MNCs in the News-2019-09-06

China

On the eve of German Chancellor Angela Merkel’s visit to China, China’s Ministry of Commerce (MOFCOM) reported that German foreign direct investment (FDI) in China grew 62.7 percent over the first seven months of the year year-over-year (YOY). MOFCOM touted that German firms have been “actively participating in the new round of China’s opening up” as witnessed by FDI from BASF, Volkswagen, BMW, and others. In tandem with rising German FDI in China, bilateral trade has been increasing as has Chinese FDI in Germany (“German Investment in China up 62.7 Pct in first 7 Months,” Xinhuanet, September 5, 2019, http://www.xinhuanet.com/english/2019-09/05/c_138368116.htm)

Chinese media reported American delivery firm FedEx “allegedly handled a package bound for Hong Kong that contained controlled knives… It once again allegedly violated Chinese law, at a time when it is still under formal investigation for a gun delivery in China and for ‘misrouting’ shipments intended for Huawei.” One interviewee said these consecutive incidents suggests some managerial problems at the firm which might affect its future prospects in China. Some believe FedEx’s errors mean it could be one of the first firms added to China’s unreliable entities list (“FedEx Faces Backlash in China,” Global Times, September 4, 2019, http://www.globaltimes.cn/content/1163679.shtml)

Recently, there were protests in three Kazakh cities about the construction of Chinese factories which protestors charged would be “outdated and polluting.” There are background sources of anti-Chinese sentiment fueling these protests such as a belief China hires too few locals and pays poor wages, fears of the sale of farmland to China, and Chinese policies in Xinjiang. China has poured a large amount of FDI into Kazakhstan, especially in the energy sector and is a major consumer of Kazakh oil and gas (Pavel Mikheyev and Tamara Vaal, “Dozens Protest against Chinese Influence in Kazakhstan,” Reuters, September 4, 2019, https://www.reuters.com/article/us-kazakhstan-china-protests/dozens-prot...)

The United States (US) has been pressing other countries not to accept Huawei Technologies involvement in the construction of their 5G wireless networks. The campaign has had mixed results in Europe and elsewhere, though the US just concluded a declaration with Poland that calls for the ‘rigorous evaluation’ of foreign suppliers including examining whether or not such suppliers are controlled by a foreign government and are transparent. The declaration does not mention China or Huawei, but it is felt it is directed at both (“U.S., Poland Ink 5G Security Agreement in Shadow of Anti-Huawei Campaign,” Caixin, September 3, 2019, https://www.caixinglobal.com/2019-09-03/us-poland-ink-5g-security-agreem...)

Japan

Tokyo’s political and economic frictions with Seoul due to Second World War related forced labor compensation issues, Japan’s subsequent imposition of export controls, and South Korea’s response have hit sales of Japanese products in South Korea. Consequently, Nissan Motor is considering stopping sales in South Korea and ending its involvement in an auto assembly joint venture (JV) with Renault Samsung. Nissan has long been a laggard in South Korea where Japanese auto companies do not fare well against Korean and German competitors (“Nissan Mulls Pulling Out of South Korea as Trade Tensions Rise,” The Asahi Shimbun, September 6, 2019, www.asahi.com/ajw/articles/AJ201909060062.html)

The operator of Uniqlo clothing stores, Fast Retailing Co., has announced that it is partnering with the International Labor Organization (ILO) “to improve conditions for workers in Asia, in its latest push to ensure labor protections in countries where social security systems are underdeveloped.” It specifically is donating money to support research on labor markets and social security systems in Southeast and South Asian countries where it has production bases. The ILO partnership will promote employment insurance in Indonesia (“Uniqlo Operator Partners with U.N. agency in Bid to Improve Working Conditions in Asia,” The Japan Times, September 4, 2019, https://www.japantimes.co.jp/news/2019/09/04/business/uniqlo-operator-pa...)

South Korea

For the first time in eight years, Hyundai Motor Co. management and the union were able to reach an accord without a strike. The union appeared motivated to settle partly because of economic frictions between Korea and Japan. Said one union representative, “‘if we had staged an all-out strike under such circumstances, we would have had to face even more criticism from the public and perhaps a boycott.’” Korean officials asked other companies engaged in wage negotiations to be “prudent” given the economic environment (Jung Min-Hee, “Wage Agreement Concluded without Strike at Hyundai Motor Co.,” BusinessKorea, September 4, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=35656)

A Korea Ministry of Trade, Industry, and Energy official recently met with top executives of LG Group and SK Group, which are locked in a dispute that has witnessed LG Chem filing a complaint with the US International Trade Commission alleging theft of trade secrets by SK Innovation. The Korean official encouraged both parties to discuss the matter because of the potential negative impact on Korea’s battery industry. There are signs they may be willing to resolve their dispute through dialogue (Michael Herh, “Korean Government Going between SK and LG Groups to Prevent Battery War,” BusinessKorea, September 4, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=35675)

*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.