Wang Wei is on a mission for the plastics industry in Chongqing, to help local companies compete directly in international markets — something that has eluded the vast majority of them, he said.
Wang directs an industrial development office affiliated with the United Nations in Chongqing, a sprawling city in western China more than 621 miles from the more-developed coastal economic zones that produce most of China's exports and where most foreign investment goes.
That office, the Subcontracting and Partnership Exchange (SPX) of Chongqing, wants to beef up the skills of local industry.
That goal is in line with a Chinese government push for economic development in poorer regions in the interior of China, but as the experience of SPX Chongqing suggests, playing catch-up may not be easy.
Chongqing factories are taking steps to upgrade, Wang said, and the city is home to joint ventures, including Ford Motor Co., Honda Motor Co. and Yamaha Motor Co., that supply autos and motorcycles for the Chinese market.
But the plastics firms and others in the local supply chain still have ``big gaps'' in the skills needed to go direct to international markets, he said.
A company could be one of the best plastic molders in Chongqing, ``but still it can only produce for local companies or joint ventures that produce for China, not for direct exports,'' Wang said.
``Our main task is to help these companies establish operations with multinationals in China.''
SPX Chongqing is part of the network of 45 SPX groups around the world in the United Nations Industrial Development Organization, and the first in China.
Established in 2004, the Chongqing office is funded by local Chinese government sources and company fees, but gets technical advice from the United Nations and pays the UN a licensing fee, Wang said in an interview at the SPX office.
One of the key problems for local firms trying to export is transportation costs to the coast. Also, they cannot get the size and scale advantages of plastics firms in the coastal manufacturing zones, he said.
SPX Chongqing estimates there are about 60 plastics firms around the city with the potential to export directly to world markets. But to do that, they'll need better training and technology to raise their average per-employee sales from about 400,000 yuan (about US$59,000) to something closer to 1 million yuan (US$147,000) per employee, Wang said.
One SPX consultant on temporary assignment there, Mahesh Desai, retired from a 28-year career at Ford, including a recent stint at a Ford plant in Nanjing, China, where he worked to develop Ford's local supplier base and source more goods in China.
Desai, who is based in Farmington Hills, Mich., said many companies in Nanjing and Chongqing don't have a strong enough understanding of the link between quality and cost.
``They can't analyze their processes backwards and figure out where the problems developed,'' Desai said. ``It takes them more time to analyze problems and that makes their cost higher.''
Desai said the companies are great at manufacturing to specifications, but he said many have too much of a top-down management approach, without enough focus on development and design, and without encouraging lower-level employees to take risks.
SPX organizes training programs, provides consultants to help meet standards like the auto industry's TS 16949 certification, and runs trade shows. The 130-employee organization also maintains a database of 52,000 local companies, with about 1,500 assessed by SPX staff, to help match potential suppliers and customers.
To date, Wang said, SPX has not specifically been able to link a local plastics firm with a direct overseas export opportunity, although it has in other industries it focuses on, such as metal processing.
But he said SPX training has helped plastics firms improve. One local injection molding company that specializes in two-color and foam molding was being considered by an American automaker for exporting parts, Wang said. He declined to name the companies because the arrangement was still under discussion.
The Chinese firm in that case has seen its management skills and product development upgrade quickly as a result of working with the overseas carmaker.
The Chongqing company previously supplied mainly to the local motorcycle industry, but found that the ``profit space is very limited'' because of intense competition, so it tried to upgrade by working with foreign automakers, Wang said.
He also said SPX helped a local plastic pipe maker license technology from an overseas firm.
Most Chinese firms attack each other on price, and makers of cars and motorcycles are very good at negotiating for price cuts, so speeding technical development and improving the production process is important, said Tang Dong, deputy chief manager of Chongqing Wang Long Industry Group Co. Ltd.
``In China, there is no textbook for these kinds of production processes,'' said Tang. ``Every company has their own kind of know-how, and they don't exchange with each other.''
The company has more than 60 injection presses, mostly Chinese Haitian machines with a handful of Japanese-made presses, and plans to build a metal-stamping and painting factory in the city, he said. It supplies plastic parts for Honda and Yamaha motorcycles, in addition to Chinese carmakers.
Chongqing is a major center of car and motor manufacturing in China, and its companies make more than 8 million motorcycles a year.
About 60 percent of local plastics firms make vehicle parts, with the rest making construction materials for local use and packaging, Wang said.
The city and surrounding area, home to 31 million people, is probably best known to outsiders as the mountainous region where China's government fled and made its capital in World War II, to escape the Japanese armies that occupied other parts of the country.