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The business models that contribute to bilateral sustainability between China and Latin America

Published onJun 27, 2022
The business models that contribute to bilateral sustainability between China and Latin America

Following the endorsement by the National People’s Congress of China’s 14th five-year plan, China’s environmental and sustainable development policies will be propelled towards a new horizon by a systematic effort to prioritise the distribution of technological innovation right across the country.

While China strives to achieve the Sustainable Development Goals (SDGs), accelerating the modernization of agriculture in rural areas, building a mutual relationship between agriculture and industry, and coordinating the deployment of technology in both urban and rural areas will be the key drivers to a greener development path and the use of new energy resources. Important elements of these new policies are initiatives to improve income distribution, and to reduce inequalities between urban and rural economies.

Despite the fact that, according to UNICEF, China lifted 740 million rural people out of poverty between 1978 and 2017 (thereby contributing fundamentally to global poverty alleviation), poverty in China is still mainly concentrated in its countryside. China’s new policies will therefore play an important role in achieving a more sustainable world, making a holistic commitment which addresses simultaneously the economic, social and environmental objectives of the SDGs.

The impact of digital transformation in rural areas and the fomentation of new business models which connect government, companies and rural citizens have proven to be of the utmost importance in advancing this agenda and creating an innovation pipeline in agriculture, bringing not only an improvement in quality and productivity, but also in the underlying conditions and income of rural workers and families.

When it comes to the digital economy, China has developed new ecosystems on a vast scale, that have allowed for a widespread availability of low-cost mobile phones in rural areas and have provided inclusive access to digital banking services. China's development in internet banking represents a breakthrough in terms of technological inclusion.

Acting as a platform which connects the rural population to the rest of China, the combination of hardware and software technologies has also gradually helped the rural population to access the digital information era, and to participate in the e-commerce revolution as consumers and creators, enabling them to advertise and sell their products to a wider audience. With a more equal access to services, it is much easier for a country to address rural and urban discrepancies, providing an inspiration for other regions with similar social structures, specifically countries in Latin America.

Traditionally, trade between Latin America and China has been based on commodities. Breakthroughs have been recently achieved, such as the newly formed strategic partnership between China and Brazil, specifically with the state of Mato Grosso, to produce carbon-neutral meat under a bilateral agreement, where China can learn how to create their own protocols and certifications for local production and at the same time create a channel for the promotion and positioning of the Mato Grosso’s carbon-neutral meat in China.

But, beyond physical products, Chinese business models and ecosystems have shown great potential for export to Brazil and adaptation to the Brazilian reality. There is much to learn from Chinese principles of cooperation in the fight against poverty, and these principles can be exported in order to promote similar endeavor in Brazil.

Pinduoduo is a Chinese platform that has recently been working towards diminishing poverty in China’s countryside. Initially, its business model revolved around providing group purchases at low prices, powered by mobile payments. Nowadays, it also helps small farmers improve their production and yield through technological improvements in their farming systems. The company has introduced new concepts into farming, promoting projects that stimulate young talents to go “back to the fields” in order to help implement new technologies and introduce new methods of farming practice. Today, Pinduoduo helps small farmers sell their high-quality products through a platform that matches their offerings to target consumers through livestreams and promotions.

As in China, the majority of the food on the tables of Brazilian people comes from small farmers spread across the country. This similarity between the situation in Brazil and the situation in China means that small farmers in Brazil would most definitely benefit from initiatives similar to those we are seeing implemented in China today. Supporting the development of poverty-stricken regions with incentives for the agricultural sector, accompanied by facilitations provided through a democratized digital economy can undoubtedly bring gains for Brazil in the contemporary scenario.

Against this background, cooperation between China and Latin America can have considerable effects on the fight against poverty. Learning through successful projects such as those carried out in China, and applying these strategies (suitably adapted to the Latin American ecosystem) provides a great opportunity for collaboration.

It is already possible to see examples of the influence that Chinese business models can have on emerging platforms in Brazil — such as Magazine Luiza and Facily, which have increasingly been implementing functionalities adapted from Chinese digital ecosystems. Another example is Moeda Seeds Bank which, through the implementation of blockchain technology and cryptocurrency, has been able to help small farmers in Brazil by offering microcredit and business support.

The point to note, here, is how the cooperation between China and Latin America has been conducted. The constant, growing digitization of contemporary life in China has attracted the attention of developing countries, and this has been particularly significant at a time when new energy resources are increasingly gaining importance.

The COVID-19 pandemic was a critical event that has had a critical impact in the worldwide economy. In China, efforts towards optimizing digital ecosystems and logistics were taken as crucial for maintaining the well being of its population. New technologies and business models were developed in order to bypass critical obstacles; and we are now seeing new ways of fueling this new reality in China.

Renewable and greener energy generation have increased in importance, and it is already possible to see China and Latin America cooperating to popularize this new idea. Electric cars and photovoltaic cells are booming in production and consumption, accompanied by increasing popular comprehension of the importance of using greener energy sources. In this field, the need for a globalized logistics chain has led to the development of new forms of cooperation in the use of renewable energy.

Latin America comes into play as a cluster of developing economies which can absolutely benefit from cooperation with China in the development of a more digitized reality. Economic and scientific partnerships between China and Latin America can be of great benefit by mirroring the practices of success and adapting them to work in latin soil. Initiatives such as the improvement of agricultural practices powered by renewable energy resources and implementation of high-scale greener logistics have the potential to generate what can be called a new vision of an eco-friendly economy.

The Chinese automotive company BYD Auto, for example, has tracked logistic routes between China and Brazil, aiming at reaching a wider market for its electric cars. Partnerships with car dealers have been established as means of guaranteeing benefits such as battery recharging locations for travelers across the country. It has also been noticed that this company took the lead in production of photovoltaic cells in Brazilian soil, offering energy independence with clean and renewable resources. Their solar panels represent the finest technology in the field, free of pollutants and with an astounding durability that can last a lifetime.

Alibaba Group has established a base in Brazil and, year by year, has penetrated the Brazilian logistics market with more and more systems employing leading-edge logistics principles. Faster and more efficient services are being implemented, with the expectation that greener technologies and eco-friendly energy resources will power this up even more. All of this serves as a role model for future practice in the Brazilian logistics sector.

The Belt and Road initiative is yet another example of how the cooperation between both worlds has been happening. First of all, this initiative is proof of how China’s foreign policy has developed, aiming for deeper dialogues with the western world and strengthening the Chinese position in a globalized world. The principles of pacific coexistence are strong and guide the entirety of such cooperation initiatives, followed by mutual respect, non-intervention, reciprocity and equality regardless of ideological differences. The incentives for accomplishing better relations involve aggregated development plans and the use of pre-existing international forums of which China is already a member. Investments of trillions of dollars make the Belt and Road Initiative the “project of the century”, and Latin America can expect great benefits from such partnership.

When we survey the initiatives that are already underway in Latin America with the cooperation of China, it is possible to foresee a future in which poverty eradication becomes a critical component of continuous and aggregated development in Latin America. The strengthening of trade and diplomatic relations between the western world and China has the potential to bring about not only unprecedented growth but also the realization of a society founded upon cooperation amongst citizens and of citizens with the environment. Greener technologies and more efficient logistics routes will provide the basis for a more sustainable future market, and the population benefitting from that market will be able to grow in the most sustainable way possible. In this way, the ideals of equality and greener development in society will become more and more compatible by the day, as more and more people benefit from healthy cooperation between nations.

These examples of cooperation are great to see in practice; but it is important to acknowledge the intense effort behind this reality. Fiscal incentives and regulatory processes need to be thoroughly assessed; and this will be possible only through intense and frequent dialogues between the economies of Latin America and China. The initial efforts will be energy-consuming and will demand time and patience, though all that is needed is a starting point in order to serve as a role model for future endeavors.

Camila Ghattas, CEO of Foreseekers

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