MNCs in the News-2019-01-25

China

Ning Gaoning, chairman of Sinochem, one of China’s biggest chemical groups, predicts that Chinese foreign direct investment (FDI) abroad will decrease this year due to trade tensions with the United States (US) and China’s domestic economic slowdown. The economic slowdown has particularly concerned Chinese politicians, with Chinese President Xi Jinping stating that “[We are] confronted with unpredictable international developments and a complicated and sensitive external environment. Our task at hand is to maintain stability as we continue our reform and development” (Arash Massoudi and David Crow, “China’s overseas investment set to slow, says Sinochem,” Financial Times, January 22, 2019, https://www.ft.com/content/561e3018-1e26-11e9-b126-46fc3ad87c65)

Former China Securities Regulatory Commission (CSRC) chairman Xiao Gang said that to quieten overseas criticism of the Belt and Road Initiative (BRI) China should make sure that its investment and financing projects meet international standards. He further stated that investment founded solely on Chinese funding is unsustainable. He suggested diversifying funding sources to balance risks and to avoid delaying projects while waiting for current skepticism on the BRI to pass (Wendy Wu, “If China wants to quieten ‘belt and road’ critics, it must meet global investing rules, says former securities watchdog boss, South China Morning Post, January 24, 2019, https://www.scmp.com/news/china/diplomacy/article/2183398/chinese-securi...)

Chinese companies developing abroad are receiving tough scrutiny, even in countries coveting more Chinese investment. Sultan Ahmed bin Sulayem, chairman of DP World, the United Arab Emirates’ state-owned port operator, criticized Chinese firms saying that “they have taken predatory practices in something that (is termed) today to be a debt trap, whereby they overextend their debts to countries and eventually take their assets. This is something that tarnishes the reputation of China.” He therefore warned other countries to be very careful of China (Natasha Turak, “Port operating giant DP World slams Chinese companies’ ‘predatory practices,’” CNBC, January 23, 2019, https://www.cnbc.com/2019/01/22/port-operating-giant-dp-world-slams-chin...)

In the wake of restrictions imposed by many Western governments on Huawei over accusations of technology theft and concern that its products may be used for spying, the former deputy governor of the People’s Bank of China Zhu Min believes the Chinese tech giant could cut investments in Silicon Valley. Furthermore, for its part, the US likely will have declining interest in investing in China. In his opinion, the trade dispute between the two countries could turn into a “tech war” (Sam Meredith, “China could completely cut off investment into Silicon Valley amid Huawei bust-up,” CNBC, January 23, 2019, https://www.cnbc.com/2019/01/23/huawei-china-could-completely-cut-off-in...)

Japan

A Reuters survey revealed that while over one-third of Japanese firms plan to raise capital expenditure in the coming fiscal year, many others are worried about the impact of the ongoing China-US trade war on spending. Tit-for-tat import tariffs and uncertainty about the global economy have started to strain global growth and hurt Japanese firms, especially those with business in China. Consequently, many firms are nervous about corporate investment with one-third of manufacturers intending to review their supply chains in April (Tetsushi Kajimoto, “Japan firms wary of boosting investment amid intensifying trade war: Reuters poll,” Reuters, January 22, 2019, https://www.reuters.com/article/us-japan-companies-trade/japan-firms-war...)

Japan’s Sony is moving its European headquarters from the United Kingdom (UK) to the Netherlands to avoid disruptions to shipping and customs procedures that might result from “Brexit.” Specifically, Sony will be merging UK-based Sony Europe into a new subsidiary in Amsterdam. Sony hopes the move will enable it to profit from the existing customs regime by having its headquarters registered within the European Union (EU) and further will ensure a stable supply of products in case of a “no-deal Brexit” (Hisashi Iwato, “Sony to move European base to Holland as Brexit nears,” Nikkei Asian Review, January 23, 2019, https://asia.nikkei.com/Business/Companies/Sony-to-move-European-base-to...)

South Korea

South Korea will actively offer financial support for overseas construction and plant orders to offset weakening exports caused in part by the global trade disputes and China’s economic slowdown. According to Finance Minister Hong Nam-ki, the government also will implement land development measures to boost domestic demand and offset sluggish exports. South Korea’s exports dropped 14.6 percent in the first 20 days of January versus the prior year and last year its economic growth recorded its slowest rate over the last six years (“Govt. to offer financial support for overseas construction, plant order,” Yonhap News Agency, January 23, 2019, https://en.yna.co.kr/view/AEN20190123003000320?section=economy/economy)

Leaders from South Korea’s major business associations and the Presidential Committee on New Southern Policy formed an alliance to help Korean entrepreneurs seek better opportunities in the Association of Southeast Asian (ASEAN) market. As a key channel between the government and nearly 8,000 Korean companies doing business in ASEAN, the new alliance plans to hold a New Southern Policy digital economy forum in the first half of the year to help Korean companies explore new business opportunities in e-commerce, mobile business, and smart mobility (Shin Ji-hye, “New public-private alliance formed for ASEAN market,” The Korea Herald, January 24, 2019, http://www.koreaherald.com/view.php?ud=20190124000470)

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.