By on May 7, 2010

As if the Japanese don’t have enough problems in China, now the Chinese are beating them at their own game: Quality.

“Many Chinese automakers are focusing on improving their quality control by introducing techniques developed in Japan and elsewhere overseas.” This assessment doesn’t come from a propaganda arm of the Chinese car industry. It comes from the voice of Japanese business, The Nikkei [sub].

The Japanese have a wary eye on increasingly scrappy Geely, the company that bought Volvo unit for $1.8b. Geely “has made a huge effort to learn from Japanese carmakers,” says the Nikkei.

Geely even does Japan one better. While Japanese companies use the 5S quality management system, Geely has 6S. And they keep Japanese terms such as “seiri” (organization) or “seisou” (cleanliness). The whiteboards, symbol for Japanese fastidious attention to detail, are everywhere.

Geely hired Japanese engineers to train their workforce. Their molds are made by Fuji Technica. “The dimensional accuracy demanded by Geely is often at the micron level, and the company’s quality standards are no lower than those at a Japanese carmaker,” said a Fujii executive.

Changan also is on a major drive to up the quality of their products. They recruited manufacturing experts from Toyota and BMW of Germany, luring them away with well-paid jobs.

We’ve gone through these phases with Japanese cars, and later with Korean cars. And when the Chinese do something, they usually don’t mess around.

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30 Comments on “Be Very Afraid: Chinese Copy Foreign Quality...”

  • avatar

    Perhaps the U.S. manufacturers should trek to Geely to train with the Chinese? I’ve been on the inside and they still don’t get it. I suspect they will still be making excuses 20 years after the U.S. industry is just a memory, jogged by the occasional hulking deserted plant and the passing of a vintage U.S. car on the road.

    • 0 avatar

      Have you been inside a US auto manufacturing plant in the last 5 years. I see the same “Problem Solving Boards”, as shown in the above picture, at every dept through the plants I work at daily.

      How would you explain Ford’s quality levels which are better than or at par with Japanese, Korean, Germans … ??

    • 0 avatar

      My plant has the same boards and problem solving routines as well. After safety, quality improvement is at the top.

  • avatar

    Their cultural interest in saving face and national desire to become a leading global economic player will drive this effort. I see it as a good thing.

    The Chinese space program is a good example of this. In just a few years, they have developed a heavily modified version of the Russian Soyuz spacecraft, and accomplished every task they set out to do, including flying 1, 2, and 3 people, and spacewalking. Future goals include producing a space station and a manned moon landing.

    So I’m sure they can make similar strides in automobile quality if they want.

    • 0 avatar

      “Their cultural interest in saving face and national desire to become a leading global economic player will drive this effort. I see it as a good thing.”

      Yes, I have heard other cultural observers say that if you want the Chinese to improve, just tell them their products are crap compared to the products of someone else. Their desire and drive to be the best is unsurpassed. I have personal experence with how their quality in manufacturing scooters has improved from total crap, to old Harley Davidson (you know disassemble and then reassemble before using), to Japanese level.

    • 0 avatar

      Their space program was stolen technologies from USA. Operation Titan Rain and such cyber attacks from them got them the technologies. Yes it’s a theory and my belief but hell I don’t believe they can beat USA in technologies. Their cultural paradigm doesn’t result in many innovations at all just copies. They’re just following in footsteps which is pretty easy considering people have paved the way.

      Their EU crash test for Brilliance is terrible and they need to fix that. Greely bought Volvo though which should solve the problem. Since they’re in economic position they have pretty much a very model technological car factory. I saw their factory in a documentary about some entrepreneur, that made Hugo a success, wanting to bring Chery over but the Chinese screw him over -_-.

    • 0 avatar

      “Their cultural paradigm doesn’t result in many innovations at all just copies. They’re just following in footsteps which is pretty easy considering people have paved the way.”

      Funny just three hundred years ago the Chinese were saying the same thing about the Europeans, before the Age of Enlightenment. A hundred years ago the Europeans were saying the same about Americans.

      Copying is a symptom, not an inherent trait. People copy other cultures when they lack confidence in their own, in large part due to being poor. As for technologies, why reinvent the wheel?

  • avatar

    the flat world is wonderful. 70 years ago they were at war and killed each other by the millions, now they compete in business and cooperate (when beneficial to both sides)

    Not to glorify a failing communist regime, but the Chinese will win because they focus on progress, education and have plan to bring their country forward. Similar to the space race in the 1950’s in the US. Also to note, most Chinese leaders have science or engineering degrees. They actually understand the world (I still hate communism, but this is beside the point). the US and Europe have lost ground by resting on their laurels and growing generations of “entitlement” worshipers that think we will be the top of the world just by being Americans or Europeans without having to work hard. Just look at the US, almost all leaders have law or MBA degrees (if they went to school at all, and we know the stories how people like W. bush got their degrees ). The youth is worshiping Paris Hilton. At some point people like bill Gates (self-made entrepreneur) were idols, now people that inherited money and spend all day applying makeup are the idols.

    • 0 avatar

      All civilizations go through this cycle, we just happen to be alive during the decline of the modern West and the rise of the East. The decay is happening in all Western civilizations, not just the U.S. (Greece is just the worst example at the moment). China will eventually go the same route, though modern communication may accelerate the cycle when compared to previous declines.

    • 0 avatar

      I agree with you. I also believe we live in a shallow entitlement minded country now.

  • avatar

    Mr. Schmitt, THAT is THE blog. Thanks for the link. The one of managing the dragon is also excellent.

    Japanese Quality + Chinese Prices + European Design = many competitors left in the dust.

  • avatar

    If this isn’t a wakeup call for our auto industries, I don’t know WHAT will be. Unlike in the 1990s, the UAW and US auto companies won’t be able to lobby for 100% tariffs. No more excuses. It’s either make greater strides toward change or die.

  • avatar
    Chicago Dude

    I’m not sure why I should be afraid. I happen to prefer purchasing quality products.

    • 0 avatar
      Acc azda atch

      Quality products..
      Look at walmart.. ya dont think what they make is quality.. its just cheap. Compare THEM to ALDI…

      Now that’s a mouth full

      Quality in the U.S really only means.. buying Domestic because of the made in USA. Ford touts their quality in ADS saying its better than the Japanese. I got news for them.. Ya dont TOUT ya quality as better than XYZ.. it just is.. and it gets around without you saying so.

      Quality in Toyota doesnt mean squat..

      Honda is decent but their focus is weaning.

      Hyun / Kia sole claim is their cheap vehicles.. with everything you cant get anywhere else.

      I think its fantasic that the Koreans are coming up.. (with price as their mantra) and I also think its fantastic that Geely is coming up.. but its going tot ake a while to be at the point where they are respected.. (Hyun/ Kia still aren’t — even though their 2.4ltr d.i dual vvti motor.. is something else!!)

  • avatar

    I have become convinced that manufacturing is dying in the NA and there is no reversing it or at least not easily. I think it comes from the business people who have MBA and Law degrees many of whom never set a foot in the factory and who believe that manufacturing is too dirty and in fact so simple that even 3 world countries can do it. And so they let them, they export the manufacturing to China, Malaysia, Indonesia etc.

    It’s one thing when a company is forced to export production overseas because of competitive pressures, it’s different when they do it because they don’t see much value in it. There is no better example than Apple the new darling of the investment world, always beating profit expectations. Apple doesn’t need to produce iPhones and other gadgets in China to lower production costs. People willingly pay premium for their products as it is. The only explanation must be is that Apple doesn’t think the actual making of its products is all that important. What they believe is important is design, software, marketing, the product itself can be made by slave labor somewhere far away. If Apple has such attitude then the rest of the business is sure to follow since Apple is a business icon and leader.

    • 0 avatar

      Really? That’s the reason you think why manufacturing is dying? The main reason is cheap labor but you can argue with that if you want. Heck in China there’s probably no unions or benefits.

      Usually, mindless and low thinking jobs are the first to be outsource. China have a nice big labor force that cost pretty cheap. One reason why Korean auto companies are beating Japan right now. But there are certain manufacturing jobs that will always stay in the USA, like building artificial hearts <3 ^_^.

      Most companies wouldn’t export jobs that requires lots of thinking skills over to China. So your example of Apple is just a drop in the bucket.

      When the Chinese start to appreciate their Yuan, we will see the manufacturing comes back unless our Dollars become stronger. Shrug, they'll end up finding cheap labor force somewhere else someone have to be our third world country.

    • 0 avatar

      When the Chinese start to appreciate their Yuan, we will see the manufacturing comes back unless our Dollars become stronger.

      One of the more clear thinkers on the subject, Peter Schiff, has explained that if China stops supporting our dysfunctional economy (via stopping their purchase of Treasury securities and/or allowing the yuan to float to market determined levels) then US interest rates and consumer prices would rise proportionately. This would, in the short run, exacerbate our weak economy. At the same time, consumer prices in China would decrease, effectively increasing their real wages and allowing them (ie, the Chinese) to absorb whatever excess productive capacity (that which was formerly exported) internally. Americans, having grown intoxicated on cheap Chinese produced goods could not afford them, and it is therefore uncertain how we (the US) would cope.

      In his words (and supported in previous comments from our own Mr Bertel): For example, while the Chinese automobile market is now the largest in the world, 90% of Chinese car buyers pay cash. In contrast, only 15% of American car buyers do so. In other words, Chinese consumers can actually afford their cars, while most Americans cannot. Without huge car payments, Chinese consumers are in much better shape not only to trade up to newer cars in the future, but to purchase other products as well. This suggests huge future growth, not only in automobiles but also in other consumer products as well.

      It should be pointed out that Schiff invests in China, so he has an interest in the Sino market, but that does not invalidate his analysis, I don’t think.

      Finally, lack of quality is not intrinsic within the Chinese ability, but is, rather, the result of very slim margins (to the Chinese, but not necessarily to the Western companies selling items–think Apple). It is also a result of a lack of the rule of law (although this is changing slowly). Also, it must be stated that in certain areas, government regulation (such as environmental laws) subtract from the cost of production. Employment benefits are meager, in many instances, too. Too, the Chinese economy is questionable inasmuch as they too experience bubbles (Shanghai real-estate, anyone?) and also engage in “short term stimulus.”

    • 0 avatar

      Ummm…that’s Mr Bertel Schmitt–the editor went bad on me in my previous post. Got to get that fixed.

    • 0 avatar

      When the Chinese start to appreciate their Yuan, we will see the manufacturing comes back unless our Dollars become stronger. Shrug, they’ll end up finding cheap labor force somewhere else someone have to be our third world country.

      If only that were true. Looked what happened after Japan allowed their currency to float. Their raw material import costs just dropped and they simply compensated for higher export prices by cutting extra costs and waste. America’s manufacturing has never “returned.”

      My my. How short-lived are memories are.

    • 0 avatar

      Why on earth should Apple, or car buyers, or anyone else, pay, say, $20,000 for something made here that can be made elsewhere for $10,000? Aren’t the workers and management who are willing to work less expensively people, too? Don’t they deserve a livelihood?

      My Chinese-made Apple computers work beautifully, and I have bought a lot of them over the years.


  • avatar

    I’ve noticed that many chinese made items recently have a better look and feel to them. It was only a matter of time before the chinese started thinking about quality.
    It won’t be long before we are paying a premium for quality chinese made items.
    Who knows, maybe africa will be the new source for cheap labor?

    • 0 avatar

      Africa and the Middle East. The oil-exporting countries know they can’t rely on the energy industry for their livelihoods forever. They’re not stupid. One sector they may gain strength in is manufacturing.

    • 0 avatar

      I think China is eyeing Vietnam. There are already Chinese companies moving factories to Vietnam.

  • avatar

    Too bad GeelyVolvo’s new S60’s Crash Avoidance system only works when it feels like it…

  • avatar

    I hope this is happening in other industries, not just cars. It’s getting so I can’t avoid buying Chinese products, but most are crap and need to be replaced frequently. I’m tired of “saving” money.

    Of course eventually production will go somewhere even cheaper, and the stores will be full of Bangladeshi, or Zimbabwean goods. I’ll tell my grandchildren that Americans used to be wealthy enough to afford Chinese made goods.

    • 0 avatar

      Of course eventually production will go somewhere even cheaper…

      One might think so, however with any form of technological industrialism there has to be an indigenous labor pool capable of adapting to said technological manufacturing processes. It is not clear that certain Third World areas, areas where one might expect “cheap labor” to naturally manifest, have a population with the intrinsic attributes required to support a technological manufacturing infrastructure. Also, along with any nascent technological infrastructure there must exist a suitably stable political foundation allowing return on foreign capital investment. It is questionable whether some of the places you mention (and others like them) have this necessary foundation.

  • avatar

    Look, Bertel, I know it’s your job to sell the stuff, but I’ll start buying Chinese the day they stop executing dissidents (and the homeless) with their mobile execution vans. Well, that among a myriad of other things.

    Until then, I’d sooner walk.

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