foreign direct investment

Dr. Hwy-Chang Moon's picture

The Global Trade War and Korea’s FDI Strategy

Concerns about the possible negative impact on Korea’s economy from the global trade war, sparked by the escalation of American trade protectionism, are serious and real. However, aside from what news reports discuss as a potential threat to world trade, the most critical area that deserves our attention is foreign direct investment (FDI).

MNCs in the News-2018-08-03

Shanghai’s release of 100 policies seems to be drawing in foreign direct investment (FDI) in advanced manufacturing and benefitting foreign firms in remanufacturing. Google reportedly will launch censored search engine in China in 6-8 months. China’s National Development and Reform Commission lightens up restrictions on overseas borrowings by Chinese companies. Negative security review leads Yantai Taihai Group to drop plan to buy Germany’s Leifeld Metal Spinning AG. Japan, US, and Australia agree to invest in infrastructure projects in the Indo-Pacific in an apparent move to counter China. Japan seeks to cooperate with Moscow on construction of liquefied natural gas transfer hub in Russia’s Far East to minimize supply risks. Korean government to invest USD $1.3 trillion in 10-year next-generation semiconductor project to attract global semiconductor firms to set up plants in Korea. South Korea bolstering efforts to win bid for Saudi Arabia nuclear project after losing bid for United Kingdom construction project.

MNCs in the News-2018-07-27

China’s Ministry of Commerce (MOFCOM) drafting rules that would subject more foreign direct investments (FDI) to its national security review process. Diverse United States (US) airlines move to comply with China’s order regarding the treatment of Taiwan on their websites and in maps. Chinese mergers and acquisitions activity in the US in the first half of 2018 has plummeted versus the comparable period last year due to political and other factors. Chinese investors kicking out their European soccer club investments due to Beijing’s crackdown on “irrational” overseas FDI. Rosneft, a Russian state-owned firm, files USD $1.4 billion lawsuit against Japanese and other stakeholders in Sakhalin oil and gas project. Just days after Japan passes controversial law allowing development of three new casino resorts, Genting Singapore forms five new subsidiaries in Japan. Laos to investigate possible construction flaws after dam collapse that was built by joint venture involving South Korean, Thai and Lao companies. Korea’s financial regulator helping Korean financial firms expand into overseas markets due to saturated domestic market.

MNCs in the News-2018-07-20

BMW and Tesla roll forward in China as government paves the road to greater ownership stakes. Foreign financial institutions banking on increasing role in China’s Belt and Road Initiative (BRI). Cambodia’s Minister of Agriculture, Forestry, and Fisheries opined that Chinese outward foreign direct investment (FDI) in Cambodia’s agricultural sector was bearing substantial fruit for his country. Sumitomo hopes to use agreements with Japanese local government to entice Japanese manufacturers to use rental plant areas at its Vietnamese industrial parks. Takeda optimistic about getting China’s sign-off for USD $62 billion Shire acquisition deal despite concerns of Chinese retaliation over US tariffs. LG Chem plans new battery plant in Nanjing to take advantage of the Chinese government’s electric car incentives, which are expected to disappear by 2020. New investment wave expected to hit Vietnam’s textile and garment industry boosted by Vietnam-South Korea FTA.

MNCs in the News-2018-07-13

China’s Ministry of Commerce (MOFCOM) says inward foreign direct investment (FDI) was solid for the first six months of 2018 year-over-year. Some observers see China opening to foreign deals because of external pressure as well as slowing inward FDI (IFDI). Merkel praises Chinese market opening moves as a sign of action, not just talk. Shaanxi Ligeance Mineral Resources Co. deal for United Kingdom (UK)’s Northern Aerospace grounded apparently for national security reasons. Japanese regulators mashing Apple over forcing customers to opt for particular product/service plans. Recent report reveals Japan moves up to third in US FDI while overall FDI drops due to US government plans to toughen regulations. Taisho Pharmaceutical Holdings to raise stake in top Vietnamese drugmaker DHG Pharmaceutical as Vietnamese authorities approve removal of foreign ownership limit at DHG.Chinese government approves LG Display’s OLED display production facility in Guangzhou. South Korea and Singapore sign two agreements aimed at strengthening bilateral investments and trade by promoting collaboration between companies.

MNCs in the News-2018-07-13

China’s Ministry of Commerce (MOFCOM) says inward foreign direct investment (FDI) was solid for the first six months of 2018 year-over-year. Some observers see China opening to foreign deals because of external pressure as well as slowing inward FDI (IFDI). Merkel praises Chinese market opening moves as a sign of action, not just talk. Shaanxi Ligeance Mineral Resources Co. deal for United Kingdom (UK)’s Northern Aerospace grounded apparently for national security reasons. Japanese regulators mashing Apple over forcing customers to opt for particular product/service plans. Recent report reveals Japan moves up to third in US FDI while overall FDI drops due to US government plans to toughen regulations. Taisho Pharmaceutical Holdings to raise stake in top Vietnamese drugmaker DHG Pharmaceutical as Vietnamese authorities approve removal of foreign ownership limit at DHG.Chinese government approves LG Display’s OLED display production facility in Guangzhou. South Korea and Singapore sign two agreements aimed at strengthening bilateral investments and trade by promoting collaboration between companies.

Wong MNC Center Co-Organizes and Co-Sponsors Conference entitled “Coping with Global Backlash”

The Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations (Wong MNC Center) is co-organizing and co-sponsoring the “Coping with Global Backlash” Conference at the University of California Berkeley (UC Berkeley) in October 2018. The two-day event, which runs from October 18 to 19, is hosted by the UC Berkeley Asia Pacific Economic Cooperation Study Center (BASC), Center for Long Term Cybersecurity, Clausen Center, and IEAS, which also are event co-organizers and co-sponsors.

MNCs in the News-2018-07-06

There is some evidence China has started sanctioning American firms in China as a way to retaliate against American tariffs against Chinese goods. Foxxconn breaks ground on potential multi-billion dollar display screen plant in Wisconsin that allow it to profit from incentives and satiate Donald Trump’s America First campaign. United States (US) Department of Commerce allows ZTE limited duration, partial reprieve on seven-year comprehensive supply purchase ban. Pakistan seeks new funding from China, warning that failure might force it to go to the International Monetary Fund (IMF) which might result in the end of some of China’s Belt and Road Initiative (BRI) projects. Value of new Japanese FDI in US increases by 70 percent as President Trump pushes to expand employment. Japan and Kazakhstan to implement seven joint projects worth approximately USD $2 billion in areas like nuclear energy, transport and water supply. South Korea working with the US and the United Arab Emirates to win $19 billion power project in Saudi Arabia. Samsung urges Chinese officials to cancel discriminatory policies against foreign businesses. Malaysia and China are discussing a future visit to Beijing by Malaysian Prime Minister Mahathir in the wake of Kuala Lumpur’s suspension of Chinese projects valued over $20 billion. Malaysian senior trade official says country is open to more value-added investments from China.

MNCs in the News-2018-06-29

China’s National Development and Reform Commission (NDRC) unveils new nationwide negative list which opens about 17 more sectors and reduces various restrictions. China’s Ministry of Commerce (MOFCOM) and NDRC released a revamped negative list for foreign direct investment (FDI) in China’s free trade zones (FTZs) that has some better features than nationwide negative list. United States apparently to go with enhanced Committee on Foreign Investment in the United States (CFIUS) review process rather than establish mechanisms that specifically focused on restraining Chinese FDI. Nissan picks Thailand as first export market for new hybrid cars which may lead to local production if results and investment incentives are attractive. Sumitomo Mitsui Banking Corporation signs memorandum with Thailand’s governmental agency that the latter hopes will boost FDI. Samsung’s managing leaders recently convened to discuss a growing “China problem” as company confronts various political and regulatory problems. Taiwan’s GlobalWafers intends to follow through on USD $450 million Korean production facility amid increased Sino-US trade tensions. Malaysian government optimistic that investors’ confidence will be restored partly due to Prime Minister Mahathir’ effort to court FDI. Survey reveals Japanese companies interested in setting up manufacturing bases in Malaysia and are looking to invest in new sectors.

MNCs in the News-2018-06-22

China to release two enhanced negative list for inward foreign direct investment (FDI) in July. Australia keeps hanging up on Huawei despite the latter’s efforts to gain new business opportunities. British officials seem reluctant to let a Chinese-owned British firm’s deal for a small airplanes part maker take off. Warming political relations between China and India provide a fertile environment for the growth of Chinese outward FDI (OFDI) in Indian start-ups. Japan Automobile Manufacturers Association stresses Japanese carmakers’ investment contribution to the US in move to undermine criticism from President Donald Trump. Japan’s financial regulator tells Japanese banks to report suspicious money transfers involving ten Japan-North Korea joint ventures. Chinese government to give LG Display approval to launch USD $6.7 billion OLED plant in Guangzhou, though partnerships with Chinese competitors may be required. SK Engineering & Construction signs letter of intent with Manila on USD $2 billion investment plan for environmentally friendly coal-fired power plants. Mahathir says Malaysia could extend new tax incentives for foreign investment in areas such as technology and research and development. Malaysia seeks to recoup USD $4.5 billion of funding that was potentially lost through 1MDB corruption scandal

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