MNCs in the News-2018-01-19

China

Recently, Marriott International fell afoul of the Chinese government for listing Hong Kong, Tibet, and Taiwan as separate countries in a survey sent to Chinese members. Following this investigations of Delta Airlines, Medtronic, and Zara revealed these foreign companies also made similar types of errors on their websites. Chinese government agencies such as the Ministry of Foreign Affairs, Shanghai Cyberspace Administration, and Civil Aviation Administration of China urged foreign companies to respect China’s sovereignty and territorial integrity and/or to correct content on their websites and issue apologies (Xing Yi, “Firms Told to Respect Sovereignty,” China Daily, January 13, 2018, http://www.chinadaily.com.cn/a/201801/13/WS5a5947f3a3102c394518ef0e.html)

The Shanghai Consumer Council has formally requested that Apple to explain the “slow-down of older iPhones after an IOS update.” It also “demanded...remedy measures as well as complete information.” Last month, Apple apologized for the slow-down of older Phones with older batteries following consumer complaints and some investigations. To defuse the situation somewhat, Apple said it would cut the price of out-of-warranty iPhone battery replacements. The Shanghai Consumer Council also announced that complaints about Apple products and services jumped to 2,615 in 2017 versus 964 in 2015 (“Shanghai Consumer Council Demands Apple’s Explanation over Slow-Down,” China Daily, January 16, 2018)

In a statement, China’s Ministry of Commerce (MOFCOM) reported China’s non-financial outward foreign direct investment (FDI) totaled USD $120 billion in 174 countries and regions last year. This represented a dramatic 29.4 percent drop year-over-year (YOY). Still outward FDI (OFDI) jumped 49.4 percent in December YOY. The fact there were no new project in entertainment, property, or sports the last two months seems to be behind a MOFCOM official trumpting “‘irrational investment has been curbed.’” MOFCOM also reported that Belt and Road outward FDI hit $14.36 billion (“China Outbound Investment Drops 29.4% in 2017,” China Daily, January 16, 2018, http://www.chinadaily.com.cn/a/201801/16/WS5a5dab1ea3102c394518f95c.html)

In response to certain members of the United States (US) Congress urging American telecommunications firm AT&T to cut ties with Chinese telecom equipment company Huawei Technologies because of potential surveillance risks, China’s Ministry of Foreign Affairs stated “the Chinese government always encourages Chinese enterprises to carry out foreign investment and cooperation in accordance with market principles, international rules, and local laws,” adding that “‘we hope that relevant countries will level the playing field and create a more favorable environment for Chinese enterprises’” (Chen Wenhua, “Ministry Urges US to Ensure Level Playing Field for Firms,” China Daily, January 18, 2018, http://usa.chinadaily.com.cn/a/201801/18/WS5a5fd7bea310e4ebf433e664.html)

Japan

Mexico’s state-owned oil provider Pemex has chosen Japan’s Mitsui Group as a partner on its USD $2.6 billion coking plant. The global downturn in oil prices has caused the Mexican government to seek foreign partners to finance key state projects. For the coking plant, Pemex will fund USD $1.24 billion, but will look to Mitsui to aid in the balance of the project’s financing. Mitsui and Pemex are still negotiating details of the partnership, but the plant is expected to be completed by 2021 (“Mexico’s Pemex picks Mitsui to complete Tula coking plant,” The Japan News, January 17, 2018, http://the-japan-news.com/news/article/0004185731)

Japanese carmaker Mitsubishi Motors Corp. has signed a memorandum of understanding (MoU) with the Vietnamese government to develop and market electric vehicles (EVs) in Vietnam. Mitsubishi and the Vietnam Industry Agency will jointly work on researching and implementing programs to introduce EVs and EV related infrastructure within Vietnam. Vietnam’s rapid economic development has pushed Hanoi to address air pollution and environmental degradation issues and turn to EVs and plug-in-hybrid vehicles which have not been promoted or adopted in Vietnam (“Mitsubishi Motors joins hands with Vietnam to promote EVs,” The Japan Times, January 16, 2018, https://www.japantimes.co.jp/news/2018/01/16/business/corporate-business...)

South Korea

South Korea’s antitrust watchdog, the Fair Trade Commission (FTC), has decided US-based chipmaker Qualcomm must adhere to new requirements to complete its USD $38 billion acquisition of the Netherlands’ NXP Semiconductors. The FTC ruled Qualcomm cannot assume NXP’s essential NFC patents and various system patents. The FTC also ruled, after hearing other firms’ worries about Qualcomm’s market dominance, that if Qualcomm wants to move forward with the acquisition it also must allow other companies to utilize NXP products (“S. Korea’s trade watchdog sets conditions for Qualcomm’s NXP takeover,” Yonhap News Agency, January 18, 2018, http://english.yonhapnews.co.kr/business/2018/01/18/0501000000AEN2018011...)

South Korean companies are increasingly turning to joint ventures (JVs) to mitigate risk and reduce potential setbacks from political turmoil. In China, both SK Hynix and LG Display chose local partners to build manufacturing plants for, respectively, DRAM and OLEDs due to ongoing South Korean political tension with Beijing. Hyundai Motors is also increasing its presence in Vietnam and Indonesia through the JV route in order to build manufacturing facilities and develop local networks in Southeast Asian countries (Jung Min-hee, “S. Korean Companies Prefer Forming Joint Ventures to Establishing Subsidiaries,” BusinessKorea, January 15, 2018, http://www.businesskorea.co.kr/english/news/industry/20281-risk-sharing-...)

Indonesia

Indonesia’s government is actively seeking to increase investment from Middle Eastern countries as part of its efforts to improve infrastructure. Illustrating this, Jakarta is pushing for Saudi Arabian firms to invest USD $1.6 billion in a new light rail transit line near the nation’s capital. Jakarta also hosted an investor forum for Saudi firms to show off investment opportunities in tourist regions. Recent noteworthy Saudi projects in Indonesia include a USD $5 billion oil refinery upgrade in Central Java (“Indonesia Invited Saudis to Invest $1.6b in New LRT Project,” Jakarta Globe, January 15, 2018, http://jakartaglobe.id/economy/indonesia-invites-saudis-invest-1-6b-new-...)

Following the success of Japan’s Mitsubishi UFJ Financial Group in acquiring Indonesia’s PT Bank Danamon, Indonesia is looking to break from its past policies of restricting foreign firms’ bank ownership. Jakarta aims to increase lending and secure funding for infrastructure projects and to consolidate smaller banks which cannot contribute to Indonesian development goals by inviting foreign banks into Indonesia. Banks from China, India and South Korea are all keen to move into the market (Chanyaporn Chanjaroen and Fathiya Dahrul, “Indonesia Wants to Lure More Foreign Banks to Its Financial Institutions,” Bloomberg, January 15, 2018, https://www.bloomberg.com/news/articles/2018-01-15/indonesia-welcomes-fo...)

Thailand

Japan’s Mazda Motor Corporation will invest USD $357 million to upgrade its Thailand based Rayong plant to produce hybrid EVs (HEVs). Mazda is currently awaiting Thailand’s Board of Investment’s (BOI) approval in order to receive special concessions for its HEV production, which are part of Bangkok’s eco-friendly initiative. This latest round of investment in Thailand follows Mazda’s construction of a vehicle assembly line, engine and transmission production facilities, and a parts distribution center for the greater Southeast Asia region (Piyachart Maikaew, “Mazda move to give jolt to Thai hybrids,” Bangkok Post, January 16, 2018, https://www.bangkokpost.com/business/news/1396478/mazda-move-to-give-jol...)

Thailand’s BoI expects applications for foreign investment to increase to USD $22.6 billion by the end of 2018 due to improved political relationships with both the US and the European Union (EU). Ongoing efforts to attract foreign investors include several “megaprojects” by Bangkok to provide the infrastructure and necessary facilities to pull investors to Thailand. The Thai government also has extended the country’s smart visa program for foreign companies investing in ten advanced “S-curve” industries which will help modernize the Thai economy (Lamonphet Apisitniran, “BoI eyes applications of B720bn,” Bangkok Post, January 13, 2018, https://www.bangkokpost.com/business/news/1394990/boi-eyes-applications-...)

Malaysia

Malaysia’s Permodalan Nasional and the state-operated Employees Provident Fund (EPF) are planning to buy Britain’s Battersea Power Station project for USD $2.2 billion. The Battersea Power Station has been decommissioned and will give the two Malaysian groups room to pursue mixed development opportunities. The project was intended by London to be repurposed, but Brexit has since thrown the United Kingdom’s (UK) property market into tumult and put the project’s future into doubt. Permodalan and the EPF are in negotiations with Battersea’s current developers (“PEF, PNB in records UK deal to buy Battersea project,” Malay Mail Online, January 19, 2018, http://www.themalaymailonline.com/malaysia/article/epf-pnb-in-record-uk-...)

Vietnam

Thailand’s most prominent industrial land developer, Amata Corporation, plans to invest USD $485 million in building up the energy, mobility and aerospace industrial sectors in Vietnam. Amata plans to dole out the investment in stages, with the first being a USD $172 million investment project in Vietnam’s northern province of Halong. The Thai company still needs to obtain Hanoi’s approval for its investment plan before beginning operations. Amata is also expecting government assistance and aid in implementing the projects (“Thai Amata plans 15.5 bln baht investment in Vietnam,” Tuoi Tre News, January 18, 2018, https://tuoitrenews.vn/news/business/20180118/thai-amata-plans-155-bln-b...)

*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.