MNCs in the News-2016-07-08

Foreign media have been calling attention to the balancing act that Apple, which derives a substantial amount of revenue and profits from China, faces in the Middle Kingdom. First, Apple reportedly has given the Chinese government greater access to customer data while concurrently resisting the efforts of the US government to gain more information. Second, it is making massive investments in Chinese ventures like Didi Chuxing, solar power, and Apple stores even while the government shut down Apple’s iMovies and iBooks services, Beijing banned sales of the iPhone 6, and an obscure company won an iPhone trademark suit against it (“Apple Faces China Conundrum, Led by Privacy Concerns,” Nikkei Asian Review, July 7, 2016, http://asia.nikkei.com/Business/Companies/Apple-faces-China-conundrum-le... “China Keeps Squeezing Apple,” The Wall Street Journal, July 7, 2016, http://www.wsj.com/articles/china-keeps-squeezing-apple-1467911148)

At the beginning of July, Walmart workers at its China stores in Chengdu, Harbin, and Nanchang went on a walkout strike to protest the company’s “new working-hour system,” which, according to one reporter, was a “unprecedented bout of nationwide co-ordination by workers” which has “realized the Communist party’s fear of coordinated cross-country labor unrest.” The worker action reportedly benefitted from the existence of more than 40 Walmart WeChat groups with an aggregate membership of 20,000 members. The workers reject the All-China Federation of Trade Unions, China’s official union, as “apathetic to their cause” and supportive of Walmart rather than them (Yuan Yang, “Walmart Workers Launch Wildcat Strikes Across China,” Financial Times, July 7, 2016)

Prior to the G20 Trade Ministers’ meeting in Shanghai, Lord Price, Great Britain’s Trade Minister, stated the post-Brexit decline of the pound meant “‘there has never been a better time to invest in the UK.’” He also reassured key investors in the United Kingdom (UK) like Huawei and China General Nuclear. Lord Price also touted that there will be some good opportunities for China and the UK to renegotiate their trade deal given the warm relations between the two countries at this point in time. Chinese analysts were not sure a trade deal with the UK would be a priority (Charles Clover, “UK Trade Minister Tempts Chinese Investors with Falling Pound,” Financial Times, July 7, 2016)

While there have been some frictions in Sino-Burmese investment relations of late, Chinese investments in Myanmar continue to move forward. The Chairman of China Road and Bridge Co., Ltd. (CRBC) Wen Gang recently announced his company had won a bid, possibly worth more than $600 million, from Myanmar’s Ministry of Construction for two road projects in the Greater Mekong Subregion. The road is the first government project awarded to Chinese companies since the new government came to power and will be important for southern Myanmar’s East-West Corridor Belt, to connect the country to Thailand, and for the country’s economic development (Zhong Nan and Jing Shuiyu, “CRBC on Road to Deals in Myanmar,” China Daily, July 8, 2016, http://www.chinadaily.com.cn/business/2016-07/08/content_26011138.htm)

Britain’s affirmative vote to leave the EU is forcing Japanese financial institutions with operational bases in London to consider the implications of the decision for their EU activities. At present, Japanese financial institutions in the UK with a license are allowed, under a so-called passport system,” to freely operate in all other EU member states. But this may no longer be the case with Brexit. Japanese firms will look at Frankfurt, Paris, and elsewhere, but each of these other locations has its own shortcomings. Moreover, UK exit negotiations with the EU may allow for a continuation of the current system (“Brexit Foreign Japanese Financial Companies to Rethink Europe Strategies,” Nikkei Asian Review, July 4, 2016, http://asia.nikkei.com/Business/Trends/Brexit-forcing-Japanese-financial...)

After the massacre at a restaurant in Dhaka that targeted foreigners and led to the death of 7 Japanese, Japan’s Fast Retailing Co., which is the owner of Uniqlo, has decided to suspend all but critical travel to Bangladesh and “has told employees there to stay home.” At present, Uniqlo has 10 staff in the country. Some wonder if the attack will cause major retailers with a presence in Bangladesh to shift to other countries such as Cambodia or Sri Lanka. This would have major implications for Bangladesh which relies on textiles for a huge amount of exports and jobs (“Uniqlo Suspends most Bangladesh Travel as Attach Rattles Garment Industry,” Nikkei Asian Review, July 4, 2016, http://asia.nikkei.com/Business/Companies/Uniqlo-suspends-most-Banglades...)

The South Korea government launched a probe into Ford Motor Co.’s sport utility vehicle (SUV) Explorer, which is one of the most popular SUVs among imported vehicles in Korea, because of safety concerns caused by the possible leakage of exhaust fumes inside the car. The investigation came after the US National Highway Traffic Safety Administration investigated Ford over similar issue. A Korean Ministry of Land, Infrastructure and Transport official said even if there were no specific guidelines the Ministry would require to recall on the SUVs if the smell disturbs driving and causes safety concerns (Chun Jung-hong and Chun Beom-joo, “Korea Launches Probe into Ford Explorer For Possible Exhaust Fume Leak,” Pulse, July 8, 2016, http://pulsenews.co.kr/view.php?sc=30800021&year=2016&no=490807)

Recently GM Korea has been plagued by a series of corruption, hiring/promotion, and public image woes. For instance, Korea’s Department of Special Investigation of the Incheon District Prosecutor’s Office recently arrested and charged two former GM executives with accepting bribes from suppliers. The Prosecutor’s Office also has launched an investigation based on allegations that union officials took bribes in return for helping shifting temporary workers from GM Korea subcontractors to regular employees in GM Korea. GM Korea also is under attack for selling cars in Korea that have fewer transmission and airbag features than similar models sold in the US (Huh Sung-Soo, “GM Korea Hiring Regular Workers in Return for Money,” Business Korea, July 1, 2006, http://www.businesskorea.co.kr/english/news/industry/15105-corruption-sc...)

Since September last year, the Indonesian government has issued 12 economic policy packages to improve the business climate and attract investment including by cutting red tape and providing incentives for some sectors. As of May 2016, it had completed 194 of the total 203 regulations required to support the packages. The Indonesian Chamber of Commerce and Industry (Kadin) chairman has urged the Indonesian government to immediately issue regulations that would allow its 12 economic stimulus packages to be fully implemented. Kadin did, though, praise the three-hour licensing services for new investors and the government’s revision of the negative investment list (“Govt urged to issue regulations to support stimulus packages,” The Jakarta Post, July 8, 2016, http://www.thejakartapost.com/news/2016/07/08/govt-urged-to-issue-regula...)

The increasing number of projects by South Korean investors in recent years is seen as the third FDI wave in Vietnam, though there are differences between the third wave and former ones in the 1990s and 2000. In the past, investors poured money into the manufacturing sector while nowadays they see Vietnam as a appealing consumer market, which is not surprising given the popularity of Korean auto brands such as Kia and Hyundai and Korean food brands. Korean investors also have expanded their investments into areas where Vietnamese enterprises have a competitive edge like cinemas (“The third wave of South Korean investment in Vietnam,” Vietnam net Bridge, July 4, 2016, http://english.vietnamnet.vn/fms/business/159573/the-third-wave-of-south...)

*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.