By John Goss
The foreign media have recently been full of stories about the
perceived poor quality of goods and products from China. This
perception can and must be effectively challenged and proved to be
an incorrect assumption and charge on their part.
In fact, the original fault lies with an irresponsible few
foreign buyers who are continually driving down the factory prices
they are willing to pay. This state of affairs can result in the
factory involved making a loss as their slice of the cake gets
smaller, so in the end there is no cake to eat.
I am British and have been living in Hong Kong for five years. I
am married to a Chinese lady and consider myself half-Chinese now.
I have tremendous respect for China and China's development into a
significant world power. My company works with many Chinese people
and over time I have developed a high opinion of the work ethic in
China.
Many of my Chinese friends and contacts have factories in China
or are involved with trading companies acting as middle-men between
foreign buyers and factories in China. Their already low prices for
the foreign buyers are based on good quality at competitive prices
and short-term deliveries.
But these competitive prices are never low enough for some of
the buyers, who continue to drive the price down until the price
they are willing to pay bears no reflection of the original brief
for quality items. Then they demand shorter turnaround even when
they are buying less than the stated minimum quantity.
Many of my Chinese friends have tales of woe about this very
real situation that exists today because of some foreign buyers'
unrealistic expectations and price demands. I hasten to add that
not all foreign buyers are cast in this role, as many, like myself,
have grown to love China and value their time here with their new
Chinese friends and colleagues.
The fact is that some factories will say "yes" to the low price
as they need the orders to keep their workers busy, or they will
leave for another factory where they can get regular work. If the
buyer drives the factory price too low then the factory must pass
these lower prices to their suppliers who in turn pass them on to
their suppliers and so on.
It is inevitable that in that supply chain there will be people
who cannot take a loss and need to make a profit so they can
survive, which is understandable. This will mean that the process
may well be hurt and even damaged by quality reductions along the
way.
So, I believe it is in fact a few unrealistic foreign buyers who
have created the "quality" problem in China, and elsewhere in Asia,
as they seek to make ever-larger profits at the expense of the
final product. They seem to forget that the factories must purchase
the materials that will be used to make the final items, and that
lower customer prices may well affect their buying power.
It is essential that buyers take a step back and think about
their responsibility and understand just how important their
function in the whole process is, and that their decisions will
affect thousands of people in China and Asia today. If all sections
of the process work together to create the correct balance between
price and quality, the cake will be large enough for all
concerned.
This situation is a reality in today's trading world, and China
should be highlighting the problems being created by the few
irresponsible buyers who wish to make an even larger profit than
before. It is of course possible that the retail stores that sell
the items to the public are unaware of the hard bargains that are
being driven by the buyers.
Of course China's authorities must play their part in ensuring
the quality of all goods exported from China. The recent moves
being implemented to establish a quality trademark for manufactured
and processed Made-in-China goods must be applauded as this proves
the authorities' determination to provide a long-term solution to
the problem.
The author is managing director of Ceejay International
Ltd.
(China Daily August 31, 2007)
