US Companies Manufacturing in China: Staying Cool and Staying Put

A survey completed by SmartCube, a firm that specializes in business research, indicates that despite the press and outlash regarding the recent China-quality debacles, the vast majority of U.S. companies aren't considering changing their supply chains, and certainly aren't considering picking up from China and moving elsewhere.

After the bad news about Mattel, toothpaste, and pet food, many China detractors speculated that companies in the U.S. would begin rethinking their quality control and supply chains, and perhaps even consider other countries to avoid the issues that they believed to be unique to China.  The SmartCube blog reports that:

In fact, the majority of manufacturers surveyed are confident their supply chains are more than adequately secure to ensure the safety of their products. Indeed, nearly 80% of respondents (all of whom were manufacturers who currently manufactured their products in China) reported that they felt no need to review their supply chain activities in the wake of the well-publicized toy and toothpaste recalls. Further, these global manufacturers believe that the recent recall issues, while serious, are aberrations and not symptomatic of some more fundamental issue inherent within Chinese manufacturing. They appear to be on solid ground, as Mattel itself has apologized for initially putting the blame on its Chinese suppliers.

Some interesting takeaways from the survey include:

• "Among the 22% of respondents that did say they would review their supply chain activities, more than one-third said they would make changes to the supplier evaluation process during selection or they would assign a person to look over quality adherence at the supplier location."
• "About 30% would send quality inspectors overseas to the production plants."
• This is noteworthy because these are not quick-fix solutions; these respondents are considering deploying significant resources to achieve greater product quality.
• We were not surprised to see that none of the survey respondents indicated that they would stop outsourcing manufacturing altogether.

Whether companies have indicated that they will be making supply chain changes or not, I think most companies and individuals working with Chinese manufacturers will have quality closer to the forefront of their minds.  This might result in anything from small corrective actions and a greater meticulousness, to qualifying suppliers more thoroughly or "making a list and checking it twice" (sorry..listening to Christmas music). 

In terms of companies relocating their supply chains, that's nonsense.  It's not easy to pick up and move factories, let alone countries.  It eats up time, money, and in the end, China is not unique with respect to the quality issues that arise in manufacturing.  Those who are sure we can escape the quality issues of manufacturing in China by simply moving to another country may be using this map to base their opinions.

It would be nice to review the findings of the study in more detail, but like Dan Harris of ChinaLawBlog, who posted on the study, I can't seem to find them.  Assuming SmartCube does their job well, it will be business as usual in factories in China.