Chinese Quality

Introduction

China is increasingly becoming a great manufacturing country. To become a great manufacturing company and to compete globally, China has had to stress quality in production. Chinese plants have been focusing on quality and Total Quality Management (TQM) since about 1978. Since that time China has made vast improvements in manufacturing. China gains ground due to low labor costs, but it will not be able to stay competitive if they do not continue to improve quality of their products.

China has been improving quality through TQM, training, and implementing systems. TQM and training have helped them improve first-pass quality yields, delivery rates, order lead times, and capacity utilization. However, there is still room for continuous improvements in lean manufacturing, supply chain management, and ways to reduce per unit costs.

Inputs to Quality

Zhang wrote in his dissertation, "The Deming approach to TQM concerns the creation of an organizational system that fosters cooperation and learning for facilitating the implementation of process management practices, which, in turn, leads to continuous improvement of processes, products, and services as well as to employee fulfillment, both of which are critical to customer satisfaction, and ultimately, to firm survival" (Chapter 2, p. 9).

The Chinese, with the help of international partners, began to implement TQM in 1978. Zhang points out that the success of Beijing Internal Combustion Engine Factory and the Qinghe Woollen Mill prompted China to establish the China Quality Control Association to promote TQM throughout the country. This association provided training courses to workers and managers at all levels. By 1985 38,000 firms implemented TQM while 500,000 (Quality

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Control) QC circles were established in various firms.

Training is a key component of quality for all levels of the organization. Drickhamer reports that over half of the Chinese respondents to his survey "provide over 20 hours of training per employee per year" (para.9). Only about one third of similar U.S. companies provide comparable training programs. The Chinese have not missed Deming's point of educating everyone. Drickhamer points out that the Chinese spend over twice as much for training than their U.S. counterparts, 5% of their annual labor budget compared to only 2% in the U.S. (para. 9).

Along with improved training programs, new systems can be implemented to correct process problems, which are a primary source of poor quality. The Chinese have been implementing various systems to help improve processes. Drickhamer says, "Many of the Chinese respondents have installed ERP systems (47% versus 35% of U.S. factories), manufacturing execution systems (45% versus 16% of U.S. factories) asset management systems (53% versus 37%), transportation management systems (47% versus 26%), and customer relationship management software (64% versus 33%)" (para, 23). These systems help improve efficiencies throughout the entire production process and they help improve quality.

With about two thirds of Chinese manufacturer's saying they follow a "TQM philosophy", the logical question is, what has TQM, training, and new systems done to improve quality in China?

The essence of Deming's philosophy is:

* Improve quality

* Costs decrease through less re-work, fewer mistakes, fewer delays, better use of plant and materials

* Productivity improves

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* Capture the market with better quality and lower price

* Stay in business

* Provide jobs and more jobs

Chinese companies have had some good success with TQM. Drickhamer's survey shows that Chinese companies have "a median first-pass quality yield of 98%, which a little better than U.S. companies" (para. 14). Just three years ago this number was only 90%. On-time deliveries are an astounding 99%, four percent better than the U.S. Improving quality through less rework helps the Chinese companies get their orders out the door faster and cheaper. Combined with low labor rates and tax incentives provided by the Chinese government, Chinese manufacturing is going to be hard to compete against.

Jim Pinto says, "A tenfold surge in high-quality Chinese