MNCs in the News-2021-November

China

China’s Ministry of Commerce (MOFCOM) announced that utilized inward foreign direct investment FDI (IFDI) for the first 10 months of 2021 hit USD $142 billion, a 17.8 percent increase over the prior period. The year-over-year (YOY) increase for IFDI in high-tech was 23.7 percent while the YOY increase for IFDI in services hit 20.3 percent. MOFCOM reported that IFDI from Belt and Road (BRI) and ASEAN countries and regions showed strong growth YOY. China’s performance relative to other global IFDI recipients was solid (“FDI Inflows to China Reach $142 Billion by October, Growing 17.8%,” Global Times, November 15, 2021, https://www.globaltimes.cn/page/202111/1239033.shtml)

China reported its law enforcement agencies had imposed punishments on Taiwan’s Far Eastern Group, a conglomerate, because of various tax, fire, and environmental issues. China did not link its measures against Far Eastern Group to the latter’s support for pro-independence forces on Taiwan, but stated, “‘Taiwanese businessmen and enterprises must…draw a clear line with Taiwan independence separatist forces, and take actions to maintain the peaceful development of cross-strait relations’” and that independence supporters and “‘their connected companies and financiers must be punished” (Ben Blanchard, “Choose a Side, China Tells Taiwan Firms as It Punishes Conglomerate,” Reuters, November 22, 2021, https://www.reuters.com/markets/commodities/choose-side-china-tells-taiw...)

During a speech, JPMorgan Chase CEO Jamie Dimon said he would “make a bet” [his bank], which began operations in China in 1921 would last longer than the Chinese Communist Party, which was founded in 1921. Dimon issued two apologies about his remarks, not surprising given JPMorgan anticipates many growth opportunities, was “the first Wall Street banking boss to go to [Hong Kong] since the start of the pandemic,” and just won regulatory approval for a wholly owned investment bank in China (Tabby Kinder, “Jamie Dimon Apologises after saying JPMorgan will outlast China’s Communist Party,” Financial Times, November 24, 2021)

China’s State Administration of Market Regulation (SAMR) has issued a guidance document for enterprises on anti-monopoly compliance. While much of the document is about monopoly, and unfair competition issues within China, it also provides information about “overseas anti-monopoly compliance management system, the focus of overseas anti-monopoly compliance risks, and antitrust risk management.” Relatedly, it supplies guidance about “the rights of enterprises in overseas antitrust investigations and foreign antitrust lawsuits.” SAMR hopes its guidance will help “integrate China’s antitrust practice with international standards” (“China’s Top Market Regulator Release Guidance for Enterprises on Overseas Anti-Monopoly Compliance,” Global Times, November 17, 2021, https://www.globaltimes.cn/page/202111/1239355.shtml)

China’s BRI has a major footprint in Pakistan in the form of the China-Pakistan Economic Corridor (CPEC), which encompasses numerous infrastructure projects. CPEC has made numerous contributions to Pakistan’s economy, but there is displeasure about the heavy use of Chinese firms and inputs and the magnitude of benefits accruing to Pakistanis. Furthermore, many projects have stalled, failed to produce the anticipated gains, or turned out to be more costly than originally expected. Culprits include political instability, Pakistan’s economic and financial situation, and the Covid-19 pandemic (Adnan Aamir, “China-Pakistan Belt and Road Initiative Hits Buffers,” Nikkei Asia, November 30, 2021, https://asia.nikkei.com/Spotlight/Asia-Insight/China-Pakistan-Belt-and-R...)

China’s $6 billion high-speed railway (HSR) in Laos, part of the BRI, has officially opened. There are hopes that it will accelerate cargo shipments, especially for remote areas, increase tourism, and boost Laos’s role as a gateway to China for other Southeast Asian countries. It is unclear, however, if the HSR project will be economically viable, a critical issue for heavily indebted Laos, and if Laos can take the steps needed to facilitate the movement of goods, services, and peoples (“Laos Hopes For Economic Boost from Chinese-Built Railway, but Some Question its Viability,” The Japan Times, November 28, 2021, https://www.japantimes.co.jp/news/2021/11/28/business/laos-train-project)

Japan

Tokyo is moving to “introduce a new screening process for defense procurement to safeguard against leaks of sensitive information which will “increase scrutiny on supply chains for missiles, ships and other equipment.” The process will give the Japanese government the ability to “seek changes to existing defense procurement contracts if there are supplier concerns” and preapprove the installation of certain kinds of equipment. Many believe the policy will have adverse implications for Chinese goods and service suppliers like Huawei (Rieko Miki and Tomoyoshi Oshikiri, “Japan to Screen Defense Contractors for Data Security, China Risks,” Nikkei Asia, November 21, 2021, https://asia.nikkei.com/Politics/Japan-to-screen-defense-contractors-for...)

Japan will boost funding for and increase cooperation with the International Labor Organization (ILO) to “help [Japanese] companies operating global supply chains ramp up efforts to protect human rights.” More specifically, it is hoped the ILO will help Japanese firms build solid “human rights due diligence systems” that can “identify and address risks and violations of human rights in their global supply chains.” The Japanese government under Prime Minister Fumio Kishida has been paying more attention to human rights issues like forced labor (“Japan to Seek ILO support in Firms’ Human Rights Risk Management,” The Manichi, November 23, 2021, https://mainichi.jp/english/articles/20211123/p2g/00m/0bu/024000c)

Korea

A Korean parliamentarian charged Apple and Google “are not doing enough to comply with a South Korean law that bars dominant app store operators from forcing app developers to use their payment systems.” It is not entirely clear, though, what constitutes compliance with the law, the first such law globally. Apple has said that it is complying with the new law while Google stated it would allow non-Google payment processors, albeit without the hoped reduction in service charges (Joyce Lee, “S. Korea Lawmaker Says Apple, Google Not Doing Enough to Comply with App Store Law,” Reuters, November 16, 2021, https://www.reuters.com/technology/skorea-lawmaker-says-apple-google-not...)

Korea’s SK Hynix, a major DRAM memory chip producer, is facing challenges in upgrading a memory chip factory in Wuxi, China because the United States (US) opposes it using advanced chipmaking equipment made by ASML, a Dutch company. The US worries that the Chinese military might benefit from ASML equipment. SK Hynix’s inability to use ASML equipment could disadvantage it in its competition with rivals Samsung Electronics and Micron Technology which plan to use ASML equipment at factories outside China (“US-China Tech War Clouds SK Hynix’s Plans for Key Chip Factory in Wuxi,” The Korea Times, November 18, 2021, https://www.koreatimes.co.kr/www/tech/2021/11/133_319013.html)