MNCs in the News-2019-09-20

China

China remains attractive to foreign investors despite a global trend of decreasing foreign direct investment (FDI) as shown by the fact that from January to August, inward FDI (IFDI) amounted to USD $85.36 billion, an approximately 7 percent increase over the same period last year. Analysts believe China continues to draw IFDI because it has continuously reduced FDI restrictions in a wide range of sectors and its “opening up” has accelerated. Furthermore, the regulatory environment has improved and there are signs of progress in the operating environment (MNCs) (“China remains strong magnet for foreign investment,” Xinhua, September 14, 2019, http://www.xinhuanet.com/english/2019-09/14/c_138391993.htm)

Shanghai city authorities recently reported that the city, which gives special incentives for headquarters, hosts the regional headquarters of more than 700 MNCs. Of this total, slightly more than 100 are Asia-Pacific Region headquarters. Shanghai also is home to around 450 foreign research and development (R&D) facilities. Per city authorities, Shanghai continues to attract large amounts of FDI with strong inflows into the service and manufacturing sectors. Of note, much of the FDI going into the manufacturing sector appears to be high-tech sector FDI (“Shanghai Home to over 700 Regional Headquarters of Multinational Corporations,” China Daily, September 15, 2019, www.chinadaily.com.cn/a/201909/15/WS5d7e022ca310cf3e3556b7cd.html)

The United States (US) will scrutinize Chinese and other FDI more strictly after issuing rules adding to the 2018 Foreign Investment Risk Review Modernization Act. The new regulations specifically would enhance the power of the Committee on Foreign Investment in the United States (CFIUS) to block FDI in critical technology, companies dealing with sensitive personal data, infrastructure, and transactions involving real estate. Many believe the new policy’s main purpose is to strengthen CFIUS’s ability to block Chinese access to sensitive technology (Alan Rappeport, “U.S. Outlines Plans to Scrutinize Chinese and Other Foreign Investment,” New York Times, September 17, 2019, https://www.nytimes.com/2019/09/17/us/politics/china-foreign-investment-...)

A bipartisan group of US Senators has sent a letter to the Federal Communications Commission (FCC) requesting it to evaluate if Chinese telecommunications companies like China Telecom and China Unicom deserve operating licenses in the US given the potential security risks they pose. The FCC said it would look at the issue, but did not commit to a formal review. Chinese telecommunications companies are a frequent object of American worry with the US previously denying China Mobile a license (David McCabe, “Senators Urge F.C.C. to Review Licenses of 2 Chinese Telecom Companies,” The New York Times, September 15, 2019, https://www.nytimes.com/2019/09/15/business/federal-communications-commi...)

Japan

The head of Japan’s Fair Trade Commission (FTC) “called on leading digital platform providers to create a system to eliminate fake news and discriminatory postings.” At a news conference, he specifically stated that “‘there is a need to craft a system in which individuals who deliberately spread misinformation are forced out.’” Last year, the FTC moved to limit the ability of Internet giants such as Google, Apple, Facebook, and Amazon to exploit user information for business purposes without prior consent (Hiroshi Nakano, “FTC Calls on Internet Giants Take Steps to Battle Fake News,” The Asahi Shimbun, September 19, 2019, www.asahi.com/ajw/articles/AJ201909190043.html)

Japan’s Trade Minister told reporters that “Japan has agreed to a consultation with South Korea over Tokyo’s enhanced export control measures.” He added that Japan still felt that its export controls were consistent with World Trade Organization (WTO) rules. South Korea launched a WTO case against Japan after Japan imposed export controls on so-called sensitive goods exports to South Korea following a South Korean supreme court ruling that required Japanese companies to pay compensation for World War II forced labor (Satoshi Sugiyama, “Japan Agrees to WTO Consultation with South Korea Amid Trade Dispute,” The Japan Times, September 20, 2019, https://www.japantimes.co.jp/news/2019/09/20/business/japan-agrees-wto-c...)

South Korea

Korea’s FTC soon will hold a meeting to “decide whether the antitrust agency will accept Apple Korea’s pledge to fix its alleged ad cost dumping on mobile carriers” based on Apple Korea’s filing of a consent decree. If it accepts the consent decree, Korea’s FTC will not judge if Apple Korea engaged in any illegal practices. This will be the fourth meeting relating to charges that Apple Korea “unfairly collected advertising funds from domestic telecoms firms, including SK Telecom and KT (Nam Hyun-Wood, “FTC Chief Goes after Apple’s Alleged Abuse of Mobile Carriers,” The Korea Times, September 17, 2019, https://www.koreatimes.co.kr/www/tech/2019/09/133_275678.html)

Korea Electric Power Corp. (KEPCO) announced Australia’s Independent Evaluation Committee rejected its coal mine development project in New South Wales. The Committee stated that the project violated “sustainable development principles and public interests” partly because of the numerous adverse environmental implications it could have. KEPCO has invested several hundred million dollars in the project including acquisition costs and it may have to sell it given the ruling and its poor financial position. Nevertheless, it could file a suit or propose a new development plan (Jung Min-Hee, “KEPCO’s Mine Development Project in Australia is Going Awry,” BusinessKorea, September 19, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=36120)

*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.