How do you think most people would describe Chinese-made products? If they are not in the manufacturing industry, I’m sure the first thing that comes to their mind is cheap, poor quality.
But is that an accurate description? Does China produce the same type of product quality as they did, say, ten?years ago? Perhaps the bigger question on almost everyone’s mind is this: do most Chinese factories actually care about product quality?
To find answers, let’s?take a look at the transformation Chinese factories have made over the last decade and how public perception of product quality there has changed.
Chinese Factories 10 Years Ago
More than a decade ago, China was a lower-tech, lower-wage manufacturing haven. Chinese factories were known for producing more labor-intensive products like toys and garments. This was a time when there was no shortage of buyers looking to import from China. In fact, supplier?would have so many buyers coming to them for products, in response, more and more people started to open their own factories. You could often find five or six factories producing the same type of product right on the same street. Sometimes as many as ten or more factories were manufacturing the same product on the same street.
With such a huge demand for Chinese-made products, China became a “seller’s” market. Lots of buyers meant that factory owners didn’t need to care so much about the quality of the products they were exporting. As a result, exporting from China was largely a quantity-driven business with a lower priority placed on product quality. Buyer complaints over sub-standard goods weren’t taken very seriously as Chinese factories could easily find another buyer to replace the current one.
As more and more competition cropped up, price wars began where factories fought to cut costs. Before long, cost cutting led to still lower quality and a growing consensus that Chinese factories didn’t care about product quality. In the end, some of the factories were driven out of business. Others were able to survive thanks to the low labor cost and cheap raw materials and in spite of lower quality.
Chinese Factories Today
These days, the Chinese manufacturing industry has gone through a major transformation. In some areas of China, the labor cost is actually higher than that of Mexico. Manufacturing wages in China have grown almost four-fold, from about 12,500 RMB per year in 2004 to almost 46,500 RMB per year in 2014. In response, production of many labor-intensive products has relocated to lower-cost countries like Indonesia and the Philippines.
Innovation in Chinese factories has given way to manufacturing higher-tech products. In 2013,?Chinese factories produced more personal computers, mobile phones, energy-saving lamps, solar panels, air conditioners and shoes than factories in any other country in the world.
These changes have not come without growing pains. Many Chinese factories have gone out of business during the last few years. If you walk down that same street that once had five or six factories making the same product, you will be lucky if you can find half of them still operating.
There is a limit to how low prices can get for materials. And as the Chinese labor cost grows, it’s harder and harder for factories to stay in business. Some of the factories have started to look into moving to other Asian countries. But for those factory owners that do not have the resources to do so, the only way to survive is by hanging on to their existing customers and learning to produce quality products more efficiently.
Manufacturing in China has seen real changes in the last ten years. Labor costs have risen significantly but so has product quality. Chinese factories have shifted away from producing mostly cheap, labor-intensive products. Now Chinese factories are leading the way in manufacturing many consumer electronics. The perception of Chinese-made products is improving and sourcing from China remains competitive for many buyers.
In order to remain profitable, Chinese factories will have to continue adopting more advanced manufacturing techniques to make better-quality products with less labor. Quality will continue to be a deciding factor for which Chinese factories thrive and which go under.
By the way, change is not customary in Chinese culture. So don’t be surprised if you suddenly lose contact with your factory and later find they’ve gone out of business!