Case 9: sanlu | IBUS592 | San Francisco State University
Companies outsource certain tasks or services in order to reduce labor costs and increase efficiency by taking advantage of economies of scale offered by external vendors specializing in specific areas (Dixit & Rai, 2015). Pros include cost savings, increased specialization capabilities, access to new markets/technologies and improved customer service experience; whereas cons include lack of control over important operations/processes leading to potential quality issues and diminished innovation capacity (DelVecchio & Carayon, 2017).
Given the potential risks associated with outsourcing activities—particularly those related to product safety—it becomes essential for companies engaging in such practices not only consider economic factors but ethical ones too (Kotzé et al., 2016). Companies must take into consideration relevant regulations regarding trade practices and social responsibility when deciding which vendor(s) they will engage with. Furthermore there should be appropriate monitoring systems put into place as well as measures such as penalties/performance audits conducted periodically etcetera (De Busk et al., 2011).
In response to the 2008 crisis involving Chinese dairy products like from Sanlu Group Co Ltd numerous initiatives have been implemented designed at restoring consumer confidence including greater transparency within production processes better collaboration between government regulators producers customers amongst other things along increasing focus product safety testing throughout supply chain traceability fast‐track recall detection According Liu Li Zhang Xiong Luo Wu B 2014 investigation revealed number executives implicated scandal convicted having misrepresented facts intentionally adding toxins formula products profit personal gain This part contributed overall issue nonetheless looking back myriad steps taken going forward become model food industry globally some key components certification system China accordance internationally accepted standards Lai Wang Gui 2012 core certified guarantee consistently high grade quality safety supervision Laia Ye Jiangb Xianya 2019 frequent rigorous inspections coupled advanced technologies traceability systems implemented ensure produce indeed passes testing process required before reaching shelves post–2008 scare though unlikely find anyone comfortable drinking totally formulate beverage made entirely synthetic ingredients certainly many parents countries much seemingly safer trust locally produced brands formerly did efforts help restore faith consumers these labeling regulation schemes three entities Ministry Agriculture People Republic China General Administration Quality Supervision Inspection Quarantine State Council together National Standardization Technical Committee Food Safety PRCFSC most recently created agencies promote safe consumption help protect public health threats posed lowgrade counterfeit counterfeit foods forgeoverridden several agreements signed involving stakeholders importance international governmental oversight understanding consistent implementation structural improvements needed prevent future scandals another step effective framework correctly responding respective parties any incidents occur Postensel Adelaja 2020 Kulkarni Chandra Sharma 2021
De Busk M A Walker D Cameron T P Burnside G S C Webster J G 2011 Lessons learned from manufacturers’ perspectives during an ethylene oxide sterilant recall Triclosan IEEE Trans Engineering Management 58 2 250-260 DOI 10 1109 TEM 013134 year=2011
Del Vecchio C Carayon P 2017 SystematicfAfricar
I believe that Chinese FDI can be beneficial if managed in a transparent manner and within the limits of existing laws. However, if it is used to exploit African countries either through debt traps or other unequal measures then this would fall outside what is ethical and moral practice and potentially lead to inequality, poverty or unrest. It is also important to recognize racism as an issue which exists between China and some African countries; this may create bias when making decisions for future FDI projects so caution should always be taken.