Quality creep, is a Chinese phenomenon whereby, little-by-little, the quality one receives from a Chinese supplier will actually deteriorate not improve, over time. In most manufacturing environments, a supplier is expected and mandated to improve quality over time, as they become more familiar with your processes and requirements. The Japanese provide a great example of this. They will actually not only ask for price step downs or decreases (say 5% per year), but also quality IPT (incidences per thousand) to improve on a year-on-year basis. To achieve this, they will often assist you in improving your processes, but to ensure a continuing and mutually beneficial relationship, this must be adhered to.

In China, it is the opposite. The product you first receive, indeed the principal shipments will USUALLY be the best that you will ever be supplied. After the agreement is signed, you are somewhat a captive audience and for various reasons are expected to accept this as a fact.

One common reason posited by locals is that:

myth 1-it is the fault of the buyer as he expects too much for such little money. In other words, the buyers are wringing out cost while expecting at least the same in quality. This is not a new issue, actually in manufacturing this notion has been around for decades. In addition this concept is a common practice in the west. The locals say that they cannot make money and provide the quality asked-the reply is that said company is in the wrong line of business. It is not unreasonably to hold local suppliers to world-wide standards. In addition, Chinese contracts also have the stipulation of a warranty of merchantability on all products. Thus pens that work for 2 days would fail miserably in this definition.

myth 2- it is an issue of face and a long term relationship. The argument is that it is a one-time problem and that patience on your part is needed. The problem is that due to Chinese supply chain relationships, this one-time problem is often repeated, even on a monthly basis. In China end of the line suppliers usually only provide a portion of the value add to the product. This means that the supplier you purchase from probably has 10 to 100 downstream providers, each of which can have varying levels of quality and quality issues. The dynamic is that your supplier, for the first time only, will ensure that all other sub suppliers do their part and he will insist on the highest in quality. After the deal is done, however, he feels no such obligation and typically takes what is given him. The problem lies therein, due to cultural issues and managerial mores, he will often accept much less than you may, as he has had a longer working relationship with the supplier. In the end, he will pass on defective or sub par goods and explain that the road is long and you must be patient. As in point 1, this is an improper view of the business landscape in the 21st century.

This reminds me of one of  my first business forays into China. I was  part of a joint venture with a foreign (Malaysian) and Chinese company. It became apparent within one year, that the Chinese company was not as worried about quality as our Malaysian partner. Although the Chinese had initially wooed the Malaysian customer, they quickly let it be known that this was China and they would do things the ‘Chinese way’.

The Chinese introduced ‘processes’ which inevitably lead to not only a lessening of quality, but also caused a sever rift in the business relationship. The processes were under the auspice of relationship building, but amunted to what was perceived as ‘face saving’ and ‘guanxi politics’ to the Malaysians.

Within the year, the relationship had a turn for the worse and eventually dissolved. The lessons learned were that quality creep is not a foregone conclusion, but a distinct possibility. One must choose a partner carefully and set standards upfront.  In addition, if you pull out of the business relationship, it is often an advantage for the local. If you have remained long enough, you have transferred some technology, maybe some training and have invested your time. When you leave, you leave with nothing but lessons learned.

The survey was conducted with 82 respondents both male and female from 18 to 55 years of age, 60% were male and 40% female. Almost half were married, and all are from the Chinese mainland.
Significant findings:

1-over 75% reported concerns the quality of products manufactured in china
2-over 40% reported significant concerns of the quality of products manufactured in China
3-over 50% are wary of products manufactured in China
4-of those with children over 85% will not buy baby care goods for their children that are manufactured in China
5-over 30% believe the quality is improving in Chinese made goods
6-over 30%  believe the quality is staying the same or worsening
7-over 68%, when given the choice, will chose a good produced in another country over a Chinese made good

8-over 50% said they had either purchased a defective Chinese made good or were extremely disappointed in its quality within the last 4 months.

please send an email for more information.

Yes this really happens, usually to foreigners who came here looking for a quick buck. My advice is to take your time and create your own guanxi or connections.  In China guanxi is built up over decades and obviously such a precious commodity would not be handed over, cheaply at least.

The idea is that many foreigners come here and are looking for a quick fix. The twitter business generation, looking for one man or company to solve all their problems.  What they find is just that, or at least someone proclaiming to have this cure-all.

What is more typical, is that someone with mad guanxi probably doesn’t need you unless you can offer him or her much more than they already have. And if for some reason they do have mad guanxi and they like you, decide to let you into their inner circle (it does happen), you are still the new man, one of the lowest on the totem pole. The relationships they have built up go deeply, as in family or provinces and cities. One day you can and probably will leave while they will still be surrounded by the rest of their clan. Obviously one has to expect to be treated as such.

Ultimately to have success you must take your time, be patient, spend a few years here if you want to have success. The notion of ‘doing your time’ here is respected and actually quite informative.

Firstly, in my experience this may not necessarily be a cyclical thing as much as a part of the ‘Chinese Cost’ as they say. I am not sure of specifics as to the companies who are making these claims, but I would say that what is happening currently has two important components.

-it is common for the Chinese to welcome foreigners with open arms, then to try and dispatch them once the local partner has obtained what he needs

-Around large-scale events such as the Olympics and World Fair, the government becomes more ‘vigilant’ all in the name of national security

To resolve problem number one, one must protect itself to the best of its abilities. I have seen this happen countless times that a foreign company arrives in China with the best of intentions, only to have their success or control subverted internally. I have been told that it is out of Chinese nationalism/pride that they feel after thousands of years of history that they are somewhat resentful that they must rely on foreigners to be ‘taught’ how to do business.  My advice here is to have a good contract and better partner. Spend some time, I mean years to get to know the lay of the land and your partner, it will save you in the long run.

As for point number two, there is not much one can do. At times like this one needs to have a good reason to be in China, plan ahead, get the visa now for instance.  Ultimately you will enjoy your stay here, but just make sure your plans aren’t ruined at the last-minute.

The answers are that, in general, the level of brand awareness in the country varies by region. Overall, they have a level that is less than most developed countries. One of the main reasons is that for the most part the country has not really been open for some 30 years as many people state. Yes it was opened up 30 years ago, but the biggest push of foreigners and foreign goods coming into China did not happen immediately. Obviously there was a learning curve on both sides and Chinese consumers learned about foreign goods, and foreigners learned how to navigate business in China. Simply stated, there have been a couple of large influxes of foreigners into China and that would be roughly every ten years, since 1989. Consider, for instance the fact that Beijing had no foreign dance club until 1989, that should give some idea as to its level of opening up.

The impact is that China has had many foreign goods enter the country, but has not been able to understand or filter out the wheat from the chaff. Due to the general closed state of the country, they did not grow with products as the rest of us. Thus, for the typical Chinese today, they dont have the background or history regarding many large corporations. This is not to imply that they are not savvy, when making a purchase, they typically do as we in the west- they consult the internet. A more fundamental issue, however is that many sub-par brands have made it into the country and have a high level of acceptance.

Secondly, the issue of a planned economy still plays a role. Up until the 90′s the country was still very poor. Many families were given housing by state-owned enterprises, (actually private property was only recognized in 2004, and has the full effect of the law in 2007). Thus, many people at that time had little if any cash. I am talking about the people who comprise the middle class of China today. These people literally had never had an RMB note in their hands until 1994 or -95. What this means is that these people, for the most part, utilized goods provided for by the central government. Teh government produced in large-scale, and thus personalization was never considered. For these people, the choices we have today are a boon, but there is still that part of them that remembers the past. With a history like that, there is proof that there emotional threshold of acceptability is quite lower.

These two instances show why there is a lower level of brand awareness and appreciation of brands in present-day China. (still to come….why there are so few Chinese brands that have a strong international presence)

I was just pondering my pc and the numerous articles I have been reading about spy bots and the like.

I wondered just how many spy bots my pc may contain ( many articles on this one here, or here), the government has supposedly backed of on many mandates, but who knows.

As I pondered it, it struck me. Historically in China, EVERYTHING belonged to the emperor. Thousands of years ago, you may say. Well, not really, actually China operated as a feudal society until 1911, so we are talking thousands of years. In modern times, the situation doesnt look better. Under the formation of the PRC, all private property was taken away. Actually this was a concept philosophically similar to her history. Over the past 3 millenia, the people had around 44 years to get things, then had it stripped away.

That right was not given back until 2004…Yeah, which means that basically if you are over the age of 5, you lived a life where you literally had NOTHING of your own, it all belonged to the emperor or party. (Actually the law was really finalized in 2007, so I could have modified the previous statement to read 2 years old.  article here, or here, and here).

Then it became clear, historically everything belonged to some leader who was not me, to this era of people, I really have few rights, my pc should be open to the use of the state as they wish. It is odd to live here and witness this strange dichotomy of fierce capitalism from the west and some of  the strong handed policies.

When operating in this country as well as others such as Vietnam etc. this is par for the course. The learning is that here, no matter what they say, no matter what you do, someone may be watching. For a multinational business this becomes a problem when company secrets, strategies, plans, are potentially exposed. At present there are few options to avoid this level of scrutiny, call it the China Cost.

for the lighter side of Chinese life click here

After deciding upon the name, the group then began to market test it. Funny thing was that some of the Beijing locals got a confused look in their eyes. We thought it just the normal process of breaking down the notion of “2″ as in “to” etc. But then a bad thing happened, the look in their eyes was not only confusion but also frustration. 2U, due to phonetics,  is not a good idea in China.

In Chinese the sound of their numbers is as follows:

1= eeee

2= are

3= sun

4= se

5= woooo

Looking at this list, as my colleagues and I did, it would seem that we were safe. Phonetically it sounds like 2 or “ARE U English”. That is if you are thinking in English, Are you English, is not that bad, maybe confusing, but it could create awareness which is good.

The problem is that in Chinese letters mean a lot, as in good and bad, the taboos are enormous.  I knew that 4 pronounced like se, is bad as it has the same sound as death. So, 4U  in a name would be a disaster. What I didnt know however was that 250 means ignorant or foolish in Chinese. Teh way they pronounce it is:

ARE BI Woo Shi

This does not present a problem yet. But, they typically cut the words down or shorten them. Thus, to pronounce 250 they actually say:

Are Bi Wo   or

Are         or

Are Wo

Basically, the name I had created had the same sound of a word that means ignorant person.

In B school we have read about many companies and their faux pas while doing business internationally. This is just another dramatic example of how important it is to get locals of all ages and from diverse backgrounds  involved, especially in an area such as naming.  None of the team had spotted the error, but those  in our focus did right away.

Needless to say we quickly rectified the situation, decided on something more International and easily digested such as American Pie.  The lesson is that there are many cultural taboos that only natives will ever understand. It is imperative to test, re-test and re-check all marketing material before moving forward. I have been in business here for a few years and have plenty of local resources from which to draw upon, but there will always be something that you  as a foreigner miss. Get the locals involved as much as possible and as early as possible, save yourself some trouble down the road.

This has a dramatic impact on everything from management, education, law (especially), and others. Consider that the constitution was passed over 54 years ago, but was never realized until the passing of Mao, and the ’82 revision. Then consider that this was merely 6 years after the horrible ‘Cultural Revolution’ that was undertaken from 1966-1976. In that ten-year period, China was shaken to its roots and forced into new thought and behavior patters.

Merely six years after this, the new constitution was adopted. obviously a governing body that condoned an action such as the Cultural Revolution, was probably not the ideal group to set out and open China to the world. The artifacts were poor education, a lack of trust in fellow-man, reinstilling the notion that the government is one’s father and family, rather than one’s own, and making a mockery of the legal system (during the cultural revolution, most law schools were closed and deemed unnecessary).

As managers this affects us in the respect that the manager is still seen as a father figure and expected to assume such a role. A dramatic example is that here it is expected that a manager take an active role in the personal lives of the workers. For instance, many bosses will aid their employees in finding an acceptable mate, they will provide advice and guidance.

In terms of education, it was not the formation of the PRC so much as the cultural revolution that has put them behind the 8 ball. Anyone from the age of 40 and up was dramatically impacted by this, from a cultural standpoint. And, as stated, during this period, education was basically non existant. Thus, there is a generation, the generation that currently leads and educates the country that was exposed to this phenomenon. Even today, China is still trying to catch up and promote MBA programs and up until not 15 years ago, had less than 20 in the whole country.  That is quite a few less educated managers and educators 90 sch 2004. Again, that shows the background of the typical manager today in China.  Of course, nowadays the premium is on MBA’s so Chinese as people the world over are hurrying to obtain an MBA. I have worked here and had the opportunity to study as well as teach, and in reality, that lost decade has proven to take much of the teeth out of education in general and business specifically.

The biggest impact may be in the field of law. As stated, the current constitution came to be around 27 years ago, and has been revised various time. The issue is that law, the practice of law and its understanding were decimated during the reign of Mao, and it takes more than 27 years to fully implement a working legal structure replete with knowledgeable lawyers judges etc.  There is much ink about how MBA’s are increasing and China is minting more lawyers, but the problem is that the fundamental issue is that they do not have the educational system in place as of yet, to produce world class lawyers, managers etc. Couple this with the fact that those who today are receiving this sub-par education are the leaders and educators of tomorrow. In realization of this, many of China’s best schools and good students are in a hurry to leave and find eduction elsewhere.  All of these things will help, but more still needs to be done.

In viewing all of the above it is easy to give kudos to China in how far they have come, but to acknowledge how far they must go. The current leadership was exposed to many things that are still having a deleterious effect on the country, and this may prove to be their undoing.

good blog on the lighter side of living in China.

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