MNCs in the News-2019-11-22

China

China’s National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM) jointly released a new negative list for market access. The 2019 list, which applies to domestic and foreign investors, contains “131 administrative measures on investment, down 20 administrative measures or 13 percent from the 2018 version” last December. All “industries, fields, and businesses not on the list are open for investment to all market players.” Among other noteworthy changes, the new list opens nursing care and social welfare to domestic and foreign players (“China Releases Shortened Unified Negative List for Market Access,” China Daily, November 22, 2019, https://www.chinadaily.com.cn/a/201911/22/WS5dd73b35a310cf3e3557939a.html)

China showed a respectable increase in inward foreign direct investment (FDI) over the first ten months of 2019. China’s ability to draw inward FDI (IFDI) of USD $107.1 billion despite China’s trade war with the United States (US) and slowing economic growth flows from the former’s continuing respectable growth rates, Beijing’s efforts to reduce red tape and embrace policies to attract FDI, and limits to alternatives (Daniel Ren and Pearl Liu, “Foreign Firms from Michelin to Burger King Shrug Off Trade War to Bet on China as Reduced Red Tape Boosts FDI,” South China Morning Post, November 20, 2019, https://www.scmp.com/print/business/companies/article/3038466/foreign-fi...)

China’s Securities Daily reported “Foreign insurance groups have been stepping up efforts to buy shares in domestic insurance companies over the past year.” Observers attribute the purchases by foreign players such as Allianz and ACE to China’s “vast market” and continuing efforts to open its financial markets. Some contend Allianz was welcome partly because of solid China-Germany ties. In 2019, foreign insurance companies increased capital in China by slightly more than $662 million. Foreign firms are seen as helping Chinese insurance companies “reform, grow, and improve” (“Foreign firms Take Stakes in China’s Insurance Market,” Global Times, November 20, 2019, http://www.globaltimes.cn/content/1170674.shtml)

At the November 2019 Fifth Congress of the China Federation of Overseas Chinese Entrepreneurs (which merged with the Chinese Overseas Chinese Entrepreneurs Association), attended by 800 businesspeople, the Chairman of the All-China Federation of Returned Overseas Chinese pushed Chinese businesspeople overseas to participate in China’s Belt and Road Initiative (BRI), which “aims to promote commercial, infrastructural, and cultural ties among participants.” He “encouraged them to be ‘participants, contributors, and beneficiaries in the new era’” (Li Lei, “Overseas Businesspeople Urged to Get Involved in BRI,” China Daily, November 18, 2019, https://www.chinadaily.com.cn/a/201911/18/WS5dd28c83a310cf3e355782d1.html)

Japan

Japan’s Diet passed a bill creating stricter review rules for investment in Japanese firms in sensitive areas such as arms production, nuclear energy, semiconductors, railways, and the like. Previously, reviews were required for stakes of 10 percent or more. Now, 1 percent or more stakes trigger review. As well, notification is needed when selling core activities and replacing board members. The bill, however, does not require review for investments for asset management purposes. Critics fret the law is too vague (“Japan Passes Bill to Tighten Rules on Foreign Investments Related to National Security,” The Japan Times, November 22, 2019, https://www.japantimes.co.jp/news/2019/11/22/business/financial-markets/...)

Japanese firms already may have witnessed the worst of the economic repercussions from their country’s tensions with South Korea. Although several Japanese businesses, such as Uniqlo, Descente, and Asahi, saw profits decrease due to South Korean consumer boycotts, experts believe the situation is unlikely to deteriorate further. Japan-South Korea relations plunged sharply after the South Korean Supreme Court ordered Japanese companies to compensate Korean wartime forced laborers. In response, Japan imposed export controls on select materials critical to South Korea’s chip industry (“For Japan’s economy, worst of South Korea boycott may have passed,” The Japan Times, November 21, 2019, https://www.japantimes.co.jp/news/2019/11/21/business/japans-economy-wor...)

South Korea

South Korea’s Fair Trade Commission (FTC) will establish a special task force to investigate unfair business practices by local and foreign tech companies such as Naver, Google, and Samsung. The team will focus on three areas—i.e., online platforms, mobile services, and intellectual property rights—to detect unlawful practices. Such practices include using exclusivity deals to prevent partners from doing business with rivals, hindering competition through sales’ tie-ins, and improperly charging royalties. Seoul’s move follows a similar move by the US FTC (Shin, Ji-hye, “FTC sets up special team to probe Naver, Google,” The Korea Herald, November 19, 2019, http://www.koreaherald.com/view.php?ud=20191119000798)

At the Korea-ASEAN Smart City Fair in 2019, Seoul plans to use the presence of government officials and business leaders from all Association of Southeast Asian Nation (ASEAN) member states to promote Korean cooperation with, contracting in, and FDI in ASEAN cities. Korea itself is working aggressively to use information and communication technologies to increase efficiencies, reduce pollution, and so on in ongoing smart city initiatives in Busan and Sejong. Korean companies will showcase its 5G and autonomous vehicle capabilities during the fair (Kwak Yeon-Soo, “Korea, ASEAN to Cooperate on Smart City Development,” The Korea Times, November 20, 2019, http://www.koreatimes.co.kr/www/tech/2019/11/133_279038.html)

*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.