MNCs in the News-2019-03-01

China

China’s Ministry of Commerce (MOFCOM) announced that China will keep improving the legal and market environments for foreign investors. The country is facing some difficulties in utilizing foreign direct investment (FDI) now that the global economy is slowing down and there is a high competition for overseas capital. Therefore, the government plans to legalize its foreign investment policy system, build high-quality national economic development zones, enhance regional coordination, and improve services and intellectual property rights for foreign investors to attract more FDI in the near future (“China to continue improving services for foreign investors,” China Daily, February 28, 2019, http://www.chinadaily.com.cn/a/201902/28/WS5c777c6da3106c65c34ebf7a.html)

According to a 2017 report by the American Intellectual Property Commission, the United States (US) economy loses at least USD $225 billion annually from counterfeit goods, pirated software, and theft of trade secrets. Sensitive to many American firms’ complaints about Chinese companies stealing their intellectual property (IP), US President Donald Trump recently announced the US has made substantial progress in talks with Beijing on improving its IP protection. China has long denied all accusations, but Americans continue to see China as an economic threat (Todd Shields, “Chasing China Theft, U.S. Uncovers Bonuses for Stolen Data,” Bloomberg, February 28, 2019, https://www.bloomberg.com/news/articles/2019-02-28/from-bounty-payments-...)

According to a recent survey by the American Chamber of Commerce in China (AmCham China), 59 percent of its members believe the Chinese judicial system’s enforcement of intellectual property rights (IPR) has improved in the last five years. However, the same survey also showed overall profitability fell slightly and business optimism declined, especially in the technology and resources and industrial sectors, where there was a sharp increase in concerns about rising costs (Evelyn Cheng, “As the US and China tangle over Beijing's treatment of foreign firms, many companies see progress on intellectual property rights,” CNBC News, February 26, 2019, https://www.cnbc.com/2019/02/26/amid-us-china-trade-dispute-companies-sa...)

Following the European Parliament's recent approval of a mechanism to control foreign investment in strategic sectors of the European Union (EU), a Chinese official called upon the EU to adopt an open and inclusive attitude towards foreign companies and create a transparent and convenient business environment for them. The EU has always been a supporter of an open market, and the Chinese government will continue to encourage competitive and creditable companies to cooperate with and invest in the EU to achieve win-win results (“Chinese commerce official calls on EU to be open, inclusive,” Xinhua, March 1, 2019, www.xinhuanet.com/english/2019-03/01/c_137858436.htm)

Japan

According to the Japan External Trade Organization (JETRO), Japanese companies supplying parts and materials to exporters in China are affected more by US-China trade frictions than other Japanese firms operating in the country. In a survey of 1,628 Japanese firms doing business in China, around 40 percent of responding firms opined the US-China trade war has had negative effects for them. A JETRO official observes the impact of US-China trade frictions may have worsened since the survey was conducted (“JETRO: Parts suppliers in China hit by trade friction,” The Japan News, February 26, 2019, http://the-japan-news.com/news/article/0005567679)

In a “last-ditch attempt,” British business secretary Greg Clark will travel to Japan to ask Honda Motors to reconsider its recent decision to shut down a car plant in Swindon, England. Clark is considering offering financial assistance to Honda and is expected to directly ask Honda's President to withdraw his shutdown plans. While Honda did not directly attribute the shutdown to Brexit, it did acknowledge worries of possible parts supply disruptions as partly influencing its decision (“U.K. minister to head for Japan and try to convince Honda to reconsider Swindon plant shutdown,” The Japan Times, February 26, 2019, https://www.japantimes.co.jp/news/2019/02/26/business/u-k-minister-head-...)

South Korea

A memorandum of understanding to build the world’s largest single underground project ever awarded for oil storage was signed in the presence of South Korea’s President and the Crown Prince of Abu Dhabi. South Korea Engineering and Construction was awarded the engineering, procurement, and construction contract by the Abu Dhabi National Oil Company. For some, the $1.21 billion project is “a testament to the strong partnership between UAE and South Korea and to the capability of SK Engineering and Construction” (“UAE, S. Korea Sign MoU to Build World’s Largest Underground Project for Oil Storage,” Asharq Al-Awsat, February 28, 2019, https://aawsat.com/english/home/article/1612031/uae-s-korea-sign-mou-bui...)

This year, South Korea’s Financial Supervisory Service will tighten monitoring of foreign firms’ unfair trading practices as a result of dramatic growth in the number of unfair trades by foreign investors. In August, the Korea Exchange investigated the Bank of America Merrill Lynch Seoul office for “allegedly disturbing the stock market through its high-frequency trading practices.” In May, it fined Goldman Sachs International and its Seoul branch $6.6 million for short selling stocks without borrowing them first (Jhoo Dong-chan, “Regulator to crack down on foreigners’’ unfair trading practices,” The Korea Times, February 26, 2019, http://www.koreatimes.co.kr/www/biz/2019/03/367_264438.html)