MNCs in the News-2018-09-28

China

At a recent China State Council Executive Meeting it was decided China would implement more policies to ensure the realization of major FDI projects, reduce tariffs on some imported goods, and more rapidly remove customs clearance red tape. Measures include introducing an online filing process for FDI, unifying market access criteria for Chinese and foreign investment “in areas outside of the negative list,” supporting land and sea-use approval procedures for major FDI projects, and reducing logistics costs (Zhang Yue, “China to Introduce More Measures to Facilitate Foreign Investment,” State Council of the People’s Republic of China, September 26, 2018, http://english.gov.cn/premier/news/2018/09/26/content_281476319587261.htm)

Companies located on the Chinese mainland are moving or contemplating shifting their production elsewhere due to the United States (US)’ imposition of more than USD $250 billion tariffs on Chinese goods. These firms, which include SK Hynix, Mitsubishi Electric, and LG Electronics, are acting not only because of the tariffs, but also because they are being recruited by others like Taiwan and Thailand. Most of the contemplated shifts seem to involve lower-value added production (Ju-Min Park and Makiko Yamazaki, “Japanese and Other Asian Firms Shifting Production from China as U.S. Tariffs Take Toll,” The Japan Times, September 23, 2018, https://www.japantimes.co.jp/news/2018/09/23/business/corporate-exodus-c...)

Chinese outward FDI (OFDI) is confronting increasing pressures globally in countries like the US, Germany, Australia, Canada, and the United Kingdom (UK). At a conference on Chinese OFDI (COFDI), an official with the Chinese Ministry of Commerce (MOFCOM) voiced concerns about the possible abuse of FDI review processes. Still he stressed COFDI was normal at China’s level of development and that “China would continue to encourage domestic firms with ‘good reputation’ and ‘strength’ to invest abroad (Amanda Lee, “China Pledges to Carry on Investing Globally, Even as Wealthy Nations Shun its Money,” South China Morning Post, September 28, 2018, https://www.scmp.com/economy/china-economy/article/2166257/china-pledges...)

China’s MOFCOM reported that “the earning ability of Chinese companies operating overseas remained robust as their profit jumped by 52 percent year-on-year (YOY) to $137.8 billion.” This was attributed to COFDI being put into the “real economy—such as goods manufacturing, infrastructure projects, and service business.” Chinese data indicate that Chinese companies were in 189 countries and regions and had established more than 39,200 companies with total assets of $6 trillion. MOFCOM touted that the good results obtained despite problematic laws and regulations elsewhere (Zhong Nan and Xin Zhiming, “Chinese Companies’ Overseas Profit Grows,” China Daily, September 29, 2018, http://www.chinadaily.com.cn/a/201809/29/WS5baeb321a310eff30328021d.html)

Japan

The Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development (JOIN) and the Japan Bank for International Cooperation will provide up to $300 million in loans for Texas Central Partners’ high-speed rail project which is estimated to cost about $16 billion. Invested in sharing bullet train technology internationally, JOIN had invested $40 million in equity into Texas Central Partners’ roughly three years ago. Japan now constitutes the second largest foreign investor in Bayou City, Texas (Sierra Smith, “Bullet Train Developer Locks In Up To $300M Investment from Japanese Backers,” Bisnow, September 24, 2018, https://www.bisnow.com/houston/news/technology/bullet-train-developer-lo...)

Japan’s Nippon Express will launch regular freight train shipping between China and Europe as China’s Belt and Road Initiative (BRI) accelerates the transfer of goods between the two large markets. Also motivating Nippon Express is its expectation that the escalation of the US-China trade war will cause some goods that would otherwise go to the US to go Europe. Nippon Express plans to charter trains operated by Chinese rail companies and is currently in talks with China’s big logistics companies over possible collaboration (Yusho Cho, “Nippon Express to launch China-Europe freight train service,” Nikkei Asian Review, September 27, 2018, https://asia.nikkei.com/Business/Companies/Nippon-Express-to-launch-Chin...)

South Korea

South Korea’s Daewoo Engineering & Construction (E&C) is expanding its overseas nuclear power plants capacity by signing an agreement with the state-run operator Korea Hydro & Nuclear Power, Korea Electric Power Corporation (KEPCO) KPS, KEPCO E&C, KEPCO Nuclear Fuel and Doosan Heavy Industries & Construction to jointly cooperate in nuclear export bids in the Czech Republic and Poland. The companies are going all out to win the massive nuclear power plant projects, which will be worth up to $19 billion each (Baek Byung-yeul, “Daweoo E&C seeks to build nuclear plants in Czech, Poland,” The Korea Times, September 27, 2018, http://www.koreatimes.co.kr/www/tech/2018/09/693_256080.html)

The South Korean and Chilean presidents agreed to further develop their bilateral relationship by developing the countries’ comprehensive partnership, particularly in the infrastructure sector. The two leaders welcomed the progress made by the South Korea-Chile free trade agreement since 2004 and agreed to start negotiations to improve on it while also beginning to discuss ways to increase the countries’ cooperation in infrastructure development. The Chilean president also promised “active and unwavering support for Seoul’s efforts to denuclearize the Korean Peninsula and establish peace” (“Leaders of Korea, Chile agree to improve ties, boost trade,” The Korea Herald, September 27, 2018, http://www.koreaherald.com/view.php?ud=20180927000131)

*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.