MNCs in the News-2018-11-09

China

Following President Xi Jinping’s defense of globalization and pledge to continue China’s economic opening at the China International Import Expo, the head of the State-owned Assets Supervision and Administration Commission (SASAC) Xiao Yaqing announced China welcomes foreign direct investment (FDI) in the country’s state-owned enterprises (SOEs). China is implementing reforms to allow mixed-ownership of SOEs to increase their competitiveness and to support the country’ efforts to achieve the goals set forth in its Made in China 2025 initiative (Daniel Ren, “China’s state-owned firms are ready to welcome foreign stakeholders, says top state-asset watchdog,” South China Morning Post, November 7, 2018, https://www.scmp.com/business/companies/article/2171988/chinas-state-own...)

At the opening of the World Internet Conference, the head of the Chinese Communist Party (CCP) Propaganda Department stated, “‘We should adhere to the principle of respecting cyber sovereignty, respecting every individual country’s right to choose its own development path for cyberspace, model of cyber governance.’” What seem to have caught people’s attention, though, was the absence of CCP Politburo Standing Committee members, the lack of high-profile Chinese internet celebrities, and the low rank of foreign company representatives (Nectar Gan, “China Reasserts it Right to Manage the Internet in its Own Way,” South China Morning Post, November 7, 2018, https://www.scmp.com/news/china/politics/article/2172045/chinas-top-lead...)

The Guangzhou Yuexiu District Court called upon LEPIN, a Chinese company, to “immediately cease the production, sale and promotion of” its copycat version of Legos and to pay damages of about $650,000. In 2017, Lego secured two major legal victories in China. The first was a ruling by the Beijing Higher Court recognizing “the Lego logo and the name in Chinese as ‘well-known’ trademarks in the country.” The second was a case by Lego against Bela’s copycat products. Lego touted China’s efforts to protect intellectual property (Chritian Wienberg, “Lego Win Intellectual Property Lawsuit in China,” Bloomberg, November 6, 2018, https://www.bloomberg.com/news/articles/2018-11-05/lego-wins-intellectua...)

Australia blocked Hong Kong CK Group’s USD $9.4 billion bid for APA Group gas pipeline operator. Treasurer Josh Frydenberg said that the acquisition of the Australian group would raise security concerns about the undue concentration of foreign ownership by a single company in one of the country’s most significant gas transmission businesses. Australia’s Foreign Investment Review Board has recently blocked other deals with Chinese companies such as Huawei and ZTE, drawing much criticism from Beijing (Jason Scott and James Thornhill, “Australia to China: don’t bother bidding for our gas pipelines,” Bloomberg, November 7, 2018, https://www.bloomberg.com/news/articles/2018-11-07/australia-knocks-back...)

In the wake of Australia’s recent rejection of the acquisition of a pipeline operator by Hong Kong’s CK Group due to national security concerns, Australian foreign minister Marie Payne flew to Beijing to reaffirm Australian’s receptivity toward Chinese inward FDI (IFDI) flows. Recently, bilateral hostility has increased because of Australia’s blocking of other Chinese IFDI deals coupled with accusations of Chinese meddling in Australian politics and media. Given this backdrop, Payne’s words are seen as indicating a desire to rekindle ties with China (Cristopher Bodeen, “As ties thaw, Australia says it welcomes Chinese investment,” ABC News, November 8, 2018, https://abcnews.go.com/International/wireStory/ministers-meeting-signals...)

As a result of the United Kingdom (UK)’s approaching exit from the European Union, China has been showing growing concerns about possible implications for its FDI in the country. Moreover, British Secretary of State for Business Greg Clark acknowledged the UK is currently reforming laws regarding its authority to block foreign acquisitions of security sensitive assets and added that because of it Chinese investments will intensify. Nevertheless, he stated the UK intends to continue welcoming Chinese IFDI even after Brexit (Mitsuri Obe and Peggy Hollinger, “Britain open to Chinese investments despite security concerns,” Nikkei Asian Review, November 8, 2018, https://asia.nikkei.com/Editor-s-Picks/Interview/Britain-open-to-Chinese...)

Japan

Despite growing criticism over its passivity regarding the Rohingya issue, Japan continues to support Myanmar out of “concern that isolation will only drive Naypyidaw back into Beijing’s arms.” Last month, Japan’s Prime Minister Shinzo Abe pledged to “fully support Myanmar’s democratic nation-building efforts through both private and public sectors” and the Japan International Cooperation Agency signed a deal to provide $52.6 million in grants for upgrades to the port of Mandalay. Two years earlier, Tokyo promised to contribute $7.03 billion to Myanmar’s urban development (“China and Japan set to reshape shipping in Myanmar,” Nikkei Asian Review, November 9, 2018, https://asia.nikkei.com/Business/Business-Deals/China-and-Japan-set-to-r...)

Japan agreed to loan the Philippines $336 million in assistance to repair the deteriorating track and trains of one of Manila’s top choices for affordable and fast transportation, the Metro Rail Transit. Japan also agreed in the same meeting to provide the Philippine Air Force grant assistance of $93 million worth of spare parts and maintenance equipment for its UH-1H transport helicopters. Thanking Japan, Philippine Foreign Secretary Teodoro Locsin emphasized the two country’s “’mutually beneficial and gratifying relationship’” and their newly elevated strategic partnership (“Japan loans Philippines ¥38 billion for Manila railway repairs,” The Japan Times, November 8, 2018, https://www.japantimes.co.jp/news/2018/11/08/business/japan-loans-philip...)

South Korea

Korea’s LS Cable & System was selected as one of the business partners in an Oman government-led project sponsored by China’s Asian Infrastructure Investment Bank. The project involves the construction of an optical communications networks in Oman. LS Cable & System is expected to secure tens of millions of dollars out of the $178 million estimated for constructing networks in major cities. The second stage, which entails expanding the networks to rural areas by 2030, is expected to be much larger in scale (Jun Ji-hye, “LS C&S to build communication networks in Oman,” The Korea Times, November 6, 2018, http://www.koreatimes.co.kr/www/tech/2018/11/133_258252.html)

Korea has denied Tokyo’s claim at the World Trade Organization that Seoul not only breached international trade rules by providing subsidies, but that these subsidies allowed Korean shipbuilders to win orders at below market price and “inflicted serious damage” on Japan’s shipbuilders. Seoul stated that it will provide Japan with an explanation during bilateral talks that “’our decision to support Korean companies was based on commercial judgement and it complies with international rules.’” Neither government linked the trade issue with politics (Shin Ji-hye, “Ministry denies Japan’s accusation that shipbuilding subsidies break WTO rules,” The Korea Herald, November 7, 2018, http://www.koreaherald.com/view.php?ud=20181107000677)