MNCs in the News-2018-09-07

China

Commenting on an International Monetary Fund (IMF) report on the Chinese economy, the IMF’s chief China representative recently observed, “‘in terms of service trade and investment, the Chinese economy is still very restrictive.’” In its report, the IMF called for China to “modernize its policy framework.” China retorted the IMF used inappropriate Organization for Economic Cooperation and Development (OECD) indicators to measure its openness. China also disputed the IMF’s assessment of its reform progress regarding state-owned enterprises (SOEs) (Frank Tang, “Is China an Open Economy? Beijing Says It is but IMF Differs,” South China Morning Post, August 24, 2018, https://www.scmp.com/news/china/economy/article/2161265/china-open-econo...)

Japan

Japanese chemical maker Shin-Etsu plans to boost silicon output by 50 percent as tighter domestic regulations and the United States (US) trade war hits Chinese rivals. Specifically, Chinese chemical makers have been forced to suspend plant operations due to tighter environmental regulations and have been suffering due to US tariffs against Chinese silicon. Regarding its expansion, Shin-Etsu will invest USD $991 million to expand its capacity in Japan, Thailand, and the US by 2020 (Shuichiro Sese, “Shin-Etsu to boost silicone output by 50 percent as new rules and trade war hit China rivals,” Nikkei Asian Review, September 3, 2018, https://asia.nikkei.com/Business/Companies/Shin-Etsu-to-boost-silicone-o...)

Japanese retailer Muji is considering moving its European headquarters out of the United Kingdom (UK), joining other Japanese companies that are leaving to avoid potential tax complications caused by Brexit. Specifically, Japanese companies are facing a tax predicament as the UK continues to lower corporate rates which could obligate Japanese subsidiaries to pay taxes in both Japan and the UK under Japanese rules. Furthermore the UK mostly likely will not be part of the Japan-European Union (EU) free trade agreement signed in July (“As Brexit looms, Muji eyes Germany for new European base,” The Japan Times, September 5, 2018, https://www.japantimes.co.jp/news/2018/09/05/business/corporate-business...)

South Korea

South Korea’s automobile industry is concerned following the government’s announcement of a new penalty scheme in response to BMW Korea’s ongoing recall of 106,317 vehicles in Korea after dozens of engine fires. According to the Transport Ministry, under the new penalty scheme, carmakers will be subject to heavier fines and will be required to submit “all necessary documents” when the manufacturer is under investigation. Carmakers feel that “introducing punitive damages and enhancing investigations will end up causing potential technology leaks, and a great administrative workload” (Nam Hyun-woo, “Carmakers worried about new penalty scheme,” The Korea Times, September 7, 2018, http://www.koreatimes.co.kr/www/tech/2018/09/419_255221.html)

South Korean automaker Hyundai Motor’s Vice Chairman Chung Eui-sun vowed to lead India’s smart mobility revolution at New Delhi’s first Global Mobility Summit. Chung’s bold statement comes in the wake of a meeting between him and Indian Prime Minister Narendra Modi at the event venue before the summit. In line with the Modi administration’s goal of resolving India’s current lack of infrastructure and administrative systems to expand its electric vehicle industry, Hyundai’s plans to release three electric vehicles in India (Kim Bo-gyung, “Hyundai Motor Vice Chairman vows to lead India’s smart mobility revolution,” The Korea Herald, September 7, 2018, http://www.koreaherald.com/view.php?ud=20180907000578)