MNCs in the News-2018-07-20

China

China recently agreed to let Germany’s BMW increase its ownership stake in its joint venture (JV) with Brilliance China Automotive Holdings from 50 to 75 percent, the first time a foreign auto company will get “super majority control.” BMW did not guarantee it would accept the offer, but likely will. Around the same time, Shanghai signed an agreement with United States (US) car manufacturer Tesla allowing the latter a 100 percent owned plant (Daniel Ren, “China Makes BMW the Envy of Foreign Carmakers, Giving It Green Light to Raise its Venture Stake,” South China Morning Post, July 16, 2018, https://www.scmp.com/business/companies/article/2155528/china-makes-bmw-...)

Chinese media touted various foreign banks like the United Kingdom (UK)’s Standard Chartered PLC, US financial institution Citibank, and Singapore’s OCBC have gotten involved in China’s ambitious Belt and Road Initiative (BRI). Standard Chartered reports it is involved in 50 BRI related projects and has a Memorandum of Understanding (MoU) with the China Development Bank “facilitating [BRI] trade and investment.” The CEO of Standard Chartered stated “foreign banks can provide expertise in project and export finance, merger & acquisition” and so on (“Foreign Banks Seek to Add Value to China’s Belt and Road Initiative,” China Daily, July 19, 2018, http://usa.chinadaily.com.cn/a/201807/19/WS5b5055fca310796df4df77f7.html)

In an interview, Cambodia’s Minister of Agriculture, Forestry, and Fisheries Veng Sakhon told Chinese reporters that agricultural cooperation with China had yielded many fruits. He not only touted China as a critical market for Cambodian agricultural output, but also emphasized the positive role of Chinese outward foreign direct investment (FDI). Sakhon stated Chinese outward FDI in Cambodia was “‘essential’” because it had brought Cambodia “new capital, techniques and job creations, and had helped process Cambodia's agricultural products for exports” (Nguon Sovan and Mao Pengfei, “Interview: China Major Contributor to Cambodia’s Agricultural Development: Cambodian Minister,” China Daily, July 15, 2018, http://www.xinhuanet.com/english/2018-07/15/c_137325483.htm)

Japan

Sumitomo Corp. is hoping to take advantage of sundry agreements with Japanese local governments to entice small to midsized Japanese manufacturers to rent plant areas at its Vietnamese industrial parks. The agreements with prefectural governments will allow manufacturers to set up operations for a low initial investment. Local government bodies hope the support they provide in referring manufacturers that wish to launch operations in Vietnam to Sumitomo will boost corporate tax revenues over the long run (Kotaro Hosokawa, “Sumitomo looks to entice Japanese makers to Vietnam rental plants,” Nikkei Asian Review, July 17, 2018, https://asia.nikkei.com/Business/Companies/Sumitomo-looks-to-entice-Japa...)

Takeda Pharmaceutical Co. is optimistic about getting China’s sign-off for the USD $62 billion Shire PLC acquisition deal, despite initial fears China would retaliate against US tariffs against it by delaying or even blocking the acquisitions of American companies. Seeing China as becoming a “core country” for its global growth strategy, Takeda is preparing to launch seven new drugs in China in the next five years. At the same time, the Chinese government is working to speed approval process for drugs in order to widen access to healthcare (“Takeda bets on China for global growth,” Bloomberg, July 17, 2018, https://www.bloomberg.com/news/articles/2018-07-17/takeda-bets-on-china-...)

South Korea

LG Chem plans to invest approximately $2 billion to build its second electric car battery plant in Nanjing, China because Chinese government’s electric car incentives are expected to disappear by 2020. Currently, cars using batteries from a number of Korean companies, including LG Chem and Samsung SDI, have been excluded from the incentive list the Chinese central and regional governments implemented to make electric vehicles more affordable in China. This had made it difficult for Korean players to compete previously (Kim Jee-hee, “LG Chem plans new battery plant,” Korea JoongAng Daily, July 20, 2018, http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3050838)

South Korean investment in Vietnam’s textiles is growing and many Korean investors in China are considering moving to Vietnam due to the fact Vietnamese exports to Korea are increasing and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership gives preferential tariffs. However, policies on encouraging investments into the textile industry remain unattractive. To facilitate realization of the investments, officials from Vietnamese and South Korean Ministry of Industry and Trade have signed an agreement to cooperate in many fields including textiles and garments (“Vietnam ready to receive South Korean investment in textile & garment sector,” Vietnamnet, July 19, 2018, http://english.vietnamnet.vn/fms/business/204227/vietnam-ready-to-receiv...