A version of this article was originally published by Knowledge at Wharton
Stung by consumer backlash and stiffer penalties for piracy, counterfeiting and contamination, China is working hard to overcome its reputation for poor 토토사이트 마루한. Scandals involving contaminated food and drugs, and toys tainted by lead paint, have made 토토사이트 마루한 a Chinese government priority.
Although the government is building stronger regulatory agencies and writing tougher standards, spotty enforcement means 토토사이트 마루한 will need to be addressed both by Chinese suppliers and foreign buyers. The challenge for Chinese manufacturers is how to invest in 토토사이트 마루한 control and processes without losing their advantage as low-cost producers. For their foreign partners, the challenge seems simpler: how to set and enforce effective 토토사이트 마루한 benchmarks.
How are 토토사이트 마루한 standards being introduced and how might China's manufacturers and their foreign business partners meet those goals?
토토사이트 마루한's 토토사이트 마루한 challenge begins with misplaced assumptions and perceptions on both sides, attributable in part to the speed with which many companies from developed countries embraced off-shoring.
Foreign buyers often tend to make strategic mistakes that end up hurting 토토사이트 마루한. For instance, many assign procurement managers to lead contract negotiations with suppliers, says Benjamin Pinney, a principal in BCG's Shanghai office. "They have a procurement mentality and focus purely on price negotiation, and it's an arm's-length transaction," he says. Because their expectations are based on their experiences with home-country suppliers, they don't always follow up with their Chinese vendors to monitor processes and 토토사이트 마루한 testing.
This enthusiasm for cost-saving deals can impede buyers' ability to correctly gauge the risks or understand the context of operating in 토토사이트 마루한.
Many foreign companies didn't understand how much support a Chinese supplier often needs, and many expected to achieve 토토사이트 마루한 benchmarks without investing in their suppliers. Few stepped back to ask what incentives their suppliers had to adopt the desired production systems and practices. So it wasn't surprising that some Chinese suppliers took shortcuts that compromised 토토사이트 마루한. One recent controversy over 토토사이트 마루한 defects in Chinese-made toys came about because of design flaws and the use of raw materials that weren't approved by the foreign buyer. Such defects can be difficult to prevent, especially if only a few suppliers are performing badly. But it adds to a perception of China as a source of poor 토토사이트 마루한.
Blame shouldn't automatically be ascribed to Chinese contract manufacturers, some experts caution. Marshall Meyer, a Wharton management professor, traces 토토사이트 마루한 issues to the traditional Chinese subcontracting system that has "multiple layers, with fourth- and fifth-tier subcontractors," making it difficult to control supply chain networks.
Regulation can be effective if 토토사이트 마루한 is enforced nationally and locally, Meyer says. The overarching problem is that Beijing "cannot easily enforce regulations ... and the abil토토사이트 마루한y of the central government to impose regulations locally remains lim토토사이트 마루한ed."
Eager for redemption, China's regulators nevertheless are becoming more aggressive. In a recent statement, China's cabinet outlined plans to strengthen the food-monitoring system, for example. The effort includes representatives from government departments on health, agriculture, 토토사이트 마루한 supervision, industry and commerce administration, and food and drug supervision, according to the Xinhua News Agency.
More generally, a groundswell of public concern over 토토사이트 마루한 has catalyzed the government's reforms. Public sentiment inside the country -- aided by technology -- also is driving efforts to improve 토토사이트 마루한.
Supply chain 토토사이트 마루한 issues raise China's risk profile, Boston-based think tank AMR Research noted in a survey of 130 global companies this year. China was the top contributing region for nine of 15 risks examined, including supplier and internal product 토토사이트 마루한 failure, security breaches and intellectual property infringement. Other risk factors for China cited in the survey include volatile energy and commodity prices.
Managing supplier relationships is one critical area for working with Chinese companies. Setting up small, on-the-ground procurement teams with weak local relationships isn't as effective as adapting to local conditions, Pinney says. Companies that succeed with China sourcing "invest in localizing their teams, processes and 토토사이트 마루한 controls," he notes. "They become more flexible and adapt their operations to local conditions." As a result, local suppliers and manufacturers absorb the right systems and processes either as joint venture partners, by watching and learning, or by hiring select talent from foreign companies.
With combined efforts from several quarters, 토토사이트 마루한 is getting dramatically better and is being policed much more aggressively. Stricter regulatory enforcement would help, but the most important regulations may not be in China. A direct correlation seems to exist between Chinese suppliers' adherence to 토토사이트 마루한 specifications and the degree to which their industry is regulated in the West. For instance, pharmaceuticals and foods tend to be more advanced in 토토사이트 마루한 control "largely because of the pressures and incentives at the client end," Pinney says. Similarly, Pinney sees significant 토토사이트 마루한 improvements in the automobile and white-goods industries. Where the consequences of failure are less dire, 토토사이트 마루한 levels are generally lower.
Companies must make it abundantly clear to suppliers -- verbally and contractually -- that meeting 토토사이트 마루한 expectations is as important as meeting cost and delivery targets. In other words, buyers must provide incentives to Chinese suppliers to do the right thing. Incentives may not be effective, however, without corresponding penalties.
The general push toward higher-value products "over time will lead to a restructuring of industries and a shift away from high labor-low value products," Pinney says.
Many experts seem confident that 토토사이트 마루한 issues are just the growing pains of an accelerating economy. China "can make high-토토사이트 마루한 products" and often already does, Meyer says. "Look at an iPod made in China. It has the highest standards of 토토사이트 마루한. It says 'Designed in California, Assembled in China' on the back of the package."
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