MNCs in the News-2019-07-19

China

In the wake of intensifying trade tensions between China and the United States (US), an increasing number of foreign multinationals are considering moving their manufacturing out of China. So far, over 50 multinationals have announced plans to shift all or part of their investments in China to other non-tariffed countries in order to avoid the punitive tariffs imposed by the US. Some of the American and Japanese companies looking to relocate their facilities including HP, Dell, Apple, and Nintendo (Yun Li, “More than 50 companies reportedly pull production out of China due to trade war,” CNBC, July 18, 2019, https://www.cnbc.com/2019/07/18/more-than-50-companies-reportedly-pull-p...)

At the latest meeting of China’s State Council, officials promised “comprehensive measures of IPR protection, which included improving its IPR examination system, advancing law revision and enforcement.” Among other things, China is working to bring more cases, increase penalties, speed up patent and trademark reviews, and “provide across-the-board protection to all types of market actors, regardless if they are domestic or foreign-funded.” Even though “IPR protection is a challenging issue in developing countries” China is working to take “forceful measures to ensure a safe and reliable market” (“China Strives to Ensure Comprehensive IPR Protection,” China Daily, July 19, 2019, http://www.chinadaily.com.cn/a/201907/19/WS5d317564a310d830563fff67.html)

As China is making changes in its Belt and Road Initiative (BRI) strategies to improve lending practices, Beijing’s recent decision to allow a Japanese bank to clear transactions valued in yuan seems like a move to woo Japan to join the BRI. The quality and cost of many BRI projects have been widely criticized overseas, and Japan’s influence on investment quality and ability reduce funding risks would benefit the BRI’s image abroad (Karen Yeung, “China may be courting Japan to cooperate with belt and road to allay controversy after yuan clearing deal,” South China Morning Post, July 18, 2019, https://www.scmp.com/economy/china-economy/article/3019093/china-may-be-...)

A month after the construction of a Chinese-invested Payra thermal power plant in Bangladesh was stopped because of a violent clash between local workers and Chinese ones, Dhaka is concerned about violent incidents scaring away foreign investors. Bangladesh does not want to be seen as hostile to its development partners, especially China, which is investing billions of dollars into the country, significantly contributing to its economic growth. Dhaka is committed to ensuring the security and safety of foreign nationals and better communication with foreign investors (Arshad Mahmud, “Chinese investment in Bangladesh comes with risks,” Asia Times, July 17, 2019, https://www.asiatimes.com/2019/07/article/chinese-investment-in-banglade...)

Japan

Japan’s Fair Trade Commission (FTC) “has drafted guidelines stipulating that it can consider cases where information technology giants obtain personal data without consent as violations of the country’s antimonopoly law.” If the finalized guidelines are violated, then the FTC will issue cease-and-desist orders and ultimate impose penalties where it deems violations as serious. The FTC’s move come about a year after the Japanese government came up with principles to strengthen controls over IT behemoths like Amazon and Google that collect vast amounts of personal information (“Japanese Antimonopoly Watchdog Drafts Guidelines to Regulate IT Giants,” Japan Times, July 17, 2019, https://www.japantimes.co.jp/news/2019/07/17/business/japanese-antimonop...)

At a meeting of ministries dealing with economic issues, Korea’s Finance Minister reported “‘The government is working on comprehensive plans to reduce the country’s dependence on Japan’s materials, components and equipment industries.’” His statement comes after Japan instituted a tighter regime on the export of high-tech materials to South Korea which many see as retaliation for Seoul’s inaction on its court’s forced laborer compensation ruling. Korea has labeled Japan’s actions as harmful and has moved to raise them at the World Trade Organization (“South Korea to Unveil Plans to Ease Reliance on Japanese Industries,” Japan Times, July 17, 2019, https://www.japantimes.co.jp/news/2019/07/17/business/south-korea-unveil...)

South Korea

Along with creating a tighter regime for the export of three vital chemicals to Korea, Japan has threatened to “remove Korea from its export white list.” This could disrupt the supply of many other goods and affect companies like Samsung BioLogics which depend upon Japanese suppliers for goods such as filters used in the manufacture of biopharmaceuticals. Samsung is limited in its diversification options because it is a contract manufacturing organization and, unlike competitors such as Celtrion, must “use parts and materials specified by corporate customers” (Choi Moon-Hee, “Samsung BioLogics Vulnerable to Japan’s Export Restrictions,” BusinessKorea, July 19, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=34086)

Hyundai Motor Co. and Hyundai Motor America recently asked the US International Trade Commission to launch an investigation against four auto part importers including Direct Technologies (US), AJ Auto Spare Parts (United Arab Emirates/UAE), John Auto Spare Parts (UAE), and Cuong Anh (Vietnam). The claim is that these companies are importing products that violate the “IPR of an American company or individual.” Hyundai’s specific concern is that non-OEM, cheaper parts are being used in its cars in the US and affecting its sales and services (Michael Herh, “Hyundai Motor Filed Lawsuit against Auto Parts Importers,” BusinessKorea, July 15, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=33880)