The Economist just published an excellent article entitled “The flaws in Chinese business - Time to change the act.” The beginning of the article focuses on the impact of the current downturn on Chinese business. Then it goes on to explain why China has mainly remained a producer of low-value-added goods. The most interesting is the list, towards the end, of all the factors that tend to prevent Chinese factories from investing in innovations and quality improvements. That very little of this … [Read more...]
Why quality can be so bad in China
There are all kinds of factories in China. A few are truly world class (think of the joint ventures producing luxury cars, for example). Others are good enough for the core (and the low-end) of Western markets, in dozens of product categories. And the rest are adequate for the needs of developing countries (Africa, India...) and the domestic market. But how low exactly is the quality of the products sold on the domestic market? I found a very interesting description in Managing the Dragon, by … [Read more...]
Chinese vs. Western business: different ethical standards?
Last night I had dinner with someone from the Trade and Industry Dept. here in Shenzhen, China. A very nice individual, who studied and traveled in the West. I was asking questions about the foreign investors, and he confirmed that many were delaying or canceling their projects, because of the crisis. We were discussing the way people do business here in China, and straight away he told me there was an "ethical problem". But is there, really? Why? Tax evasion I thought about it for a while. … [Read more...]
Hiring quality inspectors: a few tips
In my previous post entitled Quality control inspectors: an ideal profile?, I introduced the Ned Hermann model to show that only a certain thinking style tends to make a good QC inspector. Now, how to know a candidate’s profile? Recruiters can administer a full questionnaire, but it is a little pricey. In this post I suggest a few tips to use during interviews. The single best thing to do is to see this inspector perform an inspection. One can see right away whether she is experienced in … [Read more...]
Quality control inspector: an ideal profile?
Is there an "ideal profile" for inspectors? Is it enough to write and read English, and have previous experience on the job? I don't think so. Research, and our daily observations, show that every human's brain is "wired" in a specific way. It means they tend to prefer (and be good at) different types of activities. For example, a typical graphic designer likes to be "creative" and forget about all the rules that limit our action/imagination. BUT ask him/her to do an inspector job … [Read more...]
Why is the “China price” so low? And other insights about Chinese industry
I just finished reading Managing the Dragon, by Jack Perkowski. It is a great book for anybody trying to understand modern China, its opportunities and challenges. Here I want to reproduce his description of two very interesting things ignored by most foreigners: -1- The local governments' incentives A 17% value-added tax (VAT) has been levied on most manufactured goods since 1994. Local governments get a quarter of the VAT collected in their area, so they have a strong interest in attracting … [Read more...]
Chinese factories closing: more facts, please
All through the 2nd half of 2008, hundreds of blog posts and newspaper articles mentioned the closing of numerous factories, most notably in the Guangdong province and in the toy industry. Government statistics seemed to confirm this. But these figures are so unreliable (only about properly-filed bankruptcies) and general (about all exporters mixed together) that I won't even reproduce them here. From my observation, the starting point of all these articles was the much-mediated closing of a … [Read more...]
Securing the quality of imports at an acceptable price
Twenty-five years ago, the companies that imported from Asia were mostly large structures. Some have set up local offices to conduct quality control. Others have secured the quality of their imports by working with large 3rd party QC companies. Together, buyers and QC firms have organized the supply chain to fit their needs: Most of the inspections take place at the end of production, just before shipment. These large buyers can afford to put pressure on their suppliers. If an inspection … [Read more...]