MNCs in the News-2019-04-26

China

The annual report of the United States (US) Trade Representative’s office (USTR) on Intellectual Property (IP) practices stated that despite China’s reform promises “China [has] failed to make fundamental structural changes to strengthen IP protection and enforcement, open China’s market to foreign investment, allow the market a decisive role in allocating resources, and refrain from government interference in private sector technology transfer decisions.” The USTR said Beijing urgently needs to strengthen IP safeguards relating to, among other things, preventing the theft of trade secrets (Andrew Mayeda, “U.S. Reiterates Call for China to Strengthen IP Safeguards,” Bloomberg, April 25, 2019, https://www.bloomberg.com/news/articles/2019-04-25/u-s-reiterates-call-f...)

After facing criticism that the Belt and Road Initiative (BRI) is indebting poorer countries and making them dependent on China, Chinese President Xi Jinping pledged to clean up his signature initiative and adopt a zero-tolerance policy towards corruption. He added Beijing will “negotiate and sign high-standard free trade agreements with more countries, strengthen cooperation in customs, taxation, auditing and supervision, and establish a cooperation mechanism for jointly building the Belt and Road tax collection and management system” (Dandan Li, Peter Martin and Andrea Calonzo, “China's Xi Defends Belt and Road, Vows ‘Zero Tolerance’ of Graft,” Bloomberg, April 26, 2019, https://www.bloomberg.com/news/articles/2019-04-25/china-s-xi-to-sell-be...)

In early April, the European Union (EU) adopted laws to screen inward foreign direct investment (FDI) that require “the sharing of information about non-EU investment in critical sectors and allow member states to question deals they perceive detrimental to the bloc’s interests.” A survey revealed that because the screening mechanism targets sectors that receive the most inward Chinese FDI, 85 percent of Chinese companies now believe they are discriminated against when investing in the EU (Amanda Lee, “EU investment rules leave over 80 percent of Chinese firms feeling discriminated against, survey says,” South China Morning Post, April 24, 2019, https://www.scmp.com/economy/article/3007496/eu-investment-rules-leave-o...)

United Kingdom (UK) officials reportedly approved China’s Huawei developing a 5G network in the UK. The reported decision has the potential to spark tensions between Britain and the US, as US officials have long pressured the UK to ban Huawei because of security concerns. Regardless, “any decision to move forward with Huawei will not be official until it is announced by the secretary for digital culture and reported to Parliament” (Brian Fung and Ellen Nakashima, “Huawei reportedly gets the green light to participate in Britain’s 5G rollout, a would-be setback for the U.S.,” The Washington Post, April 25, 2019, https://www.washingtonpost.com/technology/2019/04/25/huawei-gets-green-l...)

Japan

Eager to keep Italy from moving too close to Beijing (as evidenced by Italian Prime Minister Giuseppe Conte signing a memorandum of understanding to participate in China’s BRI), Japanese Prime Minister Shinzo Abe called for deeper cooperation during a summit with Conte. Japan also seeks closer ties with European countries because it worries about their interest in Chinese 5G technology. It shares American anxieties about Chinese technology and the BRI though it plans to cooperate with China on the latter (Shogo Kodama, “Abe presses for deeper ties to slow Italy’s tilt toward China,” Nikkei Asian Review, April 25, 2019, https://asia.nikkei.com/Politics/International-relations/Abe-presses-for...)

South Korea

While South Korean automobile producers are struggling to enter the Chinese electric vehicle (EV) market, Chinese companies are thriving in South Korea thanks to Seoul’s generous subsidy policy. Beijing has excluded EVs equipped with Korean batteries from its subsidies list since 2016 whereas Seoul pays subsidies to EVs of all countries providing they obtain a certain certification. Some argue that Seoul should abolish the subsidy system while the industry claim that the subsidies are crucial to promote the local EV industry (Jung Suk-yee, “S. Korean Gov’t Gives Out Lavish Subsidies to Chinese EV Producers,” Business Korea, April 24, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=31206)

The upcoming end to the US policy of granting waivers to Seoul and other nations importing Iranian crude oil is expected to hurt Korea petrochemical firms such as SK Incheon Petrochem and Hyundai Oilbank. Since last November’s announcement by the US that it would ban Iranian crude oil imports, Korean refiners have been reducing Iranian oil imports significantly. However, the price of Iranian oil and its quality makes it difficult for Korean firms to shift to alternative suppliers like Qatar (Nam Hyun-woo, “US embargo on Iranian oil to hurt SK Incheon, Hyundai Oilbank,” The Korea Times, April 22, 2019, http://www.koreatimes.co.kr/www/tech/2019/04/693_267587.html)