China's PR Quality Problem

Even though "buy American" and "buy Chinese" mandated elements of each nations' respective stimulus program are capturing more attention of late than product quality scandals, you can be sure that China is still very much at the center of quality concern for many organizations doing business in the region. Now, whether or not this is more of a PR issue or whether China quality is still leaving much to be desired, I'll leave up to you to decide. But a recent article published by the Global Supply Chain Council does a good job at getting to the heart of the matter.
As I look at it, those who source in China continue to get exactly what they want -- whether for export or not. I remember one time in China when I walked out of my hotel and was accosted by a man promising handbags for my lovely -- but China-sourcing savvy wife -- at a "cheaper price and poorer quality". Which was precisely the point and precisely what he was selling. If I wanted high prices and high quality, I could have gotten that too -- somewhere around the corner. A quote in the above-linked article captures it best, noting that the rapid cost-focused moves to China for many companies created "an inescapable 'trade-off between cost and quality’ says David Lee, partner and managing director in BCG's Beijing office, and a supply chain and procurement specialist. He recalls executives at a Chinese ball bearing company offering three prices: top quality at high prices, 'acceptable quality' at lower prices, and, at the lowest price, 'something that will turn and not freeze by the time the customer gets it.'"

I just love that quote, as it captures best the essence of China Sourcing 1.0 -- people got exactly what they bargained for. But now more than ever, the recession is giving us time to re-evaluate our global sourcing programs in their entirety. In certain markets and industries, better quality suppliers who previously might have charged a significant premium are now as hungry for new orders as local alternatives. So why not use the downturn to put in place the right types of global sourcing programs and philosophies that will serve your business well over the long-term, delighting both short-term EPS focused shareholders and long-term customers that must live with your products over their lifecycle. See, it can be possible to kill two global sourcing birds with one stone provided you care enough about the initiative to focus as much on supplier development and management as the up-front supplier identification and sourcing process.

Jason Busch

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