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How quality and price are tightly linked in China

by Renaud Anjoran

I see new-to-China importers make the same mistake, over and over. They focus on nice samples (which are NOT indicative of mass production’s quality) and on the unit price.

And they completely forget to ensure that production will be up to their standard.

At the root, I think this problem comes a cultural disconnect.

How do Chinese suppliers think about this?

In Chinese suppliers’ minds, a buyer cannot demand high quality for a low price. If price is low, quality should be EXPECTED to be low.

This comment, that I saw in a forum yesterday, illustrates this mindset perfectly:

The most common reason for a complaint is quality, but you know, quality is related with price. It is impossible to ask for quality as Rolls Royce but a price of Ford.

(And that type of argument has some weight in front of a Chinese judge, in the absence of clear and written requirements from the buyer’s side. That is why I always advise to write clear specifications that are black-and-white. So black-and-white that nobody can find room for discussion.)

The problem is, Chinese suppliers do not say “for this price we can only follow a low quality standard” during price negotiations. They are, in their vast majority, incapable of illustrating what quality standard they intend to follow. That is what makes buyers’ lives so difficult!

Would illustrating their quality standard be difficult?

No. They can define the severity of the most common defects, based on their size and based on their position.

I have seen a manufacturer create 3 “areas” on its main product: visible, not very visible, not visible. And, for every area, they described what defects can be categorized as major, minor, or not-to-be-counted-as-a-defect.

Then, they can do this exercise again for “cheaper” customers. It is excellent for communicating what is different for several pricing levels.

Is quality a relative concept?

I had an interesting discussion about this with Fredy Fong from OQCS, who had two interesting comments:

1. Quality is fitness for use.

If you want a mobile phone that only lasts for one year, a cheap phone can be considered good quality. But, naturally, the buyer should specify that it should last for at least one year, and then check it.

2. Quality is the lowest cost to the company and to society.

The lowest cost to the company:

The Iphone 4 model had several problems, and Apple was aware of them. Yet they released that version to avoid delaying the launch. They knew they might have to replace some Iphones for free. It was considered the least costly solution to their company.

The lowest cost to society:

If one product, in a batch of 10,000 pieces, is shown to pose a serious hazard to users, the entire batch must be checked and sorted out. If, on the other hand, only more minor problems are found, they are often acceptable.

Quality decisions vs. business decisions

It reminds me of an article I wrote recently about decisions:

A quality decision is taken by the QC inspector (whether in an independent agency, or in the buyer’s staff). It is based on passed/failed conformity assessments, that are themselves based on a QC checklist.

A business decision is taken by a manager working for the buying organization. It is based on the quality decision, and on the significance of the failures noticed by the inspector.

Do you agree? Should quality be a relative concept?

Should suppliers make more communication efforts about their quality standards? Or is it the buyer’s job?

Renaud Anjoran has been managing his quality assurance agency (Sofeast Ltd) since 2006. In addition, a passion for improving the way people work has pushed him to launch a consultancy to improve factories and a web application to manage the purchasing process. He writes advice for importers on

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