MNCs in the News-2016-09-30

Responding to foreign business and government criticism about China’s investment environment and market access, Shen Danyang, a spokesperson for China’s Ministry of Commerce (MOFCOM), dismissed the concerns of foreign capitals and companies, saying the “foreign investment environment is not deteriorating” as shown by overall investment statistics as well as investment in particular sectors. Moreover, he added, foreign companies really are complaining because they no longer can rely on past preferential policies and low costs and feel pressure to come up with new ways to succeed. Beyond this, the Chinese government is “taking steps to make it easier for foreign investment” (Yanwen Chen and Sue-Lin Wong, “China Says Criticism of its Foreign Investment Environment is Biased,” Reuters, September 20, 2016,; Chen Xieyuan, “China Shrugs off Investment Concerns,”, September 21, 2016,

Two years after China banned the use of Microsoft Windows 8 on government systems, Microsoft is now working on “development of a customized operating system for Chinese government agencies and state-owned enterprises” (SOEs). The development is being done by Microsoft through a joint venture (JV) with China Electronics Technology Group Corp., a SOE. The 2014 ban allegedly was for security reasons, though some it had to do with Microsoft’s decision to stop providing support for Windows XP. Aside from this collaboration, Microsoft also recently signed an agreement to help the China Daily build a media presence in the global cloud (Zhang Erchi and Chen Na, “Microsoft Partners with Chinese Company to Create OS for Government,” Caixin, September 21, 2016,; Song Jingli, “Aided by Microsoft, China Daily Aim High by Moving to the Cloud,” China, September 21, 2016,

A MOFCOM, National Bureau of Statistics, and State Administration of Foreign Exchange report on Chinese OFDI (COFDI) reported that OFDI by Chinese financial institutions such as banks and insurance companies hit USD $24.4 billion in 2015, a 26 percent increase over 2014. 90 percent of this money, which is flowing from firms like Ping An Insurance and Anbang Insurance, went into foreign financial institutions. In 2015, total COFDI jumped 18.3 percent and ran approximately USD $145.7 billion, a record and the second largest OFDI total after the United States. 2015 was the first year that COFDI exceeded China’s inward FDI (Yawen Chen and Kevin Yao, “China Financial Outbound Direct Investment Surges 26 Percent in 2015,” Reuters, September 22, 2016,

For the first time, the amount of OFDI by Chinese private companies has exceeded that by SOEs, with private companies accounting for 65.3 percent of the total 2015 COFDI of USD $145.7 billion. Private firms also led in the number of overseas merger & acquisition transactions. Zhang Xiangchen, a deputy international trade representative at MOFCOM, stated “‘private companies have really become an important force in driving the growth of outbound investment.’” A lot of this COFDI had to do with more nimble private companies such as Huawei, HNA Group, and Wanda Group upgrading their technology, diversifying, and seeking new markets (Maggie Zhang, “Private Sector Leads China’s Offshore Investment Drive,” South China Morning Post, September 22, 2016, Lyu Chang, “ODI Led for First Time by Private Firms,” China Daily, September 23, 2016,

In August, China National Chemical Corp. (ChemChina) won approval from the US for its mega USD $43 billion purchase of Swiss Syngenta AG, which would make ChemChina the “world’s largest supplier of pesticides and agrochemicals.” Now, ChemChina is seeking approval from the European Union (EU) with the European Commission saying that it would issue its decision by October 28. While not commenting specifically on the ChemChina-Syngenta deal, EU Competition Commissioner Margrethe Vestager previously has expressed concerns to reporters about concentration in the agricultural sector and also has mentioned worries about “concentration in research and development, especially for plant protection products” (Aoife White, “ChemChina Seeks EU Approval for $43 billion Takeover,” Bloomberg, September 26, 2016,

Following the British government’s recent approval of a deal for the construction of a more than USD $23 billion reactor complex at Hinkley Point by a consortium involving EDF and the Chinese company, China General Nuclear Corporation (CGN) (which will provide a huge amount of financing), the relevant parties have signed a contract for the deal. The government approved the deal, imposing the condition EDF could not cede majority control of the project, and has touted the job creation and other economic benefits of the deal, though there are many who oppose the economics and environmental aspects of the deal (“China and Britain Sign Deal for Giant Hinkley Nuclear Plant, Defying Wave of Controversy,” South China Morning Post, September 30, 2016,

China and Thailand have failed to resolve a large number of issues relating to a major joint, roughly, 870 km railway project. Unsettled issues include project funding and project loan conditions. The two sides seemingly have come to terms regarding a USD $5.2 billion 250 km project within Thailand, with work to start on a 3.5km segment before the end of this year. But some sources say a deal has not yet been struck. The project is important for China’s regional connectivity plans and Thailand’s desire to improve relations with China and bolster its economy, but it is unclear if the project really can succeed operationally or in terms of financing (Michael Peel and Lucy Hornby, “China Regional Rail Venture Struggles to Gather Steam,” Financial Times, September 25, 2016)

Following Japanese Premier Abe Shinzo’s visit to Cuba, Chinese Premier Li Keqiang visited the island nation. The visit resulted in the conclusion of more than twenty bilateral agreements pertaining to economics, technology, finance, information communications, new energy, and industrial capacity cooperation. Miguel Diaz-Canel, Cuba’s first vice-president of the councils of state and ministers, “expressed his hope that China would continue to participate in Cuba’s social and economic development,” with the president of a Chinese think tank stating that Cuba needs Chinese “‘investment to support its economic upgrade’” and that Japan and the US had little chance of disrupting the relationship (Leng Shumei, “China, Cuba Ink 20 Deals on Li’s First Visit,” Global Times, September 25, 2016,

Following a report by Japan’s Fair Trade Commission (FTC) which revealed NTT Docomo, KDDI Corp., and Softbank Group were refusing to sell older surplus iPhone models to third party retailers, the Japanese government is planning to investigate Apple’s supply agreement with these firms since they could keep older phones out of the market, hobble the aforementioned firms’ smaller competitors, and allow the aforementioned three giants to control more than 90 percent of the Japanese mobile phone market. It is not clear exactly what action the Japanese government plans to take and Apple has avoided commented on the reported government action (Yoshiyasu Shida, “Exclusive: Japan’s Antitrust Watchdog Considers Action Against Apple, Carriers-Sources,” Reuters, September 23, 2016,

A delegation of Japanese business leaders met with China MOFCOM officials in late September to ask them to enhance the business environment for foreign companies. They called for easier procedures such as a One Stop shop for exiting China and also asked that China increase the transparency of its antitrust rules, which often seem different for Chinese firms. They also asked for China to “fight the unfair prevention of foreign players from making acquisitions in China, and even urged them to scrap the need for official approval when the company being bought is not very involved in the Chinese market” (Ryo Nakamura, “Japan Business Chiefs Seek Better Chinese Antitrust, Exit Rules,” Nikkei Asian Review, September 23, 2016,

“Indonesia plans to pursue Alphabet Inc.’s Google for five years of back taxes, and the search giant could face a bill of more than $400 million” for 2015 alone. Indonesian investigators have visited Google’s local office several times and made the case a criminal one. Google responds it has paid all required taxes with Indonesian authorities retorting Google has been booking in Singapore revenues it should book in Indonesia. More generally, Indonesia is seeking to impose taxes on internet companies not headquartered in Indonesia if they have a “network presence” to generate revenues that address the government’s severe budgetary shortfall (“Indonesia Pursues Google for Back Taxes,” Financial Times, September 19, 2016; “Google May Face over $400 million Indonesian Tax Bill for 2015,” The Star Online, September 20, 2016,$400-million-indonesia-tax-bill-for-2015; Herdaru Purnomo and Yudith Ho, Indonesia raids Google office after warning on tax audit refusal,” The Jakarta Post, September 30, 2016,

Indonesia’s pharmaceutical sector remains appealing to foreign companies since the government is eager to implement its universal healthcare scheme and, reflecting this, foreign pharmaceutical companies have already invested over USD $1 billion dollars in Indonesia over the past few years. According to an International Pharmaceutical Manufacturers Group (IPMG) representative, foreign investors in Indonesia’s pharmaceutical industry have been willing to absorb high upfront costs because they anticipate long-term benefits. For example, Merck, a U.S. pharmaceutical company, is investing in an expansion of its Indonesian unit’s capacity which will lead to a doubling of its production capacity by (“Foreign Investment in Indonesia's Pharmaceutical Industry,” Indonesia Investments, September 30, 2016,

According to the Malaysian Investment Development Authority, Malaysia registered RM 88.4 billion investments in the first half of 2016, a decrease of 29.8 percent versus the same period last year. Of the total, nearly 32 percent (RM 28.2 billion) came from FDI. Malaysia’s International Trade and Industry Minister, said: “With our strong fundamentals, Malaysia remains on a steady economic growth path. We continue to attract foreign direct investments (FDI) in quality projects in new growth areas and emerging technologies.” The largest sources of FDI geographically were the UK (RM 2.07 billion), China (RM 1.58 billion), and Korea (RM 1.52 billion) (Heidi Vella, “Malaysia attracts $21.4bn of investments in ‘emerging technologies,” Tech Wire Asia, September 27, 2016,

In tandem with the growing attention to tax collections in Southeast Asia, Thailand expects to publish stricter tax collection rules for internet and technology firms like Alphabet’s Google. According to the director general of Thailand’s Revenue Department, Prasong Poontaneat, the government has a special committee that has been discussing this issue over the past two months. American investors warned higher taxes may decrease FDI. Besides Thailand, other countries are on the move. For example, Indonesia is investigating Alphabet’s Google for five years of back taxes which may subject Google to a tax bill of more than $400 million U.S. dollars (“Another Country Is Considering a Tax Crackdown on Tech Firms, Fortune, September 26, 2016,

Vietnamese Prime Minister Nguyen Xuan Phuc told managers of 16 top investment funds Vietnam “might allow foreign investors to hold a stake exceeding the current cap of 30 per cent of domestic banks” [foreign strategic investors are collectively allowed to own only 20 percent]. At present, foreign investors find these caps limit their ability to influence their investments. Phúc added Vietnam would create “‘the most advantageous conditions ever” for foreign funds to invest in local firms, and it would recommend potential banks for investments.’” Beyond this, it would “assure macroeconomic stability, especially monetary stability, to facilitate foreign investment in’” Vietnam (“Foreign Ownership Cap for Banks May Increase,” VietNam News, September 20, 2016,

Vietnam plans to divest 12 large SOEs before the end of 2017. Vinamilk, Vietnam’s largest milk producer in which the government has a 44.7 percent stake and has a market value around USD $4.2 billion, is on the list. Many foreign investors from Japan, the U.S., and Europe have expressed interest, with Thai Beverage seen as an especially strong candidate, though another Thai company, Fraser & Neave, also seems interested. Investors would view a successful sale of Vinamilk as a positive sign given the Vietnamese government’s “stuttering partial-privatization drive, missed targets, red tape, contradictory signals, and allegations of vested interests’” (“Vietnam Plans Vinamilk Stake Sale for US$900ml,” The Star Online, September 22, 2016, Khuyen Bul, “Thai groups eager to purchase shares of 12 big SOEs in Vietnam,” VietnamNet, September 27, 2016,

*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.