Quality Control: Size Matters

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The Guangdong Bureau of Quality and Technical Supervision has released a special audit of DVD player manufacturers in the province in which only 39.2% of small and medium-sized manufacturers were found to pass quality spot checks. Yet large-scale manufacturers in Guangdong which, as the Bureau put it, produce relatively reliable quality products, scored a full 100% pass rate. In a similar fashion, smaller foreign companies also struggle with quality issues in China. The presence needed on the ground and the overall effort required for QC and due diligence makes for a formidable challenge. Reuters recently reported on a small number of German firms who, in response to quality concerns, are swimming against the tide and leaving China. One of these is toymaker Steiff, which originally outsourced around a fifth of its production in 2003 yet have had to reject a cumbersome number of toys made in China, some of which Managing Director Martin Frechen described as looking like they have been run over by a car. The stark quality divide between large and smaller companies seems to be a corollary of a fundamental trend with quality in China: Size is integral to every aspect of the process - the bigger the better.  

Steiff MD Frechen attributed the problems with quality to the high staff turnover in Chinese factories which meant staff received insufficient training, yet he also thought Steiff's typical orders of around 500 lots were too small to reap cost advantages in factories accustomed to mass production. For all its high-profile product quality problems associated with China last year, Mattel - the world's largest toy maker - has stood by its Chinese partners and improved quality checks, yet quality control is difficult to implement for smaller companies without a substantial presence in China. The problem for small companies in China with an emphasis on quality, as Volker Treier, chief economist of the German Chambers of Industry and Commerce, mentioned in the Reuters article, is when they have to jump into cold water and see if they can swim without the resources for proper research.    

So how can small companies keep themselves from drowning in cold water with quality concerns in China? Ultimately they will have to trust someone to do their QC for them. The Quality Wars blog (h/t China Law Blog) has weighed in on the choices available for foreign manufacturers between doing their own QC with an employee in China or hiring an outside QC service provider. While a local employee will generally be cheaper and may have access to local knowledge and networks, they may also be exposed to being bribed by the factory to pass unacceptable goods. Outsourcing QC to a third company, however, will put QC in the hands of a dedicated company that specializes in checking products and factories in Asia. 

Ultimately, in China, the best option is QC=BIG.

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6 Comments

chris said:

There are more and more inspection company now in the market to choose from. However, be aware that even some BIG NAME third inspection company hires freelance to get the job done. Some of them even do not have any experiences in inspection industry.
More info you may find at http://www.chinainspection360.com

chris said:

There is a good way to find if the BIG NAME inspection company hire any freelance inspector. If you or your friends read chinese, then go to some local HR website like 51jobs.com, and type the keyword "BIG BRAND" inspection company, then you will find they are HIRING graduates to do the job, and also freelance.

As i said,to select a reasonable inspection company is not that easy nowdays. Choose wisely and ask them to prove they are qualified for the job.

Bruce from http://www.chinainspection360.com

Barry Author Profile Page said:

Great advice Chris (or is it Bruce?). Perhaps you can tell us a bit more about your experiences QA in China? Would greatly appreciate it...

Barry

Hi Barry,
I don't think you should generalize this idea ("the bigger the better") to all industries.
We do quality control in the garments industry in China, so I think I can tell you about my observation: smaller workshops (100-200 sewing operators, no more) tend to have better quality that large ones (600+ workers). There are exceptions, of course. But a small sewing workshop does not need huge investments to be reliable--just good procedures.
By the way, I am not the only one to think that way. The boss of the Li&Fung group recently wrote that small sewing workshops are generally better in his book (Competing in a Flat World: Building Enterprises for a Borderless World). They are a contract manufacturer, selling USD 8 billion a year, mostly in garments. I think they know their subject.
Cheers - Renaud Anjoran, Sofeast Ltd

Barry Author Profile Page said:

Point well taken Renaud.

Do you think though that your experiences in the garments industry are particular to that industry? I think QA/QC in China differs from industry to industry - hence the danger of generalizing. Thanks a lot for your input. Perhaps you can tell us a bit more of the 'good procedures' you mentioned?

I am just saying it is better not to generalize. Maybe what is true for the garment sector is also valid for industries where there are lots of manual work, and reliance on experienced manual workers.
The "good procedures" I mentioned in my previous comment are nothing revolutionary, and would be checked by a good auditor. Here are a few examples of frequent shortcomings, from my past observations:
- No clear record of the customer's approvals (materials, colors...).
- No systematic control of inputs.
- No control after certain operations (i.e. fabric cutting).
- No self-quality control by the line operators (very often they don't even have the info about expected result).
- Ineffective in-line QC (whole boxes of work-in-process inventory controlled too late, or partially).
- Ineffective final QC (trimming threads at the same time as final control, not enough products measured...).
- Generally speaking, not maintaining the premises clean and orderly.
I hope it helps.
Renaud

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