IP

Bounding Investment In China: Constraints and Complications

The United States (US) has been striving for some time to hinder China’s acquisition of technology-related hardware, software, and intellectual property (IP) through export controls, limits on Chinese investment in American high-tech firms, and even investigations of researchers tied to Chinese universities and think tanks. The goal ostensibly is to prevent Beijing from acquiring technology that would bolster China’s military capabilities. For those more cynical, Washington is attempting to undercut China economically and, in turn, contain China or prevent its rise.

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-2020-02-07

China’s Ministry of Commerce pushes Chinese Chambers of Commerce to provide force majeure certificates to Chinese firms struggling to meet their contractual obligations due to disruptions caused by the coronavirus crisis. Wuhan Institute of Virology move to apply for a patent to use United States (US) firm Gilead’s remdesivir to treat pneumonia like symptoms raises intellectual property issues. Huawei’s Chief Representative to European Union (EU) institutions says the firm will build 5G manufacturing bases in Europe. US Attorney General Bill Barr advocates US and its allies taking controlling stakes in Nokia, Ericsson, or both to fend off Huawei 5G challenge. Japan’s Ministry of Defense reveals two new Japanese defense-related companies that suffered cyberattacks, without stating if classified information was leaked. Japanese company plans to cope with Brexit subject to change depending upon trade negotiations between the United Kingdom (UK) and the EU. Japan files petition with the World Trade Organization to challenge planned merger between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering. Panama re-awards Metro Line 3 to Korean consortium, rejecting challenges from Chinese firms and a consortium with a Chinese company.

MNCs in the News-2019-06-28

President Donald Trump’s tough stance on intellectual property rights (IPR) violations seems to be driving China to treat foreign IPR more respectfully. At the Osaka G20 Summit, Chinese President Xi Jinping announces several measures China will undertake to open its market further to foreign direct investment (FDI) and improve IPR protection. This past week witnessed the creation of the Belt and Road Economic Information Partnership (BREIP). Two major BRI projects in Africa end. At the Osaka G20 summit, participating countries embrace Japan’s international principles for quality infrastructure. Japan tells two leading candidates for the British Prime Ministership it does not want a “no deal Brexit.” As part of its downstream growth and diversification strategy, Saudi Aramco and its affiliates have signed a dozen accords with South Korean companies covering sectors areas like shipbuilding, engine manufacturing, and petrochemicals. A consortium involving Korea Hydro & Nuclear Power (KNHP) and KEPCO Plant Service & Engineering (KPS) signs a five-year maintenance service deal for the Barakah nuclear power plant, but fails to garner responsibilities for maintenance services, nuclear scientists, and engineers.

MNCs in the News-2019-06-21

China Premier Li Keqiang works to lure foreign direct investment (FDI) during the Global CEO Council in Beijing. In 2018, the deal value of European mergers and acquisitions (M&A) activity in China soared by 856 percent to USD $9.94 billion. European Union (EU)-China talks on a Comprehensive Agreement on Investment and China’s negative list show better progress than expected. Brazilian Vice President welcomes Chinese FDI in infrastructure as long as it creates jobs and respects Brazilian rules. Around the time of the G-20, French President Emmanuel Macron will discuss issues about the Renault-Nissan alliance with Japanese Prime Minister Abe Shinzo. Numerous Japanese corporate subsidiaries in the United States have voiced opposition to Donald Trump’s proposal to slap tariffs of 25 percent on another $300 billion of Chinese products. Tokyo has requested Seoul to establish an arbitration panel consisting of representatives selected by other countries to help deal with their wartime forced labor compensation dispute. Seoul prepared to block a deal that would sell Taihan Electric Wire to a Chinese company because it deems Taihan’s high-voltage cable technologies a “‘national core technology.’”

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.

MNCs in the News-2019-04-26

United States (US) Trade Representative (USTR) criticizes China’s intellectual property (IP) protections and calls for stronger IP safeguards. China pledges the journey along its Belt and Road (BRI) will only get better. Survey shows new European Union (EU) foreign direct investment (FDI) screening laws make Chinese companies feel the EU is discriminating against them. United Kingdom (UK) reportedly dials into China’s Huawei participating in its 5G network activities. Eager to keep Italy from moving too close to Beijing, Japan calls for deeper economic (and military) cooperation during top leader summit. Korea charged up about lack of level playing field relating to electric vehicle subsidies. Korean petrochemical firms will be hit by the upcoming end to the US policy of granting waivers to countries importing Iranian crude oil.

MNCs in the News-2019-03-08

China’s National People’s Congress (NPC) to consider new draft law on foreign direct investment (FDI) that seeks to provide stronger legal guarantees to overseas investors. About 1/3rd of North American-based corporations on the CNBC Global CFO Council say Chinese companies have stolen their intellectual property (IP) at some point in the past ten years. Mirroring global trends, Chinese FDI in Europe fell drastically in 2018 and a recent survey suggests the European Union (EU)’s new investment screening framework likely will curb Chinese EU mergers and acquisitions even more. Italian economic development ministry official announces Italy is planning to join China's Belt and Road Initiative (BRI). Faced with Mitsubishi Heavy Industries Ltd.’s refusal to negotiate, South Korean plaintiffs who won a wartime forced labor case against the company file court request to seize the company’s assets. Toyota Motor Corp. announced last week it may pull out of production in Britain due to the likely increase of tariffs in the case of a no-deal Brexit. Hyundai Motor is considering suspending operations at its Beijing manufacturing plant partly due to plummeting sales and partly due to budding opportunities elsewhere. South Korea’s Ministry of Economy and Finance reports Korea’s OFDI reached a record high in 2018 partly due to Korean companies going abroad to enjoy a better manufacturing environment.

MNCs in the News-2019-03-01

China’s Ministry of Commerce (MOFCOM) announces China will keep improving the legal and market environments for foreign investors. United States (US) President Donald Trump recently announced the US has made substantial progress in talks with Beijing on improving its IP protection. American Chamber of Commerce in China survey indicates some positive views about China’s progress in protecting intellectual property rights (IPR), though concerns about profitability and the future are rising. Following the European Parliament’s approval of a mechanism to control foreign investment in strategic sectors, Chinese official calls upon the EU to adopt an open and inclusive attitude towards foreign companies. Per JETRO survey, Japanese parts suppliers in China hit worse by US-China trade frictions than other Japanese firms there. British business secretary will travel to Japan to ask Honda Motors to reconsider its recent decision to shut down Swindon car plant. Abu Dhabi National Oil Company awards South Korea Engineering and Construction contract for USD $1.2 billion underground oil project. South Korea’s Financial Supervisory Service will tighten monitoring of foreign firms’ unfair trading practices.

MNCs in the News-2015-07-31

Mercedes-Benz blows out over faulty fuses. China works to boost mixed-ownership of state-owned enterprises (SOEs), giving new investment opportunities to foreign investors. China’s GSR Ventures to raise USD $5 billion to support China’s quest to acquire more technology. Korea Economic Research Institute head encourages the government to take anti-hedge fund measures. Indonesia grants PT Freeport Indonesia export license, deeming they are making progress in developing their local smelter capability. Widodo lobbies China to invest more and help Indonesia become an “Asian production base.” Chinese Consul-General promises hundreds of Chinese SOEs to invest in West Sumatra. Taiwan Investment Commission approves USD $2.78 billion of outbound investment by Taiwan firms. Vietnam pushes its firms to build up their domestic and international brand names.