Are Chinese Products of Poor Quality?

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That is the general perception or misconception that Chinese products are inferior in terms of quality and one must avoid buying them. Well, if that is true then why the global leaders use Chinese manufacturers to make their brands?

Submitted: June 20, 2017

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Submitted: June 20, 2017

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Are Chinese Products of Poor Quality?

That is the general perception or misconception that the Chinese products are inferior in terms of quality and that one must avoid buying them. Well, if that is true then why the global leaders use Chinese manufacturers to make their brands?

There are jokes circulating on the social media networking sites, via e-mail and verbally, all invariably maligning the Chinese products with a blatant emphasis that they are of poor quality, hence unreliable.

This topic does not require lots of details, explanations or clarifications. It is indeed very simple and easy to understand the purpose of such tactics and to grasp the Actual Reality.

Let us begin with the fundamental question;

Quality?

Quality is nothing but your requirement, your specifications and your standards. For example, if you need a vehicle to commute to workplace on a daily basis and have a limited budget then what you need is perhaps a Kia, Ford, Corolla or Honda, not Ferrari Lamborghini or Bugatti. So the vehicle that you purchase after due consideration is the quality that you actually need. If you buy a Ferrari, Lamborghini or Bugatti for going to work on a daily basis then it is sheer waste of resources and adds no value whatsoever.

There are certain aspects of the supply and demand dynamics that one needs to keep in mind;

  • it is the buyer who determines the price of the goods or services offered by the seller and not the other way around. This very fact is not known to buyers in general and they have virtually no idea about their enormous power to control the market prices.

  • The selling price is the acquisition cost plus margin.

  • The seller will strive to maximize the selling price by charging as much premium as possible.

  • To charge higher margins, the seller will create and bolster the brand image by employing catchy advertising and spending huge amounts on support activities.

  • The buyer sees the amount of premium charged as justified in certain cases and pays it without feeling cheated.

  • The reason for paying the premium is that buyers view it as good value for their money as long as it is within reasonable limits.

  • The premium in certain cases is unrealistically high in view of lack of knowledge on part of the consumer. Like for example detergent, a simple formulation where consumers pay premiums on global brands without getting any additional value as such.

  • In some cases the premium charged is justified, like Rolex watches, Lamborghini cars or handmade carpets.

  • A fair margin is what makes the purchase a win-win deal for both the buyer and the seller.

  • The buyer to get a fair market value and the seller to get a fair margin.

  • That is the ideal situation and that is what is now challenged by China, threatening manufacturers in rest of the world especially in the Western hemisphere.

China is in fact a global factory with massive production capacity to fulfill the global demand with incredibly superior craftsmanship and unmatched cost base.  All you need is to give them your specifications and the cost window and they will deliver the product accordingly. You add more features to your specs and the price goes up and vice versa.  Given the specs and cost window, no country can beat China and here is what you get;

  • Optimum quality within given specs and cost band that no other country can offer.

  • Compressed lead-times and timely shipments.

  • All you need is either a buying house in China to oversee the quality assurance part or a contractor who can do that for a fee, ensuring what is shipped is what was agreed by both parties.

  • Negotiate a sizeable holdback until the goods are received, inspected and stored or delivered to trade or end users.

  • The other countries may supply a quality-assured product but will not be able to match the price offered by the Chinese manufacturers, even after loading all the intermediary expenses like shipping costs and tariffs to goods imported from China.

Take a common example. The gift bags were being sold for over 10 dollars apiece in North America before they started pouring in from China. The quality of the Chinese gift bags is far superior and they are priced at less than twenty percent of the bags produced and sold in the Western countries. Imagine those bags from China are subject to additional costs like export, shipping and clearing charges plus the import levies and yet they are so competitive and better in terms of quality compared to the locally manufactured products.

That is the fundamental reason as to why countries especially those competing with China in order to increase their share in the global exports basket are wary of. The local manufacturers get some incentives from their respective governments and yet are not prepared to reduce their margins, or work innovatively to optimize their supply chain costs.

China is an extremely efficient factory. They make whatever you want within that specs/ cost domain that you allow them. No other country can beat them in that area without massive subsidies or tariff protection.

That is defined as quality; goods meeting the required specs that you need at a desired price.

Claiming that Chinese products are inferior is not only untrue but denotes deliberate efforts to malign the country by discouraging potential buyers. In reality, the Chinese products are excellent in terms of quality, provided you give them the right mix of specs and cost, ensure some sort of quality supervision and appropriate payment holdback are in place, and then the Chinese products are the best value for your money.

That is the main reason why the global brands are produced in China because the brand owners ensure that manufacturers get fair margin while they get fair market value. The brand owners still charge a huge premium on their products which are made in China and consumers don’t mind paying that, so why do they still think that the Chinese products are not reliable?

Quality as explained above is your requirement. Nothing more, nothing less!  

So next time when you see a joke about the Chinese product's quality, you know the underlying message and why is it propagated.

in the end its the consumer who decides what to buy. In a free world it is the quality vs quality and the price vs price.

Cheers!


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