MNCs in the News-2018-10-19

China

Google CEO Sundar Pinchar defended his company’s effort to develop a censored search engine for China even while claiming Google was “committed to its values of freedom of expression [and] user privacy.” He said China was “‘important for us to explore’ given its size and the very high likelihood that it will become the largest…internet-using population.” He added a search engine meeting China’s requirements still could serve 99 percent of all queries (Gareth Nicholson, “Google CEO Says China Search Engine would Serve 99 per cent of queries, Takes a Swipe at Baidu,” South China Morning Post, October 16, 2018, https://www.scmp.com/tech/article/2168715/google-ceo-says-china-search-e...)

Exxon Mobile Corp. is investing billions of dollars to profit from China’s voracious appetite for liquefied natural gas (LNG). On the production side, it is increasing output from places like Papua New Guinea (PNG) and Mozambique. This production does not face the 10 percent tariff China put on US gas. On the demand side, it will build its “first import and storage hub” in China. Exxon also will be involved in “the construction of an LNG import terminal in Guangdong” (Gary McWilliams and Henning Gloystein, “Exxon Mobile Bets Big on China LNG, Sidesteps Trade War,” Reuters, October 17, 2018, https://www.reuters.com/article/us-exxon-mobil-lng-china/exxon-mobil-bet...)

A report by a consultancy reaffirms the widely known fact that Chinese outward foreign direct investment (FDI) plunged over the first six months of 2018 versus the same period last year and in 2016. The reasons for the drop include challenging reviews of Chinese outward FDI (OFDI), currency fluctuation, and Chinese controls on Chinese OFDI (COFDI). The good news, per the consultancy, is that Chinese firms “are learning…and making smart adjustments.” They are better about deals and handling cultural issues (Kelly Olsen, “Chinese Firm are Spending Less on Overseas Deal, but They’ve Become More Strategic,” CNBC, October 12, 2018, https://www.cnbc.com/2018/10/12/chinese-firms-spend-less-on-overseas-dea...)

Japan

The Japanese government is launching a new service aimed at helping foreign companies take over operations of small heirless businesses in Japan that are at risk of closure due to a lack of successor. The service is designed to save companies with viable products and services from closure by encouraging foreign entities to take over their operations through mergers and acquisitions. In 2025, a third of all Japan’s businesses will be at risk of closure which could lead to the loss of 6.5 million jobs (“Japan to promote foreign takeovers of heirless companies,” Nikkei Asian Review, October 16, 2018, https://asia.nikkei.com/Economy/Japan-to-promote-foreign-takeovers-of-he...)

Japanese logistics firms are joining hands with Chinese firms in building an alternative route to ship cargo from Japan to Europe that would be faster than by sea by utilizing China’s Belt and Road Initiative. According to a Nissin general sales manager, “large corporations believe that an alternative route from Japan is crucial in case of a rise in geopolitical tensions in the Middle East.” Japanese firms are further encouraged by Chinese local government subsidies of the shipment costs (Hiteoshi Takada, “Japan firms try out China’s ‘Belt and Road’ cargo transport to Europe,” The Japan Times, October 15, 2018 https://www.japantimes.co.jp/news/2018/10/15/business/japan-firms-try-ch...)

South Korea

South Korea’s Ministry of Oceans and Fisheries announced that it will carry out a feasibility study about developing a port in Russia to help local companies take advantage of its strategic location. Hyundai Engineering & Construction Co. and Berkut, a Russian logistics and tourism company, have already signed a memorandum of understanding (MOU) to cooperate in the development of the Slavyanka port bordering North Korea and China. As a part of the “New Northern Policy,” Seoul has been expanding its economic cooperation with Russia (“Korea eyes development of port in Russian Far East,” The Korea Herald, October 15, 2018, http://www.koreaherald.com/view.php?ud=20181015000442)

The South Korean government is strengthening its efforts to support Korea firms in winning project orders from the United Arab Emirates (UAE) and Vietnam. Various government agencies, industry organizations, and companies plan to hold a meeting to discuss support measures. Additionally, the land ministry will hold a meeting with Vietnamese investment and transport ministries later in November this year to discuss inter-governmental cooperation. Moreover, the oceans ministry will sent government-private joint delegations to the UAE and Vietnam to sign memoranda of understanding on port development (“Gov’t hones in on winning orders from Vietnam, UAE,” Yonhap News, October 19, 2018, http://english.yonhapnews.co.kr/news/2018/10/19/0200000000AEN20181019002...)