MNCs in the News-2018-05-18

China

Gap, an American clothing firm, has apologized to China for a T-shirt that had a map of China without Taiwan, Chinese claimed South China Sea territories, and south Tibet, that drew serious criticism. Gap stated “it respected China’s ‘sovereignty’ and would implement ‘rigorous reviews’ to prevent a repeat of the incident.’” Gap reported it pulled its product from the “Chinese market and destroyed it.” Others like Marriott and Delta Airlines have been criticized for information on their websites at odds with China’s territorial claims (“Gap Says Sorry for T-Shirts with ‘Incorrect Map’ of China,” BBC News, May 15, 2018, http://www.bbc.com/news/business-44119125)

A China National Development and Reform Commission (NDRC) spokesperson stated during a press conference that “China has invested more than USD $70 billion in countries and regions involved in the Belt and Road [Initiative/BRI] since its inception in 2013.” Of this, $27 billion has gone into “75 overseas economic and trade cooperation zones.” The BRI involves 88 countries and international organizations and more than 100 cooperation documents with “open” “commercial” projects including high-speed railways in Indonesia, ports in Pakistan, and pipelines between China and Russia (Zheng Xin, “Chinese Investment in B&R Economies Exceeds $70b,” China Daily, May 17, 2018, http://www.chinadaily.com.cn/a/201805/17/WS5afcf76ca3103f6866ee8fb6.html)

Despite some concerns from the Chile government about the market competition impact, China’s Tianqi Lithium is moving forward on a deal to obtain a 24 percent stake in Chile’s Sociedad Quimica Y Minera (SQM) one of the “world’s biggest lithium producers” from Canada’s Nutrien, which has to sell its stake in SQM. State owned financial entities would finance the deal. Lithium is critical for electric vehicles. China’s trade representative to Chile stressed others may be trying to disrupt the deal (“Tianqi Nears Deal to Buy 24 Percent in Chilean Lithium Producer: Sources,” South China Morning Post, May 16, 2018, http://www.scmp.com/business/companies/article/2146335/tianqi-nears-deal...)

China Wu Yi Co. Ltd. will construct a $94.6 million industrial park in Kenya’s Mombasa. The park putatively will become a center for product development and manufacturing as well as logistics. China Wu Yi will provide 50 percent of the funding and the rest will come from bank loans. Wu Yi has been active in Kenya under the impetus of Beijing pushing the BRI and last year said it would spend $100 million to develop a building materials complex south of Kenya’s capital (Yang Ge, “Fujian Firm to Build $100 Million Industry Park in Kenya,” Caixin, May 8, 2018, https://www.caixinglobal.com/2018-05-08/fujian-firm-to-build-100-million...)

Japan

The first jointly built container port involving the public and private sectors of Japan and Vietnam opened in Haiphong, Vietnam. At the inaugural ceremony, Vietnamese Prime Minister Nguyen Xuan Phuc expressed gratitude for “Japanese assistance” which involved a USD $1 billion government soft loan used to develop not only the port, but also the nearby bridge and road infrastructure. A joint venture (JV) involving Japan’s Mitsui O.S.K. Lines and Itochu runs Lach Huyen International Gateway Port, and construction was also undertaken by a Japanese company (“Jointly built container port opens in Vietnam’s Haiphong,” The Japan Times, May 17, 2018, https://www.japantimes.co.jp/news/2018/05/17/business/jointly-built-cont...)

Chinese officials have increased visits with Japanese corporations to court greater investment. Spurred by Premier Li Keqiang’s formal visit earlier this month to Japan that helped improve Sino-Japanese relations, five Chinese provincial officials have met with top executives of Japanese companies like Panasonic, Canon and Toyota, and more visits are expected. According to China’s Ministry of Commerce Japan’s direct investment in China steadily declined from 2012 to 2016, but warming Sino-Japanese relations led Japanese investment to increase to $3.2 billion in 2017 (Tabeta, Shunsuke, “Regional leaders from China hunt for more Japanese investment,” Nikkei Asian Review, May 18, 2018, https://asia.nikkei.com/Business/Business-Trends/Regional-leaders-from-C...)

South Korea

Chinese workers at South Korea’s Lotte Mart affiliate in Beijing staged sit-ins to protest Lotte’s decision to withdrawn from China. Worker concerns over job security and wage guarantees rose after Lotte Group sold 21 of its stores to Chinese retailer Wumart for $231 million. The Korea-Investment Promotion Agency suggests Beijing may mediate the Lotte-worker issue as China sometimes does with confrontations involving foreign businesses. A Lotte spokesman reported worker agitation stems from misunderstandings about the details of Lotte’s sale of its affiliate to Wumart (Park Jae-hyuk, “Chinese workers protest against Lotte Mart deal,” The Korea Times, May 13, 2018, http://www.koreatimes.co.kr/www/tech/2018/05/694_248899.html)

During a recent Korean-Thai business forum, Thailand’s Deputy Prime Minister pledged to work with South Korean firms to garner more investment. South Korean investment in Thailand fell from over $270 million in 2016 to just under $100 million in 2017. Regarding causes, South Korea’s Minister of Trade, Industry, and Energy highlighted unclear information regarding the implementation of Thailand’s Eastern Economic Corridor project. The official also suggested Korean companies will invest more once Thailand’s Board of Investment clarifies the specific investment incentives it will give foreign firms (Apornrath Phoonphongphiphat, “Thailand woos South Korean investment,” Nikkei Asian Review, May 17, 2018, https://asia.nikkei.com/Politics/International-Relations/Thailand-woos-S...)

Malaysia

Malaysia’s new Prime Minister Mahathir Mohamad vowed to reassess all large infrastructure projects with Singapore. Projects that previous Malaysian administrations approved such as the $16 billion Kuala Lumpur-Singapore High Speed Rail and the $13.8 billion East Coast Rail Link, may be in jeopardy if Mahatir deems them unneeded. Projects with Singapore which are ruled to be unbeneficial for Malaysians may be cancelled, renegotiated, or frozen despite strong interest from international consortiums looking to participate in them (Kelly Ng, “Malaysia-Singapore ties hold promise under new Mahathir-led government, despite past run-ins,” Today Online, May 13, 2018, https://www.todayonline.com/singapore/malaysia-singapore-ties-hold-promi...)

Japan’s Mitsui & Co and Mitsubishi Estate are partnering with Malaysia’s Sime Darby Property to build and manage industrial facilities with a development cost of $133 million. Sime Darby will hold a 50 percent stake in the JV while the two Japanese firms will hold the remaining 50 percent contingent upon the regulatory approval of Mitsubishi by local authorities. The JV aims to create a commercial hub in Malaysia that functions to boost economic activity (“SDP partners Mitsui and Mitsubishi Estate to develop RM530m industrial facilities in Klang,” New Strait Times, May 17, 2018, https://www.nst.com.my/business/2018/05/370482/sdp-partners-mitsui-and-m...)