MNCs in the news-2019-05-03

China

Recent statistics show foreign direct investment (FDI) into China from the United States (US) increased by 65.6 percent in the first quarter of 2019. Total Chinese inward FDI (IFDI) reached USD $36 billion in the first three months of the year, an increase of 6.5 percent year-over-year (YOY). Although the flow of IFDI has been decelerating, flows into China have maintained stable growth, showing foreign investors’ faith in China’s economic growth and confidence in its investment environment (Amanda Lee, “US investors ‘confidently’ pouring money into China despite trade war, says commerce minister,” South China Morning Post, April 29, 2019, https://www.scmp.com/economy/china-economy/article/3008136/us-investors-...)

China announced it will soon further open its banking and insurance sectors. It specifically plans to remove single shareholding caps for local lenders as well as to allow foreign insurance groups to set up branches in the country without asset requirements. Despite the announcement’s surface appeal, the reality is that foreign companies will face strong competition from the state-owned enterprises (SOEs) that dominate China’s financial system and have longstanding ties to the government (Jun Luo, Lucille Liu, Dingming Zhang, Alfred Liu and Ken Wang, “China unveils plan to further open up banking and insurance sectors,” Bloomberg, May 1, 2019, https://www.bloomberg.com/news/articles/2019-05-01/china-unveils-plans-t...)

The United Arab Emirates (UAE) and China recently signed various deals totaling $3.4 billion pursuant to China’s Belt and Road Initiative (BRI). “As part of the new deals, the two countries launched a number of new investments including the development of a 60 million square feet station at the new Silk Road in Dubai for Expo 2020.” The UAE has emerged as a key player in the BRI because of its strategic location connecting China with the West, (Dan Murphy, “The UAE signed a massive, $3.4 billion deal with China — and that ‘isn’t a surprise’,” CNBC, April 29, 2019, https://www.cnbc.com/2019/04/29/china-uae-trade-deal-on-belt-and-road-is...)

During the second Belt and Road Forum, Cambodia and China signed at least nine deals, reaffirming Phnom Penh’s close relationship with China. Beijing “announced plans to launch a second phase of development in the coastal Sihanoukville province where it has already built over 100 casinos and dozens of hotels and resorts.” These investments have already moved Cambodia away from the European Union (EU), its major development partner, and have sparked strong anti-Chinese sentiment among locals (Andrew Nachemson, “Chinese investment in Cambodia is bringing Phnom Penh closer to Beijing–and further from the EU,” South China Morning Post, May 1, https://www.scmp.com/news/asia/southeast-asia/article/3008451/chinese-in...)

Japan

With China in mind, Japan is considering proposing a set of rules to increase transparency and responsible financing for infrastructure investment in developing countries during the June Group of 20 (G-20) summit in Osaka. While Tokyo says it is too early to tell whether Beijing will accept the proposed rules to “increase transparency of contracts and give due consideration to the debt repayment capacity of countries receiving investments,” it hopes that they will lay the foundation for deeper cooperation with Beijing (“With China in mind, Japan eyes new infrastructure investment rules for G20,” The Japan Times, April 29, 2019, https://www.japantimes.co.jp/news/2019/04/29/business/china-mind-japan-e...)

Lawyers representing South Koreans forced to labor for Japanese corporations during World War II requested a court to sell assets seized from Nippon Steel and Nachi-Fujikoshi to secure compensation. The plaintiffs plan to force the sale of 194,000 of the Japanese firms’ shares, worth $832,139, in their South Korean joint ventures. In response, Tokyo demanded that Seoul quickly deal with the growing number of wartime labor lawsuits or Tokyo will take “’some sort of retaliatory measure should this damage Japanese companies’” (Yosuke Onchi, “South Korean wartime laborers seek sale of Japan company assets,” Nikkei Asian Review, May 1, 2019, https://asia.nikkei.com/Politics/South-Korean-wartime-laborers-seek-sale...)

South Korea

During meetings with his Kuwaiti counterpart in Kuwait City last week, South Korea Prime Minister Lee Nak-yon asked Kuwait to allow more South Korean companies to participate in infrastructure project in the country. In particular, Lee expressed his hopes Korean companies would have the opportunity to participate in the construction of refinery and desalination plants in Al Zour as well as a port improvement project in Mubarak Al-Kabeer. During Lee’s visit, the two prime ministers signed eight memorandums of understanding to promote cooperation (“PM calls for S. Korean firms’ participation in Kuwait infrastructure projects,” Yonhap News, May 2, 2019, https://en.yna.co.kr/view/AEN20190502001100315)

*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.