MNCs in the News-2018-11-02

China

To improve foreign direct investment (FDI) environment, Shanghai will take steps to “shorten the time taken for a new company to complete business registration, obtain a manufacturing license and gain access to electricity.” At the annual International business Leaders’ Advisory Council meeting Shanghai Mayor stated “‘Whatever the economic situation we will face, the door for foreign businesses will not be closed.’” While FDI does not seem to be leaving, recent surveys have raised concerns (Daniel Ren, “Shanghai Mayor cuts Red Tape to Woo Investment as Foreign Firms Mull Relocating Amid Trade War,” South China Morning Post, October 28, 2018, https://www.scmp.com/business/companies/article/2170575/shanghai-mayor-c...)

Germany’s Federation of Germany Industries (BDI) is preparing a position paper which “argues that a long-promised opening of the Chinese market is unlikely to take place.” The draft asserts “‘Despite the attractiveness of the Chinese market, it will be increasingly important for companies to closely examine the risks of their engagement in China and to minimize their dependence by diversifying supply chains, production sites and sales markets.’” The draft also calls for better European Union (EU) efforts to regulate inward FDI flows from China (Noah Barkin, “Exclusive: German Firms Urged to Cut Dependence on China,” Reuters, October 31, 2018, https://www.reuters.com/article/us-germany-china-report-exclusive/exclus...)

Australia’s national security rules that exclude foreign firms with government ties from its new 5G network seem to have soured its relations with China because the new rules mean that Chinese tech giant Huawei is banned from involvement in Australia’s broadband network. In response to Australia’s move aimed at protecting the country’s critical infrastructure, China’s Foreign Ministry spokesman Lu Kang urged the Australian side to “abandon ideological prejudices and create a fair competition environment for Chinese companies’ operations in Australia” (Colin Packham, “Australia spy chief says 5G risks high, in nod to China firms' exclusion,” Reuters, October 30, 2018, https://www.reuters.com/article/us-australia-china-huawei/australia-spy-...)

Chile’s foreign minister has announced that his country will join China’s Belt and Road Initiative (BRI) in a move to deepen economic and political cooperation with Beijing. Ties between the two nations have been growing rapidly and the agreement will promote Chile as a destination for Chinese outward FDI (OFDI). The deal may give China the opportunity to increase its power in Latin America, an area traditionally influenced by the United States. China has already promised to invest $250 billion regionally in the next decade (Dave Sherwood, “Chile to join China´s Belt and Road Initiative,” Reuters, November 2, 2018, https://www.reuters.com/article/us-chile-china/chile-to-join-chinas-belt...)

Japan

Japanese Prime Minister Shinzo Abe and his Indian counterpart Narendra Modi agreed at an official meeting to further strengthen economic and security ties between the two countries while Tokyo pledged USD $2.8 billion in new loans for seven projects including the construction of a high-speed shinkansen system and roads. Modi endorsed Japan’s “Free and Open Indo-Pacific Strategy” while Abe pledged to help countries in the region build up high-quality infrastructure “to promote regional economic prosperity” (Reiji Yoshida, “Modi and Abe agree to boost ties as Tokyo pledges huge new yen loans for India,” The Japan Times, October 29, 2018, https://www.japantimes.co.jp/news/2018/10/29/national/politics-diplomacy...)

In the wake of South Korea’s Supreme Court’s decision to order Nippon Steel to compensate Korean nationals forced to work for the company during World War II, roughly seventy Japanese companies in South Korea are at risk of losing similar court cases. Japanese Prime Minister Abe has called the ruling “‘unthinkably in light of international law’” while Nippon Steel issued a statement calling the decision “deeply regrettable.” If they refuse to pay, the court could seize Nippon Steel’s South Korea assets (Azusa Kawakami, “70 Japanese companies at risk of litigation after wartime ruling,” Nikkei Asian Review, October 31, 2018, https://asia.nikkei.com/Politics/International-Relations/70-Japanese-com...)

South Korea

During a meeting with Vietnamese Prime Minister Nguyen Xuan Phuc in Hanoi, Samsung Electronics vice chairman Lee Jae-yong lauded Vietnam and pledged to make long-term investments there. Samsung plans not only to focus on manufacturing investment, but also R&D and hopes to work with Vietnamese companies in the field of manpower and parts supply. Phuc asked for Samsung’s help to build its supply chain and e-government and emphasized “we will continue to create favorable conditions so that Samsung can succeed in Vietnam” (Kim Eun-jin, “Samsung Vice Chairman Lee Promises to Make Long-term Investment in Vietnam,” BusinessKorea, October 31, 2018, http://www.businesskorea.co.kr/news/articleView.html?idxno=26178)