How can quality targets be ensured in the production of individual parts in China?

Production for the Chinese market is also interesting for German manufacturers from the SME sector: one reason is the increasing purchasing power. GDP per capita in China was over 14,000 US dollars in 2022. In addition, domestic consumption is becoming increasingly important for the Chinese economy. Growth no longer only comes from the production of primary products destined for export. And finally, the demand for high-quality products and services from Germany remains high.

Why it is worth investing in China

For German companies that want to produce for the Chinese market, however, the question of the production location arises. Is it worth investing in China?

I think: Yes, it is worth it. And for the following reasons:

1. In the meantime, production in neighboring countries is at least as good as in China - without the well-known political risks. The real estate boom in Vietnam, for example, is proof of this. But you still have to produce locally for certain product ranges. The automotive industry in particular needs a developed supplier industry. And in view of the very effective research facilities and the comparatively good training of Chinese workers, the risks are put into perspective again.
2. The manufacturing costs also speak for themselves. If you compare apples with apples, you still have a price advantage of at least 30 percent compared to production in Germany, mainly due to cheaper labor, machinery and energy costs. German manufacturers can therefore still make significant profits in China.

Quality assurance is crucial

However, the quality of the manufacturing processes determines whether parts produced in China can survive on the domestic market: zero defects must reach the customer. In my view, this requires a mix of efficient processes, clear quality targets and knowledge of the local conditions. During my work as a quality manager for the automotive industry in China, these aspects proved to be crucial:

1. Cooperation with a local representative
2. Consistent supplier management
3. The consideration of development and product quality
4. The implementation of manufacturing processes according to Kaizen principles
5. The implementation of measures to control process quality
6. The establishment of a Total Productive Maintenance department
7. Considering cultural specifics

1. Work with a local representative.

Quality assurance requires local presence: Only if you deal directly with your local employees, but also with your Chinese suppliers, can you ensure that you achieve your quality goals. You have two options here.

On the one hand, you can send employees to China. The advantage of this is that you know exactly who you will be working with. As a rule, there will be no surprises. And your employees can gain experience abroad, for example for future management tasks.

On the other hand, you can work with an external consultant. SMEs in particular can benefit from this if they do not have the right staff in-house. In addition, external consultants already know the local players and are therefore familiar with the Chinese particularities. The disadvantage of this model is certainly that it is not easy to find the right consultant. In any case, this person should have at least the following skills:

• They should have founded knowledge of the country, covering language and culture, but also social structures and political circumstances.
• A suitable consultant must have contacts with Chinese authorities and companies, which should not be underestimated in the People's Republic.
• Finally, he or she should know the working culture: At management level, cooperation and conciliation are expected, whereas at staff level, a rather tight management style with clear work instructions is expected.

2. Operate consistent supplier management.

In China, your purchasing will face the challenge of a rather confusing procurement market. This is because the range of Chinese suppliers is very wide: you will find some that are simply inadequate, but also some that offer very good value for money with consistent quality. Consistent supplier management is correspondingly important. On-site audits are therefore even more important than in Germany: it is not just a matter of gaining an impression of the respective production facility. You can only assess the management once you have dealt with them personally.

I would advise paying attention to supplier development. Go to your supplier if there are frequent errors and discuss the failure rates. Look for the cause together, find solutions and eliminate the failures. And replace those suppliers who deliver parts whose failure rate cannot be eliminated or at least reduced.

3. Keep an eye on development and product quality.

Do not fall behind German and international standards - even if the Chinese industry has made great progress in recent years:

• Tools such as the 8D analysis process are indispensable.
• You should pay attention to the implementation of standards such as APQP, PPAP, MSA, SPC or FMEA as early as the ramp-up phase.
• For the production phase, you must comply with the requirements of the IATF 16949 system, the VDA6.3 process audit and the ISO 9001 quality management system in the Chinese production facilities.

The implementation of these standards presupposes that those responsible in your company have gained the respect and recognition of your Chinese partners. The prerequisite for this is - as everywhere - a way of working that takes the local culture into account. As already mentioned, in China this essentially means being conciliatory towards management and providing employees with clear work instructions.

4. Implement your manufacturing processes according to Kaizen principles.

As a manufacturer, you always have several options for bringing your defect rates to "zero" - even if the OEM's quality system and the product's manufacturing process, the VDP, already prescribe certain measures. But I am convinced that you should always be guided by the Kaizen idea: namely to try to continuously improve your processes.

My recommendations:

1. Request a daily Kaizen report, which the respective department prepares and submits to the management team. The report can be discussed in an Aisachi meeting following the morning plant tour.
2. Have deficits in the implementation of the so-called 5S (self-discipline, sorting, systematizing, cleaning, standardizing) marked with a red card. During the morning inspection of the production hall, management can check the products marked in this way and decide what needs to be done.
3. It is essential that you use A3 reports for root cause analysis. You can then place the reports on the Aisachi meeting boards for review.
4. And finally, regularly recognize and award your top Kaizen employees - and have them present their work with the before-and-after effect in town hall meetings.

5. Plan measures to control process quality.

I would advise statistical process control with SPC diagrams here - not just for continuous monitoring of production processes. Rather, you can also determine whether optimizations actually improve a process. You should also regularly validate your measurement systems. The test procedure will vary depending on the system. For example, the isoplot method used in the Shainin system compares the relative size of the process and measurement system variation families. At least 30 units are each measured twice.

In contrast, the Gage R&R method measures the repeatability of the measurement result and its reproducibility. Two operators each measure ten parts twice. The result is good if the repeatability and reproducibility reach at least 90 percent of the total scatter.

And finally, I would recommend checking the ESD floor or the clothing and shoes worn if necessary. It is very important that personnel are disciplined when passing through ESD test stations to prevent any static discharge within the ESD-protected area, the EPA.

Increasing the error-proofing of processes

To avoid errors from the outset, various measures can be implemented to improve error-proofing. Here are three examples:

• Poka-Yoke: The aim is to achieve error-proofing of a process through excellent design. The quality assurance technique therefore consists of building quality into the process, so to speak.
• Five-piece counting at the assembly station: A quality assurance technique with a completely different approach. This simple trick can be used to prevent the worker from forgetting a piece at the assembly station: The operator always removes exactly five parts for assembly. Only when he has installed them does he take the next ones. The warehouse clerk is used for checking. He inspects the number of parts during his milk run through the store floor.
• JIDOKA: When it came to reducing failure rates through manual intervention, I had good experiences with this approach: installed at a few strategically selected workstations, JIDOKA reduces errors, leads to consistency and in some cases even increases speed.

6. Establish a Total Productive Maintenance department.

With such a department, you can have your equipment checked and improved - practically non-stop. Repairs are carried out at weekends and during production downtimes. In this way, you also avoid external work that leads to delays and rising costs.

7. Pay attention to cultural characteristics during transformation processes.

The cultural characteristics on site play an important role, especially when managing transformation processes. I have already mentioned one aspect several times: Depending on the hierarchical level, a different approach is needed. With workers and operators, I would advise clear work instructions, especially on topics relating to quality management, whereas I would communicate more cautiously or conciliatory with members of management.

In my experience, it has also proven successful in China to focus on quality when choosing between time, costs and quality. Organizations should therefore make quality assurance a strategic goal.

Making quality assurance a strategic goal

This goal can be achieved with very different measures, but they should always be adapted to Chinese conditions. Here is a selection of measures that have proven successful in practice:

• Perhaps the most important tool for achieving quality improvements and thus quality cost reductions is intensive communication and cooperation with the customer's SQE management.
• In order for work instructions to reach the workers faster - and more precisely - it can make sense to significantly flatten hierarchies.
• Managers should not sit in the office during the day, but mingle with the staff: for example in coaching meetings with employees, take half an hour off every day to listen to concerns and requests from the workforce or take part in the daily Asaichi meetings and plant tours. Only then will it really become clear what phase the transformation process is in, what obstacles currently exist and how willing employees are to change.
• Losing face with colleagues, friends and family is fatal, especially in Asia. But changes in responsibility or accountability are easily perceived as such. That's why you should make sure you don't give this impression during transformations.

Conclusion: quality assurance is key

German manufacturers can make substantial profits by investing in Chinese production facilities. The key to this is quality assurance: the error rate must be "zero". This requires a bundle of measures. The most important ones include:

1. Cooperation with a local expert who knows the market, the language and the culture.
2. Quality management tailored to local conditions - including seamless monitoring of implementation.
3. The consideration of cultural differences in the implementation of measures.

Do you need support with your China business? Get in touch with me! I will be happy to answer any questions you may have.