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.