MNCs in the News-2018-11-23


China is opening its financial sector and already has relaxed restrictions on foreign direct investment (FDI) in securities ventures. By the beginning of next year, foreign insurers looking to take control of their local joint ventures (JVs) should be able to apply to do so. China has recently raised the foreign ownership cap for insurance JVs from 50 percent to 51 percent and states it will remove the limit completely in three years, though specifics have not been released (Sumeet Chatterjee and Shu Zhang, “China moves closer to allowing foreigners to control insurance ventures: sources,” Reuters, November 19, 2018,

Since China’s reform and opening up, Shanghai has attracted 95,000 foreign-funded projects worth USD $237.6 billion. Statistics released by the Shanghai Municipal Commission of Commerce show that in 2017 the top 100 foreign-funded companies in Shanghai had total revenues of almost $423.5 billion, 18.8 percent more than in 2016. Foreign companies produce a large amount of Shanghai’s output, generate large amounts of tax revenues, and are major trade players, therefore the city plans to improve services for them and build new, innovative free-trade zones (FTZs) (“Shanghai attracts 95,000 foreign-funded projects since reform and opening up,” Xinhua, November 21, 2018,

The European Union (EU) has provisionally agreed on rules to toughen the scrutiny of inward FDI. The rules require the European Commission to screen deals, obligate EU countries to report their reviews, and expand the list of “critical sectors.” The rules do not specifically mention China, but come amid rising concerns about acquisitions by Chinese state-owned enterprises (SOEs) in Europe. It remains to be seen if EU countries such as Cyprus, Greece and Portugal, which covet Chinese FDI, will support the proposed vetting system (Philip Blenkinsop, “With eyes on China, EU agrees investment screening rules,” Reuters, November 20, 2018,

The Foreign Investment Risk Review Modernization Act (FIRRMA) updates the rules guiding the operations of the Committee on Foreign Investment in the United States (CFIUS). It requires CFIUS to look FDI in numerous critical sectors even where there are small stakes less than 10 percent. The deal will have a big impact on Chinese investment which has been flowing into sensitive areas such as nanotechnology through low stake venture capital and other diverse channels. The new review process is supposed to be implemented by 2020 (Don Weinland, “US national security reviews to hit Chinese investment,” Financial Times, November 18, 2018)

Under President Rodrigo Duterte, the Philippines has moved much closer to China, signing dozens of FDI, trade, industrial park, infrastructure, and other deals in 2016 as well as during Chinese President Xi Jinping’s recent visit to Manila. Two years after embracing closer relations with Beijing, however, little FDI has materialized and many infrastructure projects have not moved forward. Many Filipinos accuse Duterte of making concessions to China in the South China Sea without having received anything in return (Nyshka Chandran, “The Philippines' pivot toward China has yet to pay off, as Manila awaits promised funds,” CNBC, November 23, 2018,


US prosecutors are investigating Mitsubishi UFJ (MUFJ) for potentially allowing North Korea to launder money. Prosecutors subpoenaed it last year when it was in a court fight with the New York Department of Financial Services over the state’s claim it “intentionally ignored an internal filter designed to keep it from doing business with companies and people on international sanctions lists.” In 2013, MUFJ paid a $565 million fine relating to hiding transaction records with parties in sanctioned countries like Iran (Emily Flitter, “U.S. Prosecutors Are Said to Be Investigating Japan’s Largest Bank,” The New York Times, November 21, 2018,

A top advisor of Japanese Prime Minister Abe Shinzo met with Philippine government ministers last week in an effort to push forward major infrastructure projects, just hours after the Chinese President pledged to do the same during his visit. Although the attention has been focused on Philippine President Duterte’s pivot to China, already agreed loans with Japan far exceed those of China as a result of Prime Minister Abe’s offer of $8.9 billion in aid and investment in 2017 (“After Chinese leader’s visit, Philippine ministers meet Japan PM’s aide to advance infrastructure plans,” The Japan Times, November 21, 2018,

South Korea

South Korean manufacturers have been shifting their OFDI from China to Vietnam due to “tax benefits, cheaper labor, and other favorable conditions.” Korean small and medium-sized enterprise investment in Vietnam overtook the amount in China, with the total hitting USD $720 million in 2017 compared to $430 million for China. While China has increased corporate taxes, expanded FDI restrictions, and has rising labor costs, Vietnam’s minimum wage has fallen to half that in China, which has become a magnet for foreign companies in recent years (“Manufacturers shift investment focus to Vietnam from China,” The Korea Herald, November 22, 2018,

A POSCO Engineering & Construction Co.-led consortium was selected as the preferred bidder for a $533 million project to build a gas-fired combined cycle power plant in Malaysia. The consortium was selected by Malaysia’s local property developer Tadmax Resources Bhd, the Selangor provisional government-linked Worldwide Holdings Bhd, and South Korea’s state-run Korea Electric Power Corp. POSCO will be responsible for the engineering, procurement and construction of the plant while Mitsubishi Corp. will provide the main boiler equipment and turbine for the plant (Choi Kyong-ae, “POSCO E&C selected as preferred bidder for Malaysia plant project,” Yonhap News, November 19, 2018,

*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.