MNCs in the News-2017-04-07


In an official statement, China’s State Council noted it had authorized the creation of seven new free trade zones (FTZs). The addition of Chongqing municipality and the provinces of Henan, Hunan, Liaoning, Sichuan, Shaanxi, and Zhejiang will bring the total number of FTZs in China to 11. The FTZs carry “strategic importance in terms of opening up and reform, cutting bureaucratic red tape, and exploring financial innovation.” The State Council’s action came almost four years after the launch of China’s first FTZ in Shanghai (“More Free Trade Zones to Start Operation on April 1,” China Daily, March 31, 2017,

At a meeting with foreign businesses in Beijing, China’s State Administration of Foreign Exchange (SAFE), China’s foreign exchange regulator “asked for cooperation from multinationals…to manage and control the flow of capital out of the country.” China says it is not imposing new constraints, but rather just “implementing existing rules and regulations.” Firms and their industry associations complain that China’s controls are not solely influencing capital account transactions, but current account transactions as well (Wendy Wu, “China Urges Foreign Firms to Make ‘Joint Efforts’ to Control Flow of Capital Out of the Country,” South China Morning Post, April 6, 2017,

Prior to United States (US) President Donald Trump’s recent meeting with Chinese President Xi Jinping, Liu Binjie, “a senior parliamentarian with knowledge of China’s dialogues with Google,” said “Google’s chances of re-entering China could be scuppered if Donald’ Trump’s talks with President Xi go badly.” In 2010, Google stopped offering search services in China because of its unwillingness to block certain searches. Still, Google offers advertising services to Chinese clients, has a research presence in China, and its translate app is available in China (Yuan Yang, “Google’s China Prospects Rest on Trump, Says Chinese Official,” Financial Times, April 7, 2017)

European Union (EU) regulators have approved China National Chemical Corporation’s (ChemChina)’s massive USD $40 billion plus acquisition of Syngenta. The purchase, the largest ever for a Chinese firm, is geared to enhance China’s agricultural productivity, reduce domestic suspicions about domestic food supplies, and give China higher-value added agricultural products (e.g., genetically modified seeds) it can market abroad. As part of signing off on the deal, EU regulators obligated the merged company to sell “substantial parts of its European businesses” (Amie Tsang, “China Moves a Step Forward in Its Quest for Food Security,” The New York Times, April 5, 2017,

“The Trump administration is so alarmed Chinese investors may try to purchase Westinghouse Electric Co.’s nuclear business that” it is seeking to find an American or allied buyer for the company. Westinghouse has long been an object of Chinese interest, but the issue has risen anew with Toshiba’s, the parent company of Westinghouse, financial problems and plan to sell Westinghouse. If needed, American officials may even take a more dramatic action like a direct equity stake in Westinghouse (Jennifer Jacobs, Saleha Mohain, and Jennifer A. Dlouhy, “Trump Team Takes Steps to Keep Chinese from Westinghouse,” Bloomberg, April 5, 2017,

Another transaction raising concerns besides the forthcoming sale of Westinghouse is Sibanye Gold Ltd.’s, a firm owned in part by Chinese state-owned enterprises, planned USD $2.2 billion acquisition of Stillwater mining Co., a Montana based firm that “is the sole U.S. source of platinum and palladium,” both which the US Defense Logistics Agency labels strategic materials. Some believe the deal will go forward, but others are not so sanguine given the presence of “anti-China” individuals in the administration and Trump’s America First doctrine (David McLaughlin, “Montana Mines to Test Trump Team’s Appetite for China Deals,” Bloomberg, April 8, 2017,


The amount of foreign acquisitions carried out by Japanese businesses reached a new record of USD $97.9 billion by the end of fiscal year 2016. Unfavorable economic conditions in Japan have driven Japanese companies, even some with little experience in international acquisitions, to seek opportunities overseas, especially in Europe and the US. However, the percentage of companies with successful foreign mergers and acquisitions (M&A) is about 20 percent, relatively low. A good example of a problematic M&A is Toshiba’s purchase of Westinghouse (“Japan Inc.'s overseas acquisitions hit record,” Nikkei Asian Review, April 3, 2017,

The Iran-Japan Investment Treaty, which was signed in 2016 in Tokyo, will take effect on April 26. The treaty is designed to protect the investments of Japanese companies in Iran across various business sectors including natural gas and petroleum and to enhance relations between the two countries by promoting closer economic cooperation. Earlier, a source at the Japanese Ministry of Economy, Trade and Industry commented that “[t]he treaty is seen as a tailwind for Japanese companies considering investments” (“Iran-Japan investment protection agreement to enter into force late-April,” Financial Tribune, April 3, 2017,


South Korea’s decision to deploy the Terminal High Altitude Area Defense (THAAD) system continues to sour Sino-Korean relations. Business between the two countries is hurting in all sectors, but retail chains, auto manufacturers, and tourism have been hit the hardest. South Korean retailer Lotte Group has had 75 percent of its Chinese stores closed and its online listings are disappearing from Chinese websites. Travel agencies are experiencing falling demand for travel packages and flights between both countries (Coco Feng and An Limin, “South Korea, China Business Can’t Find Cover in Spat Over Missile Defense,” Caixin Global, April 5, 2017,

On the auto front, the deployment of THAAD has contributed to a combined 52 percent decline in Hyundai and Kia Motors’ sales in China. Kia Motors has since reduced production in its Chinese manufacturing plants and Hyundai has cut a production shift at three of its Beijing factories, as well as suspending output at a fourth in Hebei province. The sales slump comes amid a slight global decline in auto demand, stiff Chinese competition, and falling popularity for the South Korean automakers’ sedan models (Hyunjoo Jin, “South Korean automakers cut China production amid missile dispute,” Reuters, April 4, 2017,


A consortium of Chinese and Indonesian companies has recently signed a contract with KCIC, a company tasked with “monitoring the high-speed train project linking Jakarta to Bandung,” launching the construction phase of the project. The KCIC President Director was “optimistic about negotiations with the China Development Bank (CDB)” on credit worth USD $4.7 billion to partly finance the project. Indonesia’s Presidential Chief of Staff said that this project would become “the cornerstone for Indonesia's train modernization.” The project is expected to be completed in 2019 (“Contract on building high-speed train project signed in Indonesia,” China Daily, April 5, 2017,

Afghan President Ashraf Ghani has recently visited Indonesia, during which he encouraged Indonesian business leaders to invest in Afghanistan. He mentioned that the government seeks to improve the infrastructure, including highways, railroads and transit routes in order to facilitate import and export. Although Indonesian businessmen have shown interest in this opportunity, they also expressed their concerns regarding the security in the country. In response, the President assured all potential investors this is his government’s top priority (Nasir ahmad sadiqi, “President Ghani assures security to Indonesian investors,” Pajhwok Afghan News, April 7, 2017,


A “tier-one aerospace manufacturer,” allegedly from the US, plans to invest in Malaysia, contributing to high-income job creation and benefiting local small and medium enterprises (SMEs). The investment would advance the government’s “Aerospace Industry Blueprint 2015-2030 road map, launched in 2015,” with the goals being “very achievable” given the projection for future Boeing and AirBus orders. To ameliorate Malaysian concerns about potentially uncertain investment flows following Trump’s election, US ambassador Kamala Shirin Lakhdhir stressed that US companies in Malaysia make autonomous decisions “according to the commercial environment” (David Tan, “Tier-one aerospace firm to invest in Malaysia,” April 3, 2017,

India and Malaysia have signed pacts for deals with a value of USD $36 billion, with the lion share of the projects being carried out in Malaysia. According to India’s commerce ministry, Malaysian and Indian companies from business sectors including infrastructure, engineering and oil witnessed the signing process. Various Indian companies signed memorandums of understanding with Malaysian industries for investment, with one of the most noteworthy agreements being the development of “an integrated maritime city on Carey Island, southern Malaysia,” worth USD $23 billion (Shuriah Niazi, “India, Malaysia sign $36B in investment deals,” April 4, 2017,


Belgium’s Chief of Cabinet has declared Belgium’s Rent A Port, a partner in Vietnam’s Dinh Vu Industrial Zone (DVIZ) Joint Stock Company, to be ramping up investment and development of green energy projects in Hai Phong. The DVIZ has pulled in over USD $3 billion from more than 70 MNCs since it began operation in Vietnam two decades ago. To continue green initiatives, Rent A Port is partnering with the city of Hai Phong in pioneering wind-powered water treatment facilities and renewable energy sources with initial investments from Belgium (“DVIZ targets green development,” bizhub, April 7, 2017,


Lindsay Murdoch, “Kingsgate seeks compensation from Thailand over Chatree mine closure,” The Sydney Morning Herald, April 4, 2017,

“Alibaba still in talks to set up logistics hub for South East Asia in Thailand,” Thailand Business News, April 4, 2017,


“Singapore visa issue may hurt future deals for IT companies like TCS, Infosys: Nasscom,” Economic Times, April 3, 2017,

Neil Chenoweth, “Singapore slug: BHP and Rio Tinto's tax bills have reached $1.9b,” AFR Weekend, April 6, 2017,


Moe Myint, “Govt to Announce Foreign Investment Details,” The Irrawaddy, April 4, 2017,

Steve Gilmore, “Is foreign investment really stalling in Myanmar?” Nikkei Asian Review, April 7, 2017,

*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.