With China now rapidly moving toward becoming the world's largest economy and seemingly all our of consumer goods coming with "Made in China" on the label, it would seem a no-brainer for smaller graphic arts companies to look toward sourcing their products there just as huge companies have done.

　　However, some recent experience has shown us that this may not be the wisest course of action for all, especially for the smaller company with limited resources. Those who do undertake outsourcing to China for manufacturing may find it more complex and costly than they have been led to believe.

　　We have written previously about various aspects of this global phenomenon. More recently our work led us to a company that was researching, testing and qualifying a new product partially of Chinese manufacture. During the last six months of this effort we had real first-hand evidence of an employee culture that will strike Americans as seemingly counter to what we believe is needed to produce quality goods.

　　A "Fine" Day at the Factory

　　Just as China is taking a crash course in international trade relations, it also has to close the gap in quality control.
At a printing capital goods equipment manufacturing plant near Shanghai, China, we noticed that the factory was extremely cold in winter, requiring us to wear our outdoor coats inside. All of the employees normally wore jackets to keep warm. But it was the sign in the lobby that revealed how truly different our work cultures are. Instead of proudly displaying the names of the employees of the month, this sign showed the names of employees who paid the highest fines for their infractions of the work rules.

　　And when some equipment that was supposed to have been part of a shipment didn't appear to be there, the Chinese manufacturer asked for confirmation so it could punish the employees responsible for packing by docking their pay.

　　Another jolting signal was the recent firing of one of our primary contacts in China. A soft-spoken and professional manager, he had been the company's sales and marketing director and was a minority owner. He was also from Hong Kong, not mainland China. We learned that though he met one of the key criteria for managing a Chinese factory that does business overseas-the ability to speak good English-a Hong Kong heritage is regarded by some in China as "foreign." In this instance, he was replaced by the plant manager's daughter, a true "native" and a recent graduate of college in the West. We were expecting to have a much less effective communication with our new sales and marketing contact, but because of her "standing" in the company, communications and actions improved.

　　Mind the Gap

　　With the Chinese government often paying for infrastructure, at least until the company has shown that it can succeed, the quoted costs can be quite low. Therefore, it falls to the importer to determine the true total costs of doing business in China before making commitments.

　　Just as China is taking a crash course in international trade relations, it also has to close the gap in quality control. Without critique from an offshore buyer, there is no history among Chinese workers that would give them any knowledge about necessary quality and quality control. It appears to be up to the buyer to show them the quality level that is necessary to meet the requirements of American and other Western markets.

　　We are told that mechanical goods are done well, but that we cannot rely on electrical and electronic components to meet our reliability needs.

　　Consistency cannot be assumed. We hear that buyers must list parts that must be in all future shipments, or they may be replaced by other parts more readily available at the time. This can include even the more important components, such as PC board computer control interfaces.

　　Doing business in China gives all the appearances of being inexpensive. After all, we have been told that:

　　- There really are no fixed costs, only variable ones.
　　- There is no price too low, if necessary to get the business.
　　- We could receive product prices that start at about one-third of what a comparable product would cost here in the West.

　　But, we are not yet sure, based upon what we've seen, that a smaller American manufacturer outsourcing to China-lacking the ability to efficiently test and manage shipments from the Chinese factory-would ever be able to get the quality and consistency necessary to bring a product to market at an effective cost in both dollars and resources.

　　Who Adds the Value?

　　Consistency cannot be assumed. We hear that buyers must list parts that must be in all future shipments, or they may be replaced by other parts more readily available at the time.

　　Apparently in China, in large factories, at least, a philosophy of work prevails that is far different from ours. With the Chinese government often paying for infrastructure, at least until the company has shown that it can succeed, the quoted costs can be quite low. Therefore, it falls to the importer to determine the true total costs of doing business in China before making commitments. For example, if you had to add your own electronics, change components (except for mechanical ones), dress up the unsophisticated but acceptable quality of the hardware, and integrate and test each unit before shipping to a customer, would it be worth the effort?

　　Just as many technology firms are realizing that customer service offshore in English-speaking countries doesn't always give their customers what they need and can be false economy, it is not yet proven that relatively cheap Chinese manufactured goods provided in the relatively low volumes (hundreds, not hundreds of thousands) of the current printing industry is economically viable either.