MNCs in the News-2018-05-11

China

Customers in China have made complaints that Apple has overcharged its iOS users in China when they make in-app purchases. They contend that purchasing the same services such as online video or calling a taxi through apps is much cheaper through Android than iOS. The alleged reason for this is the high commission that enterprises and app developers pay to Apple. Apple retorts that the pricing for in-app purchases is controlled by developers and that Apple has no commission for goods sold or services provided through apps (“Apple Denies Overcharging Consumers over In-App Purchases,” China Daily, May 5, 2018, http://www.chinadaily.com.cn/a/201805/08/WS5af10864a3105cdcf651c8ed.html)

Data from China’s Ministry of Commerce (MOFCOM) and State Administration of Foreign Exchange (SAFE) indicate Chinese outward foreign direct investment (FDI), both financial and non-financial, jumped a healthy 16.2 percent year over year (YOY) over the first quarter of 2017 reaching USD $28.2 billion. Of this total, $25.5 billion went into non-financial areas in 140 countries and regions and more than 2,000 enterprises. Of note given China’s crackdown on so-called “irrational investment,” there were no “new ODI projects reported in the real estate, sports, and entertainment sectors” (“China’s Total Outbound Investment Jumps in Q1,” China Daily, May 8, 2018, http://www.chinadaily.com.cn/a/201805/08/WS5af156bea3105cdcf651caa8.html)

China Three Gorges has proposed taking full control of EDP, a Portuguese utility in which it already has a 23.3 percent stake, for €9 billion. The deal is likely to attract political attention because EDP is Portugal’s dominant generator and distributor of electricity and because EDP has a number of solar and wind assets in the United States (US), which will make the deal subject to review by the Committee on Foreign Investment in the United States (CFIUS) (Andrew Ward, Arash Wassoudi, and Peter Wise,” China Three Gorges Launches €9bn Bid for Portugal Utility EDP,” Financial Times, May 12, 2018)

During the recent Malaysian election, Chinese influence on the economy was a contentious issue. This was a function of rising Chinese outward FDI (OFDI), partly because of soaring Chinese Belt and Road Initiative (BRI) related investment in Malaysia, but also an increasing perception the benefits of Chinese OFDI (COFDI) were just going to China/Chinese workers and anxieties about the ability of Malaysia to pay for projects. At present, there are $34 billion of project in process in areas like logistics, manufacturing, pipelines, railways, and so on (Adam Minter, “Malaysia is Fed Up with Chinese Cash,” Bloomberg, May 8, 2018, https://www.bloomberg.com/view/articles/2018-05-07/malaysia-is-fed-up-wi...)

Japan

The British government has offered $18.2 billion in loans to Hitachi, reflecting the amount of money Hitachi claims is needed to build a nuclear power plant in Wales. The offer of state funding aims to address the Japanese firm’s desire to reduce risk and encourage London “to put more skin in the game.” The proposal also calls for a total investment of over USD $8 billion, with Hitachi, and Japanese and British “public-private interests” taking a one-third share each, and corporate loan guarantees (“London offers $18bn in loans for Hitachi's UK nuclear plant,” Nikkei Asian Review, May 11, 2018, https://asia.nikkei.com/Business/Business-Deals/London-offers-18bn-in-lo...)

Japan’s apparel retailer Uniqlo will enter the Indian market in fall 2019. According to analysts this move not only reflects the alluring opportunity flowing from the country’s large consumer base, but is also driven by the Indian government’s recent policy initiatives including “allowing 100 percent foreign direct investment for single-brand retail trading” and promotion of “ease of doing business” in India. Uniqlo plans to establish a wholly owned subsidiary Uniqlo India Pvt. Ltd and open its first store in Delhi (Ranjan, Atul, “Japan’s apparel giant Uniqlo to make foray into India in 2019,” The Japan Times, May 10, 2018, https://www.japantimes.co.jp/news/2018/05/10/business/corporate-business...)

South Korea

Following various gestures by Seoul to support American automaker General Motors (GM)’s operations, GM will move its Asia-Pacific headquarters from Singapore to South Korea to show commitment to revitalizing its Korean operations. South Korea’s Minister of Trade, Industry and Energy signed a memorandum of understanding (MoU) with GM confirming the move. The MoU also stipulated the two sides will jointly invest $7.15 billion into GM’s Korean business. Discussions to designate GM’s facilities as foreign investment zones are currently postponed (Ko Jae-man and Lee Eun-joo, “GM to set up a new Asia Pacific headquarters in Korea,” Pulse, May 10, 2018, http://pulsenews.co.kr/view.php?sc=30800021&year=2018&no=298125)

US investment fund Elliot Associates is pursuing legal action against the South Korean government for $670 million it claims to have lost from the merger of two Samsung affiliates in 2015. While Elliot, a minority shareholder in one of the Samsung firms, tried to block the deal, Korea’s state-operated National Pension Service voted in favor of the merger. Elliot believes the merger undervalued the company and represented undue government influence. Elliot will seek remediation through international bodies if Seoul does not respond (“Elliot seeks $670 million in compensation for loss from Samsung merger,” The Korea Times, May 11, 2018, http://www.koreatimes.co.kr/www/tech/2018/05/133_248814.html)

Malaysia

Following his coalition’s victory over the incumbent government headed by Najib Abdul Razak, new Malaysian Prime Minister Mahathir stated that his country might renegotiate some deals with China. While Mahathir repeated his support for China’s BRI, he asserted that Malaysia held the power to renegotiate the terms of some agreements with Beijing. Critics of China recently accused the former Prime Minister of “selling” Malaysia to China following a report which detailed China’s USD $34.2 billion cumulative investment in the country (“Malaysia may renegotiate some deals with China–Mahathir,” The Sun Daily, May 10, 2018, http://www.thesundaily.my/news/2018/05/10/malaysia-may-renegotiate-some-...)

*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.