Environmental Analysis of Nestle

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Devaluation of the Chinese yuan

The most serious problem for Singapore today is the devaluation of the Chinese yuan. For the last 5 years, there was a recession in China’s economy, to prevent that Chinese government tried out everything except for devaluation. This decision caused some turmoil in the global economy, such as the collapse of the Stock Exchange in Shanghai and the Wall Street. China is an important player in the global market and these problems in the Chinese economy have a negative impact on Singapore as it directly depends on the growth of the Chinese economy. The negative effect for Singapore means that China began to carry out this policy because of the weakness of its economy. If China’s economy is going recession, Sino-Singapore trade turnover will decrease, which would hurt the economy of Singapore (Marketrealist, 2016).

Kra Canal

In 2015, China again began to actively discuss the construction of a Kra canal from the Indian Ocean to the South China Sea, bypassing the Strait of Malacca. This China’s project has fatal economic consequences for Singapore. As if this channel will be built, Singapore will lose its position in the economic market as a transit point. Therefore, essential part of trade and economic relations with China may be under serious threat of disruption of future projects. Currently, for the economy of Singapore is a very difficult situation in which the state must take a tough decision to stay on the market as a transit point. If we look at the graph (graph 2), we can see that the channel, according to reports, can reduce the way from Africa to China about 1,200 kilometers, which is beneficial for China. The challenge for Singapore economy is that Singapore have to find solutions, how to keep staying as transit point for China and at the same time retaining all economic contacts in logistics with this country in order to prevent the decline of its own economy (PCL, 2015).

- The economic strategies or policies to strengthen the relationship

The China-Singapore Free Trade Agreement (CSFTA)

The China-Singapore Free Trade Agreement (CSFTA) entered into force on 1 January 2009. This agreement. This agreement is important for Singapore, because the country will be able to export more than 90% of goods in China without paying customs duties. This agreement covers nearly 7500 different products, including petrochemicals, processed foods and electronics. The companies that operate in these areas receive the greatest benefit from this agreement, as duty-free import helps them stay competitive in the Chinese market. Speaking about the results, that despite the crisis in 2008-2009, the agreement has helped the two countries to increase the trade volumes. According to statistics, trade volume between China and Singapore in 2009 was about $75 billion, but in 2010 it increased to $95 billion. Even despite the fact that the South-East region in the recession in the economy, both countries continue to provide cooperation in other spheres. Because of effective cooperation in trade, Singapore become the fifth largest investor in the Tianjin Eco-city (Guidemesingapore, 2015).

Tianjin Eco-city

Tianjin Eco-city is the result of collaboration between Singapore and Chinese governments to build eco-friendly city in China, to indicate that the two countries are interested in protecting the environment. This is the second flagship project that was collaborated between two governments. Singapore investment in the city is an important step in the development of mutual relations. This cooperation opens up a number of opportunities for local companies to show off their solutions to environmental problems in order to start a new cooperation in the field of environmental services. In addition, co-operation may open in other areas, such as retail or education. Due to the city is supposed to have a population of 300 thousand people with a developed infrastructure of the city, such as hospitals, schools and transport. Singapore and Chinese sides have the same number of shares at 50% and for both countries opened the opportunity to show a practical and ideal model city for the world. That will increase the number of joint projects in future and not only in China (Tianjinecocity, 2015).

Payments in national currencies

August 27, 2014 Singapore and China have decided to improve relations in the financial cooperation, due to the new initiatives in the offshore Renminbi (RMB) market, capital markets and insurance. China and Singapore have agreed to strengthen financial relations and communications between the two countries, and to further internalize yuan for future investments. This decision will help the two countries to reduce foreign exchange transaction costs, and will serve as a motivation to continue to trade in national currencies in cross-boundary trade and investment. Also, simplified system of credit, for example about 30 companies from Tianjin Eco-city took about 2 billion RMB from the banks of Singapore under the terms of the new agreement. In addition, 7 Singapore companies have been approved to participate in the RMB Qualified Foreign Institutional Investor scheme. As a result, the financial cooperation has become a pillar in bilateral relations between China and Singapore. As China carries out reforms to improve its financial system, the economic cooperation between the two countries will only increase (CNA, 2015).

Conclusion

Currently, the economic relations between the two countries are at a high level of confidence that has a positive effect on the whole market of South-East Asia. Singapore's confidence in the future with China is reflected in constant investments in China. Therefore, we can say that the two economies are confident going forward. Sino-Singapore economic relations are developing in step with the times, which means a gradual and steady development. China will work with Singapore to enhance political trust and increase bilateral projects on the basis of mutual respect and equality. As elsewhere, between the two countries, there are some difficulties, as it is now and in the future. However, Singapore and China are trying to efficiently and in the interests of both countries to solve all the problems that can cause undesirable consequences for both countries. Singapore relationship began over 25 years ago, but they actively began to develop in the beginning of 2000th, when the two countries signed a number of mutually beneficial agreements that allow to the both countries are think positively about the future in the