MNCs in the News-2019-12-06

China

Chinese media have reported that the Chinese government soon plans to issue a list of “‘unreliable entities,’” though it is unknown which firms might be on it. Some see the timing as associated with US pressures on China because of the situation in Xinjiang and Hong Kong as well as continuing and escalating American sanctions on Huawei. Companies put on this list could face sanctions, though China’s Ministry of Foreign Affairs would not confirm reports the list’s release was imminent (Jeff Black and Daniel Flatley, “China Hints U.S. Blacklist Imminent in Threat to Trade Talks,” Bloomberg, December 2, 2019, https://www.bloomberg.com/news/articles/2019-12-03/china-hints-u-s-black...)

According to the Beijing municipal government, the city will “further open its services market to foreign investors in several industries such as tourism, internet access services and non-profit nursing institutions for the aged, as well as audio and video products.” In the tourism area, to illustrate, Beijing will permit wholly foreign-owned enterprises to provide outbound tourism services, a previously restricted area. The entry of foreign firms is seen as a pathway to increase foreign capital inflows, broaden consumer product options, and enhance competition (Du Juan, “Beijing to Widen Services Market Access to Foreign Investors,” China Daily, December 4, 2019, www.chinadaily.com.cn/a/201912/04/WS5de70c64a310cf3e3557bcd8.html)

Vietnam reported pledged foreign direct investment (FDI) from China between January and November 2019 ran almost two times the level of the same period last year. The amount, which was USD $2.28 billion, far exceeded amounts seen in 2016, 2017, and 2018. China was the 2nd largest source of FDI after Korea, with many deeming China-United States (US) trade tensions the force driving the surge in Chinese FDI to Vietnam. Less positively, some believe higher FDI flows reflect China sending polluting FDI to Vietnam (Minh Son and Hung Le, “Chinese Investment in Vietnam Surges,” VnExpress International, December 3, 2019, https://e.vnexpress.net/news/business/economy/chinese-investment-in-viet...)

The recently released Chinese Enterprises Global Image Survey Report (Latin America) showed 73 percent of respondents to an online questionnaire conducted in major Latin American countries, “feel good about Chinese firms.” The best attitudes were found in, respectively, Brazil, Mexico, Chile, Peru, and then Argentina. Per the survey, Chinese firms were viewed more positively than US and French firms, but less favorably than Japanese and German firms. Respondents took the view Chinese companies contributed to local economic development, especially by bringing in cutting-edge technologies (Jing Shulyu, “Nation’s Firms Welcome in Latin America, Survey Finds,” China Daily, December 4, 2019, www.chinadaily.com.cn/a/201912/04/WS5de6bd51a310cf3e3557bbc2.html)

Japan

A panel, organized by Japan’s Internal Affairs Ministry, has promulgated a draft proposal for the creation of a “public-private team to fight fake online news” which major foreign technology players such as Apple, Amazon, Facebook, and Google would be asked to join. The objective of the panel would be to “promote voluntary efforts by private-sector companies to prevent the spread of fake news as well as to prod companies to disclose their standards for removing fake news (“Japanese Panel Wants to Establish Team to Fight Fake News, with Help from U.S. Tech Giants,” The Japan Times, November 30, 2019, https://www.japantimes.co.jp/news/2019/11/30/business/japan-fake-news-gafa)

A Japan Bank for International Cooperation (JBIC) survey found that “nearly half of Japanese manufacturers operating overseas expect to see their revenue fall in fiscal 2019. Key reasons for the decline include the China-US trade war as well as China’s slowing economy. In 2018, about 34 percent of the more than 1000+ respondents predicted a slowing so firms are getting more anxious about contemporary developments. Firms in non-ferrous metals, automakers, and general machinery makers were the most pessimistic about the future (“Nearly 50% of Japanese Manufacturers Operating Overseas Predict Revenue Falls in 2019,” The Japan Times, November 30, 2019,

https://www.japantimes.co.jp/news/2019/11/30/business/corporate-business...)

South Korea

US chipmaker Qualcomm lost its bid in the Seoul High Court to overturn its record fine of 1 trillion won ($827 million), imposed by South Korea’s anti-trust agency, the Fair Trade Commission (FTC). Although the Court did overturn some penalties and rejected some FTC findings, Qualcomm later announced it would appeal to the Supreme Court. In 2016, the FTC concluded Qualcomm was guilty of monopolistic practices, which include arbitrarily rejecting and limiting licenses for chips, and ordered it to renegotiate its patent use requirements (Shin Ji-hye, “Seoul Court upholds W1tr penalty for Qualcomm,” The Korea Herald, December 4, 2019, http://www.koreaherald.com/view.php?ud=20191204000601)

In anticipation of the Chinese government’s plan to phase out subsidiaries for electric vehicle (EV) batteries, Korea’s SK Innovation plans to invest $1.05 billion to build a new manufacturing plant in Yancheng to supply Kia Motors. Yancheng factory would be SK Innovation’s second in China. Beijing’s incentives for EVs and hydrogen vehicles and the elimination of subsidies for domestic manufacturers have spurred closer cooperation between SK Innovation and Kia Motors because South Korean manufacturers supply products with higher quality than their Chinese counterparts (Jung Min-hee, “SK Innovation to build EV battery plant in Yancheng,” Business Korea, December 2, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=38725)

*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.