Quality Fade: The Production Cycle in China is the Opposite of the Theoretical Model of Continuous Improvement
May 17th, 2009Via: Economist:
Most of Mr Midler’s work is coping with what he calls “quality fade” as the Chinese factories transform what were, in fact, profitless contracts into lucrative relationships. The production cycle he sees is the opposite of the theoretical model of continuous improvement. After resolving teething problems and making products that match specifications, innovation inside the factory turns to cutting costs, often in ways that range from unsavoury to dangerous. Packaging is cheapened, chemical formulations altered, sanitary standards curtailed, and on and on, in a series of continual product debasements.
In a further effort to create a margin, clients from countries with strong intellectual-property protection and innovative products are given favourable pricing on manufacturing, but only because the factory can then directly sell knock-offs to buyers in other countries where patents and trademarks are ignored. It is, Mr Midler says, a kind of factory arbitrage.
Research Credit: Lagavulin
They still (I believe) have the fasted growing economy in the world. They must be doing it right — time to rewrite all those business and economics text books!
Is this one of the perils of outsourcing? Perhaps cultural and geographic distance means reputation is harder to cultivate and less valuable. There has got be a lot more to this than what was mentioned in the story, though. Something doesn’t add up.
Ha, this is just as prevalent in the U.S. Here’s one example: go to the opening of a new restaurant. You will get large portions and the food will be of good quality. Now come back a year later. The same or higher prices, but less quantity and quality. At first I thought I was just paranoid, but apparently this has been a common restaurant practice for ages.
And then you have food companies engineering cereal boxes to look larger than they are and having people pay the same price for less, etc. etc. etc.
“…companies engineering cereal boxes to look larger than they are…”
Not just cereal boxes, but LOTS of other food containers; coffee containers being the first I noticed some time ago.