COVID-19

Founding Executive Director Jean-Marc F. Blanchard interviewed for Financial Times story about plummeting China-US bilateral investment

Dr. Jean-Marc F. Blanchard, Founding Executive Director of the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations, was interviewed for a Financial Times story covering plummeting foreign direct investment (FDI) flows between China and the United States (US). The story described trends in bilateral FDI statistics, identified some of the reasons such as Covid-19 and tensions between Beijing and Washington for the depressed numbers, and noted some future risks. Asked to comment on the reasons for the dismal bilateral FDI flows situation, Dr.

MNCs in the News-2020-September

China’s Ministry of Commerce (MOFCOM) issues rules relating to China’s long-discussed “unreliable entities” list. MOFCOM tells foreign companies not to worry about unreliable entities list as it is not targeted at any specific country or company. China’s State Administration for Market Regulation is preparing to launch an antitrust investigation into Google relating to Google’s alleged abuse of the Android mobile operating system’s dominant position. MOFCOM, China’s National Bureau of Statistics, and the State Administration of Foreign Exchange issue report showing Chinese outward foreign direct investment (FDI) fell 4.3 percent year-over-year in 2019. Chinese outward FDI (OFDI) in the United States (US) plummets to record lows because of Covid-19 and US-China political frictions. Indian Minister says there will be no blanket ban on all Chinese mobile apps, nor will Chinese companies be excluded from 5G contracts for wireless equipment. The tightening of US restrictions on the export of semiconductors will have potent adverse effects on Japanese companies. Frictions relating to the fees Apple takes in conjunction with its App stores have sparked regulatory attention in Japan. Covid-19 and the resignation of former Prime Minister Abe Shinzo are hindering the expansion of Japanese OFDI in Africa. Hitachi may terminate its multi-billion-dollar project in the United Kingdom (UK) to build two nuclear reactors because of a failure to obtain UK government support to cover rising project costs. Korean semiconductor firms will suffer big loss of business due to new US restrictions on the export of semiconductors to Huawei. Korea Fair Trade Commission apparently sends signal to Google that it is being watched for its app store fee collection practices. Korea’s Hyundai Engineering & Construction led consortium wins $573 million railway project in the Philippines.

MNCs in the News-2020 August

On October 1, China will establish a new compliant mechanism that, among other things, will allow foreign business associations to raise concerns about the investment environment. China’s Banking and Insurance Regulatory Commission has given permission for a second foreign asset management joint venture (JV), involving BlackRock and Temasek. Looking to exploit China’s financial sector opening, JPMorgan will spend a huge amount of money to take full control of its China mutual fund JV. Foreign pharmaceutical companies fail to win public hospital bulk medicine purchase contracts in China due to an apparent unwillingness to cut prices to near zero. China based firms such as Foxconn reportedly looking at expanding their presence outside China in countries such as Mexico due to troubled political economic environment. Sino-Indian tensions drive Alibaba to suspend plans for new investments in India. US backlists 24 Chinese firms because of their role in the building of South China Sea artificial islands. Chinese outward foreign direct investment (FDI) in Belt and Road countries jumps nearly 29 percent for the first seven months of 2020 year-over-year. Japan will move to improve administrative procedures, such as allowing English paperwork, to draw in more FDI and improve Japan’s prominence as a financial center. Japan is considering tax and other measures to enhance Japan’s role as an international financial center. A Japanese ruling party official raises concerns about TikTok with respect to data privacy and national security. Japan, Australia, and India are discussing a supply chain resilience initiative. South Korean regulators are watching what the US, Japan, and India do vis-à-vis TikTok before they decide how to address relevant data privacy and national security concerns. India’s exclusion of Chinese telecommunications players like Huawei and ZTE from its 5G network may create openings for Korean players.

Dr. Hwy-Chang Moon's picture

More or Less Globalization? Thinking about the Real Lessons of Covid-19

Dr. Hwy-Chang Moon
Posted: Aug 30, 2020

Many contend the lesson of Covid-19 is the need to reduce global business activities, particularly the United States (US)’s dependence on China for imports of manufactured goods. They further assert American multinational corporations (MNCs) operating overseas, particularly in China, should return to the US, undertaking a so-called a “reshoring strategy.” The wisdom of such propositions, however, is open to debate.

Mr. Naoyuki Haraoka's picture

The Coronavirus Reveals Inconvenient Truths

Mr. Naoyuki Haraoka
Posted: Aug 16, 2020

The spread of international supply chains has played a key role in advancing globalization as well as enabling greater production efficiencies at multinational corporations (MNCs) because it has facilitated the division of labor. This has especially been the case where manufacturing industries, an engine of the global economic growth, such as automobiles, are concerned.

MNCs in the News-2020 June

China Ministry of Commerce data shows respectable year-over-year inward foreign direct investment growth (FDI) in April and May, with some hoping for continued growth in the 2nd half of the year. China’s new development initiatives for its Western regions are not succeeding in attracting inward FDI (IFDI) for both business and political reasons. The China Securities Regulatory Commission will look to allow big Chinese commercial banks into investment banking so they can help China fend off the growing challenge from foreign investment banking firms. The United States (US) Pentagon has submitted a list of 20 Chinese companies with ties to China’s military that operate “‘directly or indirectly’” in the US. The Indian government bans almost 5 dozen mobile apps. India’s state government of Maharashtra freezes investment proposals from three Chinese businesses. Japan adds select medical fields to the list of areas requiring special FDI reviews. Japan moves to allocate funds to domestic firms so they have a greater chance to participate in the 5G wireless technology race. Japan’s Kirin Holding will commission an audit of its Burmese joint venture (JV) partner over allegations its JV channels funds to Myanmar’s military. Japan is contemplating Indonesian proposals that Japan participate in its Jakarta-Bandung high-speed rail which is delayed and overbudget. The Korean Communication Commission announces that Google will revise select YouTube subscription practices following a large fine and negative ruling. South Korea outward FDI, which favors North America, plunged dramatically in March. Potential for Doosan Heavy Industries & Construction to start its Indonesian Jawa Thermal Power Plant Construction Project increases after project based second feasibility study. US Presidential election increases pressure on Korean carmakers and tiremakers to invest more in the US.

MNCs in the News-2020 May

China’s recently issued Guideline regarding its economy contains numerous favorable, albeit general, offerings for foreign direct investment (FDI). To retaliate against United States (US) exports controls against Huawei, China readies itself to add US companies to an “unreliable entity list” which may subject them to various sanctions. US Chamber of Commerce decries potentially excessive measures by US government to move supply chains away from China. United Kingdom looks to reduce Huawei involvement in its 5G network with Huawei potentially being removed from all telecommunications infrastructure by 2023. Chinese contractors plan to make substantial progress on Indonesia’s Jakarta-Bandung high-speed rail over the balance of 2020. US pressure influences Israel to reject Hong Kong firm’s bid on strategically located, large-scale desalination plant. Japan categorizes firms into three groups as part of its effort to clarify what review processes apply to FDI pursuant to its Foreign Exchange and Foreign Trade Act. New Japanese law requires technology companies operating e-commerce websites and apps to submit annual reports, notifications of contract changes, and establish complaint processes. In quest for supply chain resiliency, Japan will provide subsides to encourage Japanese firms to return to Japan or move to Southeast Asia. Realized inward FDI into Korea in the first quarter 2020 plunges over similar period last year due to shorter worker hours, higher minimum wages, and other factors. South Korean parliament passes legislation that likely forces content providers to share network costs with local internet service providers. US support for the Economic Prosperity Network raises fears among Korean companies they will be pushed to shift FDI to the US. Korean firm to make huge investment in UAE pipeline as part of its consortium’s winning bid.

Dr. Jean-Marc F. Blanchard's picture

Run Bank Run? The Deposits Foreign Financial Firms Made in China Market (Still) are Not Liabilities

Dr. Jean-Marc F. Blanchard
Posted: May 30, 2020

How fast sentiments can change! The much vaunted opening of China’s financial sector to foreign banking, insurance, and securities firms has become a source of angst with observers now wondering if foreign financial players such as Allianz, Citigroup, JPMorgan, Nomura, and UBS will get caught up, directly or indirectly, in China-United States (US) tensions relating to geopolitics, trade, foreign direct investment (FDI), portfolio investment, Covid-19, and the changed status of Hong Kong. Potentially at risk are billions of dollars in FDI such companies have spent to acquire majority stakes in or establish securities joint ventures (JVs), build up their China insurance operations, and begin mutual fund operations.

Dr. Jean-Marc F. Blanchard's picture

Casting after Covid-19 or Premature Predictions about COFDI’s Demise

Dr. Jean-Marc F. Blanchard
Posted: Apr 28, 2020

Last month, I wrote pessimistically about the prospects for foreign direct investment (FDI) in China in the post-coronavirus world. Contrastingly, I am not so pessimistic about the future of Chinese outward FDI (OFDI), though China’s economic situation, the challenged cash flows and balance sheets of Chinese investors (state-owned and private), and China’s ever present worries about capital flight will constrain OFDI amounts. This seemingly pollyannaish view derives from home (China) and host (recipient) country factors shaping Chinese OFDI (COFDI).

MNCs in the News-2020-04-17

China’s Ministry of Commerce reported that inward foreign direct investment (FDI) plunged over the first three quarters of 2020 when compared to 2019 largely due to the effects of Covid-19. A Shanghai court ordered Chinese shoe company New Barlun to pay USD $1.41 million in damages and litigation costs for trademark infringement and unfair competition to American shoe company New Balance. Huawei responds to criticism in the United Kingdom (UK) and proposed restrictions on its involvement in the UK 5G network by noting its role in keeping Britain online and the damage done by the criticism. A British parliamentarian calls for the UK government to ensure Imagination Technology’s technology base is not moved to China. Yahoo Japan will cooperate with the Japanese government to provide data from consenting users that could help identify clusters. The Board of Investment of Thailand approves Mitsubishi Motors’ plan to improve manufacturing lines at one existing plant to allow for production of hybrids and electric vehicles. After the failure of arbitration, Netflix opts to take South Korea’s SK Broadband to court over special fees for data-heavy content that the latter wants to improve upon the former. LG Chem obtains special privileges from the Polish government enabling its employees dispatched to its electric vehicle plant there to avoid certain quarantine.

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