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Chinese newspaper "People's Daily" published a front page editorial Saturday telling Europe to quit "dilly-dallying" and get its act together, via Reuters.
While the paper is not the official mouthpiece for the government, it is considered an organ of the Central Committee of the Communist Party leadership. Even an editorial is thought to be indicative of government sentiment.
Author Qin Hong pointed to a deepening of the European fiscal union as a way out of the eurozone mess.
"If it is able to set up a fiscal union, Europe can still turn its luck around. If the decision comes too late, some (euro) members may be forced to pull out," the Hong wrote. "But if Europe keeps dilly-dallying, the situation can only worsen and gather speed. Outsiders who want to help will not dare, and then the euro zone may really disintegrate. Without doubt, this would be a huge disaster for Europe and the world."
China has around $3.05 trillion in foreign currency reserves according to Reuters, and stands to lose big in an escalating eurozone crisis.
This commentary suggests that Chinese preoccupation with the eurozone crisis is escalating. It follows discussions last month among BRICS countries (Brazil, Russia, India, China, and South Africa) on lending to Europe to stabilize markets. BRICS leaders ultimately pointed to the G20 as the proper organization to carry out such an action.
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Renaud Anjoran works in a quality inspection firm. He has been engaged in China trade and quality control since 2005. He is based in South China (between Shenzhen, Foshan, and Hong Kong). If you purchase from China, there is one thing you have noticed: prices are going up, often by 10-25% a year. The reason is not that manufacturers are increasing their margins, but that their costs are rising very fast. Yet, these same factories are under more and more intense pricing pressure from their customers.
Which manufacturers will survive and turn out a profit over the next 10 years? Those who increase their efficiency (by reducing waste in their operations or by increasing throughput) and/or who raise their production quality.
What will it take for them to reach these goals? I see 7 obstacles they will need to address:
1. Short-term focus
Right now, most exporters are focused on surviving, and if possible on getting enough for the boss to get a new car (or for his wife to buy another apartment).
But there also seems to be an aspect of Chinese culture that pushes every one to focus on the short term. It makes it extremely hard for companies to sustain a long-term investment aiming at improving the organization.
2. No pride of workmanship
Why are they in business? For money, of course. Very few manufacturers here care about a nice workmanship, a new design, or a defect-free production run.
It is very frustrating to explain to factory technicians that products must look better, and to realize that people nod politely (if at all) and actually don’t care. All they want to know is “what is the absolute lowest effort we can make?” Not a great customer retention strategy…
3. Focus on “making production”
Go inside a factory building, and you will see everyone trying to get the products out of the door. In 95% of cases, the shop floor is an absolute chaos.
The problem is, no one wants to stop the line when they notice bad quality, since they are paid by the number of pieces they make. As long as this attitude subsists, quality will be inconsistent.
4. No respect of workers
Ten years ago, it seemed like the Chinese workforce was endless. Unskilled workers were easily disposable. Fear was an effective motivator (“follow the rules, or you are out”).
The problem is, the situation has changed much faster than managerial methods. Training the operators and retaining them should become one of the top objectives.
5. Compartmentalization of activities
It is very common for factories to prepare prototypes in one place, and to produce the corresponding order in another floor (or to subcontract it to a different company). But development, engineering, and production should work hand in hand.
Another problem is the young and aggressive salespeople who say ‘yes’ to all requests, in their search for new orders. In the end, customers are disappointed and look for another source.
6. No analytical accounting
To reduce costs, it is important to know where they come from. Not only don’t most Chinese companies use analytical accounting tools, but their tax evasion tactics often deprive them of any accurate accounting!
They have no idea how much non-quality (rework, re-order of components, discounts, lost customers) costs them, for example. So why make an effort?
7. No interest in best practices
Most factory bosses have copied the way another manufacturer — often a previous employer — was organized. To them, the way to make money is to grow up, while keeping costs down… and occasionally screwing a few customers.
They are usually not interested in running experiments or purchasing software/machinery to improve their organization. If there is one thing that makes me pessimistic about Chinese manufacturing, it is this lack of curiosity in new methods.
I guess my 7 “deadly sins” are related. But where does it start? Probably by seeing good examples and copying them. Or maybe by starting new factories from scratch, with better management?
This post originally appeared at Quality Inspection Tips.
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Image: apChinese officials told European Union members that the yuan would be fully convertible 2015, but the Chinese central bank's governor Zhou Xiaochan said there was no deadline for convertibility, according to Bloomberg. Zhou said the offshore yuan market was developing faster than imagined. China has agreed to give the UK formally support to make London a key yuan trading center, for now, Hong Kong remains the most important player in the offshore yuan market.
Achieving full convertibility has been a condition for the yuan entering the IMF reserve currency basket, but Zhou has said that he sees no 'urgency' in including the yuan in the IMF currency basket.
The yuan's power in international markets is however growing. For one, Africa's biggest oil producer Nigeria, said it is diversifying its foreign exchange reserves to include the yuan, and will have yuan-denominated trade settlements in oil deals.
Meanwhile, China's central bank has injected 1.778 trillion yuan through its open market operations this year, but has also raised reserve requirement ratio six times in 2011 to curb inflation, a move that drained 2.2 trillion yuan from the financial system according to Reuters.
Don't Miss: 5 Reasons Doomsayers Are Wrong About China >
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China's ministry of culture has made its own 100 list, The Guardian reports -- a list of 100 songs that cannot be played in the country.
All songs, they say, violate a 2009 law that bans songs with "poor taste and vulgar content."
Websites that don't remove them before September 15th will be prosecuted.
Not all of the songs are American, but we have some serious stand-outs. Lady Gaga made the list 6 times -- truly impressive. And the ministry even found the time to dig back into the 90s, pull out a track from The Backstreet Boys, and ban that pop gem.
This is old hat for China. The Rolling Stones are unable to play hit songs like "Honky Tonk Woman" and 'Let's Spend The Night Together" when they play there. I suppose that makes more sense than banning Bruno Mars, though.
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