Hong Kong

Dissecting the Flawed Dissin of No Delisting…of Chinese Companies

The United States (US) Public Companies Accounting Oversight Board (PCAOB), part of the Securities and Exchange Commission, has a variety of duties, one of which is to “inspect registered public accounting firms’ audits and quality control systems.” It had been unable to do this, however, in the case of many US-listed Chinese companies because Beijing would not permit any accounting firms to share Chinese audits.

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Finding Greatness in China’s Greater Bay Area (GBA), part III: The GBA as (yet) another “Silicon Valley”

This series’s first blog notes the GBA seeks to create a global innovation, research, and technology hub in the mold of “Silicon Valley.” There are many reasons to expect success. These range from a “cocktail of inputs” including massive government support to huge capital pools to a strong ecosystem for research to prominent artificial intelligence, health tech, robotics, smart city, and telecommunications players with extensive patents and research and development (R&D) spending to broad and deep (and continuously improving) hard infrastructure.

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Finding Greatness in China’s Greater Bay Area (GBA), part II: Implications for IFDI and OFDI

China’s Greater Bay Area (GBA), detailed in my last blog, appears an obvious magnet for inward foreign direct investment (FDI) and catalyst for outward FDI (OFDI). Beijing’s backing, infrastructure improvements, supportive government science and technology (S&T) policies, the GBA’s surfeit of supply networks, and the GBA’s scale and diversity should attract inward FDI (IFDI). The GBA’s role as a financial center and the relaxation of barriers to outward capital flows promise greater OFDI. Some question the GBA’s ability to realize its lofty aims given myriad barriers to internal flows, the vagueness of government plans, and dearth of true technology leaders.

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Finding Greatness in China’s Greater Bay Area (GBA), part I: Diving into the Bay

Possessing about a decade-long lineage, China’s Greater Bay Area (GBA) formally began in 2017 with the signing of a Framework Agreement between the People’s Republic of China (PRC) and the Hong Kong Special Administrative Region. The objective is to create a mega economic cluster, involving 11 cities (e.g., Guangzhou, Dongguan, Hong Kong, Macao, and Shenzhen) that will be a leading international financial hub, a major global innovation center, a critical node between China and Southeast Asia, a world-class research center in fields such as biotechnology, and, more recently, a major link to China’s ambitious Belt and Road Initiative (BRI).

MNCs in the News-2021-June

China adopts law for countering foreign sanctions, which some in foreign business community in China fear may be applied against it. Japanese Chamber of Commerce and Industry in China releases report highlighting anxieties about uncertainties created for Japanese firms by a slew of new, ambiguous laws and regulations such as the unreliable entities list and national security review law. Current data do not support the thesis that China’s national security law for Hong Kong has damaged Hong Kong’s status as an international financial center. Chinese firms are expanding their overseas operations to escape home country competition, gain local knowledge, and so on. Chinese outward foreign direct investment in Belt and Road Initiative countries shows respectable growth over first five months of 2021 versus prior year period. Japan continues along the path of greater regulation of internet giants and their potential abuse of market power. South Korean district court dismisses wartime labor compensation lawsuit brought by a group of Koreans against 16 Japanese companies. Korean firms substantially increase their lobbying activities in the United States for various political and economic reasons. Korean consortium’s hopes to win nuclear power plant bid rise with Czech government’s decision to rule out the involvement of Chinese and Russian companies.

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.

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Dashing for the Door Due to Dealing in Data or Singapore Sling

The recent passage of the National Security Law for Hong Kong has raised all kinds of quandaries for high-technology and other companies, especially those that deal in data. This is so because the new law makes it easier for government authorities to access data, restrict the kinds of content that are published, and control the transmission of data. In the event of noncompliance with (vague and likely fluid) regulations, firms risk significant fines, imprisonment, or other sanctions. There has been a mild reaction by big firms such as Apple, Facebook, and Google, but they are not located in Hong Kong per se and their longer-term plans are unclear. Businesses actually located in Hong Kong face a serious quandary.

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

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.

MNCs in the News-2020-02-21

China’s Ministry of Commerce reports that inward foreign direct investment (FDI) in January reflected a small increase over the same period last year, with South Korea’s inward FDI (IFDI) surging and IFDI in medical equipment and instrumentation showing strong increases. Foreign businesses seem attracted by the Greater Bay Area’s promise of market opportunities and ongoing market liberalization, though policy, legal, and regulatory barriers still deter/concern some. The coronavirus’s adverse effect on the movement of goods within and outside China has affected some Belt and Road Initiative projects. Chinese contractors in Indonesia reject foreign media reports coronavirus has had a significant adverse impact on the Jakarta-Bandung high-speed rail project. Japan issues new rules relating to FDI screening in the wake of the passage of its Foreign Exchange and Foreign Trade Act. Japan’s Shimizu and Indonesian state-owned enterprise form joint venture to extend Jakarta’s mass transit system. Korea’s LG Chem wins default judgement from United States (US) International Trade Commission regarding its lawsuit against SK Innovation for violating its electric vehicle rechargeable battery trade secrets. Korea’s Samsung faces Iranian retaliation for restricting Galaxy stores app services to Iranian users.

Executive Director Jean-Marc F. Blanchard interviewed for Asia Times article on situation in Hong Kong and impact on Chinese investment

Dr. Jean-Marc F. Blanchard, Executive Director of the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations, was interviewed for a Asia Times story about the impact of Hong Kong protests on Chinese overseas foreign direct investment (FDI). The issue arises because a large proportion of Chinese outward FDI (OFDI), almost 60 percent, flows through Hong Kong. Chinese OFDI (COFDI) is already facing pressures because of increased sensitivites in host countries, project problems, and other factors. Dr.

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