MNCs in the News-2021-August

China

Per China’s Ministry of Commerce (MOFCOM), China’s utilized foreign direct investment (FDI) for the first seven months of 2021 was USD $100.74 billion, a 25.5 percent increase over the same period year-over-year (YOY). The vast majority of this inward FDI (IFDI) went into the service industry with strong flows into wholesale and retail sales, information technology services, and scientific research and technology services. MOFCOM reported that there was strong growth YOY in inward FDI flows from Belt and Road (BRI) and Association of Southeast Asian Nation countries (“China’s FDI Inflow up 25.5% in Jan-July,” China Daily, August 15, 2021, global.chinadaily.com.cn/a/202108/16/WS611a6c9da310efa1bd6691f2.html)

A China MOFCOM spokesperson noted in late August that “China has been speeding up the formulation of the negative list for 2021, as part of ongoing efforts to continuously open its vast domestic market to global investors.” Its objective is to “further shorten the negative list for foreign investment to build a higher-standard open economy.” As part of its process of improving the negative list, MOFCOM has been soliciting feedback from various individuals and groups and coordinating the list drafting process with other government bodies (Zhong Nan, “China Continues Work on 2021 Negative List,” China Daily, August 31, 2021, global.chinadaily.com.cn/a/202108/19/WS611e3ec2a310efa1bd669e56.html)

In a statement in early August, China’s MOFCOM said that it had “organized a trip for representatives from 15 international Chambers of Commerce, associations and multinational companies to visit Xinjiang…where the inspection tour participants looked for investment opportunities.” Tour participants included representatives from the United States (US), Western Europe, Central and Eastern Europe, and Central Asia. They explored, among other things, opportunities in cotton, energy, and agricultural processing as well as the political and social situation in the province (“Ministry Organizes International Chambers of Commerce, Multinationals to Visit Xinjiang,” Global Times, August 10, 2021, https://www.globaltimes.cn/page/202108/1231119.shtml)

In an announcement in mid-August, China MOFCOM noted that the country’s outward FDI (OFDI) to BRI countries hit $11.29 billion for the first seven months of 2021, almost a 10 percent increase YOY. Still, China’s total nonfinancial OFDI dropped 4 percent YOY. Chinese companies poured money into information transmission and software services, which witnessed 32.9 percent growth YOY. They also demonstrated interest in scientific research and technical services, manufacturing, and transportation. Per analysts, countries want to attract Chinese OFDI to special economic zones, manufacturing, and logistics (Zhong Nan, “Nonfinancial ODI in BRI Economies Up,” China Daily, August 20, 2021, https://global.chinadaily.com.cn/a/202108/20/WS611f0063a310efa1bd669f9e....)

Chinese companies are attracted to India because of the latter’s trillion-dollar plans to improve inter alia its clean energy, power, rail, and road infrastructure. They see opportunities to sell “goods, services, and invest. Even so, they are cautious because of India’s previous actions against Chinese companies in the high-tech sector as well as challenges regarding the business operating environment in terms of tariff policy and other measures. The former allegedly damaged Chinese OFDI flows into India in 2020 (“Chinese Firms Eye India’s Infrastructure Plan,” Global Times, August 24, 2021, https://www.globaltimes.cn/page/202108/1232329.shtml)

Chinese companies hope regime change in Afghanistan will create a more stable and secure environment there, which, in turn, will facilitate the resumption or acceleration of projects and the initiation of new ones. There is particularly strong interest in the energy, power, and mining sectors. In this regard, it is important to note Afghanistan is in dire need of more electricity, has the world’s second largest copper mine (stalled for almost 15 years), and some promising oil fields (stalled for almost 10 years) (“Chinese Firms Eye Resumption of Projects in Afghanistan Amid Power Shift,” Global Times, August 17, 2021, https://www.globaltimes.cn/page/202108/1231749.shtml)

Japan

Following the passage of a law in early 2021, Tokyo is moving to identify areas that will be subject to inward FDI restrictions as part of an effort to prevent or limit activities that might “threaten Japan’s national and economic security.” Presently, it appears the government will pay special attention to areas around defense installations, radar sites, and critical infrastructure such as nuclear power plants. The US and Australia also have become more aggressive in regulating FDI in sensitive areas (Yukio Tajima, “Japan Radar and Missile Sites among 600 Areas Eyed for Investment Curbs,” Nikkei Asia, August 12, 2021, https://asia.nikkei.com/Politics/Japan-radar-and-missile-sites-among-600...)

Despite losses in connection with the turmoil in Myanmar that have flowed in the wake of the military coup there, a senior executive of Japan’s beverage giant Kirin Holdings noted that his firm had no plans to exit Myanmar. Indeed, he stated “discussions about the local business were still ongoing.” Earlier in 2021, however, Kirin did terminate a “beer partnership with a joint venture linked to Myanmar’s military” (Ritsuko Shimizu, “Japan’s Kirin Not Planning to Exit Myanmar despite coup, losses,” Reuters, August 10, 2021, https://www.reuters.com/world/asia-pacific/japans-kirin-not-planning-exi...)

Korea

In late August, “a South Korean parliamentary committee voted…to recommend amending a law, a key step toward banning Google and Apple from forcibly charging software developers commissions on in-app purchases.” The two firms require software developers using their app stores to use proprietary payment systems that charge commissions as high as 30 percent. Apple said the bill would increase the risk of fraud and hurt South Korean developers while Google charged the process has moved forward without adequate study (Heekyong Yang and Joyce Lee, “S. Korea Parliament Committee Votes to Curb Google, Apple Commission Dominance” Reuters, August 25, 2021, https://www.reuters.com/technology/skorea-parliament-committee-votes-cur...)

Korea’s Personal Information Protection Commission imposed fines and penalty surcharges on Facebook and Netflix in late August. It levied fines and surcharges against Facebook because the latter had “‘created and collected face recognition templates without user consent.’” It levied fines and surcharges against Netflix because the latter had “collected personal information without consent before service subscription procedure completion” and for “not having disclosed the content of cross-border personal information transfer.” The Commission also ordered Google to improve its notification and data transfer procedures (Kim Eun-jin, “Measures Taken Against Illegal Information Collection by Facebook and Netflix,” BusinessKorea, August 26, 2021, http://www.businesskorea.co.kr/news/articleView.html?idxno=74906)

*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.