MNCs in the News-2019-09-27

China

Speaking at an event in the United States (US), Chinese Foreign Minister Wang Yi said “China will never close its door but will only open wider.” Six months before Wang Yi’s speech, China passed a new foreign investment law that will become effective at the beginning of next year. Wang stressed that “the law and its matching regulations will foster a fairer and more transparent market environment.” He further highlighted China’s progress on negative lists and called for the US to remove its investment restrictions (“China will Never Close its Door, Says Chinese FM,” People’s Daily.com, September 25, 2019, http://en.people.cn/n3/2019/0925/c90000-9617803.html)

The European Chamber of Commerce in China recently released a report accusing Chinese state-owned enterprises (SOEs) of “‘sucking up all the oxygen.’” The report further observed China’s many reforms have not been enough to “‘offset the resurgence of the state-owned economy.’” Chinese analysts, though, retort that what European companies want is not a level playing field but a field tilted in their favor. They added that foreign firms need to realize that China’s business environment is highly competitive rather than blaming their difficulties on SOEs (Li Xuanmin, “EU business group’s SOE criticism biased: analysts,” Global Times, September 24, 2019, http://www.globaltimes.cn/content/1165432.shtml)

China’s sovereign wealth fund, the China Investment Corporation (CIC), established a multi-billion-dollar joint investment fund with US investment bank Goldman Sachs two years ago. This fund, called the China-U.S. Industrial Cooperation Fund and which aims to invest in the manufacturing sector, only recently made its first investment. The CIC refused to provide details, but said it is cautious about investing in the US given the trade war and the US review process for foreign investment, which it believes discriminates against Chinese investors (Lingling Wei, “Goldman, China’s Sovereign-Wealth Fund Begin Investing in U.S. Manufacturing,” Wall Street Journal, September 20, 2019, https://www.wsj.com/articles/goldman-chinas-sovereign-wealth-fund-begin-...)

China Power International Holding (CPIH), a subsidiary of state-owned enterprise (SOE) State Power Investment Corporation, has signed a memorandum of understanding (MoU) with Norway’s SOE oil and gas producer Equinor pursuant to which the firms will work to partner on overseas alternative energy deals such as solar and wind power in China and Europe. China is one of the world’s largest renewable energy investors, though the bulk of this investment has been occurring within China rather than abroad (Nerijus Adomatis, “Norway’s Equinor to Cooperate with China’s CPIH in Offshore Wind,” Reuters, September 25, 2019, https://www.reuters.com/article/us-equinor-renewables-china/norways-equi...)

Japan

In Brussels, Japanese Prime Minister Abe Shinzo signed an agreement with the European Union (EU) calling for Japan and the EU to “coordinate infrastructure, transport, and digital projects.” Per reports, the agreement “repeatedly stresses the importance of projects being sustainable both environmentally and fiscally.” Many opine that this is a “veiled swipe at [China’s] Belt and Road Initiative.” Both Europe and Japan are concerned about the implications of Chinese infrastructure activities for freedom of navigation and their political influence (“Japan and EU Ink Infrastructure Cooperation Pact in Counter to China’s Belt and Road,” The Japan Times, September 28, 2019, https://www.japantimes.co.jp/news/2019/09/28/business/japan-eu-vow-infra...)

Japanese and Indonesia officials have signed a ¥458 billion deal (about USD $4.2 billion) for a medium-speed train project connecting Indonesia’s capital Jakarta with Surabaya. The project will use narrow gauge rather than standard gauge and will have two phases. According to sources, a “‘political decision’ was made by Jakarta to have only Indonesia and Japanese companies participate in the tender to build the railway network” partly to assuage Japan after the latter lost a 2015 Jakarta-Bandung high-speed railway deal to China (“Indonesia and Japan Reach Deal on ¥458 Billion Jakarta-Surabaya Rail Project,” The Japan Times, September 24, 2019, https://www.japantimes.co.jp/news/2019/09/24/business/indonesia-japan-re...)

South Korea

South Korea’s trade war with Japan is adding fuel to the development of domestic supply chains as well as reshoring of Korean companies. This is because Korean companies must make sure they have materials in case they cannot obtain Japanese parts. Korean firms benefitting from the situation include those in the battery, semiconductor, and other high-tech sectors. Seoul is actively encouraging these new developments with millions of dollars in subsidies and tax breaks as well as efforts to reduce red tape (Song Jong-A, “South Korea Groups See Supply Chain Boost in Trade War with Japan,” Financial Times, September 24, 2019)

In tandem with Korean President Moon Jae-In’s meeting with US President Donald Trump in the US, a number of Korean firms such as Hyundai Motor and SK Engineering & Construction rushed “to announce their investment plans in the US.” This is partly to address Trump’s call for more investment in the US by Korean businesses, but also because of poor economic conditions in Korea. Notable Investments include a $2 billion joint venture between Hyundai and an autonomous driving firm called Aptiv (Nam Hyun-Woo, “Korean Firms Bet High on US Market Amid Moon’s Visit,” The Korea Times, September 25, 2019, http://www.koreatimes.co.kr/www/tech/2019/09/419_276170.html)

*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.