MNCs in the News-2018-10-05

China

Pursuant to China’s cybersecurity law passed in 2017, Chinese authorities will have the authority to “physically inspect businesses and remotely access corporate networks to check for potential security loopholes.” “Police will also be authorized to copy information and inspect records that ‘may endanger national security, public safety, and social order.’” These privileges, on top of requirements to store data in China and subject technology products to security checks, will exacerbate the worries of foreign firms about the security of their proprietary information (Shan Li, “China Expands its Cybersecurity Rulebook, Heightening Foreign Corporate Concerns,” Wall Street Journal, October 5, 2018, https://www.wsj.com/articles/china-expands-its-cybersecurity-rulebook-he...)

In a report, China’s Ministry of Commerce (MOFCOM), National Bureau of Statistics (NBS), and State Administration of Foreign Exchange (SAFE) revealed China’s annual outward foreign direct investment (FDI) flows declined in 2017 to USD $158.29 billion from $196.15 billion. This was the “first time on record” there has been a drop. Outward FDI (OFDI) flows to the United States (US) plummeted dramatically, not surprisingly given high previous volumes as well as the increased scrutiny the US and China are giving FDI (Evelyn Cheng, “China’s Overseas Investment Drops in 2017 for the First Time on Record,” CNBC, September 28, 2018, https://www.cnbc.com/2018/09/28/chinas-overseas-investment-drops-for-the...)

According to Bloomberg Business, a unit of the Chinese People’s Liberation Army secretly had placed computer chips on hardware manufactured by Super Micro Computer which later went into servers used by 30 companies such as Apple and Amazon and various US government agencies. This hardware would give Chinese agencies access to internal networks of companies and the US government. Amazon and Apple strongly rejected the Bloomberg story, saying they had not found any “malicious chips, hardware manipulations, or vulnerabilities” (“Apple, Amazon Deny Report China used Tiny Chips to Hack into their Networks,” South China Morning Post, October 4, 2018, https://www.scmp.com/tech/enterprises/article/2167032/apple-amazon-deny-...)

Japan

According to reports, Japan’s SoftBank Group’s $200 billion solar power plant project in Saudi Arabia may have been halted. It insists, though, that plans to build the world’s largest solar farm are moving forward. Still, Saudi Arabia’s decision to delay plans to list state-run oil company Saudi Aramco indicate there may be problems with Prince Mohammed bin Salman’s efforts to wean the economy off petroleum. Problems in Saudi Arabia further are a concern because it is the largest Softbank’s $100 billion Vision Fund investor (Minoru Satake, “Saudi power struggle clouds Softbank’s solar ambitions,” Nikkei Asian Review, October 4, 2018, https://asia.nikkei.com/Business/Companies/Saudi-power-struggle-clouds-S...)

Japan’s Mitsubishi Corp. along with state-owned firms PetroChina Co., Korea Gas Corp., Malaysia’s Petroliam Nasional Bhd and Royal Dutch Shell PLC have agreed to invest in a $31 billion LNG project in western Canada, which will become the fastest route to Asia for North American gas. The project is a welcome boost for Canadian Prime Minister Justin Trudeau and marks a turning point for Canada and the gas industry which suffered badly from the recent global supply gut (“Shell, partners OK huge $31 billion LNG Canada project to shorten gas route to Asia,” The Japan Times, October 1, 2018, https://www.japantimes.co.jp/news/2018/10/01/business/shell-partners-ok-...)

South Korea

South Korea’s Hyundai Development Company (HDC), in a joint venture (JV) with India’s Hindustan Construction Company Ltd (HCC), has been awarded a $300 million Mumbai Coastal Road Project contract by the Municipal Corporation of Greater Mumbai. HDC’s 45 percent share in the JV is worth about $133 million and the project is expected to be completed in four years. Based on its success in winning this project, HDC will actively explore other potential infrastructure project opportunities in India (“HCC-Hyundai Development Corp JV bags Rs 21-bn Mumbai Coastal Road Project,” Business Standard, October 3, 2018, https://www.business-standard.com/article/companies/hcc-hyundai-developm...)

South Korean automaker Hyundai Motor Group is planning to build a car manufacturing plant with an annual production capacity of 200,000 vehicles in Indonesia as it sets its eyes on the country’s rapidly growing automobile market. Aside from the Association of Southeast Asian Nations (ASEAN) Free Trade Agreement, which allows tariff-free auto exports and imports among ASEAN member countries from this year, South Korean President Moon Jae-in’s New South Policy and Indonesian government support, which entails tax incentives and other benefits, have encouraged Hyundai (Jung Min-hee, “Hyundai Motor Group Planning to Produce Cars in Indonesia,” BusinessKorea, October 2, 2018, http://www.businesskorea.co.kr/news/articleView.html?idxno=25392)