We live in a globalizing world – a world in which businesses face more competition and must adjust their activities to stay in the race. This globalizing world is kinder to consumers who can now get good quality products at a fair price – faster. However, this environment that favors consumers puts a heavy strain on businesses. To stay competitive, businesses are forced to quickly manufacture high-quality products for these consumers. So, they source their products from other countries where they can get high-quality products manufactured quickly, and inexpensively, giving them a cost advantage. Emerging as a colossal center of manufacture in this scenario is China.
A significantly large proportion of products that are circulating global markets today are made in China. It is, in fact, the first country that businesses around the world turn to, to achieve a cost advantage. Many companies, including some of the biggest brands globally, have started manufacturing their products in China. But, amidst all its glory, China has been tainted as a country that creates some of the worst quality products.
Chinese products have failed to meet quality standards in the past, which has negatively influenced the consumer’s attitude toward Chinese products. There is a negative opinion of China-manufactured products on the one hand. On the other hand, most valuable global brands like Apple, Boeing, General Motors, Nike, Ford, Starbucks, plus over 1,700 EU companies manufacture their products in China. Sounds confusing? There is a simple explanation:
Study after study has proven that consumers' attitude towards china-manufactured products is wrongly influenced by:
Cultural and communication differences
Suppliers who fail to meet the high standards of western countries.
As one purchaser rightly put it: “it’s easy to let one bad event negatively influence your opinion of China. You could have nine fantastic shipments from China with good results, but the tenth shipment arrives with a less positive result. And all of a sudden, the other nine are completely forgotten, and we are back to square one with China again.”
The fact is that China produces some of the highest quality products in the world. This article aims to break the age-old myth that made in China's quality is low. We will also look at why made in China is good, and how to get the highest made in China quality.
While it is still cheaper to manufacture products in China than in most countries, the difference is that you can still get high-quality products inexpensively manufactured in China. There are several reasons for this:
Low cost of labor. According to Statista, the average manufacturing labor cost in China per hour in 2020 was 6.5 USD. During that same period, it was 29.06 USD in the United States.
Labor is cheap and in abundance in China. Although the country’s economy is improving consistently and more people are rising to the middle and higher classes, over a billion people live below the poverty line. At any given time, there are about 100 million underemployed or unemployed workers in China. With the supply of workers much higher than the demand for low-wage workers, wages are still relatively low in China.
Low cost of materials. The high volume of materials ordered by Chinese companies makes their availability relatively inexpensive.
A fine-tuned ecosystem: China’s fantastic business ecosystem of component manufacturers, suppliers, and distributors has made it a cost-effective country to manufacture products.
Low cost of compliance. The price of compliance with environmental and health and safety regulations is lower than in western countries. While western manufacturers have to comply with various laws, Chinese manufacturers have a more permissive regulatory environment.
The currency peg: China’s currency has been pegged since 1994. That keeps the value of the currency low. The low currency ensures Chinese exports are cheaper, making them more attractive than other countries.
China’s undervalued currency. China’s currency is undervalued by anywhere between 30% and 40%. So every product that leaves the country is 30% to 40% cheaper than the same product shipped out of a western country.
While low cost does not translate to low quality, there is an exception. In China, it is possible to get a high-quality product for a relatively low price. You can also get a very low-quality version of that same product made for a much lower price. The bottom line – you get what you pay for. For instance, some importers tend to buy the cheapest Chinese products to make profits that could go as high as 300% (Nacaroglu, 2008: 163).
Ask iPhone users about what they thought of their iPhone’s quality, and they will tell you it’s a fantastic, high-quality product. Ask the same people what they thought about made in China quality, and they will probably complain about problems with products made in China. Not realizing that the iPhone that they raved about earlier was manufactured in China. Let’s not forget that three Chinese smartphone brands – Xiaomi, OPPO, and Huawei are now three of the five largest smartphone suppliers in the world today.
A common myth is that Chinese products are of poor, use-and-throw quality. That, however, is not true. Sure, there are some problems with products made in China because some manufacturers are not quality conscious. However, you will find a dozen or more leading manufacturers who demonstrate strong quality awareness for every complacent manufacturer.
The Acceptance Quality Limit or AQL is the quality level that is the worst quality level that is still tolerable and considered satisfactory. It represents the maximum percent or number of defective units acceptable in a batch, beyond which that batch will be rejected. So, suppose an importer sets the AQL at 1.5%. That means that that importer expects no more than 1.5% of defective pieces in the entire order quantity, on average over multiple production runs with that supplier.
More and more quality-conscious suppliers are now requesting third-party inspection services to get better insights into improving the quality of their products. They are even willing to buy high-quality raw material and invest in the necessary skills and equipment to meet high-quality standards.
Thanks to technology development and social media channels, today’s Chinese consumer is more informed, more sophisticated, and more demanding. Today’s Chinese consumers act more like their Western counterparts and are willing to pay for better quality and value.
Chinese consumers are now more active in protecting their consumer rights. Plus, the country’s consumer protection regime has grown leaps and bounds and currently comprises several laws and regulations. Some critical laws that protect the consumer’s rights include:
Consumer Law (Consumer’s Rights and Interests Protection Law)
Product Quality Law
Food Safety Law
Standards in China fall into one or more of five broad categories.
National standards take precedence over the other standards. Here are some national standards that high-quality products conform to.
General Administration of Quality Supervision, Inspection, and Quarantine of the People’s Republic of China (AQSIQ) certificate is the quality mark for products conforming with standards that have been tested and monitored. The products satisfy all additional requirements like quality and environmental measures during production. The production quality control system of the factory is also monitored annually. All products entering the Chinese market must obtain this certificate.
Certification and Accreditation Administration of the People’s Republic of China (CNCA) is the primary government agency responsible for supervising China’s conformity assessment policies, including the country’s safety mark – the CCC mark.
China’s CCC (China Compulsory Certification) is China’s compulsory safety and quality mark for imported goods and goods made in China that are usedsold in the Chinese market. This mandatory certificate was introduced in 2002. The two most important aspects of the CCC are product testing (tested in Chinese laboratories) and factory audits (inspection of the product manufacturers by Chinese auditors). A certification once granted is valid for five years, but annual audits are still necessary.
Products made in China solely for export and are produced according to foreign trade contracts don’t require CCC certification.
The “Made in China 2025” initiative was a plan and industrial policy initiated in 2015 as part of the country’s initiative to develop China’s manufacturing sector. The idea is to transform from a low-end manufacturer (producer of cheap goods at low costs that relies on foreign technology) to a high-end producer with its technological manufacturers.
If MIC2025 succeeds, China’s reputation as a manufacturing superpower will be further enhanced. The country will be able to create companies that can compete domestically and globally. By creating its own manufacturing process, it hopes to increase the production of components and final products.
The MIC2025 initiative emphasizes quality and has invested in technological innovation and intelligent manufacturing (for example, machine learning).
China’s safety and quality policies, demand for high-quality products, and the Made in China 2025 initiative all point to one thing: China manufactures high-quality products. It’s up to the buyer to:
Define their quality control requirements by providing clear-cut quality control instruction and documentation. Chinese translators must be used to ensure the correct information is conveyed.
Understand that they must be willing to pay more to get high-quality goods – no matter what is outsourced. While it’s tempting to drive down costs as much as possible, manufacturers will only be able to provide what they are paid. In many instances, Chinese manufacturers do not make a massive profit. Suppose you can get a product manufactured at a meager price. In that case, it usually means the manufacturer has compromised on the quality of the product, so he makes maximum profits and doesn’t lose your order to a competitor. Substandard costs will give rise to substandard products.
Work with skilled, experienced, and reliable manufacturing partners who adhere to strict quality control and safety standards. They should be:
Able to handle high volumes of orders – even during peak season.
Willing to share certifications and references.
Ready to work with a third-party control inspector.
Experienced in creating products similar to the buyer’s requirements for more than three years.
Sellers must do their bit to ensure buyers get quality products. Here are some things that a reliable seller will do to ensure only superior products make their way to buyers.
Sellers should arrange for factory audits and manufacturing control.
No two manufacturers are alike. For instance, you could find a factory with a quality control process in place, but the final product might be a disappointment. At the same time, another factory might not have the quality control processes you might hope to find but turn out a product that exceeds your expectations. Here’s how to find a company that can manufacture fantastic goods.
Please inquire about the manufacturer and their reputation concerning your product category.
Don’t trust a factory simply because it has an in-process quality control officer.
Make strong and detailed contracts with the manufacturer.
Specifications can get misinterpreted during translation. Engage a China outsourcing agency to identify reliable
Manufacturers with high-quality standards.
Conduct a factory audit yourself. You could also consider involving a third-party agency to conduct an inspection.
Suppose a manufacturer is invasive and hesitant about answering questions about their quality control process or refuses to allow a third-party audit. In that case, consider taking your business elsewhere.
Sellers should be aware of the differences in the safety standards used in China and the standards in their market.
Countries follow various quality and safety standards. So it is critical to ensure the product meets the quality and safety standards of the country where it will be shipped.
Specifications must be reiterated and checked repeatedly because Chinese companies might not understand the product functions, lifestyle requirements in Western countries, and quality requirements. As a result, they might manufacture products that they deem as “good” but are below standard in the country they are exported to.
Conduct a pre-shipment inspection (PSI) before your products are shipped to verify the product’s quality at the source. That way, you can avoid paying for defective goods.
Ensure you have a written report stating the quality of Chinese products meets the quality standards of your country.
Conduct a PSI by a credible and independent third party to avoid any conflict of interest. Ensure your product’s performance, overall appearance, durability, functionality, and dimensions are all correct.
For products that require laboratory testing, this arrangement must be planned during the sourcing journey. Samples must be procured and sent to a lab within your own network to test the quality.
Sellers should be aware of how they are legally protected in the event of a quality dispute
There is no point in filing a case against a Chinese manufacturer in a Western court because China does not recognize foreign judgments. You will have to try appealing in a Chinese court; however, this can be a time-consuming and costly affair. Most manufacturers would prefer to settle a dispute out of court and amicably – especially in the case of smaller consignments.
Made in China quality is fantastic. Chinese manufacturers can manufacture products that would be deemed “exceptional quality” even in western countries. However, you must be willing to refrain from bargaining for the lowest of low prices and ensure you conduct regular quality inspections. Unfortunately, it’s not easy to collaborate with a Chinese manufacturer. They are sitting thousands of miles away, do not speak the same language, and have no way of understanding your product requirements, specifications, and quality. That’s where a product sourcing agent comes into the picture.
Hiring a Chinese product sourcing agent is one of the most brilliant sourcing strategies. A sourcing agent is a third-party agent who will find you multiple Chinese suppliers who can meet your product specifications. With a product sourcing agent in China, you have someone who can liaise between you and the manufacturer, speak the local language and translate your requirements. With your Chinese sourcing agent, you can be sure you have someone in China who understands the business practices and customs. They can address risks, overcome obstacles, and ensure you make the most of China’s manufacturing abilities.
When choosing a sourcing agent, ensure the agent is located in China and has a complete understanding of the differences in the way China and the West do business. Check for references, and ensure they have a proper license. Check on how they approach quality issues and their experience in sourcing products in your category. Finally, choose a sourcing agent who has good ethics.
For more information on global sourcing and all your China global sourcing requirements, give us a call or email us. You can find more information about us here.