Cheap and crappy to excellent quality: The transformation of China-made products.

China used to be well-known for mainly cheap, low-quality products, but those days are largely behind us. Any number of cutting-edge and high-quality products are made in China now, think Apple and Tesla products, world-class white goods, and many consumer electronics, to name but a few. So how did China move away from poor quality to amongst the best in the world? We trace the story and the driving factors over the past few decades here…

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Where did the concept of poor-quality Chinese products come from?

It simply comes from the ever-growing body of cheap, use-once-and-throw-away products China has inundated the world with.

Around 2008 Paul Midler wrote an interesting book ‘Poorly Made In China‘ which coined that phrase and elaborated on how Chinese products were often low quality and low priced. The blame for this lay with the manufacturers and Western buyers pushing them for ever lower prices. But is it still fair to say that products from China are poorly made? (00:00)

What happened to transform China-made products from low to high quality over the past couple of decades or so?

China has rapidly modernized since the early 2000s. The transformation of Chinese products from poor to good quality has moved in parallel. Changes affecting quality are:

Buyers continually feeding back and running product inspections allowing suppliers to improve over time and also investing in the suppliers by sending in quality engineers to advise on process controls, materials, etc, as this can help show them that quality is cheaper for them in the long term.
Buyers concentrating on rewarding ‘good’ suppliers with more business (and penalising them with chargebacks for poor quality) and moving away from the cheapest.
Government subsidies (which certainly improve efficiency by allowing factories to invest in better equipment and technologies and if everything is well set up it can also improve quality).
Increasingly head-on competition from the likes of Japan, USA, Italy, Korea, Germany, and so on.
Chinese culture promotes extreme competitiveness, perhaps with some government influence. (03:46)

Why the foreign buyer’s role in this cannot be underestimated.

Since the 90s foreign buyers have been going to Chinese suppliers with a clear quality standard and enforcing it with inspections, penalties, etc. This has been pivotal for improving Chinese quality. Transparency and traceability became a more important focus, too.

However, not every product category is like this, and in some, the buyers are still focused mainly on prices, such as cheap underwear and footwear. In fact, the quality of these items has gone down over 15 years ago to be able to keep prices low despite inflation, so buyers really accept lower quality in the name of cost. (17:05)

4 key drivers of improved quality.

Buyers pushing suppliers, charging back for mistakes, and supporting them to improve (see above).
Quality Standards like ISO 9001 drive factories to manage suppliers’ quality, perform factory audits, etc.
The use of MES and/or ERP systems, which were built into processes by many Chinese factories and drive them in the right direction. For example, an MES system that logs batch numbers and so on is critical for improving traceability and quality, as the data is there to investigate and fix any issues.
The supply chain for raw materials has become a lot more mature in China, so they are able to be obtained domestically and fewer imports are necessary. In some sectors, they have got a near monopoly, such as EV batteries, by investing in them over time (as a direct goal of the government). (22:09)

Chinese ODMs have an incentive NOT to provide poor-quality products.

Chinese ODMs have evolved to sell a lot of products they have designed themselves off the shelf to foreign buyers who may perhaps often simply add their brand name and become a kind of distributor, rather than giving the manufacturer their design and having them produce it (like a contract manufacturer would traditionally do a lot of the time). If their products are of poor quality they will lose their customers who are distributors of sorts, therefore they can’t afford to produce bad quality goods.

Walmart is somewhat reliant on this process as they procure many products from China. If the US relationship with China became totally fractured they and other big box stores would really suffer. (32:59)

Which Chinese products have benefited from the most reliability and quality improvements?

White goods – foreign brands taught the Chinese to improve their own brands or OEM products and now numerous factories have reliability and quality engineers on staff and a capable component supply chain.
Consumer electronics – those geared towards the export market in the West are improved as long as they are above the lower price points.
Automotive – Chinese cars could not rival foreign brands making ICE models, so about 15 years ago they decided to focus on EVs and now top the market. (39:06)

What quality challenges remain for China-made products?

Crappy and cheap products will still be made – There are still huge domestic and foreign markets for ‘crappy and cheap’ products from China. In fact, some foreign importers make a living from selling the cheapest, worst-quality products. So, since this sector will not disappear, it’s unlikely that we will see an end to horror stories about poorly made Chinese products any time soon.
Speed VS quality – many foreign buyers demand products to be developed in a very short time, say 6 months to get to a fully working prototype, and this drives manufacturers to skip important tasks, such as starting with a feasibility study, to get to market on time. Unsurprisingly, many importers receive products they’re not happy with, but the blame in cases like this is shared as both they and the manufacturer should take more time to investigate if the timeline is possible (and it usually wouldn’t be as short as 6 months).
Brand differentiation – Even if Chinese products can be very high quality these days, the overall image of Chinese brands is still that they’re not ‘as good’ as their Western counterparts. This is changing because consumers are aware that some quality products like the iPhone are made there. Chinese white goods and electrical home appliances like TVs have probably bucked this trend by now, though, as the likes of Midea, Haier, Gree, and so on are very commonly sold and accepted by consumers (in Europe, at least). Chinese autos are starting to become more common, as BYD has entered the market in the EU, for example, and there are dealerships now.
IP misuse – There used to be a lot of counterfeits and a lack of domestic innovation in China, and Chinese copycats are still around today although the Chinese government is starting to take action. IP protection was one driver of Trump’s tariffs, so serious an issue it was/is considered by the USA. For example, there is also evidence that hastily developed (possibly copied) toys reach the US market and are sold online even though they are not safe, and while this still happens the negative view of Chinese products will also continue.
Geopolitical issues – The tensions between the USA and China and the cost of living and cost of labor in China are affecting the Chinese manufacturing sector. There could be a negative impact that affects quality, such as if Chinese companies move production out of China, could there be a drop in quality due to a lack of experience in the new country? (44:47)

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