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Can Chinese Companies Build A Culture of Quality?

Paul Midler has written an excellent article ‘Quality Fade: China’s Great Business Challenge’. Midler, who is founder and president of his own outsourcing firm, China Advantage, discusses what he calls ‘Quality Fade’ in China.

In the article, he talks about how how Chinese companies almost consistently fail when it comes to improving the quality of their products and services. Most of the time, this happens when after securing an overseas buyer, the manufacturer cuts back on quality materials. For the overseas buyer, this creates a dilemma. He/she has jumped through hoops to find a supplier, so he really doesn’t want to change manufacturing suppliers. So in a way, he really ends up trying to cover the weaknesses and shortfalls of the manufacturer’s products. This creates a downward spiral in quality, until something dramatic happens, such as a product recall, or in the worst case, even deaths. In a globalized world, this leads to a public relations disaster of global proportions, affecting not only Chinese consumers, but consumers all over the world. In the US, which is now going through the runup to the 2008 elections, China (whatever that is), has become the demon of choice among TV commentators such as Lou Dobbs (who always refers to the country as “Communist” China. After all, he’s got to hit those American fear words).

Midler makes the point that quality does not always rise over time. The example he raises was that Chinese silk was known for its quality in the late nineteenth century, but it was then overtaken by the Japanese. By 1930, Japan was exporting twice as much silk as China. As he puts it, the Chinese start out well, and “the initial production sample is fine, but with each successive production run, a bit more of the necessary inputs are missing.”

So what is the cause of quality fade? Midler says “The factory owner who practices quality fade knows exactly where he stands with his customer in these cat-and-mouse games. He has virtually nothing to lose and only margin to gain — and, having gotten away with it once, no one should be surprised when he goes for it again. When the factory owner offers his most sincere apologies and promises that it won’t happen a second time, importers simply close their eyes and hope for the best.”

In 1986, David Halberstampublished an excellent book The Reckoning. In this book, Halberstam looked at how a small Japanese manufacturer, Honda, took a Detroit giant, Ford, and won over consumers by creating a culture of quality and continuous product improvement. At its time of publication, the book spurred a renewed interest iin the US in product quality improvement. This took form in the Malcolm Baldridge National Quality Award, the only quality award in the US handed out to corporations by the US president.

So what makes for quality? Most importantly, a corporation must make a thorough commitment to quality from the top down. At Toyota, it means that any floor worker can stop the manufacturing line anytime they discover something wrong without suffering recriminations from management. In fact, they are rewarded for their actions, and are asked to share their knowledge about what they learned.

While Lou Dobbs can blame “Communist Chinese companies” for shoddy workmanship and quality, the fact is that there are many companies in China which make excellent quality products. Their names are Toyota and Honda, just to name a few.

In the past few years, the Chinese government has put its strong support behind creating Chinese global brands. It would do well to everyone in China to study how global brands became popular, by creating great brands and offering great quality products which excite consumers.

The true way to making great Chinese brands is competing on quality and design, not on cost. This change has to come about from a commitment from the government such as Lee Kuan Yew did in Singapore, and from Chinese business owners.

It is high-time for Chinese to invest and believe in China, instead of going for the quick buck.




11 Responses to “Can Chinese Companies Build A Culture of Quality?”

  1. 3-Dot Friday . . ….

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  2. All Roads says:

    If this is the first post, I am looking forward to the future ones.

    While I think that the article and the post are both great, there is one thing that is not address: the fact that from day one, buyers should be actively monitoring suppliers.

    If one were to leave their 5 year old on the first day of school to a room full of 5 year olds with no teacher. What would they expect in 30 days?

    Many companies feel in China that the supplier can run on autopilot once they have passed that all important RFQ. that if the first sampled send by UPS is a good one, htat they all will be.

    But for anyone operating in China, we all know that is not the case. That frequent visits must be made, and they always will. It is not about face, or trust, it is about risk.

    There has been a lot of news lately focusing on this, and it is something that I have been covering for the last month or so on All Roads, but these are not news stories and no one should be surprised. china has for YEARS been considered the land of cheap copy/ low quality goods, and the fact that buyers do little to establish ongoing monitoring just proves how negligent they are.

    Congrats on a great start. I will be adding you to my blogroll.

    Rich
    http://www.allroadsleadtochina.com

  3. China is not alone. Other Third World Country manufacturers have tried to use the same trick.

  4. Robs Place says:

    [...] The China Vortex Can Chinese Companies Build A Culture of Quality? Paul Midler has written an excellent article Quality Fade: Chinas Great Business Challenge. Midler, who is founder and president of his own outsourcing firm, China Advantage, discusses what he calls Quality Fade in China. In the article, he (tags: manufacturing quality) [...]

  5. Law Office of Todd L. Platek says:

    The commitment to quality is key. Seen from another angle, if anyone thinks Japanese cars are great, keep in mind that many excellent “Japanese” cars, my Toyota Sienna included (still #1 minivan per Consumer Guide), are made by Americans in the USA. Management makes all the difference.

  6. China Works says:

    One thing often overlooked on the quality issue, is the responsibility of the customer.

    I have seen many instances where the customer supplies poor quality reference samples, incomplete drawings, unrealistic delivery timetables, or worst of all selects a Chinese manufacturer on the basis they were ‘the cheapest’. You get what you pay for in the UK, and China is no different.

    Adam
    http://www.china-works.co.uk

    • I quite agree with Adam. For the quality issue, poor quality reference samples sometimes account for the biggest reason. In China, some suppliers prefer to get a sample from customers other than product drawings. Even 3 d drawings like stp format. And usually, the samples will be the primary standard for them. Besides, cheapest prices always brings trouble for lowering quality. I think customers should consider reasonable prices.

      Young

  7. It is easy to blame the supplier greed in cutting corner.It is a fact that such behaviour exists in China as much as in any other country.When we look to reality
    that they are a lot of factories deliver goods meeting the expectations of the buyers.So I take all these accusations with a grain of salt.

    Many people work as third party contracters or in purchasing offices for the companies that can afford having a sourcing office and QC System.
    Can we talk about quality fade of products without talking about fading of quality in quality control system?

    The first job of any quality control system is to have due diligence.

    If we search the description of due diligence:

    Due diligence in Supplier Quality (also known as due care) is the effort made by an SQE professional to validate conformance of product provided by the seller to the purchaser. Failure to make this effort may be considered negligence.

    The aim of a quality control system is to prevent Quality Fade regardless of the root cause.

    If any product reach the destination with quality the responsability of the system to prevent it comes to those who day after day are involved to detect prior to the shipment.

    When the control system fails to deliver products in conformity, we can than talk about Investigative due diligence, involving a general obligation to identify true, root cause for non-compliance to meet a standard or contract requirement.

    If we are talking about Quality Fade this word can only coexist with Quality Control Fade.

    The lesson can be learnt from this events that Quality Control System should function without lowering the awareness, that accidents happens even when there is no bad intention.
    If I am paid to control the quality in every stage of production it is my duty to make sure that Quality fade can not pass the door of the producer.

  8. Adetayo ADESOYE says:

    QC DEPT. MUST DO THEIR WORK

    The problem of production of inferior goods is not peculiar to China alone, but is common in all countries where enforcement of quality control laws are not enforce.
    Enforcement of quality control should start from the company. Every company should have a Quality Control Department. and they must do their job well.
    Government of various countries should enforce quality control laws at various levels.
    Effects of Poor Quality of Goods…
    1. Customers…. Cause them to loose their clients. It can led to psycological trauma of the customers. It can ruin their business. Also, it can lead to premature death of children and adults; a case study is the delicate toys made in China for US market can caused death of various kids thus leading to withdrawal of the toys from the market.
    2. Producers… They loose valued clients. It leds to reduction in their gross profit at long run. They loose age long reputation of their companies. And finally, they loose customers to their competitors
    3. Country Image… Because of poor quality control in China in particular, every buyer check-out all products made or originated from China. It is a great doubt of national integrity !
    In summary, quality control laws should be enforced all over the world if the world must be a safe place to live, and China should stop producing poor quality of godds called “Copy”.

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