MNCs in the News-2018-08-17

China

China’s Ministry of Commerce (MOFCOM) has reported that inward foreign direct investment (FDI) over the first seven months of 2018 grew 5.5 percent year-over-year (YOY) in dollar terms, reaching $76 billion. MOFCOM touted that FDI into high-tech industries (which constituted 21.5 percent of total FDI) and high-tech manufacturing sector showed strong growth and that there was significant FDI growth YOY in China’s 11 pilot free trade zones (FTZs). Of note, the growth rate for FDI in regions in western China went up 14.5 percent YOY (“FDI into Chinese Mainland Grows Steadily in Jan-July Period,” China Daily, August 16, 2018, http://www.chinadaily.com.cn/a/201808/16/WS5b754cd1a310add14f3862d0.html)

In its report on inward FDI (IFDI) over the first seven months of 2018, MOFCOM reported Singapore, the United State (US), United Kingdom (UK), South Korea, and Japan were major sources of IFDI with IFDI from the UK growing by more than 85 percent while South Korea and Japan both topped 30 percent growth rates. Chinese observers remained confident that flows of IFDI into China would remain solid given China’s productivity level, infrastructure, and rising consumerism as well as ability to provide complete supply chains (Ren Xiaojin and Zhong Nan, “FDI Remains Stable, Dynamic,” China Daily, August 17, 2018, http://usa.chinadaily.com.cn/a/201808/17/WS5b760353a310add14f386378.html)

Reacting to reports Google planned to build a censored version of its search engine for China, hundreds of Google employees have signed an internal letter stating the company’s “apparent willingness to abide by China’s censorship requirements ‘raise urgent moral and ethical issues.’” Expressing concern about the project, code named Dragonfly, the signatories of the letter called for “‘more transparency, a seat at the table, and a commitment to clear and open processes’” and product ethical reviews (Kate Conger and Daisuke Wakabayashi, “Google Employees Protest Secret Work on Censored Search Engine for China,” The New York Times, August 16, 2018, https://www.nytimes.com/2018/08/16/technology/google-employees-protest-s...)

China’s state-owned enterprise (SOE) China National Petroleum Corp. (CNPC) has taken a majority stake in Total’s, a French company, stake in Phase II of Iran’s South Pars field. This follows Total’s apparent inability to gain a waiver from reinstituted US sanctions against Iran. Total had been one of the first major Western energy investors to reenter Iran after sanctions were lifted in 2016. Specifically, it signed a contract in 2017 to develop Phase II with an initial investment of $1 billion (“China’s CNPC ‘Takes over Total’s Share in Big Iran Gas Project,’” South China Morning Post, August 12, 2018, https://www.scmp.com/print/news/china/economy/article/2159309/chinas-cnp...)

Japan

The Japanese Fair Trade Commission (FTC) is investigating US company Apple Inc. over allegations that it unfairly pressured Yahoo Japan Corp. to slow the expansion of its online games platform, a competitor of Apple’s App Store. The investigation involves Yahoo Japan’s Game Plus platform whose budget Yahoo abruptly slashed last fall. Yahoo told multiple business partners it was forced to cut back on the site because of pressure from Apple. Just last month, the FTC investigated Apple over possible antitrust violations (“Apple accused of pressuring game rivals in Japan: Nikkei,” Reuters, August 16, 2018, https://www.reuters.com/article/us-apple-japan-investigation/apple-accus...)

Japan sent over 70 percent of its official development assistance to the Indo-Pacific and is making economic cooperation with the region a priority in order to counter China’s Belt and Road Initiative (BRI). Japan plans to expand its “Free and Open Indo-Pacific” strategy, which starts in Southeast Asia, to reach the Middle East and Africa. By the end of August, Japan’s Ministry of Foreign Affairs plans to draw up its fiscal 2019 budget requirement with a notable 60 percent being directed to development assistance (“Japan shifts focus of its development assistance to Indo-Pacific,” Nikkei Asian Review, August 15, 2018, https://asia.nikkei.com/Politics/Japan-shifts-focus-of-its-development-a...)

South Korea

The South Korean Transport Ministry has placed its first-ever driving ban on over 20,000 BMWs after more than 30 engines caught fire this year due to faulty hardware. Drivers who ignore the ban could face as much as year in prison or a fine up to $8,865. Public opinion in South Korea of BMW has significantly plummeted hurting the automaker’s ability to battle rivals like Daimler in the country. Seoul also plans to investigate allegations that the company tampered with emissions testing software (Kenichi Yamada, “South Korea orders fire-prone BMWs off the street,” Nikkei Asian Review, August 15, 2018, https://asia.nikkei.com/Business/Companies/South-Korea-orders-fire-prone...)

Korean Prime Minister Lee Nak-yon called for increased cooperation with Qatar by asking the country’s deputy prime minister to expand business opportunities for Korean firms. Lee particularly noted an interest in Korean companies taking part in projects involving the expansion of Qatar’s ports and desalinization plants and the introduction of natural gas buses. Lee further stated his hope the two countries would expand their cooperation in the health and medical sector while Qatar stressed the need for “continued and stable” cooperation in the energy sector (“Korean premier calls for increased cooperation with Qatar,” The Korea Herald, August 16, 2018, http://www.koreaherald.com/view.php?ud=20180816000811)