MNCs in the News-2019-08-23


United States (US) banking giant Goldman Sachs has applied to increase its ownership in its securities joint venture (JV) in China from 33 to 51 percent, the new upper limit for foreign shareholding. For some, this shows foreign investors are still confident about investing in China and that China is willing to keep its promise to further open its financial sector despite trade tensions with the US. Foreign companies entering China’s equity market will increase competitive pressure on domestic brokerages (Li Qiaoyi, “Goldman Sachs applies to take controlling stake in China securities joint venture,” Global Times, August 21, 2019,

The city of Beijing unveiled plans to allow foreign firms to invest in virtual private network (VPN) services within a trial zone by the end of 2019. Foreign ownership in VPN providers will be capped at 50 percent. Per one interviewee, “‘The long-term implications are China is open for business, and continuing to embrace globalization and the multipolar world order by further integrating itself into the global system’” (Phoebe Zhang and Sidney Leng, “China plans to allow foreign investment in VPN services as part of Beijing trial in latest opening up move,” South China Morning Post, August 16, 2019,

According to credit rating agency Moody’s Investors Service, in the next few years China’s foreign direct investment (FDI) growth will likely slow or even decline because of increasing geopolitical and economic risks around the world. Chinese outward FDI (OFDI) will remain at a solid level, but firms will invest more cautiously due to their increased awareness of risks, particularly in emerging markets. Additionally, foreign governments’ attitudes toward Chinese OFDI are continuously changing, with Belt and Road Initiative (BRI) investments under particularly tighter scrutiny (Abigail Ng, “Why Chinese overseas investment growth is set to slow further,” CNBC, August 21, 2019,

Pakistani ministers have long talked about the need to review China’s BRI projects in the country. It was surprising, then, when the Pakistan government announced that it will set up a body in charge of fast-tracking them: the China-Pakistan Economic Corridor (CPEC) Authority. The sudden policy reversal is seen as an effort by Pakistan to woo China’s support over Kashmir, a territory disputed for decades between Pakistan and India. China’s support will depend on the role of the US government (Adnan Aamir, “Kashmir issue puts Pakistan’s Belt and Road projects on fast track,” Nikkei Asian Review, August 18, 2019,


According to the monthly Reuters Corporate Survey, 3/4th of almost 505 queried companies “broadly support Prime Minister Shinzo Abe’s tough trade stance against South Korea.” Interestingly, 9/10ths of surveyed firms anticipate that Japan would win if South Korea filed a case in the World Trade Organization (WTO) against Tokyo’s restrictions on the export of certain high-tech chemicals to South Korea. Some Japanese firms worry about the impact of Japan-South Korea frictions on their bottom line while others see no substantive adverse impact (“Japan Inc. backs tough trade stance vs. S. Korea amid row,” The Asahi Shimbun, August 20, 2019,

Per a South Korea Ministry of Trade, Industry, and Energy and Korea Association of Machinery Industry report, over the first five months of this year, “South Korea’s material and component imports from Japan went down 8.4 percent while its total material and component imports edged down 1.4 percent…[consequently] the ratio of the imports from Japan to the total imports decreased from 16.6 percent to 15.4 percent.” Still, Korea’s biggest trade deficit was with Japan while its largest trade surplus was with China (Jung Min-Hee, “South Korea’s Dependence on Japanese Components and Materials Falls Slightly,” Business Korea, August 22, 2019,

South Korea

The Korea Economic Research Institute recently conducted a survey of nearly 1000 larger Korean firms and 51.6 percent of respondents (153 firms) stated they believed “business will suffer negative effects as a result of Japan's export restrictions.” Respondents forecast declines in sales and profits with companies in the machinery, petroleum, and semiconductor sectors anticipating the largest impact in terms of reduced sales and profits. While the expected average profit decline was not large, operating margins also were not large meaning many companies might experience losses (Nam Hyun-Woo, “Japan Row Impact on Each Industry’s Sales,” Korea Times, August 19, 2019,

An investigation in 2018 by German authorities that revealed Audi and Porsche had rigged exhaust gas emissions for certain Audi vehicles led Korea’s Ministry of the Environment to investigate whether Audi Volkswagen Korea and Porsche Korea has engaged in similar illegal behaviors. The MoE recently decided that these companies had “illegally rigged exhaust gas emissions” and subsequently revoked the certifications for certain Audi, Volkswagen, and Porsche diesel models, ordered the firms to correct all problems, and reported the firms for prosecution (Michael Herh, “Audi Volkswagen Korea, Porsche Korea Found to Have Rigged Exhaust Gas Emissions,” BusinessKorea, August 21, 2019,

*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.