MNCs in the News-2019-11-15

China

The German Chamber of Commerce in China published the results of a survey of more than 500 member companies. According to this survey, done this summer and fall, “about 67 percent of German companies operating in China intend to further invest in the country over the next two years.” According to one consultancy, German businesses are attracted to the Chinese domestic market and “increasing demand for foreign brands and quality.” They also value the opportunity to profit from “innovation and digital technologies” (Zhong Nan, “German Companies in China to Invest Further in China: Survey,” China Daily, November 13, 2019, www.chinadaily.com.cn/a/201911/13/WS5dcbac5aa310cf3e35577217.html)

It is highly unlikely foreign direct investment (FDI) will flee China despite the United States (US)-China trade war and rising costs in China. As a recent study showed, there are no countries in Asia which have the same package of advantages that China does which includes strong supply chains, strong logistics, solid transportation, and political stability, among other things. Other countries lack scale, market access, the right work force, access to capital, or a market-oriented bureaucracy (Jiyeun Lee, Miao Han, and Carol Lynn Look, “Asia’s ‘Mini-Chinas’ Struggle to Capitalize on U.S. Trade War,” The Japan Times, November 14, 2019, https://www.japantimes.co.jp/news/2019/11/14/business/economy-business/a...)

China’s Ministry of Commerce (MOFCOM) reported that China’s non-financial outward FDI (OFDI) grew almost 6 percent over the first 10 months of 2019 year-over-year (YOY). OFDI, which totaled roughly USD $90.5 billion went to 164 countries and regions. Of this total, MOFCOM reported nearly $11.5 billion consisted of money going to so-called Belt and Road Initiative (BRI) countries. The OFDI growth rate for the first 10 months of 2019 showed a notable jump over the amount registered for the first three quarters of the year (“China’s Outbound Investment Rises 5.9% in First 10 Months,” China Daily, November 14, 2019, www.chinadaily.com.cn/a/201911/14/WS5dcd0338a310cf3e355775ea.html)

US Congressional versions of the National Defense Authorization Act block federal funding for “‘rolling stock’” made by CRRC Corp. The House version, though, specifies “‘rail rolling stock.’” This matters because a broad definition could prevent federal moneys from being used to buy electric buses from China’s BYD, which has a California factory. Critics content federal fund should not be available for buying BYD buses because they could be used to spy and BYD gets government subsidies (Mark Magnier, “Bus Stopped? Why BYD’s Electric Bus Operations May be Cut Short in the US,” South China Morning Post, November 15, 2019, https://www.scmp.com/print/news/china/article/3037797/bus-stopped-why-by...)

Japan

South Korea’s Air Seoul plans to close offices in Japanese prefectures such as Hokkaido, Yamaguchi, and Okinawa because tense Japanese-South Korean relations have led to a plunge in the number of South Korean tourists visiting Japan. Other Korean airlines also have had to suspend or reduce flights to Japan. Bilateral relations have grown tense after Japan imposed restrictions on select products exported to South Korea to retaliate against Korean court decisions requiring Japanese companies to pay compensation to wartime laborers (“Air Seoul to close half of Japan offices due to decline in travelers,” The Japan Times, November 11, 2019, https://www.japantimes.co.jp/news/2019/11/11/business/corporate-business...)

Meeting with Bangladesh’s Finance Minister, Japan’s Ambassador to Bangladesh called for Bangladesh to provide “competitive incentives and long-term policies” to Japanese firms. Japan desires incentives like tax exemptions and a reduction in import duties on capital machinery. As for long-term policies, it particularly covets policy stability. Per one source, inflows of Japanese FDI, which are growing nicely, also would serve to attract others to the country. Japan already is a major player in special economic zones (SEZs) in Bangladesh (Rejaul Karim Byron and Jagaran Chakma, “Japan Wants Incentives, Long-Term Policies to Raise Investment,” The Daily Star, November 15, 2019, https://www.thedailystar.net/business/news/japan-wants-incentives-long-t...)

South Korea

LG Chem has requested the US International Trade Commission (USITC) to issue an early ruling in its lawsuits against SK Innovation. It claims SK Innovation tried to destroy evidence of infringement of LG’s patents for electric-vehicle batteries by, inter alia, ordering employees to delete documents. In April 2019, LG Chem filed lawsuits with the USITC and a US court, alleging SK Innovation had stolen its business secrets through employee poaching and asked for a ban of SK Innovation battery imports (Baek Byung-yeul, “LG Chem asks ITC to make early ruling against SK Innovation,” The Korea Times, November 14, 2019, https://www.koreatimes.co.kr/www/tech/2019/11/133_278731.html)

Hyundai Heavy Industries has submitted a formal request to the European Union (EU) for approval of its planned merger with its smaller rival, Daewoo Shipbuilding & Marine Engineering. In March 2019, Hyundai signed a deal worth $1.7 billion with Korea Development Bank to take over Daewoo. However, the deal can only be consummated after antitrust authorities from six places, including South Korea, the EU, Japan, China, Singapore, and Kazakhstan, give their approval for the merger of these companies (Shin Jie-hye, “Hyundai Heavy requests EU approval for DSME merger,” The Korea Herald, November 13, 2019, http://www.koreaherald.com/view.php?ud=20191113000740)

*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.