MNCs in the News-2019-04-19

China

More than 1,000 institutional investors have pledged to divest US $6.2 trillion of investments in the fossil fuels sector with a focus on divesting investment in firms heavily involved in coal mining or production or using substantial percentages of coal. This new direction among institution investors is not yet affecting Chinese mining and power companies because they do not rely on foreign investment or their primary investors are not very concerned about environmental issues (Eric Ng, “Why Is Global Investor’s Fossil Fuel Divestment Not Having the Desired Effect on China’s Carbon Emissions?” South China Morning Post, April 19, 2019, https://www.scmp.com/business/companies/article/3006768/why-global-inves...)

China’s State Council recently issued a guideline promising to give foreign investors in China’s elderly (nursing home) care sector “equal treatment to that of domestic investors.” As with domestic firms, foreign companies in the sector would be required to “‘admit disadvantaged seniors whose care would be covered by the government.’” China also is going to eliminate the requirement for administrative approval for firms entering the sector. China seeks to encourage foreign direct investment (FDI) in the sector to increase the supply and quality of nursing homes (Hu Yongqi, “Overseas Firms to Provide Elder Care,” China Daily, April 17, 2019, www.chinadaily.com.cn/a/201904/17/WS5cb660e5a3104842260b68f5.html)

In response to complaints from Chinese mobile phone makers that Swedish telecom company Ericsson violated China’s anti-monopoly law in the way it administers 3G and 4G “standard essential patents,” China’s State Administration for Market Regulation (SAMR) recently initiated an investigation of Ericsson. Ericsson acknowledged the investigation and said it is “fully cooperating with the investigation” while stressing that it licenses its patents on a “Fair, Reasonable and Non-Discriminatory” basis. In 2015, United States (US) telecom company Qualcomm paid a huge fine for violating China’s antimonopoly rules (“Ericsson Confirms It’s Under Antitrust Investigation in China,” Global Times, April 14, 2019, www.globaltimes.cn/content/1145882.shtml)

China has created an international tax cooperation mechanism under the BRI called the Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM) which includes tax authorities from almost three dozen countries and regions. 11 other tax authorities belong to BRITACOM as observers and “will have advisory roles.” BRITACOM will have a Chinese head and its office in Beijing and it will work on “expanding tax dispute resolution activities, increasing transparency, streamlining compliance, and digitizing filings.” It also may serve as a venue for sharing best practices (Chen Jia, “Multilateral Tax System Established under BRI,” China Daily, April 19, 2019, http://www.chinadaily.com.cn/a/201904/19/WS5cb9076ba3104842260b7083.html)

The President of the Energy Foundation China contends China’s Belt and Road Initiative (BRI) is “an opportunity for the world to transition into a sustainable energy future” because China, which has been championing green development,” “has plenty of experience in energy transition in fields including green finance and technology transfers.” Pursuant to the BRI, Chinese companies are building solar power projects in Morocco, waste-to-energy plants in Vietnam, and wind farms in Panama. Beyond this, Chinese firms have brought down substantially manufacturing costs in some renewable energy sectors (“BRI An Opportunity for Global Energy Transition,” China Daily, April 18, 2019, www.chinadaily.com.cn/a/201904/18/WS5cb84887a3104842260b6fc3.html)

Japan

While China intensifies its efforts to incorporate European countries into its BRI, Japanese Prime Minister Shinzo Abe seeks greater ties with Central and Eastern European countries to offer them another path to economic recovery. Abe visited Slovakia last month and plans to speak further with leaders from the Czech Republic, Hungary, Poland and Slovakia in October. Despite this as well as raising concerns about the BRI’s so-called debt trap, Japan has pledged support for the BRI to enhance ties with Beijing (Shogo Kodama, “Japan woos Eastern Europe as Belt and Road moves west,” Nikkei Asian Review, April 18, 2019, https://asia.nikkei.com/Spotlight/Belt-and-Road/Japan-woos-Eastern-Europ...)

A French newspaper revealed email exchanges between Nissan Motor and Renault executives which show Tokyo intervened last spring to block any potential merger plans between the two companies. In the emails, a Nissan executive wrote that Tokyo feared that Paris would further pressure Carlos Ghosn to push for a merger at the next general assembly and that Nissan had asked Japanese officials “‘not to be too aggressive’” toward their French counterparts while things were calming down (“Japan opposed Renault-Nissan merger via METI in spring 2018, French newspaper reports,” The Japan Times, April 15, 2019, https://www.japantimes.co.jp/news/2019/04/15/business/corporate-business...)

South Korea

Korean President Moon Jae-in called for continued cooperation between Korea and Turkmenistan during his visit to the Kiyanly plant, Turkmenistan’s first petrochemical plant built by a Hyundai Engineering Co.-led global consortium. Moon declared that the $30 billion construction project was a “’great achievement of friendship and joint prosperity between the two countries” and vowed to support Turkmenistan’s development efforts as well as Korean companies working with the Central Asian nation. The countries have agreed to further expand bilateral cooperation in the energy plant sector (“S. Korean president hopes for continued joint projects with Turkmenistan,” Yonhap News, April 18, 2019, https://en.yna.co.kr/view/AEN20190418000251320)

South Korea’s finance minister Hong Nam-ki announced that Seoul will internally prepare for inter-Korean economic projects in case sanctions on the North are eased (in exchange for a commitment to dismantle its nuclear and missile programs). Although Hong declined to elaborate on what preparations are under way, he has made appeals for assistance for North Korea to heads of the World Bank and the International Monetary Fund in case progress is made in North Korea’s sanctions relief and inter-Korean cooperation gets under way (“S. Korea to prepare internally for inter-Korean economic projects: minister,” The Korea Herald, April 13, 2019, http://www.koreaherald.com/view.php?ud=20190413000025)