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In China, quality control is still a work in progress

© Nir Elias / Reuters/© Nir Elias / Reuters/REUTERS

For an already-struggling car maker such as Toyota, the recall of nearly 700,000 cars in one of its few growing markets was a painful blow.

Toyota Motor Corp.'s recall last month of its Chinese-made Camry, Corolla, Yaris and Vios models, because of faulty electronic window switches that could overheat and short circuit, was the car maker's largest-ever recall in the country. But for those who monitor quality in the Chinese manufacturing industry, the great surprise was that it was issued at all.

In a market where DVD players and cellphone batteries for export can spontaneously combust and children's toys have been found covered in toxic lead paint, such a minor fault as a broken window control is generally accepted by both local manufacturers and customers as an acceptable cost of building quickly and cheaply.

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"I believe Toyota is targeting that top-end market, so for them, this marketing recall is a good gimmick," said Ou Jihong, an associate professor of operations management at the prestigious Cheung Kong Graduate School of Business, speculating that a Chinese car company might not have bothered.

"They would recall a more critical defect that could cause fatal accidents, but for a small defect like this, they would not."

As China's manufacturing industry comes of age, the country's government has pledged to crack down on dangerous goods, with the high-profile executions of officials linked to last year's melamine-milk scandal to accentuate the point.

A new food safety law was also introduced in June and, last month, the vice-minister in charge of the country's inspection agency, Wei Chuanzhong, told a meeting of his provincial counterparts that the government was increasing inspections. The department did not respond to requests for an interview.

But for the vast majority of Western companies sourcing products out of this industrial powerhouse, it is still very much buyer beware, as factory owners continue to put the cost and speed of manufacturing above the reliability of what's produced.

"Nobody from the West should be ordering from China unless they have someone here to look at it," is the flat advice from Bonnie Rich, a Canadian who has spent the past five years matching foreign buyers with Chinese manufacturers and policing the quality of the products as chief executive officer of Canadian/China Business Investment Group.

In the case of Toyota, its public relations team said the problem stemmed from a "local car accessory supplier," and called the repair a simple one.

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"Toyota would like to apologize to its clients for this mistake and would like to strengthen controls on suppliers in the future," said spokesman Chen Yiming. "Toyota's quality control system has the same standard all over the world. We will not lower the standards in China on these controls."

Ms. Rich, a former chief financial officer for an auto parts manufacturer, was unsurprised by the tale. While in Canada, parts manufacturers are permitted a 0-per-cent defect rate, in China, "they don't even understand that concept," she said.

She tells stories of kitchen cabinets shipped with one crucial section in the wrong colour and Christmas linens that glowed brilliant orange under fluorescent lighting, and says she refuses to accept any deals - including food-related - that have a high potential for recall, for fear her company could be sunk by the resulting liabilities.

"They really do want to make you happy. They really do want to do business," she says of Chinese factories doing business with the West. "But they work on very slim margins, so if they make a mistake, they do not have a lot of money to address it."

At issue are, in part, the cultural differences inherent in the great leaps Chinese manufacturing has taken in a short amount of time.

A factory boss who for decades was used to making do with what was available may genuinely not understand a foreign customer's frustration with last-minute changes to fragrances added to a shampoo, or substitution of colours on a mobile phone. Nor are manufacturers concerned with making everything perfect when many Chinese consumers, demanding low prices and also accustomed to years of imperfect products, are willing to accept minor flaws.

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Adding to the difficulties: Most factory workers have little hope of ever affording the products they're assembling, and may be disciplined rather than rewarded for reporting problems on the assembly line.

"At the root level, I'd like to see factory officials talking about what to do about quality control. We don't really see enough of that," said Paul Midler, a former adviser to Western companies sourcing products in China and author of Poorly Made in China. "For many manufacturing processes, the customer is an abstract concept anyway. But in China, because of the distance and the culture, it's really a stretch. … The gap between what the people are making [in the factory]and what they are able to purchase is much greater."

As a result, very little in the world of Chinese manufacturing is sacrosanct. Even Chairman Mao tourist memorabilia - buttons, Little Red Books and so on - are to face new government-imposed standards of production later this year, after shoddily made souvenirs were found bearing little resemblance to the original Mao Zedong.

A key concern now is whether the global economic downturn will stifle progress in improving quality control practices in China's factories. Chinese exports have continued to fall this year - 23 per cent year on year in July - and while government assistance has helped many factories stay afloat, the quality of the merchandise being produced is likely to slip farther down a company's list of priorities.

"I do not believe China wants to push too hard on manufacturers to improve quality," said Mr. Ou at the Cheung Kong school. "It's not wise for any government to push too hard, too fast, beyond what the market can tolerate."

But he draws comparisons between the China of today and the questionable quality of Japanese exports of the 1970s and '80s, and believes that decades from now, the quality of Chinese-made goods in higher-end markets, at least, will be vastly improved.

"We want to make better products, we want to improve the quality," Mr. Ou said. "I am not trying to play down the importance of quality and working to improve quality. It's just that overall quality is a relative concept and the demand for different levels of quality is there."

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