Dirk Dusharme, editor in chief at Quality Digest, wrote a well researched and thoughtful article about the progress of China’s manufacturing sector, the challenges it faces, and what importers should do about it.

Part 1 (‘China’s exploding middle class drives improvement’) focuses on the trend for better quality. It rightly points out that certain brands have emerged (e.g. Huawei, Oppo…) and are competing successfully on non-price factors with the best foreign brands. And, at the same time, in many categories (toys, garments…), a lot of substandard goods are still made and exported.

The article outlines the forces that have been driving China product quality up (especially in high-tech sectors):

• The old mindset that short-term profits trump any long-term business consideration is slowly waning.
• Managers in many factories are now part of the middle class. They understand better what quality means for Americans and Europeans. And they know that some people/companies are willing to pay more in order to get a better product.
• Some local manufacturers have learned a lot from their customers and/or partners and are getting closer to what is considered world-class standards. They are still a tiny minority, but they are setting an example for others.

Part 2 (‘Chinese quality is improving. Fast!’) points out that the Chinese government has taken several initiatives to help its manufacturing sector improve quality and be more innovative (which often means ‘higher tech’ in their minds).

However, it is a long, uphill battle. For two reasons.

First, Beijing’s policies don’t aim at educating manufacturers in advanced quality concepts. Rather, they aim at stimulating process automation, one consequence of which is supposed to be better quality. (From what I have seen, it is not always the case.)

Second, there is no thought leader preaching for process improvement:

China doesn’t have a quality strategy per se, not like Japan did, if we want to draw that comparison. There is no Chinese equivalent of W. Edwards Deming, Joseph Juran, Eiji Toyoda, Kaoru Ishikawa, or Taiichi Ohno.

Where will the light come from? Requirements from (and, sometimes, help from) foreign customers. This is what I have seen, in a very consistent manner.

As prices go up, there is less and less tolerance for costly quality issues and unexpected delays. More and more foreign companies set a higher bar for their Chinese suppliers. Some manufacturers come to the conclusion that, if they want to survive and thrive in the next 20 years, they have to work on improving their internal systems and processes.

Another consequence of rising costs in China is the relocation of many low-margin, labor-intensive operations to other Asian countries, as John Niggl from InTouch points out. These are the types of factories that have produced the lowest quality items. Good riddance, in a sense…

What do you think? Is this consistent with what you see in your business?