MNCs in the News-2020-03-13

China

At a State Council executive meeting, Chinese Premier Li Keqiang stressed the importance of foreign direct investment (FDI) for the Chinese economy and noted that “targeted policies” must be put into place to “arrest the slide in…FDI.” The meeting also called for “shortening the negative list for FDI and expanding the catalog of industries where FDI is encouraged.” Premier Li also noted that all companies, regardless of if foreign, should get access to government policies designed to aid companies handle difficulties flowing from the virus (“China Will Take Multi-Pronged Measures to Keep Foreign Investment Stable,” Xinhuanet.com, March 12, 2020, www.xinhuanet.com/english/2020-03/12/c_138867688.htm)

Despite Covid-19, Shanghai has scored USD $10.3 billion of FDI pledges through March 9, 2020. These pledges, which largely relate to existing projects, may reflect Shanghai’s success in containing the epidemic, among other lures. In 2020, the city’s goal is to attract more total FDI than in 2019. Towards this end, Shanghai Communist Party Secretary Li Qiang recently required “officials in the local authority to behave like attendants at a retail store, rather than bureaucrats” (Daniel Ren, “Shanghai Sees Sustained Commitments from Foreign Investors as Covid-19 makes Little Dent to City’s Prospects,” South China Morning Post, March 10, 2020, https://www.scmp.com/print/business/companies/article/3074451/shanghai-s...)

In the wake of charges from members of United States (US) Congress that it shares user data with the Chinese government, China’s TikTok, which denies such accusations, plans to establish a “content moderation center” in the US that will be supervised by “external experts.” This center later will “provide insights into the app’s source code.” To date, some US security-related agencies have banned employees from using the app on government issued devices. Some lawmakers want a blanket ban by all federal agencies (Neha Malara, “TikTok Steps Up Transparency Efforts after Privacy Concerns in United States,” Reuters, March 11, 2020, https://www.reuters.com/article/us-usa-china-tik-tok/tiktok-steps-up-tra...)

At a hearing of the US House of Representations Committee, US Treasury Secretary Steven Mnuchin stated “The U.S. Treasury is working with the International Monetary Fund and the World Bank to gain full transparency of countries’ debts from China’s Belt and Road infrastructure initiative and ensure that funds from the institutions are not used to repay China.” Mnuchin specifically stated, ““We’re not ever going to be using money from these international organizations to pay back China’” (David Lawder. “Mnuchin Says IMF and World Bank Funds Won’t Repay Debts to China,” Reuters, March 11, 2020, https://www.reuters.com/article/us-usa-china-debt/mnuchin-says-imf-world...)

Japan

In November last year, the Japanese Diet passed legislation tightening regulations on foreign investment, lowering the threshold for prescreening from 10 to 1 percent. Concerned about additional burdens, foreign investors pressed Tokyo to allow applications online or in English. For now, foreign investors purchasing a 1 percent or more stake in strategic Japanese companies will not be allowed to submit applications in English or online. The government could not not develop the necessary framework on time plus felt adjustments were not cost effective (Mariko Kodaki, “Japan won’t allow English for foreign investment screening,” Nikkei Asian Review, March 12, 2020, https://asia.nikkei.com/Politics/Japan-won-t-allow-English-for-foreign-i...)

A preliminary report by Japan’s Ministry of Finance showed the country’s current account surplus for January had risen to ¥612.3 billion ($5.89 billion), a 6.6 percent increase compared to the same period in 2019. The positive numbers resulted from growing returns from Japan's overseas investments. The surplus of primary income, which indicates the profitability of investments, saw an increase of 4.8 percent to ¥1.85 trillion compared to January 2019. This is the 67th consecutive month Japan’s current account showed a surplus (“Japan’s returns on foreign investment lift current account surplus to ¥612 billion,” The Japan Times, March 9, 2020, https://www.japantimes.co.jp/news/2020/03/09/business/economy-business/f...)

Korea

Hyundai Heavy Industries (HHI)’ acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) encountered another obstacle with the European Commission delaying its decision on the merger until July 2020, citing the need for more time to assess its implications. The merger has to be approved by antitrust authorities in the European Union (EU), Singapore, Japan, China, South Korea, and Kazakhstan. Since European shipping companies are the main customers of HHI and DSME, EU competition authorities fret the merger could reduce competition and increase prices for shippers (Nam Hyun-woo, “EU, KFTC delaying HHI-DSME merger process,” The Korea Times, March 9, 2020, https://www.koreatimes.co.kr/www/tech/2020/03/693_285803.html)

Korea’s Samsung, the biggest foreign business in Vietnam, planned to send around 700 engineers to its factories in Bac Ninh province (Vietnam) to increase the production of light-emitting diode panel modules. However, Vietnam’s restrictions on travelers from South Korea to prevent the spread of the coronavirus could delay the process. Specifically, Vietnamese authorities have suspended visa-free travel and stopped issuing work-visa for Koreans. Even in the case of exemptions from these restrictions, Koreans still have to go into quarantine for 14 days (Song Su-hyun, “Samsung’s Vietnam operations may be affected by entry ban,” The Korea Herald, March 9, 2020, http://www.koreaherald.com/view.php?ud=20200309000821&np=3&mp=1)

*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.