Innovation is the Key to China Manufacturing Success


Most people think manufacturing designs made in China are cheap and of poor quality, and yet most products are made in China. The reason for this is because manufacturing cost is a lot cheaper in China, than anywhere else. Since production costs are very cheap, and few people generally call to complain about their cheap products, the customers who complain of issues are usually given new product replacement by the supplier. However, this is no longer the case.

The once known to be cheap and low-quality products of China, are no longer perceived as that, rather more affordable but good quality. From smart phones to computers to flat screen TVs, China has stepped up their game in the market. Aside from their low cost of manufacturing they are also focusing on innovation, to create something newer and better than the international brands that they also produce in China.

China has been known to be the factory of international brands worldwide, but now, they are making their own name for themselves. Also, the variety in their products expands to almost all custom electronic gadgets. Products such as mp3 players, DVD players, mobile phones, digital cameras, and car DVD players, parking sensors and HDD media players are some of the hottest items and in very affordable prices.


Getting Good Quality Products from China

We have worked with Chinese lawyers on dozens of projects which has allowed us to find out what works and what doesn’t for China manufacturers. If you are going to raise your odds of getting great quality manufactured goods from China, you should have the following things in order:

1. Pick a Good Manufacturing Company.

We continually see this rule If you do nothing else that we advise, do this one thing as it matters as much as all the other things put together. Study the company, do basic research and due diligence.

2. Use a Good OEM Agreement.

Great contracts ensure your Chinese enterprise understands what is asked and what will occur if it fails to uphold.

3. Use Detailed Documents.

Chinese manufacturers do exactly what you tell them to do which means what you tell them needs to be accurately conveyed: orders and requirement should be shown in Chinese.

4. Visit the Factory.

Either your own people or a third-party inspection company should pay normal visits to your manufacturing plant for quality control. Doing this allows you express your needs in person rather than a phone call; trust me, in China this is important. Perform normal inspections suitable to the goods you are having made.

Do the above and your odds of getting good quality products from China increases tremendously.


Why China Excels in Lean Manufacturing

China is relevant in the manufacturing industry because they take pride in doing each of the process involved in custom manufacturing the right way. Chinese factories along with workers are very efficient when it comes to chain supply and just in time manufacturing wherein, they can be regarded as experts to it regardless of the type of products they produce.

Monitoring the Production Process

OEM investors always make sure they monitor the production process even if they already know the Chinese are well-adept in lean manufacturing. Everyone knows keeping a close eye on production is important and catching problems earlier is far cheaper than later; however, few effectively do. Here are two ways to effectively monitory production of your product based on how most successful Chinese factories do it:

  • Taking several snapshots along the production cycle by performing 1-day inspections
  • Looking at the movie as it unfolds by stationing 1 technician in the factory for a certain period.

3 main factors should be considered: the process and the product, the production status and allocated capacity, and the place of production. It is vital and necessary for any buyer to ask the supplier to provide the CAR (Corrective Action Request). Moreover, large or complex projects should use a GANTT chart to more closely follow the production process and completion dates.

Managing Quality Control in China

Another important aspect of manufacturing is the quality control plan. In China, most companies employ their own inspectors because they are unsatisfied about the behavior and/or their working methods of some of their quality control staff. Why? There are three reasons why managing quality inspectors is hard:

  • Monitoring: They often do their work “in the field” and alone. It is hard to keep an eye on what they are doing.
  • Poor Human Resources: Experienced hands with bad habits reinforce bad procurement habits.
  • Personality Type: People who go into an inspector role like repetitiveness. They like knowing what to do and doing it repeatedly. Having them change their approach is difficult.

China poses some new challenges as well:

  • Suppliers often bribe and pressure inspection companies.
  • Chinese employees are good at “gaming the system”; auditing them is insufficient to uncover wrong behaviors.

What is the biggest source of unreliability?

By far biggest source of unreliability is the fact that inspectors believe in their “intuition”. They improvise every time when it comes to checking a product’s appearance. Moreover, many sourcing agents allow firm to perform time-consuming tests themselves. Unfortunately, their intuition fails time and again. Professionals should trust their intuition when the environment is stable over time and when they get regular feedback. The typical inspector scenario is as follows:

Stable over time? Yes.

Frequent and clear feedback? No!

From time to time, inspectors get a complaint about quality assurance issues on a shipment they checked, but often the buyer blames the supplier for “hoodwinking” them: This type of feedback is totally insufficient.

How to Manage QC inspectors

First, design a procedure to follow. If you think “we hire experienced inspectors, so they know how to do their job”, you are doing this wrong. You are effectively giving your freedom without any guidelines.

Second, give them training in the procedure to follow. Give them pointers in the field, coach them, and give them immediate feedback.

Third, give them working documents which support the procedure to follow: have them fill out a form. Ideally, they would fill out a form that follows the steps, one by one.

Unfortunately, all this indicates you should hire more junior inspectors and train them the right way but each situation is unique.


China’s Innovation Challenge

Despite having world-class lean manufacturing systems, China is never satisfied, and they continually innovate and improve on what they already have in order to be the best in all facets of manufacturing. The term innovation can be difficult to describe. Many assume it simply means the next new product or idea.

China’s concept of innovation is not only limited to manufacturing. Their context of innovation is closer related to a wider view of the term. “The application of better solutions that meet new requirements, inarticulate needs, or existing market needs”. This definition encompasses new products or services, that achieve the end goal in a more effective manner. Innovation relates by the same token to business models in a more liberal view of the term.

The Benefits for Innovation in China

Innovation and economic growth have a positive correlation. By being at the forefront of innovation a country can be leaders of emerging industries. Innovation can create jobs, can set a country apart from competitors and increase wages amount citizens.

New product designs are continually emerging from factories within China. Benefits of new products themselves are marginal. Globalization has seen worldwide changes in economic pressures. Competition is on a global scale. Countries now worry further afar than their domestic borders.

China creating a business environment that encourages innovation to foster and flourish will drive all industries (not only manufacturing). Job security would be increased. China could cement itself as a leader in future markets. In fact, innovation does not simply have to mean increased profits. For instance, public services would benefit from found efficiency gains. Innovation within sectors like healthcare and education will result directly in net gains to all citizens.

The Ageing Chinese Population

Innovation may just be the answer to China’s ageing population. China would have the worlds most aged population by 2030 claims on thinktank. 2050 could see 30% of China’s population being senior citizens.

Profound economic implications result from changes in these demographics. Policies, social security and health care will still need to be adequate to support such a demographic. Currently, China and many nations globally struggle to address the needs of an ageing population.

Through innovation and technological advancements, these needs can be better met. A futuristic vision by and large contains a world without jobs. An alternative to the traditional 9-5 shift. Citizens may buy a share in an autonomous machine. Similar to a stock market share, this slice of ownership could result in a regular income stream like dividends. Pensions would no longer be required. Arguably a welcome break from one of the biggest costs to 1st world countries.

Business process innovation could greatly benefit hospitals. Services are constantly in-demand, and the elderly depend on these the most. Efficiency increases, and cost savings could result in more citizens being treated. Resulting in an increase in age expectancy.

In conclusion, innovation in China do not only impact the custom manufacturing industry but can actually solve many upcoming problems for the country in general. However, innovation is not something that happens overnight. Luckily the government recognizes this factor. Investments within technology and encouraging innovation are forthcoming. Presumably, noticeable gains will result from the investment. However, money does not always solve all problems. The Chinese government have historically been capable of tackling challenges. With a stagnating growth rate, innovation should be top of the agenda.

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