MNCs in the News-2021-May

China

According to China’s Ministry of Commerce (MOFCOM), China’s utilized foreign direct investment (FDI) for the 1st four months of 2021 increased 38.6 percent over the comparable period in 2020. Inward FDI (IFDI) in the service sector witnessed particularly strong year-over-year performance over the 1st fourth months of 2021. Regarding FDI sources, MOFCOM reported that IFDI from Belt and Road Initiative (BRI) and Association of Southeast Asian Nations (ASEAN) countries grew by 62.8 percent and 65.2 percent respectively over the 1st four months of 2021 YOY (Zhong Nan, “China’s Use of FDI Surges 38.6% Jan-April,” China Daily, May 13, 2021, http://global.chinadaily.com.cn/a/202105/13/WS609ce8e7a31024ad0babdb81.html)

In the British Chamber of Commerce in China’s recent position paper, the Chamber noted that its members viewed China’s “cybersecurity [rules; e.g.., ambiguities in terms of government access to corporate data] and data restrictions [e.g., on cross border data flows] as among their biggest challenges” on top of persistent problems pertaining to market access and a level playing field with China’s state-owned enterprises (SOEs). Beyond these issues, freedom with respect to the movement of capital represented another area of concern (“China’s Data Protection Rules among ‘Core Challenges’ Facing British Firms, Despite Steps to Open Economy,” TheStreet, May 25, 2021, https://www.thestreet.com/partner/china-s-data-protection-rules-among-co...)

The China Banking and Insurance Regulatory Commission has given the United States (US)’s Goldman Sachs approval to enter into a wealth management joint venture (JV) with the Industrial and Commercial Bank of China (ICBC) where Goldman would be the 51 percent majority partner and ICBC the minority partner. Goldman is following in the wake of BlackRock, Amudi, and others who are excited about the business opportunities created by China’s opening of its financial sector in areas like mutual funds, securities ventures, and wealth management (Thomas Hale, “Goldman Wins Approval for Wealth Management Deal in China,” Financial Times, May 25, 2021)

Tesla recently announced that “it had built a new data center in Shanghai to store information on gathered on local users and their vehicles” and that it planned to build several more. Tesla’s move followed in the wake of new Chinese government rules on the handling of car data gathered from Chinese users. It also follows increased attention to consumer complaints about Tesla vehicles, restrictions on the entry of Tesla vehicles into Chinese military bases and housing complexes, and other issues (Ding Yi and Flynn Murphy, “Tesla Announces New Shanghai Data Center to Allay Concerns,” Caixin, May 26, 2021, https://www.caixinglobal.com/2021-05-26/tesla-announces-new-shanghai-dat...)

Following European Union (EU) sanctions against a few Chinese officials because of China’s treatment of Uyghurs and China’s counter-retaliation against various EU officials and four entities, a high-ranking European Commission official suggested the ratification process for the EU-China Comprehensive Agreement on Investment (CAI) had gone into a deep freeze. A EU spokesperson later indicated there was no suspension though the situation had changed adversely. Prospects for the EU-China CAI ratification already looked bleak given strong opposition in the European Parliament (Lu Wen and Denisa Jia, “EU-China Investment Deal Up in the Air Amid Heightened Tensions,” Caixin, May 7, 2021, https://www.caixinglobal.com/2021-05-07/eu-china-investment-deal-up-in-t...)

Responding to Australian anxieties that China’s Landbridge 99-year lease of the Australia’s Darwin port represents a national security threat, the CEO of Landbridge’s Hong Kong unit argued “‘the lease is purely commercial, it has nothing to do with security’” and added his company had been living up to the terms of its lease. In the background, China-Australia relations have been declining with each side taking measures to sanction the other, modify the parameters of the relationship, or accuse the other of various misdeeds (Zach Coleman, “Chinese Owner of Australia’s Darwin Port Rejects Security Worry,” Nikkei Asia, May 26, 2021, https://asia.nikkei.com/Politics/International-relations/Chinese-owner-o...)

Japan

A Japanese Liberal Democratic Party (LDP) group investigating methods to enhance Japan’s economic security has proposed the creation of a public-private body, consisting of representatives from government, business, and academia, to research related issues and propose solutions. Topics the body might explore include supply chain resiliency, methods Japanese firms might use to minimize the effect of sanctions and export controls the US and China have initiated against each other, and methods for managing Chinese national security laws relating to technology that affect Japanese businesses (“LDP Seeks Body to Protect Japan Firms Amid US-China Rivalry,” The Mainichi, May 20, 2021, https://mainichi.jp/english/articles/20210520/p2g/00m/0bu/077000c)

An official Chinese media article about the decision of various prominent Japanese apparel companies like Mizuno and World to stop using cotton sourced from Xinjiang because of concerns about human rights abuses there noted this could cause the firms to lose business in China. The companies already are the recipients of criticism on the Chinese blogosphere for bowing, supposedly, to American pressure. Others have indicated they view the companies as hypocritical since they actively market in China while criticizing it (“More Japanese Brands will Lose out in China Due to Xinjiang Cotton Ban: Analyst,” Global Times, May 23, 2021, https://www.globaltimes.cn/page/202105/1224235.shtml)

Korea

Tokyo’s export restrictions against South Korea are driving Japanese semiconductor material companies to increase their activities and FDI in South Korea as a way to circumvent Japanese government limits. TOK, which counts Samsung among its major clients, is dramatically increasing its production capabilities in Korea. Daikin Industries, which counts SK Hynix as a major customer, is investigating a JV with a South Korean semiconductor manufacturing equipment supplier entailing a large-scale investment. Korean companies are attractive to Japanese ones given their plans to increase semiconductor production (Kim Eun-jin, “Japanese Semiconductor Material Companies Increasing Production in Korea,” BusinessKorea, May 4, 2021, http://www.businesskorea.co.kr/news/articleView.html?idxno=66331)

During Korean President Moon Jae-in’s summit with US President Joseph Biden, Korean companies like Hyundai, Samsung, and SK proposed USD $40 billion in investments in manufacturing plants and related infrastructure in sectors such as electric vehicles (EVs) and semiconductors. Investment plans pertain to a new semiconductor foundry, EV factories and charging infrastructure, and EV battery plants. Korean firms view these ventures as a way to “secure critical roles in [US] value chains, a share in the market for EVs, and to boost their global semiconductor market share (Kim Bo-Eun, “Korean Conglomerates’ US Investments,” The Korea Times, May 23, 2021, https://www.koreatimes.co.kr/www/tech/2021/05/133_309255.html)

*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.