Why the Chinese best many Countries in manufacturing – mostly trinkets and low-cost items

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African Presidents at a past function

By Dorcas Sarkozy

In response to the request for quotations (RFQ) that I put out about a month ago for the delivery of two manufactured items – microfiber drawstring bags and plastic safety plugs – someone made the comment that the “Chinese can’t beat us qualitywise (sic)……(that Kenya/ns) can’t be beaten by Chinese….”

I happen to agree with that assertion.

Mano-a-mano; head-to-head, the quality of China’s manufactured goods – across all price points/customer base – are among the worst out there and I can attest to that first-hand. It is also this belief that underpins my concurrence with the comment above.

The Chinese are also not original.

In fact, the country’s telecommunications equipment and consumer electronics giant Huawei is facing charges of corporate espionage, misleading banks about its business practices and violating (US) sanctions.

Additionally, I also know that China makes as a precondition for any funding or investment from Chinese national or bank, significant Chinese boardroom presence in the target companies.

Why?

They do that to give them (Chinese citizens) access to details of the technology i.e. intellectual property of the company/technology which they then share with the Chinese government and Chinese businesses – as part of their patriotic duty!

Aside from the suspect product quality i.e. aesthetics, fit and finish alluded to by the opening comment, Chinese product not only lack originality and creativity, more importantly, their safety and efficacy has proven deadly and repeatedly so.

Now where China bests the world – America and Kenya et al – aside from their aggressive pricing – is in their hustle; their dogged pursuit of business opportunities – regardless of the volumes in question – an ethos that Beijing incentivizes through tax breaks and other less tangible inducements.

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For the record, two US-based companies looked at the two orders and one told the client that “they were too busy to take on the order – given the requested delivery date” and the other one was just under 3x the amount the Chinese quoted – $11.99 vs. $4.11.

The Kenyans who expressed (initial) interest in the project simply failed to follow-up thereafter – in any way, shape or form – even though “Follow-up” on a commitment or promise is a most basic component of sales and plain common courtesy.

The Chinese company that expressed interest in the order was not even a manufacturer of textile or plastic items. They specialized in 3-D printing and Chemical Etching/2nd-Ops of PCBs and related product. They also had a light footprint in injection molding of precision plastics and an even smaller footprint in CNC Machining.

The client thus asked them about the bag and the safety plug as a BTW i.e. “Do you know anyone who makes microfiber bags and this type of safety plug?”

Without skipping a beat, the woman on the China end of the phone (a Ms. Lan) replied affirmatively – and confidently.

“How many pieces of each item do you need? I can help you source this type of plug cover and the bag.”

Curious why a company whose core competence is 3-D Printing and Chemical Etching/2nd Ops of PCBs and related-items was able to source propylene AND textile product, I asked how she could source the items. I also asked why.

According to Ms. Lan (her real name – on the email thread), Beijing encourages business, especially those proximal to one another, to work together and share business opportunities so that as many people remain employed which in turn keeps the regional and national economy humming along. This policy is the very “sharing the wealth” socialism that is frowned upon and ridiculed by the uber-capitalists Americans and Kenyans.

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The Chinese Government incentivizes the original point of contact i.e. the person who first takes the potential request/order i.e. Ms. Lan, to pass the opportunity onto a local company whose core competence IS the requested item.

In this case, Ms. Lan passed the opportunities to a Chinese manufacturer of microfiber bags and another one of plastic parts/plugs respectively – all within her network of business associates and responded with a competitive quote within 72hours – 3days!

Even more impressive was the fact that the quote for the two items AND the other items – PCB and 3-D-printed Ferris Wheels – the latter modified from a previous order after the first version of the component failed stress testing – was one and the same with each order a line item. Put another way, Ms. Lan and her company remained my sole point of contact even as she worked with the others within her network to provide me the bag and the safety plug!

So in a quote whose total value was just south of KSh5M, some textile and plastics manufacturers got KSh.0.5M or 10% of the $49,350 order.

500K from one order, another 500K from another and soon we are talking real money for companies who were not part of the original inquiry and/or order!

For Ms. Lan, the origin contact of the 5M order that generated 500K order for a company other than hers, she received “Social Credits” (shehui xinyong) while her company received unspecified tax incentives.

The “social credit” was first broached in 2014 to reinforce the idea that “keeping trust is glorious and breaking trust is disgraceful” and at its core is the desire to affect behavior that aspires towards the greater good such as Ms. Lan’s offer to source the original order BEYOND just her company did.

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Summarized, Chinese manufacturers best their global competitors because aside from their low labor rates and overall low cost of doing business:

– They aggressively and doggedly hustle for EVERY available type and amount of business opportunity out there,
– Share opportunities within their network of (business) associates – especially if the opportunities are OUTSIDE their core competence,
– Have unparalleled sense of urgency and are responsive – reasonably so – to the customer’s needs,
– Beijing incentivizes the foregoing qualities – and has done so for so long that said qualities are now in the DNA of most Chinese companies.

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