infrastructure

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. Jean-Marc F. Blanchard's picture

Small Waves Precede Tidal Waves: American Sanctions on Chinese Companies involved in South China Sea Island Building and their Larger Ramifications

The United States (US) Department of Commerce recently blacklisted two dozen Chinese firms which it said, “played a ‘role in helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea.’” Companies listed included Guangzhou Haige Communications Group, China Shipbuilding Group, and China Communications Construction Co. (CCCC). The US State Department later accused CCCC and its subsidiaries of “‘corruption, predatory financing, environmental destruction and other abuses.’”

Dr. Jean-Marc F. Blanchard's picture

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

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-2020-04-24

According to China’s Ministry of Commerce (MOFCOM), more than 1000 companies including many from the United States (US), Germany, and Japan have registered from the 2020 November China International Import Expo. MOFCOM reports that China’s non-financial outward foreign direct investment (FDI) declined less than 1 percent year-over-year when compared to the 1st quarter of 2019. Many interpreted a recent India notification indicating special government scrutiny of FDI from bordering countries as directed against China as a time when Indian companies might be vulnerable. Canyon Bridge, the Chinese owner of the United Kingdom (UK)’s semiconductor designer Imagination Technologies, says the company’s headquarters will stay in the UK. Japan will add the medical sector to the list of sectors where FDI is subject to review pursuant to the Foreign Exchange and Foreign Trade Control Law. Japan’s NEC wins major deal to supply observation satellite to Vietnam. Korea’s Fair Trade Commission needs more time to review Delivery Hero’s deal to acquire Woowa Brothers due to concerns about the anti-competitive effects of the deal. Korea’s GS Engineering & Construction concludes a roughly $450 million deal with the Singapore’s Land Transport Authority to build an Integrated Train Testing Center.

Pichamon Yeophantong, Ph.D., has joined the Wong MNC Center as a Senior Research Fellow

Dr. Pichamon Yeophantong has joined the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations as a Senior Research Fellow. Dr. Yeophantong is an Australian Research Council Fellow, Senior Lecturer at the University of New South Wales Canberra, and leads a project examining the impacts of Chinese resource and infrastructure investment. For more information, please see http://www.mnccenter.org/research-fellows.

MNCS in the News-2020-01-31

The coronavirus is affecting the operations of numerous multinational corporations (MNCs) in China, though many remain hopeful about the longer-term and are not overreacting. The former Chairman of China’s Sinopec opined that Chinese foreign direct investment (FDI) in sensitive areas and big deals would be avoided due to the contemporary political environment. Chinese firms win railway tenders in Namibia, where they already have a noteworthy presence. Japanese Diet bill proposes requiring major technology firms, foreign and domestic, to report annually to Japanese authorities on practices like data collection and also to establish complaint procedures. Due to the coronavirus, Toyota Motors suspends operations in China pending further review. South Korea seeks to create a better environment for domestic and foreign startups to promote growth. South Korean FDI in the US hits USD $10 billion for the fourth consecutive as relatively higher growth rates and lower taxes prove attractive.

MNCs in the News-2019-09-27

At an event in the United States (US), Chinese Foreign Minister Wang Yi stressed China’s opening, the value of its new foreign investment law, and its improving negative list. Chinese analysts criticized a European Chamber of Commerce in China report for blaming the woes of European firms in China on China’s state-owned enterprises (SOEs) rather than the highly competitive business environment in China. The joint investment fund between China’s China Investment Corporation and US bank Goldman Sachs has only recently made its first investment due to problematic the problematic political environment. China Power International Holdings concludes memorandum of understanding (MoU) with Norway’s SOE energy producer Equinor for cooperation in renewable energy. Japan concludes MoU with European Union calling for cooperation on infrastructure, transport, and digital project and the need for projects to be environmentally and fiscally sustainable. Japan and Indonesia sign a deal for a more than USD $4.2 billion medium speed train project which is partially politically motivated. Korea’s trade war with Japan is fueling the development of domestic supply chains and the reshoring of Korean firms. Concurrent with Korean President Moon Jae-In’s visit to the US many Korean companies announced their investments in the US.

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.

MNCs in the News-2019-08-30

China’s plan to apply its social-credit system to foreign companies is raising concerns about possible abuses. China’s State Council announces it will establish pilot free trade zones (FTZs) in Shandong, Jiangsu, Guangxi Zhuang, Yunnan, Hebei, and Heilongjiang. United States (US) companies likely to stay in China despite trade war, a problematic regulatory environment, and US President Donald Trump’s call for them to leave. Although frictions over maritime issues remain unsettled, Chinese President Xi Jinping proposes joint oil & gas development in Reed Bank area to visiting Philippines’ President Rodrigo Duterte. Japan is paying more attention to tax shifting activities by high-tech companies and has recently forced Facebook to pay more in taxes for some questionable tax shifting activities. After the 7th Tokyo International Conference on African Development (TICAD), Japan and 53 African countries signed the Yokohama declaration which stressed “‘quality infrastructure investment.’” South Korea’s new policy for network fees has led to frictions with Facebook and service problems that led to fines which Facebook fought successfully in court. The Korea Startup Forum, the Korea Internet Corporations Association, and local and foreign content providers have called upon the South Korean government “to completely overhaul its network fee calculation structure.”

MNCs in the News-2019-05-10

The ongoing China-United States (US) trade war coupled with other economic and political factors drives more firms to consider other locations besides China. China moves to take more steps to protect intellectual property (IP), partly to assuage the concerns of foreign investors. China poured record amounts of investment into US start-ups last year despite Sino-American tensions, but there are dark clouds on the horizon especially in regard to investment screening. Security and other concerns lead US Federal Communications Commission hangs up on China Mobile’s effort to operate and offer service in the US. Not a single European country has joined Washington’s call to boycott China’s Huawei. Japanese banks move to improve their anti-money laundering and terrorist financing practices so as to increase chances of good Financial Action Task Force review. Japanese foreign direct investment in the US surges for political and economic reasons, with some “red states” seemingly benefiting from the former. Seoul police investigate if BMW Korea’s Chairman covered up automobile defects. Lotte Chemical launches USD $3.1 billion ethylene cracker complex in Louisiana with strong political support from Korea and the US.

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