and Azerbaijan had agreed to expand economic cooperation. Specifically, the two countries discussed ways to enhance investment and trade, and assist more South Korean companies to engage in infrastructure projects in Azerbaijan. Azerbaijan, a country with rich natural resources, is working on an intelligent transportation system between Baku and Sumgait, three subway lines in Baku, and a construction of a transnational express highway. Korea’s Vice Trade Minister expected “South Korea’s advanced industrial plant technology and Azerbaijan’s abundant resources will create higher value-added products” (“Korea, Azerbaijan agree to expand economic cooperation,” The Korea Herald, June 14, 2016,

The South Korean government plans to reorganize the overseas business of government-run energy companies and clean up less viable companies so that their financial soundness and management efficiency is improved. The Korea National Oil Corporation, the Korea Gas Corporation, and the Korea Resources Corporation are engaged in 37 resource exploration projects and 54 resource development and production projects abroad, most of which were initiated by the previous government and imposed heavy debt burdens on those companies. In addition, the government plans to move rapidly to adjust the inefficient business structures, e.g., illogical non-specialized project allocations, and practices of such companies (Jung Min-hee, “Korean Government to Tidy Up Public-sector Energy Companies,” Business Korea, June 15, 2016,

Indonesia and Japanese oil giant Inpex reached a deal on the multi-billion dollar Masela onshore liquefied natural gas (LNG) plant, which may bring more new opportunities for Japanese business to invest in Indonesia. According to Inpex Indonesia’s vice president for corporate services, the project is symbolic for both countries. Japan has been facing uncertainty in Indonesian after it lost a high-speed rail contest with China and in the face of increasing China’s investment in Indonesia. However, Indonesia and Japan kept working together to these setbacks behind them and, as a result, Japanese investors are again enthusiastic about investing in Indonesia (Dewanti A. Wardhani, Ina Parlina and Tama Salim, “New dawn for Japan-RI business ties,” The Jakarta Post, June 15, 2016,

A survey by the Mizuho Research Institute shows Japanese companies rank Vietnam as a top favored investment destinations among Association of Southeast Asian Nations (ASEAN). Compared to last year, Japanese firms’ confidence in Vietnam increased by 4.9 percent. Nearly 13 percent of the respondents said they would choose Vietnam as their first ASEAN investment destination. A Japan External Trade Organization(JETRO) survey showed more than 60 percent of Japanese companies expressed their willingness to continue expanding their business in Vietnam. Aside from growth and increased profit opportunities, Japanese companies see Vietnam as a good investment location because of its ASEAN membership (“VN top Japan investment locale,” Vietnam News, June 14, 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.