MNCs in the News-2018-11-30

China

China has announced a series of measures to deepen reforms in the country’s free-trade zones (FTZs). Illustrating this, the State Council recently stated that, among other changes, it will lower minimum investment thresholds in certain FTZs for building facilities and recruiting foreign workers. Access to China will be facilitated for many multinationals hoping to put money there. Even so, a large number of investors remain doubtful about the authenticity of China’s pledge to improve access through FTZs (Amanda Lee, “China pushes reforms in free trade zones as skepticism grows among foreign investors,” South China Morning Post, November 23, 2018, https://www.scmp.com/news/article/2174745/china-pushes-reforms-free-trad...)

China’s National Development and Reform Commission (NDRC) announced “it will allow foreign banks in China to apply for government approval for a quota increase in their medium to long-term foreign debt for 2019.” Permission will depend upon various conditions such as the purpose of the debt. Moreover, the NDRC wants foreign banks to inter alia use the money in line with China’s industrial and other policies. A higher quota is beneficial to foreign banks because they can use the debt to support expanded business in China (Jiang Xueqing, “Nation Raises Foreign Banks’ Debt Quota,” China Daily, November 27, 2018, http://www.chinadaily.com.cn/a/201811/27/WS5bfc7a60a310eff30328b24e.html)

At present, USD $200 billion of Chinese goods imported into the United States (US) face a special 10 percent tariffs. To date, Apple products such as iPhones and MacBooks have escaped the list of goods subject to special tariffs. During a recent interview, however, US President Donald Trump said the situation might change, observing “‘people could stand that very easily.’” Trump added “‘what I’d advise is for them to build factories in the United States and to make the product here’” (Annie Gaus, “Trump Says Apple iPhones and MacBooks Imported from China Could Face Tariffs,” TheStreet.com, November 28, 2018, https://www.thestreet.com/technology/president-trump-could-slap-a-14791591)

Following some Western nations’ bans on the supply of 5G infrastructure from Chinese telecommunications services providers over national security concerns, New Zealand’s intelligence agency has blocked Chinese tech company Huawei from supplying 5G mobile network equipment to the major domestic telecom provider, Spark New Zealand. Huawei insists that Beijing has no influence over it, but more and more Western countries seem to side with Washington’s recent warning to its allies to be wary of conducting business with Chinese tech firms, especially Huawei (Charlotte Greenfield, “New Zealand rejects Huawei's first 5G bid citing national security risk,” Reuters, November 28, 2018, https://www.reuters.com/article/us-spark-nz-huawei-tech/new-zealand-reje...)

After reviewing contracts awarded by his predecessor to Chinese companies, Maldives’ new finance minister Ibrahim Ameer stated that the prices of China’s infrastructure projects in the country are much higher than initially proposed, and he fears that they may have left the country in debt. For this reason the Maldives will return to an “India First” policy, favoring its neighbor and traditional partner. China rejected allegations it is driving the Maldives to debt and asked the new government to keep welcoming investments from Beijing. (Sanjeev Miglani, “Maldives says China is building projects at inflated prices,” Reuters, November 28, 2018, https://www.reuters.com/article/us-maldives-politics-china/maldives-says...)

Japan

Following a similar court order last month against Nippon Steel & Sumitomo Metal, South Korea’s Supreme Court ordered Japan’s Mitsubishi Heavy Industries to pay a total of $365,500 in damages to two groups of South Koreans for forced wartime labor. Japanese Foreign Minister Taro Kono called the court decisions “’extremely regrettable and totally unacceptable.’” He even threatened to take the cases to an international court if Seoul fails to take the appropriate steps as the rulings go against international law (“South Korea’s top court orders Mitsubishi Heavy to pay compensation for wartime labor,” The Japan Times, November 29, 2018, https://www.japantimes.co.jp/news/2018/11/29/national/crime-legal/south-...)

In a meeting with his Japanese counterpart, French Economy and Finance Minister Bruno Le Maire implied “the head of the Renault-Nissan alliance should be from the French automaker,” reflecting the French government’s desire to continue exerting influence over the auto partnership. Nissan Motor’s board dismissed Carlos Ghosn as chairman after his arrest by Japanese authorities on various charges but Ghosn remains the chairman and CEO of Renault and, according to Le Maire, will remain so “’as long as there are no tangible charges’” (Togo Shiraishi, “Ghosn scandal shouldn’t affect Renault-Nissan pact, France insists,” Nikkei Asian Review, November 26, 2018, https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/Ghosn-scandal-sho...)

South Korea

At a press conference in Seoul, European firms with business in South Korea asked the Korean government to enhance the country’s business regulations to reach international standards. With $6.5 billion in foreign direct investment flowing from the European Union (EU) to Korea last year, the EU represents the largest source of FDI in Korea. However, European companies feel “Korea still needs to provide a more open business environment and that many regulations continue to hamper trade and business” (Shin Ji-hye, “European firms call for more deregulation in Korea,” The Korea Herald, November 27, 2018, http://www.koreaherald.com/view.php?ud=20181127000745)

At the 6th Association of Southeast Asian Nations (ASEAN) Connectivity Forum in Seoul, South Korea’s Secretary-General of the ASEAN-Korea Centre Lee Hyuk stated Korea is looking to improve relations with ASEAN countries. Seoul specifically pledged to increase South Korean investment in infrastructure in the region to compete with China and Japan. Relatedly, Lee said Seoul will create the “ASEAN-Korea Infrastructure Fund” by raising $100 million by 2022 to promote mutual cooperation in areas like transportation, energy, water resources and smart cities (Sorn Sarath, “South Korea seeks to improve relations with Asean states,” The Phnom Penh Post, November 30, 2018, https://www.phnompenhpost.com/business/south-korea-seeks-improve-relatio...)