Global Economy First Sector: Agro-Foods Sector In China

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Global Economy
Through the process of globalization, companies develop international influence and begin to operate on a global scale. Two such firms are Nestle and HSBC, which are multinational corporations widely recognized as leaders in their respective industries. This paper evaluates the provided statement with respect to two sectors namely the financial sector and the agro-food sector; two countries namely China and Vietnam; and two companies namely HSBC and Nestle. Specifically, the paper discusses how the process of production, distribution and consumption as part of globalization has generated either bad or good outcomes.
First Sector: Agro-Foods Sector in China
Nestle is one of the major multinational corporations operating in China’s Agro-Foods sector. This Switzerland-based firm is the world’s leading health, nutrition, wellness and food conglomerate, and operates in 194 countries (Askew 8). With regard to its operations in China, the greater geographic area covered by Nestle includes Macau, Hong Kong, Taiwan and Mainland China. Nestle has operated in China for decades now. It has a long history of carrying out business in this country. In the year 1908, Nestle opened a distribution centre in the city of Shanghai, which was the company’s first distribution office in the whole of China. In 1990, the firm’s first joint venture on the mainland of China started to operate (Roberts 25). At the moment, its head offices in China are situated in Beijing’s Chaoyang District.
The agro-food sector is characterized by the extraction of raw materials from the environment. Over the past 4 decades, the production, distribution and consumption of food has been changing. The sector is responsible for 92 percent of water consumption, and major water security and management decisions are made in this sector.
Nestlй’s operations in China have generated a number of good outcomes. For example, they have produced employment opportunities considering that Nestle employs in excess of 49,100 people in the country. It operates two research and development centers located in Beijing and Shanghai. It also has about 32 factories in the China region that employ the aforementioned number of Chinese worker. The firm has invested over $1.5 billion in its business operations across China (Doherty 19). Equally important, Nestlй’s operations in China have produced access to a growing assortment of consumer goods including various Nestle brands such as KitKat, Maggi, Nan, Nescafe, in addition to local brand like Totole and Haoji. It is worth mentioning that 99% of the company’s products that are sold throughout the China region are produced locally. Nestle offers breakfast cereals, bottled water, sugar confectionary, milk, beverages, coffee, ice creams, family cereals, infant cereals, healthcare nutrition, growing up milk, culinary, in addition to pet care products (Bloomberg).
In addition, the firm has established a number of technical assistance initiatives for coffee and milk farmers throughout China. It purchases fresh milk from thousands of Chinese farmers. It also offers them assistance aimed at increasing the efficiency, quantity, as well as quality of their milk production. In the province of Yunnan, the company has been encouraging and supporting the cultivation of coffee for about 2 decades now, and over 4,050 farmers have been given direct training on processing, quality control, and even planting techniques (Abdulla 5). Nestle’s operations in the China region have also produced incomes. In the year 2016 for example, the company generated revenues amounting to $6.6 billion or 6.5 billion Swiss Franc, representing 7.3% of its total revenues globally. The income taxes its pays to the local and national governments in China contributes to the government earnings. It is the market leader in the country’s $21.5 billion baby-food market with a market share of 17%.
Nonetheless, those operations have also produced a few bad outcomes. For example, Nestle has been implicated in food-safety scandals in China. Parents in different parts of China are worried as regards a series of food-safety scandals that usually favor foreign brands like Nestle (Roberts 25). Over the recent past, high-value products (HVPs) have become a global process. The transnational food producer Nestle has locked the distribution and consumption into its own network. Owing to the increase in demand for high-value products foods in China, more supermarkets have opened all through the country. Local markets in the country continue to shrink as the market demand shifts for highly-processed foods. Nestle has trans-nationalized a significant segment of the food market in which global retailers sell its product items.
The other bad outcome produced by Nestlй’s operations in China is resource depletion particular in relation to the company’s water business. The company has been accused of draining the aquifers it controls as much as possible, devoid of any regard to environmental concerns or sustainable usage. Nestle has also dug deep wells for its bottled water operations that have deprived many local people in China of potable water, and in some places the level of water has gone down from one-hundred feet to three-hundred or even four-hundred feet making local people to suffer a water crisis (Askew 12). Unsustainable usage of aquifer water, as Roberts (27) pointed out, could result in a considerable reduction in the levels of water, and may even exhaust the aquifer. China is a country that is already facing the problem of groundwater depletion thanks to urbanization and population growth, and Nestle’s unstrained water extraction serves to compound the scarcity of water in the country as demand increases. At the moment, China is facing significant water crisis (Fluence Corp).
In addition, Nestlй’s operations have produced environmental pollution in China. Agricultural and industrial expansion in the agro-foods sector, especially the expansion of Nestle factories and coffee/milk farms, has polluted water supplies. Moreover, Nestle has violated various pollution regulations in China and has emitted pollution that was more than the allowable levels (Watts). Researchers have reported that a certain bottled water plant of Nestle had started to operate in China before its wastewater treatment facilities had met the standards for environmental pollution (Watts). T...