MNCs in the News-2020-03-06

China

At a press conference, the Vice Minister of China’s Ministry of Industry and Information Technology touted measures being implemented by the government to “help firms resume operations as well as restore supply chains” that have been disrupted by the coronavirus epidemic. He stressed that “foreign and domestic companies will be treated equally.” While the government wants to aid small- and medium-sized businesses, the focus of programs initially will be on bigger firms and their supply chains (Cheng Yu, “Favorable Restart Policies to Treat Foreign, Domestic Companies Equally,” China Daily, http://www.chinadaily.com.cn/a/202003/06/WS5e62169ba31012821727d056.html)

Foreign intellectual property (IP) fillings in China (e.g., invention patents and trademarks) showed respectable growth in 2019 over the previous year. China’s National Intellectual Property Administration (NIPA) opined this had to do with China’s efforts to improve the environment for foreign direct investment (FDI) including enhancing IP laws and regulations, toughening enforcement, and limiting “abnormal applications and trademark hoarding.” China also is processing IP filings more quickly and cheaply. Major IP filing countries include the Germany, Japan, the United Kingdom, and the United States (US) (“China’s IP protection spurs growth of foreign patent filings,” China Daily, March 2, 2020, http://www.chinadaily.com.cn/a/202003/02/WS5e5ca7faa31012821727b9d9.html)

The US Committee on Foreign Investment in the United States (CFIUS), an investment review body, previously ordered Beijing Kunlun Tech Co. to sell Grindr, a dating app that it purchased in 2016 without obtaining CFIUS approval. It is not known why CFIUS ordered the sale. Regardless, Beijing Kunlun Tech. said it had struck a deal to sell the app for USD $608.5 million to San Vicente Acquisition, a group of investors and entrepreneurs. This deal also is subject to CFIUS review (Echo Wang, “Grindr's Chinese owner says to sell social media app for $608 mln,” Reuters, March 6, 2020, https://www.reuters.com/article/us-grindr-m-a-investors-exclusive/exclus...)

CFIUS reportedly has recommended US President Donald Trump block German firm Infineon Technologies proposed purchase of Cypress Semiconductor Corp. Specifics are not known, but CFIUS feels there are security risks and Infineon’s efforts to assuage CFIUS’s worries have been in vain. It is known, though, that China is a major Infineon customer and Cypress “sells components to the defense industry, although its products are not considered particularly sensitive.” In 2016, Infineon had a deal blocked by CFIUS (Saleha Mohsin, David McLaughlin, and Jenny Leonard, “Trump Advised to Halt Infineon Deal Amid China Security Risk,” Yahoo! Finance, March 6, 2020, https://finance.yahoo.com/news/trump-warned-security-risk-infineon-22382...)

Japan

Japan’s Council on Investment in the Future, chaired by Prime Minister Shinzo Abe, will examine ways to protect the economy from supply chains disruption in China flowing from the coronavirus epidemic. The Council might encourage Japanese businesses to outsource more production to Southeast Asia or to bring the production of some highly profitable items back to Japan. Japanese businesses, such as automakers, depend heavily on supply chains in China, making disruptions there even more painful (“Japan aims to break supply chain dependence on China in light of COVID-19,” The Japan Times, March 6, 2020, https://www.japantimes.co.jp/news/2020/03/06/business/japan-aims-break-s...)

The Japan Institute for Overseas Investment (JOI) has concluded a Memorandum of Understanding (MoU) with the Embassy of the Republic of Zambia in Japan that will bring the latter into a network of embassies, companies, foreign investment promotion agencies, and international organizations that will facilitate FDI flows to Zambia through research, information provision, and seminars. Japan already provides Development Assistance to Zambia. Zambia, though, would like Japanese companies to play a more prominent role in its economy through partnerships with Zambia firms (“Zambia Signs MoU to Attract more Japanese Investment,” Mwebantu, March 5, 2020, https://mwebantu.com/2020/03/05/zambia-signs-mou-to-attract-more-japanes...)

Korea

Disputes over network sharing costs between US content provider Netflix and South Korean internet service provider SK Broadband might finally end with the Korea Communication Commission (KCC) advancing an arbitration proposal that might serve as a template for resolving similar conflicts in the future. The disputed started in November 2019 when SK Broadband submitted an application for arbitration to KCC over Netflix’s refusal to pay for using SK Telecom’s internet networks despite heavy network traffic resulting from Netflix’s streaming services (Kim Hyun-bin, “Regulator to release network usage guideline to arbitrate SK, Netflix conflict,” The Korea Times, March 2, 2020, https://www.koreatimes.co.kr/www/tech/2020/03/133_285442.html)

Vietnam has decided to quarantine all visitors from South Korea, regardless of if they are citizens and residents of Vietnam, to limit the risk of the coronavirus spreading to Vietnam. This is particularly quite consequential for Samsung, even though its factories in Vietnam are currently unaffected, because it is a major investor in the country and has very large smartphone factories there. Furthermore, it and other Korean companies such as SK Group are expanding their operations or pouring new FDI into the country (Tomoya Onishi, “Vietnam Isolates All South Korea Arrivals, Squeezing Samsung,” Nikkei Asian Review, February 29, 2020, https://asia.nikkei.com/Spotlight/Coronavirus/Vietnam-isolates-all-South...)