China sets the course for new quality standards
Chinese products are said to be poorly made, extremely short-lived and the use of cheap materials. But the time when companies from the Middle Kingdom relied on quantity instead of quality are increasingly a thing of the past. quality control of products and services is becoming the norm in China. Change doesn’t happen without a reason. On the one hand, the international market is flooded with cheap products from China. On the other hand, it is the Chinese themselves who want more quality and thus more value from products from their own country.
Quality assurance: Profitable for companies and end customers alike
In quality assurance compliance with quality guidelines is monitored in every single step of the project in order to meet established standards. There are two forms – on the one hand the dynamic and on the other hand the static quality assurance. With dynamic monitoring, there are no external requirements for quality compliance. With the static method, on the other hand, there are external specifications. Throughout the process, there are so-called benchmarks that must be checked and met step by step. The product is only certified once the requirements have been met.
Both companies and end customers benefit from this. If a company meets the requirements of quality assurance, individual process steps can be optimized at the same time. The result is high-quality goods and at the same time lower manufacturing costs. This in turn can be passed on to the end customer, who receives goods at a consistent price-performance ratio in the course of optimized quality compliance. At the same time, customer loyalty is strengthened.
China undergoing quality change for a better standard of living
For products from China, on the other hand, the motto for a long time was: mass instead of quality. But the Middle Kingdom is changing. The Chinese economy has grown far too rapidly in recent decades and the fear of a collapse is palpable. This is sometimes the reason why China wants to distance itself from its cheap image. In order to be able to achieve this goal, the Chinese government is relying on reforms and new structures. Away from dependence in the export sector towards a stronger domestic economy and more social balance – these are the goals the Chinese government is striving for. Of course, the Chinese government’s previous model has also done good things. After all, cheap goods and cheap wages have lifted about 20 million Chinese out of poverty in the past twenty years.
However, the opening of the communist state to the western world meant that the population suddenly got to know the western consumer world and this offered far more than what the Chinese planned economy offered. In the meantime, there are high-end boutiques, colorfully illuminated advertising signs for foreign goods and huge shopping centers in the Chinese metropolises. So far, however, one cannot speak of social equality in the population. The country’s social aisles are far too deep. This means that the goal of social balance and a stable economic situation, in which consumer behavior also leads to positive figures, cannot be achieved on the path that China has taken so far.
Therefore, an increase in wages in China is inevitable, even if these cannot be compared with European standards. Although the average income of the Chinese has risen by up to 200 percent since 2006, people still earn the equivalent of 600 euros on average in Beijing. Therefore, many parents save very early on so that their child can study at university and thus get better job opportunities.
But if the average income of the Chinese population is to increase, a new era of economic planning must be ushered in at the same time. And wages in China will and must rise – experts, studies and well-known companies are forecasting this. The consulting firm McKinsey also predicts that the income of around 400 million Chinese will double again by 2020. However, not only the economy of the second largest economy is changing, at the same time the consumer behavior of the population is changing. Many people – especially in the Chinese metropolises – want quality products. In addition, the Chinese population is slowly realizing that handmade goods also have a high value.
Now the state has to react in order not to miss the economic connection on the international market, but also in the own country. There are currently a few construction sites that China needs to reform in order to continue to maintain its pioneering role in the international market. On the one hand, structural reforms are needed. On the other hand, environmental protection is a big issue. The construction sites also include the objective of social balance and the adjustment of qualitative standards in the production of goods.
China: quality instead of quantity in your own country
But simply raising wages in order to stimulate consumer behavior in your own country does not work. In this case the magic word is: quality control. And this already begins in the Chinese production halls. To achieve this, China is investing millions in research and development. At the same time, the state takes care of the quality control that production processes are optimized in order to find a balance between qualitative products and low manufacturing costs. At the same time, rising wages have to be absorbed. A clear challenge for the Chinese government. Because in the past few decades, foreign companies in particular have been drawn to the Middle Kingdom because the production costs there were so low. But China’s economy no longer works with dumping prices and cheap wages. The Chinese government is convinced that without own brands it is not possible to establish itself on the international market. Therefore, in the future, products from China will not have the burden of a cheap image, but will convince with quality.
The Chinese people want that too. Because they have become accustomed to foreign products with their high quality standards. At the moment, China can still cover the demand. But if wages are raised and the infrastructure is improved, the population that can afford these products will grow at the same time. China would only achieve independence if goods and services from its own country met the same quality standards as foreign products.
China is on a positive path to achieve just that. The Chinese government’s list of structural reforms is long. But many recognized economic experts agree that China can certainly make the leap from a cheap image to high quality standards.
External quality assurance of foreign investors in China
China is also an attractive location for foreign companies. Since the late 1970s, many international companies have settled in the Middle Kingdom because the manufacturing costs are many times cheaper than in their own country. But the big challenge for companies that produce abroad is compliance with quality standards. Because there is a strict obligation to comply with guidelines on the international market in order to be able to sell goods at all. In China, many foreign companies therefore rely on external quality assurance to guarantee compliance with the guidelines. But quality assurance also serves to ensure that the entire manufacturing process runs optimally and costs can be saved. This is of course a complex process, but it can lead to constant improvement and at the same time to an increase in profits. One of the most important factors in quality assurance is analyzing and planning in order to create a structure for the overall process. This structure helps to divide the process into individual sections. At the same time, it can show the company which resources are required, how the process can be implemented and what investments are required for this. In summary, quality assurance offers a transparent and clear structure even before the start of the process, which can offer a planned design during implementation. In addition, sections can be regularly checked with the determined key data during the process. This guarantees that the quality standards are met during the process. At the same time, individual process sections can be optimized without having to change the entire process.
Last but not least affects the quality assurance positive for customer loyalty. Because in order to stand out on the international market, it is no longer enough to have a name steeped in tradition or to offer a particularly inexpensive product. Nowadays it is the combination of attractive price and quality that convinces customers. At the same time, customer complaints can be better received and improvements made by applying quality assurance. All of these together make a company trustworthy for customers.
International companies in China pave the way to more quality assurance
However, foreign companies in China must first lay the foundations for competent quality management. Because compliance with quality standards in the manufacturing process requires an interaction of specialists, suitable technologies and structure. That’s where the crux lies. China has been able to catch up in the areas of technology and structure, but even China is not immune to the shortage of skilled workers. Engineers in particular are in demand at foreign companies. There are enough graduates with excellent degrees in China, but the training content often does not meet the requirements of foreign companies. German companies in particular feel that Chinese graduates have learned too much theory and too little practice during their training. The training of local specialists often turns out to be lengthy. To counteract this, many companies are working together with the Chinese government and are offering training courses for Chinese specialists in order to be able to meet the requirements of foreign companies. Many companies invest in their skilled workers. Grants, small gifts and a pleasant working atmosphere offer companies to retain their specialists. This is also part of quality assurance. Because only trained specialists can optimally check the manufacturing process and comply with standards.
Another challenge for foreign companies in China is the country’s infrastructure. Although there are hardly any differences in the Chinese metropolises to other major cities in the world, a completely different picture emerges, especially in rural areas. This makes logistics in particular more difficult for foreign companies. But even there, the government and companies are working closely together to constantly improve the country’s infrastructure.
However, these aspects also show that quality assurance is a cross-company project that reaches far beyond the walls of the production halls. But for China it could Quality management can certainly be an opportunity for the desired change.
From a planned economy to the second largest global economic power
In order to understand the difficulties of change, one must take a look at the country’s recent past. With Mao, China became a communist state with a planned economy in the 1940s. Only after the death of Mao was the country able to start reforms. This began the gradual opening of the country. The first foreign companies came to China, foreign trade was promoted and China grew to become the second largest economic power behind the USA. But that brought new problems. Many areas have been neglected during China’s years of economic boom. These include, for example, the food supply for the population and increasing environmental pollution. It is now becoming apparent that there is an urgent need for trade. But the Chinese government’s “China Modernization Report” paints a less rosy picture. The Chinese development standard of the industry is about 100 years behind Germany and Great Britain. The Middle Kingdom cannot even come close to Japan. But China still has potential – also for foreign companies. Because the state is investing billions to catch up and not lose touch with the global economy.
Positive forecasts for China’s image change
But the prospects for China’s future look positive. Experts expect that China will overtake the USA as early as 2020 and become the world’s largest world power. Foreign companies are also noticing a new trend. The automotive industry in particular not only exports from China, but can also increase its sales in the Middle Kingdom. Even Porsche sold about 30,000 luxury cars to Chinese in 2012. The reason: the quality is well received by the Chinese population. And China copies the quality standards of foreign companies.
This also applies to traditional Chinese brands. A Chinese brand that is more than 50 years old receives a certificate from the state. However, out of tens of thousands of products, around 70 percent have disappeared from the market. About 10 percent of the remaining brands are now experiencing a renaissance after a thorough modernization.
While the transition is not without its hurdles, China will continue to hold its own in the international marketplace. Only in the future not only with cheap products, but also with goods that have high quality standards. It will still take time for this, but if the desired goals are implemented and the infrastructure is further expanded, China has a good chance of remaining an attractive location for foreign companies as well. Because China has proven over the past few decades that it can create something great out of nothing.
You too can import good quality goods from China if you lay the groundwork yourself. An agency for Inspections in China can support you.