"China's tooling industry remains substandard and largely incapable of making highly complex, sophisticated products," a recent story on the Design News Web site quoted Zhou Yongtai, vice secretary general of the China Die & Mold Industry Association (CDMIA) in his year-end report.

That's why the article had an eye-catching headline: "Want to develop products in China? Think Again." But is the reality that gloomy? Are companies that are currently using Chinese-made molds in jeopardy? Not really. Here, Larry Hotaling, founder of Hong Kong-based consulting firm Global Diligence Ltd., shared the lessons he learned of how to watch out for the pitfalls and ensure good quality:

Tooling/molds in China are, in fact, still sub-par, if you don't hands-on manage the build and you use the lower tier mold shops versus the better ones, which are limited in number. Left to their own devices, they will build a substandard mold. But, as I have advocated for years, a company must take ownership of the mold build through a focused collaborative process of managing the design and build. Then it is possible to get a good mold with a higher tier shop.

For instance, regarding the life cycle, they will normally use soft steels -- my clients have insisted on hard inserts for maximum life. The cost increase is usually minimal, as materials cost is only slightly higher. Machine time is longer and so adds cost. But it is against a low base, so you are still way ahead. The other aspect is ensuring that no mold ships until you have several test runs with 100% acceptance of part quality (dimensional and functional) as well as proper mold performance (cooling, cycle time, etc). Where there have been disappointments you usually find these steps were skipped.

The Design News article also quoted Zhou that the lack of skilled workers as one of the biggest problems plaguing Chinese mold making. In an e-mail correspondence, Hotaling confirmed the problem:

This is a big challenge -- I know one Singapore mold maker who has had to slow down his program of mold build in China substantially due to an inability to find and or retain skilled workers. He is bringing skilled people in from Singapore -- although it raises his base costs, rework/quality costs have gone down.

Leveraging talents in India can help overcome the language barrier, Hotaling suggested:

Another aspect to this is we are having the design work done in India -- low cost like China but much more sophisticated. The mold build with good 3D drawings and a BOM (Bill of Materials) that specs out the materials to be used (like hard inserts) allows the build to occur in China provided there is a solid Western-thinking project engineer in China to guide the build. The other option is build the mold in India at low cost vs. the USA but good quality and easy program management since English is the language there.

The most important take-away message I get from the Design News article, though, was that China provides big business opportunities for more sophisticated molders in Europe and North America. Instead of holding a grudge against the Chinese for stealing low-grade tooling work, it's the perfect time for American toolmakers to upgrade to the higher-margin business of top-grade tools, which Chinese molders are craving.

How desperately does China need advanced tooling? The latest data I've received from CDMIA showed that in the first 10 months of 2007, China imported US$1.67 billion in molds and exported $1.10 billion, posting a trade deficit of $569 million. Plastics and rubber molds account for 51.96 percent of the import and 69.46 percent of the export.

China's largest mold importers are Japan, South Korea, Taiwan, Germany, the Untied States, Singapore and Italy. China's top export destinations include Hong Kong, Japan, the United States, Taiwan, Germany and Thailand.

Note that China's most popular export markets are actually quite sophisticated. The CDMIA theory, only based on data reported by state-owned and collectively owned enterprises, simply doesn't reflect the entire industry, which features foreign-invested and private companies as the majority development forces.