MNCs in the News-2016-08-19

Recently, foreign business groups sent a letter to Chinese Premier Li Keqiang expressing concern about China’s cybersecurity law which has what they believe are onerous regulations pertaining to data storage, security reviews, and data sharing in regards to criminal and anti-terrorism investigations. China’s Foreign Ministry said the law “will not be used to ‘carry out differential treatment and will not create obstacles and barriers for international trade and foreign businesses investing in China.’” It said China would allow data to be sent outside China “after it passed a security evaluation” and rejected the notion its data sharing rules were unconventional (“China Says Cyber Rules No Cause for Foreign Business Concern,” Reuters, August 18, 2016, http://www.reuters.com/article/us-cyber-china-business-idUSKCN10S0DG)

During a visit to China, Tim Cook said Apple would “set up a research and development center,” “‘strengthen relationships with local partners and universities…to support talent development,’” “step up its investments,” and “be an active part in promoting the country’s smart manufacturing and Internet Plus strategy.” Apple also plans to “add more China-specific features to its mobile operating system,” and help Chinese apps go global. The firm has made all of its China final assembly sites zero waste, too. Apple’s initiatives come at a time when its China phone sales are declining and it is facing a tougher political environment (Ma Si, “Apple Mulls R&D Center,” China Daily, August 17, 2016, http://europe.chinadaily.com.cn/business/2016-08/17/content_26510037.htm; Paul Cartsten, “Apple to Boost China Investments as Demand Slows,” Reuters, August 18, 2016, http://www.reuters.com/article/us-apple-china-idUSKCN10R14G; “Apple Goes Green, Company Commits to Zero Environmental Waste in China,” China Daily, August 18, 2016, http://europe.chinadaily.com.cn/business/2016-08/18/content_26519366.htm)

China’s Ministry of Commerce (MOFCOM) say “it was entitled to investigate whether the merger deal between Didi Chuxing and the China unit of Uber Technologies raised any anti-trust issues.” At a minimum, it said the companies needed to file an application for the merger if their revenues reached a certain amount. MOFCOM did not said it would undertake an investigation, but it could do one not only if the merger resulted in a monopoly, but also had the potential to create one. MOFCOM said no application had been filed while Didi said no application was needed given the firm’s revenues (Meng Jing and Zhong Nan, “Didi-Uber Merger Eyed by Watchdog,” China Daily, August 18, 2016, http://europe.chinadaily.com.cn/business/2016-08/18/content_26514050.htm)

Reacting to Australia’s decision to stop the sale of AusGrid to Chinese firms due to national security concerns, MOFCOM spokesman Shen Danyang said “‘this is the second time this year the Australian government has made decisions to block Chinese applications to conduct business investment in Australia.” MOFCOM said that Australia’s action “‘will severely hurt Chinese enterprises’ enthusiasm in investing in Australia.’” Shen further stated, China “‘hopes Australia’s government works to create a fairer, better, and more transparent trade and investment environment for Chinese enterprises.’” The other deal that was recently blocked was a Chinese-consortium’s attempt to buy Kidman & Company (“Australia Warned over Grid Deal Block,” China Daily, August 18, 2016, http://europe.chinadaily.com.cn/business/2016-08/18/content_26519375.htm)

In Beijing, Ali Tayyebnia, Iran’s Economic Affairs and Finance Minister, said his country “welcomes Chinese investment in non-oil sectors and hopes to “‘maintain an active role’ in the Belt and Road initiative.” Tayyebia added “‘Iran is willing to expand all-out relations with China in the post-sanction era” and also that “‘Iran has identified projects for Chinese investment both for the land and maritime Silk Roads. We hope to start discussions on those projects as soon as possible.’” Tayyebia touted China as an important market and Iran as an important resource supplier. He also touted Iran’s location and educated work force (Liu Caiyu, “Iran’s Non-Oil Sectors Open Up to Chinese,” Global Times, August 17, 2016, http://www.globaltimes.cn/content/1001105.shtml)

After imposing penalties against Audi Volkswagen Korea and a whistleblower’s claim that cheating on emissions and noise level tests is rampant among the imported car industry in Korea, Korea’s Ministry of Environment will undertake an independent investigation of over 100 different car models equipped with Euro 6-engines. It is unclear if the Ministry of Environment has the authority to conduct an investigation but it claims there is no problem with it comparing certification documents. The aforementioned investigation against Volkswagen led to the revocation of licenses on more than 80,000 VW and Audi cars sold in Korea between 2009 and 2016 (Jung Suk-Yee, “Korean Government to Wider Emission Test Probe to All Foreign Car Brands,” BusinessKorea, August 19, 2016, http://www.businesskorea.co.kr/english/news/industry/15600-expansion-inv...)

The Seoul Central District Prosecutors’ Office called Volkswagen Korea Managing Director Thomas Kuehl to interviewed him about charges Volkswagen Korea “illegally changed parts of the Golf 1.4 TSI” to obtain approval from the Korean government regarding its emissions performance. It previously grilled Johannes Thammer, the chief of Audi Volkswagen Korea. Thammer denied the charges while Kuehl stated that, “‘I am very sorry for the situation, and I apologize to our customers in the Korean public.’” Earlier, Korea’s Ministry of Environment “banned sales and revoked certifications for 80 Volkswagen models in the country” and imposed a fine of USD $16 million (“Seoul Prosecutors Summon Volkswagen Korea Executive over Emissions Scandal,” Korea Times, August 18, 2016, http://www.koreatimes.co.kr/www/news/nation/2016/06/116_206826.html)

Korea’s Fair Trade Commission (FTC) has concluded that “Google Korea’s preloaded apps and subsidies for search ads to do not constitute any abuse of market dominance.” It was hard for it to do otherwise when its search share was 2-8 percent between 2008 and March 2016 versus 70 percent or so and 15-19 percent for the two top search apps, Naver and Daum Kakao. In contrast to the European Union, Korea’s FTC found the search ad subsidies Google paid to mobile carriers to be relatively insignificant and thus having no meaningful impact on market competition (Cho Jin-Young, “FTC Acquitted Google of App Preloading in South Korea,” BusinessKorea, August 12, 2016, http://www.businesskorea.co.kr/english/news/ict/15534-different-conclusi...)

Korea’s National Geographic Information Institute (NGII) announced the South Korean government is “working on a manual to respond to global companies’ request for detailed map information.” Choi Byung-nam, NGII Director-General, noted “‘South Korea currently has no system to respond to [Google map data requests] along with various issues such as controversies as to taxation and place names…including the wrong naming of Dokdo and East Sea in Google map services.’” The government also plans to convey a national council meeting to discuss the national security implications of supplying map data as well as the unification of currently inconsistent government ministry practices (Cho Jin-Young, “Korean Government Working on Measures to Deal with Map Data Submission,” Business Korea, August 16, 2016, http://www.businesskorea.co.kr/english/news/ict/15558-map-data-korean-go...)

Iskandar Malaysia keeps attracting investors, securing USD $69.56 billion from 2006 to June 2016, of which 51 percent has been realized and 40 percent of the committed total, according to Prime Minister Datuk Seri Najib Tun Razak, coming from foreign investors. Najib said the government will continue to support Iskandar Malaysia and noted that the country’s first economic growth corridor was the best model of partnership involving the public and private sector. From 2006 until this year, the top five foreign investors in Iskandar Malaysia have been China, Singapore, the United States, Japan, and Spain (“Investors show strong interest in Iskandar Malaysia,” Asiaone Business, August 15, 2016, http://business.asiaone.com/news/investors-show-strong-interest-iskandar...)

Vietnam has attracted a high amount of registered foreign investment over the past few years, but its realization of foreign investment has been poor. According to Vietnam’s Foreign Investment Agency (FIA), total registered FDI volume ran a startling USD $71.72 billion in 2008, dramatically higher than the amounts recorded for 2007 ($21.34 billion) and 2008 ($21.48 billion). However, actual FDI has only run $15 billion per annum. Moreover, only three of the seven biggest projects licensed in 2008 have managed to make significant progress with many multiple billion dollar projects stalled and some in danger of having their licenses cancelled (“FDI records misleading at best, meaningless at worst,” Vietnam net, August 18, 2016, http://english.vietnamnet.vn/fms/business/162245/fdi-records-misleading-...)