China inc, stick in the mud or future innovator ?

Closed Thread
Page 1 of 4 1 2 3 4 LastLast
  1. #1

    Join Date
    Jun 2007
    Location
    Ex Sai Kunger Sunny Qld for now
    Posts
    8,318

    China inc, stick in the mud or future innovator ?

    I was speaking with a friend of mine in Aus who was recently advised by his accountant that he should cease manufacture of his clothing line in Aus, and start buying his wares in China. Purely under the pretense that he stands to greatly increase his profitability and that everybody else is doing it, so best to get cracking.

    My friend took some examples of his clothing line to China to see what the price differential was, and to see what level of maintained quality was to be the outcome, as his company has a very good reputation for quality, something he is unwilling to compromise on ethically.

    To cut a very long story short, after receiving the China made samples that were interpreted off his supplied examples, which were 50% the cost of his production line in AUS, the quality was extremely poor, the fabrics much thinner, and the quality of stitching was not consistent to the AS Quality assured expected standards, and didn't last 1/4 of their standard durability test.

    When he gave a detailed list of changes that needed to be implemented to equal the identical quality that was achieved in Australia, guess what ? The price quoted per garment ended up being 25% more expensive to produce than what he was already paying in Australia, providing Australian staff a living... Very much a false sense of economy when products are compared on a quality for quality basis, it seems that China does not share the same quality aim that the Japanese did, which improved dramatically every 5 years, with reliable qulaity having adopted W. Edwards Deming and Joseph Juran quality maintained supplier consistency processes...

    Will China ever be seen as a country that will assemble products under its own ( quality ) brand names like the Japanese successfully achieved, and be a leader in what it makes ? They ( China ) seem to hide behind nameless ( unknown ) OEM's ( That badge engineer ) that sell container lots at the lowest price, average quality products, with no interest in producing a reputation for increasing quality levels at a fair price that say, Germany or Japan consistently achieve/improve.

    Is this where it's at, or will China just fizzle out the moment a competing country that can provide even cheaper labour emerges, dropped like a hot scone, with nothing to fall back on, but its own local market, which probably won't affect them much, having 1.3 billion customers at its disposal. lol

    I just cant help think that China will end up being a bit of an anticlimax, with no real long term strategy for the future in place.....

    What are your thoughts ?

    Last edited by Skyhook; 19-07-2009 at 08:43 PM.

  2. #2

    Join Date
    Mar 2007
    Location
    Gold Coast Marina
    Posts
    17,934

    When I look at what China is doing in my industry (electricity) I would have to disagree. 20 years ago, they were purchasing second hand (terrible quality) power stations from the UK. Then they started importing from quality manufacturers. Then they started copying the quality folks and building their own. Now they are exporting these power stations outside China for prices that are substantially less than the majors charge.

    Is the quality comparable? No. But I think that's just "No, not yet" rather than just "No". The knowledge they are gaining and the leaps in capability and quality just keep coming.


  3. #3

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,205

    I tend to disagree. Brands which have reasonable reputations for quality seem to have found suppliers who can maintain them. I don't buy a lot of clothes, but as an example, I was recently given a British Lions replica shirt which is sold by Adidas. The quality seems to me to be very good, but it was made in China. So were my Merrell hiking shoes which have also been performing very well, and a Kukri short likewise.

    How did your friend find the people he used for his production?


  4. #4

    Join Date
    Jun 2007
    Location
    Ex Sai Kunger Sunny Qld for now
    Posts
    8,318

    O.k lets use more clear examples of comparison.

    Name a Chinese brand that makes a better product than the following:

    Miele Kitchen and laundry appliances

    Any car maker in China that exceeds any of the made in Germany offerings, or LEXUS japan benchmarks of quality.

    Any consumer electronic brands that produce better quality than say Sunfire ( US ) or even the top tier Japanese made electronic brands Sony ES, top end Yamaha, Luxman, Denon or Onkyo Integra levels of performance and quality.

    What does China produce better than anybody else in the world ?

    I have to say, that all the clothes that I have purchased in Europe by European makers, still feel and look new, even today. The quality is definitely there, and hence why price is not an issue if the item lasts. ( Answering PDLM ) My friend had detailed discussions with DEFAT and worked with an experienced consultant.

    Last edited by Skyhook; 19-07-2009 at 09:03 PM.

  5. #5

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,205

    There's quite a difference between "better than anyone else in the world" and "of high quality". Miele is a tiny niche at the top end of the market.

    But more and more Sony stuff is made in China and I have sufficient confidence in the Sony brand that I that I'm not going to worry about where it is made.


  6. #6

    Join Date
    Jun 2007
    Location
    Ex Sai Kunger Sunny Qld for now
    Posts
    8,318

    Tiny niche lol Miele is a huge company in Europe, and has one of the best inhouse designed electronic distribution systems ever conceived... DONT talk about things you know NOTHING about PDLM.

    Miele might be expensive in export markets, its not as expensive in its home market, and most of the worlds hotel laundries, commercial kitchens, hospitals and laboratories globally, use Miele industrial washing gear... It also invented the front loading washing machine and has exponentially innovated many of its own technologies . A leader in its field.

    Also if you are going to comment, comment fairly, I mentioned SONY ES, which is an entirely different division of Sony and only produces that high end range in Japan and the USA, NOT IN CHINA, ever !

    In a very short space of time, the Japanese kept raising the quality bar of the products they made themselves, with significant success, look back at history... China isn't achieving the same overall consistent levels of quality.

    The Japanese stood by their company names, a by product of Bushido collective culture ( societal pride ? ).... I firmly believe it has everything to do with cultural attitude.

    Ever seen Japanese stainless steel components rust ? No ?
    Me either, but can the same be said for Chinese Stainless steel products ? Which rust like an iron nail in the dead sea...lol

    Last edited by Skyhook; 19-07-2009 at 09:34 PM.

  7. #7

    Join Date
    Oct 2007
    Posts
    1,896

    Eh, Miele is a tiny niche brand. I've been to their HQ during some school excursion, and they used the very same words. Well, in German. Of course they are a billion dollar corporation, but still a niche brand even at home.

    But I don't think quality is the only side of the story. Certainly China will over time increase their quality standards. People were mocking Japanese Cars in the 1970s too. My grandfather was anything but comfortable sitting in my Dad's Nissan. But that will have an impact on their prices. Chinese products aren't ridiculously cheap anymore to begin with, and that at a time when China is still artificially keeping its currency below its real value. (Wasn't that a joke when they spoke about replacing the dollar as the world's reserve currency during the last G20? Well, they could easily do so - they'd just have to remove the ties of the renminbi.... now why just did they never do this ). Plus, future rises in energy prices and subsequently transportation costs will further eat away exports profits.

    China benefitted greatly from opening up their economy when transportation costs were shrinking and wages in the developed world were very high. The situation will not always be that beneficial, and when that happens, they will try top produce better, higher priced goods as well.

    Oh, and... apparently Miele has a plant in China. Making only vacuum cleaners, for the time being, but still...

    Last edited by er2; 19-07-2009 at 09:47 PM.

  8. #8

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,205
    Quote Originally Posted by Skyhook:
    Tiny niche lol Miele is a huge company in Europe
    Largish perhaps, but Haier, the leading Chinese whitegoods manufacturer has a turnover 6 or 7 times that of Miele.

  9. #9

    Join Date
    Jun 2007
    Location
    Ex Sai Kunger Sunny Qld for now
    Posts
    8,318

    Miele employ 16,163 staff and were awarded in Munich, 2007 as Germany's most successful company, beating Google and Porsche...

    Not a bad effort for a company that started in 1899, has done nothing but improve year to year, exporting billions of dollars worth of its niche products globally.... Must be because of all the marketing they spend, which if you have ever owned Miele gear, you know its usually via recommendation of happy other customers.

    My parents have a Miele dishwasher, washing machine and dryer, purchased in 1995 for $8,000 aus and have never had a days trouble, 19 years later, still going strong, and likely to go for another 10 years before it gos kaput!
    Not many products can boast that kind of dependable reliability/durability.

    PDLM would much rather that we all buy 4 or 5 Haier brand washers over the same time frame and fill our land fills even more than they are, or consume more energy to recycle short cycle lifespan product. Nice one lol

    Last edited by Skyhook; 19-07-2009 at 09:59 PM.

  10. #10

    Join Date
    Feb 2009
    Posts
    49

    Actually your friend is a bit behind the times; most of the big garment brands have outsourced their manufacturing to poorer SEA countries now, often Vietnam or Cambodia.

    So in fact cheaper labour has already emerged - this hasn't fazed China - they are very much pushing (from Beijing down) to move the country away from low cost manufacture and up the value chain towards being an innovator. I've often heard it said that China is now where Japan was about 10-15 years ago. Culture has nothing to do with it.

    Re the OP's oddly chosen specific examples, not worth addressing. But to play the same irrelevant non-generalizable game for a minute - how about phones? Name a better phone than iPhone, which is made in Shenzhen? Admittedly, designed by Apple in the US and I'm sure they exercise strict QC (though I bet most of the hardware design was outsourced).

    Then look at something like the Meizu M8, well known in geek circles as a clone iPhone that actually betters it in some ways. Totally designed in China by the 'Shanzhai' guys. Give it that 10-15 years and the designers will start to hook up with the quality producers, add in then the money and marketing skills that Miele et al have had access to for the last 100 years - China will wipe the floor with everyone else.


Closed Thread
Page 1 of 4 1 2 3 4 LastLast