MNCs in the News-2019-09-13

China

Despite claims large numbers of multinational corporations (MNCs) are leaving China, they continue to regard China as an “attractive environment for new investment.” One renowned economist notes inward Chinese nonfinancial foreign direct investment (FDI) maintains the same growth rate as the past five years. Per the economist, MNCs are not leaving China because they have established extensive local supply chains with skilled employees, relocating within Asia and to the United States (US) is costly or unviable, and because of the China market’s attractiveness (“Multinational firms still investing in China despite US tariffs: US economist,” China Daily, September 11, 2019, https://www.chinadaily.com.cn/a/201909/11/WS5d78b56ba310cf3e3556b09d.html).

Meeting with a Japanese business delegation, which included leaders of the Japan-China Association on Economy and Trade, the Japan Chamber of Commerce and Industry, and the Japan Business Federation, Chinese Premier Li Keqiang stated “China welcomes the Japanese economic community to seize the opportunity brought forth by China's opening up and increase foreign direct investment (FDI) in China, expand cooperation areas, and promote more cooperation achievements.” The Japanese side responded they “were willing to boost cooperation with China in science and technology innovation, health care, and third-party markets” (“China Welcomes More Japanese Investments: Premier Li,” Xinhuanet, September 12, 2019, http://www.xinhuanet.com/english/2019-09/12/c_138384906.htm)

According to a report by China’s Ministry of Commerce, National Bureau of Statistics, and the State Administration of Foreign Exchange, China’s outward FDI (OFDI) in 2018 totaled USD $143.04 billion, the second highest after Japan’s. The 2018 total represented a decrease of 9.6 percent over 2017. In 2018, China’s OFDI stock reached $1.98 trillion, third after the US and the Netherlands. The report touted “China has set up more than 10,000 overseas enterprises in countries and regions involved in the Belt and Road Initiative” (BRI) (Ouyang Shijia, “China Second in Global Outbound Direct Investment,” China Daily, September 12, 2019, http://www.chinadaily.com.cn/a/201909/12/WS5d7a4021a310cf3e3556b507.html)

China has been moving to cooperate with BRI countries and regions in the “‘internet plus healthcare’” areas. An example of this is China’s cooperation with Benin which entails a joint telemedicine cooperation center whereby Chinese doctors in China can undertake diagnostic work in the African country by using the internet. Internet+healthcare cooperation also was a part of cooperation discussions that occurred at the 4^th China-Arab States Expo. China has been moving to cooperate with Arab states in areas like disease control and traditional medicine (“China, BRI Countries Eye Joint Projects in Internet-Powered Healthcare Sector,” Global Times, September 10, 2019, http://www.globaltimes.cn/content/1164169.shtml)

Japan

Japan’s Fair Trade Commission (FTC) searched the Tokyo offices of German auto firm BMW last week “over suspicions it set impossible sales targets for dealers and unfairly punished them when they failed to reach the goals.” The punishment reportedly involved requiring dealers to buy BMW cars that they were unable to sell, with dealers ultimately having to sell these cars at a loss. Japan’s FTC specifically is probing if BMW’s Japanese subsidiary abused its market power thereby violating Japan’s Anti-Monopoly Law (Hiroshi Nakano, “FTC Investigates BMW Japan for Alleged Pressure on Car Dealers,” The Asahi Shimbun, September 12, 2019, www.asahi.com/ajw/articles/AJ201909120039.html)

Japan’s Trade Minister told reporters “Japan won’t adjust its export control measures against South Korea but is considering how it will respond…after Seoul filed a complaint…at the World Trade Organization” (WTO). He specifically stated “‘We are going to address the issue appropriately, including whether to respond (to a request for bilateral consultation).’” Per WTO rules, Japan has less than two weeks to decide. Regardless, Tokyo’s position is that its measures violate no WTO provisions (Satoshi Sugiyama, “As WTO Dispute Looms, New Trade Chief Says Japan Won’t Budget in Export Control Row with Seoul,” The Japan Times, September 12, 2019, https://www.japantimes.co.jp/news/2019/09/12/business/wto-dispute-looms-...)

South Korea

The Korea Employers Federation and similar groups have told the Korean government they have problems with Seoul’s proposed partial amendment to the Trade Union and Labor Relations Adjustment Act related to the ratification of International Labor Organization (ILO) Conventions 87 and 98. They contend the ratification, which will give labor more rights, allow union membership to laid-off and unemployed individuals, and permit wages to be paid to full-time union officials, will promote more powerful and therefore more contentious labor unions (Jung Suk-Yee, “Economic Organizations Opposed to Amendment to Trade Union and Labor Relations Adjustment Act,” BusinessKorea, September 11, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=35913)

Stressing the importance of protecting intellectual property rights (IPR) to deal with challenges from Chinese competitors and European carmakers, South Korea’s LG Chem opined in regards to its lawsuit against SK Innovation in the US for trade secret theft that “‘There is no basis whatsoever that the ongoing lawsuits will undermine the national interest.’” Despite the lawsuit, firm remains open to negotiating with SK Innovation. While the lawsuit proceeds the firm is moving to cooperate with China’s Geely Auto to produce electric vehicle batteries (Jun Ji-Hye, “‘LG-SK Lawsuit Does Not Undermine National Interest,” The Korea Times, September 10, 2019, http://www.koreatimes.co.kr/www/tech/2019/09/133_275410.html)