MNCs in the News-2019-04-05

China

The trade war with the United States (US) and increasing costs are accelerating a shift of foreign firms away from China. To attract more inward foreign direct investment (FDI), Beijing took an unusual step to pressure local authorities to implement national policies: specifically, it publicly named and shamed dozens of local governments for mistreating foreign companies. The National Audit Office announced it found 45 local authorities who “committed violations relating to levying unauthorized fees and delays in granting business licenses” (Amanda Lee, “China names and shames local governments for mistreating foreign investors,” South China Morning Post, April 3, 2019, https://www.scmp.com/economy/china-economy/article/3004479/china-names-a...)

Chinese Vice Premier Han Zheng stated that opening-up and attracting inward FDI is crucial for Beijing at this moment. During a meeting with ExxonMobil CEO Darren Woods, Han said that the American petrochemical giant is welcome to set up its wholly owned subsidiary in China. China is a key market for global energy companies, therefore the government wants to encourage the entry of more wholly foreign-owned enterprises (WOFEs) in the petrochemical industry, which so far has been dominated by state-owned enterprises (SOEs) (Runhua Zhao, “China Tells Exxon Boss: Bring on the ‘Wholly Foreign-Owned Petrochemical Projects,’” Caixin, April 4, 2019, https://www.caixinglobal.com/2019-04-04/china-tells-exxon-boss-bring-on-...)

After being subject to criticism about its Belt and Road Initiative (BRI), China is drafting rules to identify a list of BRI projects that is officially acknowledged by the Chinese government. Unchecked use of the “BRI” name on projects has created confusion about the aim of the initiative and damaged its reputation abroad. Therefore, China is seeking a way to stop companies from misusing the name. Chinese President Xi Jinping emphasized that the BRI is about economic cooperation, not a geopolitical alliance (Dandan Li, “China Moves to Define ‘Belt and Road’ Projects for First Time,” Bloomberg, April 3, 2019, https://www.bloomberg.com/news/articles/2019-04-03/china-moves-to-define...)

China’s expansion in Latin America via the BRI is raising concerns in Washington due to the fact increasing Chinese FDI is flowing to strategically important areas such as Panama. President Donald Trump’s “America first” policies are leaving a vacuum of leadership in a region traditionally under US influence and it seems China is trying to fill it. “There are concerns about the possible effects on US firms, on regional stability and, above all, on US influence in the region” (Juan Zamorano, Kathia Martinez and Joe McDonald “China’s construction binge spreads to Americas, rattles US,” Washington Post, April 4, 2019, https://www.washingtonpost.com/world/asia_pacific/chinas-construction-bi...)

Japan

British government officials and senior labor union members will travel to Japan to meet with Honda executives and press them to review their decision to shut down the Honda Swindon plant. Many placards in last month’s rally staged by thousands of factory workers called on the British government to take action and even nationalize the plant. While calling the planned shutdown “‘the wrong decision,’” a British official refrained from commenting on the ongoing turmoil over Brexit (“U.K. government and labor union officials plan trip to Japan in bid to save Honda’s Swindon plant,” The Japan Times, April 4, 2019, https://www.japantimes.co.jp/news/2019/04/04/business/corporate-business...)

Toshiba is facing delays in securing approval from the Committee on Foreign Investment in the United States (CFIUS), which examines the national security implications of foreign investments in the US, to sell its liquefied natural gas (LNG) business to a Chinese company. As Toshiba wants to avoid carrying over more losses from its LNG investment to the next business year, it will report a USD $838 million loss on its business in the current business year (“Toshiba runs into hurdle as it tries to sell Texas LNG Asset,” Nikkei Asian Review, April 1, 2019, https://asia.nikkei.com/Business/Companies/Toshiba-runs-into-hurdle-as-i...)

South Korea

Korea Hydro & Nuclear Power (KHNP) may have blown its $2.6 trillion won bid to become a long-term maintenance service provider of the United Arab Emirates (UAE) Emirates Nuclear Energy Corporation’s (ENEC) Barakah Nuclear Energy Plant due to a deepening feud over KHNP’s “unilateral” decision to replace the plant’s workforce. KHNP defended its action by stating that it was just a “regular workforce reshuffle,” but ENEC CEO Mohamed Al Hammadi warned KEPCO, KHNP’s parent, of the “severity and the critical risk” of the unilateral decision (Nam Hyun-woo, “’Nuclear feud’ deepens between Korea, UAE,” The Korea Times, April 3, 2019, http://www.koreatimes.co.kr/www/tech/2019/04/693_266552.html)

Hyundai Motor denied last week that it was building a new manufacturing plant in Saudi Arabia, in response to a Saudi Arabian Cabinet member’s interview in which he said “there had been ‘advanced’” talks on the matter. While the Minister had welcomed Korean automobile companies with support, stressing the growing demand for automobiles in the region in his interview, Hyundai stated that there are no plans to make investments in Saudi Arabia and there were no advanced talks in regards to doing so (Cho Chung-un, “Hyundai Motor denies ‘advanced’ talks on Saudi Plant,” The Korea Herald, April 4, 2019, http://www.koreaherald.com/view.php?ud=20190404000592)

*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.