As managing editor of Rather than just sharing yet another story about allegations of quality control issues in Chinese-made products, I think I'll share a story from a different perspective -- the perspective of a Chinese manufacturer.
This story from the Chicago Tribune is interesting, because it's built around the point of view of of a Shenzhen executive, as well as U.S. buyers and government officials.
It's striking how the factory owner's complaints sound so similar to the complaints we've heard from North American factory owners. Here's a taste:
Sitting in a windowless conference room surrounded by the remote-control toy Ferraris and Mercedes he sells the world over, factory owner Kuma Gu summed up what it's like to manufacture products for American consumers these days."A lot of Chinese companies have a saying," he said between drags on a cigarette. "Do you want to kill yourself? Then do business with Wal-Mart."
Gu and others go on to complain about high resin costs, rising labor costs, and market pressures that have led to safety problems.
There's also an interesting interview with Jiang Ling, Dongguan's vice mayor for economic development, who made it clear that the government is taking the recent spate of quality problems seriously.
"If the quality and credibility of our products is bad, that will ruin our city," Jiang said. "In the past, we paid much more attention to quantity. Now we have to pay more attention to quality."
Comments (4)
It's difficult to have it both ways as expressed in the comments of idividuals in this article and others here in the USA. Not just Wal-Mart but other companies and I must say consumers want the low prices and the quality. I know there must be a break even point but price will win out more than 1/2 of the time when the purchase is made. Quality and safety of children need to be the first concern being a parent myself. Why buy a toy that can seriously hurt or even kill a child...is it really worth saving even a few dollars not to mention pennies more! I rather pay a couple more dollars and if that means made in the USA so be it and provide more jobs here or other countries that will comply with even basic safety requirements.
Posted by Joe Iannone | November 9, 2007 8:42 AM
Posted on November 9, 2007 08:42
I don't know the answer, but let me posit the issue. China has a right to trade in the world, many I suspect naively think otherwise? If we want peace with China we must trade with them. The smart ones will be those who recognise that reality and employ the defences available. Make them adhere to the commitments contracted in joining WTO. Use world opinion, IMF, WTO and the UN to force them to stop illegal pegging of their currency. Call their bluff on dumping their US Currency holdings wherein they stand to lose billions -- I think not.
In the West we are never at our best when whining, but absolutely unstoppable when we mobilise - this time our intellect not our armies.
Posted by Dan Coll | November 9, 2007 10:01 AM
Posted on November 9, 2007 10:01
I agree this is, at its core, a consumer attitude problem as much as anything. Too many people forget "you get what you pay for."
The comment that China's peg of the yuan to the dollar being illegal is not correct. There are no laws or treaties, including the WTO regulations, that forbid any sovereign country from pegging their currency. China is not the only country that does so, furthermore; for example, Panama has pegged their currency to the dollar for decades. Anyhow, China no longer uses the dollar peg and has had a managed float against a basket of currencies since July 2006. Nevertheless, the dollar's swoon and mounting inflation in the US is putting heavy pressure on China to revalue because staying at the current level will import our inflation and diminish their competitiveness in markets other than the US. Their is a strong probability we are headed into a recession within the next 12 months and the Chinese are smart enough not to want to be drawn into one as well.
Posted by Roger Jones | November 9, 2007 11:48 AM
Posted on November 9, 2007 11:48
The Chinese are by nature very entrepenurial and risk takers. Their philosophy is they came from poverty and to return to poverty has not changed their position.
They have to learn how to say no to preserve their quality and profit. Our economy learned in the 70's that withholding product would increase prices meaning more profit for less work.
It doesn't make sense that we can buy a product made in China for less than our raw material cost. We just purchased a vernier caliper made in China to see the quality. The vernier had a digital readout, in/mm conversion, zero button, hardened stainless steel construction, plastic case and extra battery for $12.50. Assuming the wholesaler has to make a profit, the price for manufacturing has to be under $5.00. It is impossible to make this product for this price without losing money or subsidy. This should sell for over $100.00.
The consumer is happy, the wholesaler is happy but the manufacturer has to lose out. We have seen this situation in many products and wonder when it will stop.
The Chinese owner has to learn how to say no!
Posted by Charles Sears | November 13, 2007 9:34 AM
Posted on November 13, 2007 09:34