A DKN Research newsletter released a couple of years ago commented on the quality of products made in China.
Most of us did not trust the quality or workmanship from anything labeled “Made in China,” but if a foreign brand name was printed on the package. The consumers supposed that the manufacturing was controlled by foreign standards. Even manufacturing companies that outsourced to China did not completely relinquish control of the manufacturing process due to quality issues. The Chinese consumer preferred more expensive foreign made brands for the same reasons.
The shoe may be on the other foot now. News Medias in China and Japan are reporting about an American company selling subpar food products. An American meat dealer in China has been selling meat to distributors with dates past their expiration. Instead of pulling the outdated product from the supply line, they are relabeling the meat with a new expiration date. Many restaurants and food companies use this America-based supplier because of price and product availability. A manager from a meat distributor who was interviewed from a local newspaper state: “We have doing business this way form years. Everybody in China does business the same way, and no one has been killed eating our meats.” Unfortunately, consumers have no choice when purchasing meat products if they want to save money.
The news sent shock waves throughout the food industry in Japan. Companies are reevaluating their purchasing habits from distributors in China, and the parent company of the American supplier in question has ordered them to stop shipping expired products. Many customers stopped purchasing products from the American dealer and are looking for alternative vendors in China.
One of my business associates trades frequently with Chinese companies and shared some of his experiences with me. He is the president of a mid-sized electronics company in the US. All its products are custom-designed based on customer requests. The company has no manufacturing facility in the US and relies on subcontractors in Asia. It prepares detailed drawings with exact specifications including a strict quality assurance process and test methods, and has branch offices in China to ensure a level of quality control from its subcontractors. Even with all these safeguards in place, every product that arrives to its plant in the US is tested. My friend showed me several large trashcans filled with NG parts that could not pass the quality control testing process. These are the additional costs needed to maintain quality, and are priced into the products bottom line.
The “Made in China” label can be found on almost every item in the world, not just products from the electronics industry. Still, Chinese manufacturers pay little attention to putting out a quality product. Foreign companies in China maintain the same quality level as parent their parent companies, but are overwhelmed by the low-cost business culture in China. Price still drives sales China. The bottom line is this: if you pay cheap, you get cheap!
DKN Research Newsletter #1422, August 3, 2014 (English Edition)
DKN Research, www.dknresearchllc.com
*For newsletter archives, visit http://www.dknresearchllc.com/DKNRArchive/Newsletter/Newsletter.html
Headlines of the Week
1. NGK will expand manufacturing capacity of NOx sensor device 50% to 10 million units per year to satisfy the growing demands in automobile applications.
2. Kyoto University developed a new metallic magnesium base secondary battery with a higher energy density, higher safety and lower cost than lithium ion battery.
3. Sumitomo will build a biomass power generation plant with a 75 MW capacity in Aichi Prefecture. Commercial operation will start in 2016.
4. Tohoku University codeveloped a porous silicon powder with an open cell structure as the anode material with a large relative surface.
5. FDK developed a new tiny power inductor “MIPSKZ1608G” (1.6 x 0.8 x 0.3 mm) with LGA package for wearable devices and mobile devices.
6. J Touch will start volume supply of metal mesh type touch screen to Japanese customers in 4th quarter. It has invested one billion NT$ for the manufacturing line last year.
7. FDK commercialized the smallest insulation type DC/DC power module “KD Series” for both of SMT and TH mounting. 34.28 x 22.8 x 8.5mm.
8. Tohoku University codeveloped a new nano-granular film material with giant dielectric and magneto-electric responses at room temperature.
9. Furukawa Electric developed a tin plating process “Anchor Four” for the soldering process of lead frames as the alternative solution of gold plating. It has a longer life, avoiding surface oxidation.
10. Tanaka Holdings will provide MEMS CORE the patterning technology with sub-micron gold powder. MEMS CORE will subcontract the packaging for MEMS manufacturers.