Some buyers ask me if China product quality is going up over time. It is a tough question.
I am not going to badmouth Chinese factories in this post. They are certainly not the only ones to blame. A good proportion of quality issues in China pop up because the importer doesn’t take his responsibility.
Anyway, I don’t think there is an easy answer:
- On the one hand, most sourcing professionals say that yes, there is improvement over time. I think what they mean is that the number of “good” factories to choose from in China is increasing. Overall they are probably right.
- On the other hand, from my observations, product quality does not tend to go up in certain industries in China.
So the response cannot just be “yes” or “no”. Over the past five to ten years, China quality has only increased in certain product lines.
First, which products have seen clear improvements in quality?
Certain kinds of products cannot be sold at all if a certain quality standard is met, and cannot be repaired easily in the importing country. This ensures that buyers spend time and energy to find suitable suppliers and monitor their product quality.
This is what Mr. Pinney, from BCG’s Shanghai office, recently wrote in Can China Meet the Quality Challenge?:
A direct correlation seems to exist between Chinese suppliers’ adherence to quality specifications and the degree to which their industry is regulated in the West. For instance, pharmaceuticals and foods tend to be more advanced in quality control “largely because of the pressures and incentives at the client end,” Pinney says. Similarly, Pinney sees significant quality improvements in the automobile and white-goods industries.
For sure, China manufacturing has made huge progress. Many luxury cars are made here. And I see some successful Chinese brands getting distributed in high-end department stores and boutiques, at the price point of most imported products.
Second, why has average quality stagnated, or even decreased, in certain product lines?
I have worked extensively in sourcing and then quality control of textile products. My opinion is that quality has NOT improved in that industry. I see mainly three reasons:
- As Pinney also wrote, “The downside to quality mess-ups is relatively small in shoes and textiles.” If a T-shirt is a little too small, the worst case scenario is a re-labeling. Finding a discount channel to sell garments is not difficult, if prices are low enough.
- Pressure on price is intensifying, so importers deal more and more directly with manufacturers. It means there is no trading company to have a look at product quality, and sometimes this function is not replaced by third-party inspections.
- As costs go up in the traditional exporting areas of China (around Guangzhou and Shanghai), new factories open in cheaper cities like Shantou, Quanzhou or Wenzhou. The learning curve is not always respected before they start exporting to developed countries.
- Small workshops, producing the lowest grade of products, keep opening up. Established suppliers subcontract all kinds of orders to them (including products for export to the US or Europe) to widen their margin. This is what keeps competition so tough in China. Here is how Jack Perkowski describes it in Managing The Dragon:
Where do these Chinese competitors come from? New entrants sometimes seem to appear out of thin air, but they actually emerge from a purely local market—a market that’s beneath the radar of most foreign observers, and in most cases is much larger than Western competitors would ever expect.
The China market is actually two distinct markets. For virtually every product, there is a ‘foreign/local’ market, characterized by higher technology and higher price, and a second purely ‘local’ market, which is characterized by lower technology and lower price.
Due to vast income disparities, the total China market tolerates all levels of technology and quality. (Average incomes in cities like Beijing and Shanghai are $2,500 per year, while average incomes in the countryside, where 750 million people live, are approximately $500.) Any company, no matter how low its quality and level of technology, will find a market for its products in China—if its price is cheap enough.
Anybody has experience in another product line, and agrees/disagrees?
Renaud Anjoran is the manager of a 



