Hazard of Sourcing to China 9

[plasgears]

At this point we have had long experience with sourcing to China, and my experience has been negative for the most part. It caused the downfall of my company in an automotive disaster. When Ford mandated a 10% cost reduction, we passed the reqt to our supplier. He promptly sourced plastic material from China. The source and material were not qualified; so much for QS9000.

Why is China such as economical place to get parts made? This warrants in-depth study and intelligence. Some have described the Chinese economy as a 'false' economy. My theory is that oil money from our enemies is undermining American economy by priming China to sell very low to us. The result has been closed enterprises, jobs lost, and spiraling disasters in the housing market and Wall St. Recent visitors to China report that the Chinese revel in these outcomes. If this scenario is true, what an ingenious plan our enemies have plotted to destroy us. Who would have anticipated it.

China doesn't care about our specifications; we should not care about China and their practices. We should withdraw and study what is going on under the surface. It has been confirmed that Chinese are brought down from the western mountains, and they are put to work on our parts. This doesn't fully explain the very low pricing.

We are now hearing American businessmen expressing regrets about associating their production with China. Realization of what it means to do business in China is rising. When Detroit, in response to union demands years ago, expressed that car business would heretofore become international, most didn't anticipate the full import of that statement. We will have to wake up before it is too late.

 

[MintJulep]

"You don't get what you pay for, you get what you accept."

China is no different than ANY other potential manufacturing location.

If you send prints to a shop with no quality controls, no processes, no supervision, no training and a high-turnover rate for employees, then you should not be surprised when you get crap.

If you spend the time to assess and qualify potential suppliers, insist and pay for the necessary quality controls, processes, supervision and training, and oversee all of that yourself, then you get good product.

This holds true for China, India, Mexico, Brazil, the USA, Europe....

 

[KENAT]

plasgears, while I agree with much of what you say, one has to be very carefull to look at this objectively as some comments can come across as racist given the ethnic differences between Europe/USA & China.

This has come up a number of times in other forums such as thread16-221050 thread1103-216008

KENAT,

Have you reminded yourself of faq731-376 recently?

 

[civilperson]

If you buy from the godless communists, then you can burn in hell. However, in this realm of reality, their quality is only what is enforced by QA and penalties.

 

[TheTick]

Someone with long experience with China would know that material is the first thing they cheat on. Also, material is the same cost here or there, if you are buying name-brand material from trustworthy source.

There is no gentle way to say the oil money theory is a crackpot notion. We are quite capable of implementing our own self-destruction, thank you very much.

Two manufacturers in the Milwaukee area recently showed Ford the door. Too expensive to do business with them. Tower Automotive shut down the plant that welds SUV frames. Another company (former employer) got all the Ford business they rejected back in the form of tier 2 business, rebid & adjusted & without Ford's interference.

 

[IRstuff]

Lots of supposition going on here. WHY did the stuff get outsourced? It was either labor costs or material costs. The labor cost difference is obvious; 1.3 billion people chasing a few million real jobs.

The material costs have some labor associated with it, but the main reason it's cheap is because of the lack of environmental laws and quality controls. This was well known 20 yrs ago. The only people we can really blame is ourselves; because in our greed, we sourced out stuff without checking or inspection, because we knew that there was no "there" there, and wanted the plausible deniability. Ultimately, we, the consumers, were more interested in low cost, at the expense of quality, hence Walmart no longer touts "Made in the US."

TTFN

FAQ731-376

 

[drawoh]

plasgears,

It sounds to me like your company demanded a 10% cost reduction, and then looked the other way.

What are the margins of your typical fastener manufacturer? Can anybody mass manufacture parts to specification as per whatever QA standard you may want, drop its prices 10%, and continue to make money? Your company demanded cheap stuff, and they got cheap stuff.

The biggest problem with the Chinese is that there are over a billion of them. Back in the old days when we went to Japan for cheap crap, there were less than a hundred million of them. We could saturate them with orders and drive prices up.

JHG

 

[moltenmetal]

The problem I have with China isn't the cheap labour cost: that in and of itself is just part of globalization. What's wrong with China is the action of their government to manipulate the value of their currency. Normally a competing nation's currency rises sharply as their trade surplus with the rest of the world rises, such that their labour and all goods that they sell tend to become more expensive in relative terms. Market forces tend therefore to level the playing field. Not for China, though: their currency is pegged to the $US. That's blatantly unfair in trade terms and SHOULD be addressed by tarrifs- but isn't. It's not the Chinese to blame for that per se- it's governments in the West, who are unwilling to risk their $1 in reciprocal trade with China by putting tarrifs on the $10-$100 worth of Chinese imports they're buying.

The other problem I have with China is their blatant disrespect for intellectual property, and the lack of properly functioning civil courts there. NEVER get into a dispute with a Chinese company if you value your freedom- just ask any number of Chinese-Canadian businessmen who have been jailed over disputes with Chinese businesses.

 

[carnage1]

The prevailing attitude I have seen in the Chinese business world is that if you wont sell them intellectual property than they will just take it, they don't seem to have any concept that it is not theirs.
The good news is that their engineering capability is quite lacking. Their culture still has trouble with creative thinking as they have been taught for several generations that everything has a "right" way to do it and you shouldn't question that. This mindset is not conducive technological growth.

Luck is a difficult thing to verify and therefore should be tested often. - Me

 

[moltenmetal]

carnage1: Access to that "cheap labour" can come at a very steep cost. You can't sell IP to someone who doesn't understand its value. And it's very tough to have a proper business agreement with someone in a country without a functioning civil court system- because you will have no power of enforcement against them in the case of a dispute.

I know of more than one technology development company who sold one unit into China, only to discover numerous units operating later- directly cloned from the original. Some even have the stones to call up the inventor/tech owner and ask them to consult with them to get their stolen units up and running- and don't understand why the owner/inventor won't do it, despite their willingness to pay for the consulting!

...and that's if the technology wasn't obtained via industrial espionage in the 1st place. One tech developer I spoke to witnessed a Chinese prospective "customer" walking around the office during a break in a meeting, photographing drawings on people's desks...

You're getting this "heresay" from me, so you'll have to take what I say with a grain of salt because I can't name names. But you can take my word for it that these aren't anecdotal reports without a basis in fact: these incidents were related to me first hand by the people who observed them directly.

 

[GregLocock]

The Chinese government has been doing a great job keeping their exchange rate low by buying US Treasury bills.

As many governements have discovered, in the long term you can't maintain an artificial exchange rate. The US dollar needs to fall big-time, and when it does, the RMB will rise.

To be honest this thread seems to be absurdly racist. It would be better retitled to "manufacturer switches to alternate supplier and fails to perform due diligence DESPITE the massive amount of literature pointing out the problems of working in China" , but of course that would involve taking responsibility, rather than whining.

Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[carnage1]

Greg I am surprised, you are quite experienced and should know that whining is the best way to accomplish anything as evidenced by its prevalence throughout society


Luck is a difficult thing to verify and therefore should be tested often. - Me

 

[KENAT]

Thanks Greg, I was starting to think I was the only one that saw a racist element to the OP, figured I'd been in California too long and was starting to see discrimination under every rock!

I agree on the due dilligence thing, and part of that due dilligence would be carefully considering the IP issue.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[plasgears]

Me, racist? No. I'm just reporting on the serious impact of doing business with China. Don't be blind to what's going on.

 

[KENAT]

I wouldn't rule out the possibility that China is deliberately undermining the US, effectively war by economic means, maybe a lack of 'due dilligence' by the people writing, and voting for, the free trade agreements.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[drawoh]

plasgears,

I understand that Mattel has formally apologized to the Chinese for some of their toy quality scandals. The Chinese were responsible for the lead based paint. Mattel was responsible for the design's that allowed for tiny, easily swallowed components on small children's toys.

Your vendor was out for minimum cost. The Chinese suppliers who were ethical, and were prepared to meet QS9000, were not going to land the contract.

Imagine you visit your local grocer, and you tell them "I want 10lb of lean ground sirloin steak, and I want it for 89[ ]cents a pound, and I will go outside and have a cigarette while you are getting it ready."

JHG

 

[IRstuff]

The truth is that the low paid workers are simply from rural communities, where subsistence farming is the norm, unemployment is rampant, and wages are one tneth of that in the cities and factories. They don't get much education in their home towns, and aren't qualified for higher paying jobs in the cities.

The other truth is that the Chinese, like all other people in the world, understand that the US market is more price driven than quality driven. The fact that someone contracts for goods without performing source inspections, shows either naivete, or complicity in the actions taken in the factory.

We've seen this over, and over, again, with shoe factories all over Southeast Asia, where labor laws are blatantly ignored unless there's a big stink raised. After the dust settles, it's business as usual. Even the one shining example of quality in Asia, Japan, has shown that second and third tier suppliers in the auto industry were working in hazardous conditions. The showroom Just In Time factories hid the fact that there were many garage shop suppliers that didn't have the nice, clean jumpsuits, and nice, clean, well-lit work areas.


TTFN

FAQ731-376

 

[TheTick]

The whole OP is just a mindless rant. Nothing we didn't already know about China ten years ago. I find it interesting/appalling/amusing that there are people still just learning this lesson.

Even in China, you get what you pay for.

 

[GregLocock]

A. Rolf Harris in 1960 (that'd be 48 years ago)






Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[IRstuff]

Even in China, you get what you pay for

Only if you are vigilant and diligent. If you don't pay attention to the job, then you'll get crap, no matter what you paid for it. Isn't that the case with zubprimes and CDOs, or even the CEO of Lehman Bros?


TTFN

FAQ731-376