MNCs in the News-2019-05-24

China

In apparent response to the executive order by the United States (US) government preventing American companies from selling their technology to China, China’s Cyberspace Administration has released online a draft document titled “Cybersecurity Review Measures” for public feedback. The draft states that “operators of the country’s critical information infrastructure, including major telecom companies and financial service providers, will be required to take into account national security risk when purchasing foreign products and services” (Meng Jing, “China’s cybersecurity laws may be used to block US tech firms on national security grounds, says expert,” South China Morning Post, May 24, 2019, https://www.scmp.com/tech/policy/article/3011655/chinas-cybersecurity-la...)

European companies have long complained that they are forced to hand over technology in exchange for gaining access to the China market. The results of a recent survey by the European Union (EU) Chamber of Commerce in China revealed that forced technology transfers not only persist, but also that they happen at double the rate of two years ago. Beijing keeps disregarding the issue and denying claims of forced transfers. In the background, the EU’s outlook for China’s regulatory environment is increasingly “bleak” (Michael Martina, “China's tech transfer problem is growing, EU business group says,” Reuters, May 20, 2019, https://uk.reuters.com/article/uk-china-eu/chinas-tech-transfer-problem-...)

While the United Arab Emirates (UAE) aims to become a major partner of China’s Belt and Road Initiative (BRI) in the Middle East, China’s East Hope Group conglomerate is contemplating a $10 billion port investment in the Gulf state. As part of its efforts to diversify away from oil, the UAE is promoting its infrastructure and strategic location in hopes of becoming a BRI hub. President Xi Jinping’s visit to the UAE last year increased hopes for more investments from China (Simon Kerr and Lucy Hornby, “Chinese group eyes $10bn industrial investment in UAE,” Financial Times, May 24, 2019, https://www.ft.com/content/1c93d350-7e2c-11e9-81d2-f785092ab560)

China’s chargé d'affaires in London has warned that if Huawei were to be banned from Britain's 5G network that there might be “substantial” repercussions for Chinese investment in the United Kingdom (UK). Beijing has already “witnessed some conscious moves” in that direction, but the diplomat reiterated that the Chinese government would never force Chinese firms abroad to send information to its intelligence agencies. The UK is currently reviewing its 5G telecoms policy and may allow Huawei to supply non-core 5G components like antenna masts (“Huawei: China warns of investment blow to UK over 5G ban,” BBC, May 23, 2019, https://www.bbc.com/news/business-48377235)

Japan

The Japan unit of US e-commerce giant Amazon has decided to stop direct sales of all Huawei products through its online store. This follows US Google’s decision to stop allowing Huawei access to updated versions of its Android mobile. Amazon Japan stated, “it is taking steps to ensure shoppers will not experience problems with the products they purchase.” Amazon, though, is allowing third-party sellers to market Huawei devices on its marketplace. Huawei items also remain on sale through other e-tailers in Japan such as Rakuten (“Amazon Japan Halts Direct Sales of Huawei Devices,” Nikkei Asian Review, May 24, 2019, https://asia.nikkei.com/Spotlight/Huawei-crackdown/Amazon-Japan-halts-di...)

Mizuho Financial Group Inc. said that it will tighten standards for lending to coal-fired power plants with high emissions of CO2, as part of its measures to fight climate change. From July, new loans will be supplied just to plants that use so-called ultrasupercritical pressure or even more efficient systems to reduce CO2 emissions. Mizuho’s rival Sumitomo Mitsui Banking Corp. already applies the same standard for new funding for coal-fired power plants (“Mizuho to Tighten Rules on Lending to Coal-Fired Power Plants in Lines with Other Japan Banks,” The Japan Times, May 23, 2019, https://www.japantimes.co.jp/news/2019/05/23/business/corporate-business...)

South Korea

Renault Samsung workers rejected the draft wage and bargaining agreement their leaders and the joint venture’s (JV) management had reached after 11 months of negotiation. Workers, who had announced in the middle of May they would launch an “indefinite all-out strike” if the agreement was rejected, already had staged 62 strikes of various duration while the deal was being negotiated, causing the JV significant production delays and losses. It is possible Renault may manufacture its XM3 in Spain if the JV’s labor problems continue (Jung Min-Hee, “Intra‑union Conflict Coming to Surface in Renault Samsung Motors,” BusinessKorea, May 23, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=32126)

Iraq’s Ministry of Petroleum awarded Hyundai Engineering and Construction (Hyundai E & C), a $2.45 billion order to build a seawater supply facility in Iraq. Water from the plant, which is expected to produce 5 million barrels of water per day, will be injected into oil wells at a field in Basrah to increase crude output. Hyundai E&C has a long history in Iraq and has won 39 projects worth about US $7 billion, including the Al Mussaib Power Station (Michael Herh, “Hyundai E&C Lands US$2.45 Bil. Order to Build Seawater Supply Facility in Iraq,” BusinessKorea, May 23, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=32143)