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What Chinese factory managers don't understand

by Renaud Anjoran

Have you ever been in front of a Chinese manager who has misconceived notions, yet won’t change his mind? It happens to us all the time.

Here are a few examples of concepts that are foreign to 99%+ of Chinese factories:

Buying expensive automated equipment is very risky. The failure rate (of a big machine that can’t be made to work properly) is much higher than their manufacturers will admit. For example, setting up an automatic welding machine can be daunting and can take 6-12 months of trial and error.

The “we fix machines when they break” approach is fine when processes are relatively simple. But it can drive a factory out of business. Imagine a CNC machine with a tool that gets used and makes out-of-specification parts for a few weeks — these parts often have to be sold as scrap (at a steep discount). Then that machine breaks down and it takes a week to get the replacement part. Multiply this by 20 CMC machines — it can eat up all the margin of the operation!

Tolerating a high staff turnover rate is bad business. Factory owners usually see it as a fact of life since “it is the same all over the industry in this area”. But an employee who leaves costs the company about 3 months of his/her salary in lower quality and production, hiring costs, and training costs. And there are many ways to keep employees for longer without paying more.

Most managers also believe that paying operators by the piece is the best way to motivate them. The problem is, it is very bad for the company as a whole. Quality is often sacrificed. And everybody wants to over-produce. (I won’t mention the folly of paying QC inspectors by the piece… We have seen it in a few factories!)

And of course, they think producing at a higher quality level will cost them more money. They see this from the wrong angle — increasing inspection and testing, reworking and scrapping more pieces because of the tougher quality standard, etc. What they are not aware of is the positive impact of improving their processes — I am talking about improvements both in quality and in costs.

We have recently written an e-book about these myths and a few others. We tried to keep it simple and to the point.


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 qualityinspection.org.

 

Want to know how to work with factories to produce your unique products?  Join the Smart China Sourcing Summit to learn sourcing best practices, April 17-19, 2016.  Co-located with Global Sources 3,000-booth trade show in Hong Kong.  Learn more at http://www.GlobalSources.com/summit

Keep updated on sourcing best practices and the Summit.  Join the Smart China Sourcing Facebook group at http://www.facebook.com/groups/SmartChinaSourcing

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