export controls

A Somewhat Tightening Vise on US FDI in Chinese High-Tech: Death by 1000 Cuts… or So…

The United States (US) recently issued a “Final Rule” to implement President Joseph Biden’s August 2023 Executive Order titled “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.” They both target persons from the People’s Republic of China.

MNCs in the News-2021-May

According to China Ministry of Commerce statistics, China’s utilized foreign direct investment (FDI) over the 1st four months of 2021 showed impressive growth. In a recent report, the British Chamber of Commerce in China highlighted China’s data rules and data flow restrictions as new areas of concern on top of continuing issues like market access and the lack of a level playing field. 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). In the wake of new data rules and various image problems, Tesla announced the construction of a new data center in Shanghai to store information on gathered on local users and their vehicles. China’s initiation of economic sanctions against various European Union (EU) officials in response to EU sanctions against China has raised questions about whether or not the ratification process for the EU-China Comprehensive Agreement on Investment will move forward. China’s Landbridge rejected concerns that its 99-year lease of Australia’s Darwin port presents any kind of a national security threat. A Japanese Liberal Democratic Party group investigating methods to enhance Japan’s economic security has proposed the creation of a public-private body to develop solutions for public policy issues like supply chain resiliency. An official Chinese media piece warned various prominent Japanese apparel companies’ decisions to stop using Xinjiang cotton might cause them to lose business in China. Japanese export restrictions against South Korea are driving Japanese semiconductor material companies to increase their activities and in South Korea as a way to circumvent Tokyo’s economic sanctions. During Korean President Moon Jae-in’s summit with US President Joseph Biden, Korean companies proposed massive investments in manufacturing plants

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.

MNCs in the News-2020-04-10

United States (US) financial giant JPMorgan strikes terms for taking 100 percent stake in its Shanghai mutual fund joint venture (JV). US trade bodies write to US Department of Commerce head to warn about adverse effects of contemplated changes to US export controls of semiconductors and semiconductor equipment to China, stressing for the first time the importance of chips in healthcare equipment. Reported attempted Board coup at United Kingdom (UK) graphic chipmaker Imagination Technologies blocked by UK government. China rejects reported charge that it was donating masks to France on the condition Huawei could participate in France’s 5G network. Japan prepares massive supplemental budget to facilitate Japanese firms leaving China for Japan or Southeast Asia. Indonesia’s partial lockdown in Jakarta drives Japanese firms to temporary shutter their factories there. Korean regulatory authorities will conduct a comprehensive review of Germany’s Delivery Hero’s acquisition of Woowa Brothers, the operator of food delivery app Baemin. India’s Mahindra & Mahindra says it will not inject fresh funding into SsangYong Motor.

MNCs in the News-2019-10-11

China Ministry of Foreign Affairs (MOFA) spokesman rejects claim that Beijing is forcing American companies to abandon their values. China Securities Regulatory Commission (CSRC) has put forth the specific timetable when 100 percent foreign direct investment (FDI) stakes in brokerages, futures, and fund management companies will be allowed. United States (US) Senator Marco Rubio has sent a letter to the US Department of the Treasury requesting a national security review of China’s Beijing ByteDance Technology Co.’s acquisition of Musical.ly. US sanctions may have driven China National Petroleum Corporation’s dismissal from Iran’s South Pars field Phase 11 project. Japan and South Korea will soon have consultations relating to South Korea’s World Trade Organization case against Japanese export controls. Pressure from international institutions and business considerations are driving Japanese firms to pay more attention to corporate social responsibility (CSR) issues in their Southeast Asian supply chains. Korea witnesses growth in inward FDI for the first time in five quarters, with strength in new industrial sectors. Samsung Electronics contemplate major semiconductor FDI in Xian despite poor macro-political and economic conditions because of needs of Chinese government and customers.

MNCs in the News-2019-09-20

Despite falling global foreign direct investment (FDI), China continues to show strength in attracting inward FDI (IFDI). Shanghai continues to be a magnet not only for IFDI, but also for regional headquarters and research and development facilities. The United States (US) has issued a regulation that will give the Committee on Foreign Investment in the United States new powers to scrutinize FDI which many believe are directed at China. US Senators send Federal Communications Commission a letter asking it to review the operating licenses of Chinese telecommunications providers in the US. Japan’s Fair Trade Commission (FTC) pushes Internet companies “to create a system to eliminate fake news and discriminatory postings.” Regarding Korea’s recent filing of a World Trade Organization complaint related to Japanese export controls, Japan has agreed to consultations. Korea FTC to decide if it will accept Apple Korea’s pledge to fix its alleged illegal collection of advertising fees from mobile carriers. Korea Electric Power Corp.’s coal mine development project in New South Wales rejected by Australia’s Independent Evaluation Committee.

MNCs in the News-2019-09-13

Despite the United States (US)-China trade war, renowned economist highlights that US firms continue to remain in China because of the attractiveness of China as well as limits associated with the alternatives. During a meeting with a Japanese business delegation, Chinese Premier Li Keqiang welcomes more Japanese foreign direct investment (FDI) in China. Although it decreased compared to 2017, Chinese outward FDI in 2018 was the second highest globally after Japan. China is moving to expand “internet plus healthcare” cooperation with BRI countries generally and BRI countries specifically. Japan’s Fair Trade Commission (FTC) is investigating whether BMW’s Japan subsidiary abused its market power to punish dealers that failed to meet sales quotas. Japan’s trade minister notes South Korea’s filing of a World Trade Organization (WTO) complaint will not affect Japan’s export control measures and that it will decide later if it wants consultations. Korean employer and business groups express worries about government plan to ratify parts of International Labor Organization (ILO) convention which they fear will make Korean labor unions more powerful. Head of LG Chem opines that his company’s lawsuit against SK Innovation in the US does not undermine the national interest.

MNCs in the News-2019-09-06

On the eve of German Chancellor Angela Merkel’s visit to China, China’s Ministry of Commerce (MOFCOM) reports German foreign direct investment (FDI) in China grew more than 60 percent over the first seven months of 2019 year-over-year. Chinese media delivered some packaged criticisms against FedEx for the latter’s alleged shipments of controlled goods and rerouting of packages destined for Huawei. Relatively small-scale protests took place in three Kazakhstan cities against potentially questionable Chinese factory FDI. The United States (US) concludes declaration with Poland for the rigorous evaluation of foreign suppliers involved in 5G networks which some see as directed at China and Huawei. Nissan considers leaving Korea as Korea-Japan frictions make its challenging situation there even worse. Uniqlo partners with the International Labor Organization (ILO) to support research on labor markets and social security systems in some of its production hubs in South and Southeast Asia. Korean economic difficulties due to frictions with Japan encourages Hyundai union to settle with management without a strike. Korean government official meets with LG Group and SK Group executives to try to get them to resolve trade secrets dispute that LG Chem has brought to the US International Trade Commission.

MNCs in the News-2019-08-16

China’s Ministry of Commerce (MOFCOM) announced inward foreign direct investment (FDI) over the first seven months of 2019 grew 7.3 percent over the same period last year. The city of Beijing intends to relax controls over FDI in cultural and entertainment businesses. Chinese FDI into Europe has slowed as a result of economic uncertainties and trade frictions. A survey suggests Vietnam, Singapore, and Indonesia are the top three Asian countries presenting the best opportunities for participating in China’s Belt and Road Initiative (BRI). Japanese firms in Hong Kong are becoming cautious given tumultuous situation there. Japan alerts new Andhra Pradesh Chief Minister that talk of renegotiating power purchase agreements raises risks. Korean lawmakers contemplate limiting Korea Investment Corp.’s ability to invest in Japanese companies with ties to wartime forced labor. Korean consumer boycott of Japanese goods and services produces decline in imports of Japanese goods of 14 percent over the same period the prior year.

MNCs in the News-2019-08-09

To cope with United States (US) tariffs on Chinese goods, several prominent Japanese firms operating in China are planning to relocate some of their manufacturing to other Asian countries. China’s State Council has expanded the Shanghai Free Trade Zone (FTZ), adding an area called Lingang area which is supposed to become a business cluster for international businesses and cross-border financial services. The China-US trade war has driven two large Chinese consumer health care companies to seek to cooperate with/invest in Malaysia’s largest generic drug maker to grow their manufacturing base in Malaysia. China’s Zhong Ji Mining froze operations at its gold mine in Kyrgyzstan after 20 people were hurt in clashes between local protesters and Chinese workers. Tokyo touts that it had approved the export of a sensitive chemical to Korea, the first since it intensified export controls in July. Malaysia’s International Trade and Industry Minister reports Japan’s Daihastu Motor “would provide ‘advanced technological support’” for Malaysia’s third national car company. A Korean National Labor Relations Commission decision to freeze the ongoing arbitration between GM Korea and its labor union means the labor union now has the legal right to strike. Due to Seoul’s decision in 2018 to have all public enterprises sell their overseas assets,” Korea Resources Corp. has been pursuing the sale of its Cobre Panama copper mine, albeit unsuccessfully.

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