MNCs in the News-2021-June

China

China has adopted a law geared towards countering foreign sanctions. The law details who can be targeted, the types of penalties that can be applied, who can start the initiation of the law’s provisions, and so on. There are concerns among the foreign business community in China that foreign companies might be targeted for sanctions such as asset seizures or limits on activities in China as a way for China to retaliate against foreign governments that sanction Chinese individuals or entities (Yew Lun Tian, “Explainer: An Eye for an Eye? China’s new Anti-Foreign Sanctions Law,” Reuters, June 11, 2021, https://www.reuters.com/world/china/an-eye-an-eye-chinas-new-anti-foreig...)

The Japanese Chamber of Commerce and Industry in China recently published a lengthy report which expressed concerns about the increasingly uncertain business environment in China emanating from inter alia new (and ambiguous) laws and regulations. Some of these laws and regulations include China’s new unreliable entities list, export control law, and national security review law. Aside from asking for greater clarity, the Japanese Chamber has called for a more level playing field, greater transparency, improvements in market access, and the streamlining of administrative rules (Tang Ziyi, “Japanese Companies List Concerns about Doing Business in China,” Caixin, June 17, 2021, https://www.caixinglobal.com/2021-06-17/japanese-companies-list-concerns...)

Many contend China’s national security law for Hong Kong has damaged Hong Kong’s role as a international financial center. The data do not seem to validate this. The IPO market in Hong Kong has remained strong with 2020 showing significant growth over the prior year and the first five months of 2021 demonstrating strong performance. In addition, one does not see significant capital outflows; the number of headquarters in Hong Kong is stable; and the financial talent pool shows good signs (“HK’s Global Financial Hub Elevated Under National Security Law – Not Ended as Claimed,” Global Times, June 27, 2021, https://www.globaltimes.cn/page/202106/1227205.shtml)

Despite the disruptions created by Covid19, data indicate that Chinese companies are expanding their overseas presence. This has to do with the fact that Chinese companies’ production and operations remain largely normal, but also with their desire to acquire foreign talent that will help them in standard areas like management and science and adapting to the local environment. Small- and medium-sized enterprises seem to be particularly active perhaps because of their nimbleness as well as a need to escape “fierce competition in the domestic market” (Ouyang Shijia, “Chinese Firms Eye Expansion Overseas Despite Covid,” China Daily, June 17, 2021, http://global.chinadaily.com.cn/a/202106/17/WS60caa018a31024ad0bac9997.html)

China Ministry of Commerce data indicates that Chinese outward foreign direct investment (FDI) in Belt and Road (BRI) countries grew 13.8 percent over the first five months of 2021 versus the comparable period in the prior year period. BRI outward FDI (OFDI) totaled USD $7.43 billion or 17.2 percent of the total amount of OFDI from China during the first five months of 2021. There was particularly strong growth in the “manufacturing and information transmission sectors” with manufacturing representing more than 1/6^th of China’s total OFDI (“China’s Investment into BRI Countries Expands in Jan-May,” China Daily, June 18, 2021, https://www.chinadaily.com.cn/a/202106/18/WS60cc6012a31024ad0baca0dc.html)

Japan

Starting in February, the Japanese government moved to increased transparency in digital platform transactions as well as internet advertising. In line with this trend of increasing regulation of the sector to ensure competition and innovation, Tokyo has launched an investigation of the practices of global IT giants such as Apple and Google to determine if they are abusing their dominance in smartphone operating systems; e.g., by requiring the installation of their own apps, services, and payment settlement services (Ayumi Shintaku, “Apple, Google in Government Sights over Antitrust Issues,” The Asahi Shimbun, June 12, 2021, http://www.asahi.com/ajw/articles/14371527)

In early June, a South Korean district court “dismissed a wartime labor compensation lawsuit brought by a group of Koreans against 16 Japanese companies.” It opined plaintiffs had rights to make claims, but that they could not “exercise such rights through lawsuits.” Three years ago, Korea’s Supreme Court already had ordered Japanese companies such as Nippon Steel and Mitsubishi Heavy Industries to compensate South Koreans that had been forced to do labor while Korea was a Japanese colony. Plaintiffs plan to appeal (“South Korean Court Dismisses Wartime Labor Case against 16 Japan Firms,” The Japan Times, June 7, 2021, https://www.japantimes.co.jp/news/2021/06/07/national/crime-legal/south-...)

Korea

The increasing presence of Korean firms in the US, the large size of the US market as well as attractive opportunities in particular market segments like semiconductors and 5G telecommunications, and worries about being caught in the middle of the US-China economic and political conflict are driving Korean companies to ramp up their lobbying activities in the US. Illustrating this, Samsung and SK Hynix, which already spend millions on lobbying, have doubled or tripled their lobbying expenditures (Baek Byung-Yeul, “Korean Firms Ramp Up Spending on Lobbying in US,” The Korea Times, June 1, 2021, https://www.koreatimes.co.kr/www/tech/2021/06/133_309767.html)

The Czech government decided to rule out Chinese and Russian companies for the construction of a nuclear power plant in Dukovany that would have a capacity of 1,000 to 1,200 megawatts and cost $7 billion. There are hopes the rejection of Chinese and Russian companies will boost the prospects for a Korean consortium consisting of Korea Hydro & Nuclear Power, KEPCO E&C, KEPCO Nuclear Fuel, Doosan Heavy Industries & Construction and Daewoo Engineering & Construction to win the bid (Jung Min-Hee, “Czech Republic to Rule Russia and China out of Nuclear Power Plant Construction Project,” BusinessKorea, June 8, 2021, http://www.businesskorea.co.kr/news/articleView.html?idxno=69055)