MNCs in the News-2020-02-07

China

China’s Ministry of Commerce (MOFCOM) has encouraged Chinese Chambers of Commerce to issue force majeure certificates to Chinese companies that cannot meet their contractual obligations due to parts and logistic disruptions caused by the contemporary coronavirus crisis. Such certificates would allow Chinese companies in a vast swath of industries such as automobiles, electrical equipment, and medical equipment to delay or terminate their supply obligations. MOFCOM also asked Chambers to provide legal assistance and information to manage any trade issues flowing from the health crisis (Zhong Nan, “Commerce Chambers urged to Issue Force Majeure Certificates,” China Daily, February 6, 2020, http://www.chinadaily.com.cn/a/202002/06/WS5e3b7db9a31012821727566f.html)

The Institute of Virology in Wuhan, China revealed it has applied for a patent in late January to use remdesivir, a drug developed by United States (US) firm Gilead, to deal with the coronavirus. According to Gilead, which is working with Chinese health authorities to determine if its drug is safe and effective against pneumonia, the firm already had filed for a patent globally, including in China, in 2016. It is unclear how Gilead will respond or if China will override Gilead’s intellectual property rights (Eric Ng, “Who Owns the Coronavirus Cure?” South China Morning Post, February 6, 2020, https://www.scmp.com/business/article/3049227/who-owns-magic-cure-chinas...)

The Huawei’s Chief Representative to European Union (EU) institutions stated at a reception that the firm would establish 5G manufacturing bases in Europe to “‘truly have 5G for Europe made in Europe.’” A former EU Commission Vice-President opined that such an action would bolster Europe’s faith in the security of Huawei’s products because “the manufacturing would be ‘under European rules.’” At present, it is not known where Huawei will build its facilities, though it states it already has candidates in mind (“Huawei to Set up Manufacturing Bases in Europe,” Global Times, February 5, 2020, https://www.globaltimes.cn/content/1178565.shtml)

During a speech on the economic threat posed by China, US Attorney General Bill Barr stated that the US and its allies “should take controlling stakes in Nokia, Ericsson, or both” to battle Huawei in the 5G sphere. Otherwise they would not be able to challenge Huawei given Huawei’s size and government support. Barr stressed that the failure to win the fight over 5G would allow China “‘to dominate the opportunities arising from a stunning range of emerging technologies’” (“U.S. Should Buy Control of Nokia and Ericsson to Fight Huawei, Attorney General Says,” The Japan Times, February 7, 2020, https://www.japantimes.co.jp/news/2020/02/07/business/tech/u-s-buy-contr...)

Japan

Per Japan’s Ministry of Defense, Kobe Steel and satellite date provider Pasco Corp. became the latest victims in a series of cyberattacks against Japanese defense-related companies. Both companies discovered their networks were infected with a computer virus in August 2016 and May 2018. However, the Ministry did not confirm if classified information was leaked. Mitsubishi Electric Corp. and NEC Corp., two major Japanese defense industry players, previously acknowledged that they had been hit by cyberattacks over the past few years, potentially by Chinese hacks (“Kobe Steel, Pasco hit in latest cyberattack cases: Defense Ministry,” Kyodo News, February 7, 2020, https://english.kyodonews.net/news/2020/02/b7911a9e6225-kobe-steel-pasco...)

Many Japanese companies operating in the United Kingdom (UK) already have decided upon their preparations for Brexit and its transition period, but uncertainties regarding trade talk between Britain and the EU could upend their plans. For example, if Britain and EU cannot reach a trade agreement, tariffs will be imposed on automobiles produced in the UK. This will have ramifications for Toyota Motor Corp. and Nissan Motor Co. which have decided to continue operating their facilities there (“Japanese firms take Brexit in stride but worry over British prospects for trade talks with EU,” The Japan Times, February 2, 2020, https://www.japantimes.co.jp/news/2020/02/02/business/corporate-business...)

South Korea

The planned merger between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering has run into an obstacle due to Japan filing a petition with the World Trade Organization (WTO). Insiders in the South Korea shipbuilding industry believe Japan is trying to stall the merger because leading Japanese shipbuilders specialize in merchant vessels while Hyundai and Daewoo focus on high value-added activities. However, the WTO might turn down the petition given the merger is under review and Japan needs to provide evidence of potential loss (Jung Suk-yee, “Japan Hampering Merger between HHI and DSME,” Business Korea, February 3, 2020, http://www.businesskorea.co.kr/news/articleView.html?idxno=40773)

Panama’s Metro Line 3 construction project finally was awarded to the Korean consortium HPH Joint Venture Consortium consisting of Hyundai E&C, POSCO E&C, and Hyundai Engineering. This consortium previously won the award for this USD $2.06 billion project, but appeals by other bidders, China Railway Group and the ACPC consortium consisting of Acciona Construction and Power Construction Corporation of China, forced Panama’s General Directorate of Public Procurement to re-evaluate the decision. The project aims to alleviate traffic problem in Panama City (Michael Herh, “Hyundai E&C Consortium Wins US$2.0 Bil. Metro Construction Order from Panama,” Business Korea, February 6, 2020, http://www.businesskorea.co.kr/news/articleView.html?idxno=40946)