Quality Management in China

by

Marina Chan, Kitlen Fung, C M Ip, Tony Mak & William Wong

1.                Introduction

After the adoption of the open market policy by the Chinese Government in the late ‘70, the awareness of the importance of quality among Chinese companies has been rising gradually.  On one hand, the Chinese Government has laid down some policies and regulations to emphasize and promote the importance of quality and quality management.  High percentages of state-owned enterprises have started to implement modern quality management or TQM since the early 1980s.   On the other, the development of market economy has intensified competitive pressures, which in turns has created a strong driving force in implementing TQM.

 

The purpose of this study is to analyze the current status of quality management in Mainland China and gives some suggestions in achieving TQM.  Section 2 gives an overview of the existing situation of quality management in China.  The problems encountered and other important issues concerning quality management in China are outlined.  Since we believe that the historical development of quality control in the Chinese history had big influences on today’s quality management, in Section 3, we discuss different stages of development of quality management starting from the ‘70s in.  The influence of the Chinese culture in quality management is analyzed in Section 4.   The market forces are discussed in Section 5.  In the final Section, we have given some recommendations in accomplishing TQM in China.

 

2.                Methodology

 

This study begins with a literature review on issues related to quality improvement/ management in Mainland China.  The materials that we have gone through cover different areas such as China’s ancient history of managing quality, TQM application in China, culture and the problems of Chinese management, worker participation and motivation, ISO 9000, Asian power, economic reform, etc. From these materials, we could draw a picture of the current status of quality management in China and understand the causes of the current situation.

 

After getting enough background information about the current status of quality management in Mainland China, site visits in Shanghai and Guangdong were arranged to get in-depth information through observations, informal discussions and talks with front-line employees.

 

3.           Current Situation and Problems of Quality Management in China

 

Starting from the late ‘70, the Chinese Government has spent a lot of effort in promoting quality management.  Polices and regulations were passed to put pressures on producers to pay more attention to their product quality.  Under the pressures of the government, the implementation rate of TQM in China is unexpectedly high, especially in state-owned enterprises.  A survey (Yu, Cochran and Spencer 1998) reported that 96% of the state-owned enterprises claimed that they had implemented TQM. At the same time, the fierce competition arising from market economy makes the managers take TQM in their enterprises more voluntarily.  Generally speaking, the senior management’s commitment in improving quality is high.  However, the quality of products from China is still undesirable.

 

Obviously, there are a lot of obstacles and problems in the process of deployment of modern quality management or TQM in China.  The following paragraphs depict the major obstacles and problems.

 

-    The concept of modern quality management was not properly promoted.  Chinese managers and workers do not have a good understanding of modern quality management principles.  There are different versions of quality management concept in different parts of the country.  Some managers still cannot distinguish between quality control and quality management.   

 

-    The top-down approach in implementing the quality management system causes a lot of problems.  At the country level, the government gives directions to force enterprises to implement TQM.  Insides the enterprises, the policy and regulations are also implemented from the top to the middle and bottom levels of the management and finally reached every employee.  The enterprises are forcing the employees to participate instead of encouraging them to get involved.  Since the employees only take it as another order from the above, they were not enthusiastic.  This leads to low participation.   Such authoritarian approach creates more fears at the workplace, which further lessen employee participation.

 

-    The low employee participation is not just caused by the top-down implementation approach.    The Chinese society has historically been dominated by respect for age and hierarchy of authority.  The large power distance in China makes it very difficult to implement the participatory management model.  Workers would rather follow orders instead of giving suggestions.

 

-    Due to the lack of training resources, the training provided on quality management is not comprehensive enough to cover employees at different levels.   Training provided to bottom-line employees is very limited.  No training on statistical control, problem solving skills, leadership abilities is given to bottom-line employees.

 

-    Although the Chinese government has laid down policies and regulations about improving quality for enterprises to follow, there is a lack of actual government support in terms of funding, technologies and other resources.  Also, no recognition is given to the enterprises with significant quality achievement.

 

-    In the western world, it is believed that statistical process control is one of the vital elements in improving quality.  However, in China, little emphasis has been placed on statistical analysis, owning to limited resources and inadequate technology.

 

-    The concept of earning quick money, which is very popular among people in Mainland China, is another obstacle in improving quality.  In order to gain the highest profit in the shortest time, people would rather sacrifice high quality for higher productivity and cheaper price.

 

-    Traditionally, businesses award contracts based on connection instead of the quality of products.  It seriously destroys the incentives of improving quality.  The “harmonious” culture of the Chinese is also a hindrance to treating quality seriously.

 

4.           Historical Development of Quality Management in China

 

China is one of the earliest nations to have developed a civilization. In our more than 5,000 years of history, we could trace the first Chinese quality system or quality control system back to Shang and Zhou Dynasties (17th century and 18th century B.C.) The new China has, since 1949, developed its quality management along with the souci-political-economic development in China.  In the current section, we outline the development of quality management in China from a historical perspective.  From 1949 up to the present, we can divide quality management development into five stages, viz., quantity age, dark age, experimental stage, promotion stage and strengthening stage.

 

4.1           Quantity Age

 

In 1949, the communists took over the Mainland China and established a socialist society, which adopted a centrally planned economy.  Under the centrally planned economy, the state set production goals and targets for the enterprises, allocated resources and raw materials to them, laid down broad policies and guidelines to be followed in their operations and management, and distributed or marketed their output.  The ultimate goal of enterprise managers was to produce enough products to meet the goals set by the state.  Managers did not need to take care of the quality of products.  As long as they produced, the state would buy without taking quality consideration seriously.

 

The centrally planned economy followed the strict and stiff Soviet managerial model.  Under this model, quality control only involved inspection of products, and only the inspection department was responsible for product quality.

 

The awareness of quality concern was typified by the formation of the quality control research group in 1957.  The group introduced quality production education and statistical process control (SPC).  The application of SPC was limited to the machine and apparel industries.  SPC was never integrated with the management systems during those years.  In the early 1960s, China put forward a quality management model namely, "two participations, one reform, three-way combinations" which was based on the philosophy of cooperative relationships among managers, technicians, and workers.  A new system combining self-inspection, mutual inspection, and line inspection was developed.  Line workers were encouraged to create teams to discuss problems related to product quality.

 

It is noted that a centrally planned economy was not compatible with product quality.  The centrally planned economy shielded people from competition and was concerned with meeting production targets rather than satisfying customers.  Quality management operated in this direction led to low motivation of staff toward quality improvement.

 

4.2           Dark Age

 

From 1966 to 1976, the Cultural Revolution was rampant throughout China.  The efforts toward developing quality management in China were all destroyed.  The revolution frantically raised emphasis of quantity in a zenith.  It focused on outputs of heavy industries with almost no regards to quality as well as management.  SPC was even treated as a symbol of anti-revolution. All developments including quality management ceased in the period.

 

4.3                Experimental Stage

 

Since 1978, China had realized that it had to reform its economic and social systems if it was to build a prosperous and modern country.  A key strategy for change was to increase exports in order to buy advanced foreign science and technology.  To compete in the international marketplace, China had to improve product quality.  Therefore, the practice of quality management had been promoted widely and strongly since then.

 

From 1978 to 1979, the period represented the experimental stage of quality management.  In 1978, Beijing Internal-Combustion Engine Company established an exchange relationship with a Japanese company and imported quality management (TQC and QCC) from that firm.  The experiment was expanded to some other enterprises in Beijing and other provinces after managers paid visits to the company.  At the same time, the national China Quality Control Association was established.  One year later, quality control associations were established in fourteen provinces and three industrial ministries.

 

4.4                Promotion Stage

 

The promotion stage covered from 1980 to 1985.  In 1980, the National Council of Economy issued "Temporary Provisions of Total Quality Management in Industrial Organizations".  The provisions emphasized the important role of quality management in economic development, and offered ways of promoting and implementing it.  The provisions included sections on quality planning, quality management in design, quality management in production, quality management in customer service, quality management systems, employee participation in quality management, training, rewards, and punishment.  They required that everyone in industrial organizations should learn and participate in quality management and all industrial organizations should start to implement quality management from March 1980.  Between 1980 and 1985, more than 10 million copies of a textbook relating to quality management were sold.  Moreover, televised lessons sponsored by the China Science Association, the China Quality Control Association and the China Central Television were studied by over 20 million Chinese managers and workers.  During the same period, the number of quality control circles increased rapidly on the work floor.

 

4.5                Strengthening Stage

 

Since 1986, China has embarked into the fifth stage during which quality management has undergone the strengthening, deepening and diffusion processes.  Training has been expanded to different levels, and its effectiveness has been determined through examination and assessment.  The number of registered quality circles reached 2.85 million nationwide in 1990.  In 1993, the economic benefits created by these circles amounted to about RMB 2.22 billion.

 

In December 1988, China adopted the ISO 9000 series of standards for its own national standards with conversion made for technical contents and the coding system.  In August 1992, the State Council issued "Decision on Further Strengthening Quality Management".  The document emphasized the crucial meaning of quality and quality management.  In September 1993, the National People's Congress passed the Product Quality Law.  The Law holds producers responsible for the quality of their products.  It requires producers to manufacture products that: (1) conform to applicable standards of the state or trade; (2) are free of unreasonable dangers to persons and property; (3) have the properties that should be possessed by the product, except where explanations about defects have been provided; and (4) conform with samples or packaging descriptions.  In December 1993, the State Economic and Trade Commission, the State Science and Technology Commission, and the State Technical Supervision Bureau jointly issued "Regulations of Adoption of International Standards and Foreign Advanced Standards".  The regulations made the requirements more detailed and enforceable.

 

Quality management has undergone several stages and has become a more concern among enterprises in China.  From non-existence to gathering momentum, quality management has gained a legal status that it deserved.  The battle is not, nevertheless, over.  We reckoned that there were a lot of challenges at best or a lot of shortcomings at worst.  Despite that the government has placed strong emphasis on quality management and enacted laws to force its way into the enterprises, the effect brought forth by quality management is not particularly exciting.  We might describe quality management in China with the idiom, “the spirit is willing, but the flesh is weak”. The challenges of quality management in China lie more in the culture and the economic system, which will be discussed in the following section. 

 

5.           Cultural Influence

 

Successful quality management requires everybody in the organization have a mindset of quality. In addition to the influence of historical, political and ideological background which shape the behavior of workers in China, the long history of the Chinese culture also plays an important role in the development of quality management in China.

 

Since the establishment of the People’s Republic of China in 1949, the Workers’ Congress has mandated workers’ participation in setting rewards, penalty and other regulations in relation to the interests of workers. The socialist ideals, however, have not changed the well-entrenched traditional Chinese value of respect for the senior, the aged and the hierarchy of authority. The deference to and dependence on power and authority distinguish Chinese culture from that in the Western world where rules are repeatedly debated and challenged. The large power distance of Chinese culture discourages the participatory management philosophy that underpins the Western tenets of quality management.

 

In the Chinese culture, it is very difficult to build a “bottom-up” management system. For example, the quality drive in China has very much been government mandated. Organizations prepare corresponding policies that are then enforced using systems of reward and/or penalty. The autocratic cultural also goes again Deming’s belief that fears and quotas should be removed from the management system and joy should be returned to the workplace.

 

It is also not surprising that few if any critique is offered by the frontline workers when quality plans are introduced by the management, even though the system is subsequently, privately, criticized in the implementation stage by the workers. The management then feels alienated and labels the criticism.

 

Years of revolutions, warfare, reforms and poverty have entrenched a sense of insecurity in the Chinese culture. The Chinese are more risk aversive and resistant to new management concepts. The propensity to maintain the status quo and preference to follow the peer are the major impediments to successful implementation of quality management system in China.

 

The Chinese culture is considered strong on collectivism and is group-oriented (Hofstede 1994; Fernandex et al. 1997). Strong peer pressure discourages education in the areas of leadership, entrepreneur and experimentation. The Chinese value “face” predominates, especially with the authority and seniors in autocratic organizations, while the basic tools of quality management system such as work team, quality circle and statistical quality control are neglected.  In the interest of face saving, the frontliners are reluctant to point out mistakes. Chinese managers are unwilling to accept mistakes, especially in front of peers or seniors.

 

Quality management systems emphasize documentation and traceability. The systems are formally documented by way of procedures; they are also unofficially defined by the culture and shared values of the organization. On the other hand, Chinese culture has been praised as “flexible”, because it has adapted to and survived the four thousand years of changes in the environment. This “flexibility” is often manifested in organization when workers ask for “special” consideration due to “special” situation or need. Rules and procedures are habitually requested to be bent or by-passed.

 

The above-mentioned culture of collectivism, face-saving, deference and autocracy is at the very heart of the guan xi so treasured by the Chinese. The western quality management system as “modified” by Chinese culture is, instead of “following the book”, tailored and curtailed in accordance with “special” considerations, individual judgement and guan xi to produce “good enough”, albeit random, outcome. In addition to problems resulting from non-conformity, the “flexibility” hinders continual improvement of the existing systems because the modifications and results are undocumented. We regard this Chinese culture as the biggest impediment to the long-term development of quality management in China.

 

However, there are still some cultural characteristics that are favourable for the success of quality management in China. The collective and group oriented aspects in the Chinese culture facilitate the development of quality management in China. Once shared beliefs in value of quality and team participation are developed in the workplace, peer group pressure will ensure that the quality crusade will continue.

 

6.           Market Force

 

6.1         The Shift from a Planned Economy to a Market Economy

In the past, China followed a centrally planned economy.  The state set the production goal and targets, allocated resources, laid down management policies and guidelines.  The managers’ role was to meet the production targets in terms of quantities.  Quality was not a concern with managers.  However, with the south visit of Deng, China has officially moved from a state-controlled economy to a market economy.  Private enterprises emerged to compete against state-owned industries.  Increased competition has woken the industries to the importance of quality to sustain and dominate the market.  The concept of quality management is a result of the market economy.

 

6.2         Open Door Policy

 

China has taken an aggressive role to get into the international business arena.  One of the targets China has been striving to achieve is to enter the World Trade Organization (WTO).  As a condition for successful entry, China has been forced to remove tariffs for foreign competitors.  Foreign competition has put great pressure on local industries.  The quality of most foreign goods is more superior than local products and many of these foreign goods quickly take up a sizeable market.  This is a great threat to local industries.  To survive and flourish, they must improve the quality of their products.  China’s open door policy has facilitated the development of quality management.

 

6.3         Joint Venture

 

With a population of 1.1 billion and a rapidly growing middle class bent on consumption, China is an attractive market to many companies in the Western world as well as those in Asia such as Japan, Taiwan and Hong Kong.  Her open door policy and pursuit of a market economy have encouraged a lot of foreign companies to set up business in China.  Many of these companies partner with local companies to set up joint ventures.  In most cases, the foreign companies will bring in not only the high technologies but also their quality management practices and standard requirements.  This serves to reinforce the concept of quality management among local managers.

 

6.4         International Standard

 

China’s export has grown tremendously in the past decade.  Foreign trade has been a great source of income for China.  To maintain this income source, China has to compile with the quality standard laid down by the foreign markets.  In most of these markets, ISO 9000 is the required standard.  This is another external factor that speed up the practice of quality management in China.

 
7.           Recommendations

 

7.1         Identify National Goals - A Top-down Impetus

 

Deming identified seven factors which hinder the success of quality management, one of which is the lack of constancy of purpose to plan products and services that are demanded by the market. China should identify the national priorities and goals in the global market place and develop national core competencies to provide products and services in demand.

 

Rather than emphasizing on short-term gain, such as the number of ISO9000 accreditation achieved at each province, or dressing up QC passing rates by lowing the quality requirements, organizations in China should be encouraged, possibly aided with venture capital, to invest in genuine improvement of quality.

 

The nation should continue the direction of a market economy that stimulate competition, and the drive to improve productivity through continuous quality improvement and process reengineering. The government should remove fear amongst the managers of state owned enterprises. As resources invested on quality will one-day increase productivity and profit, the approach of using immediate term profitability to appraise the managers’ performance should be amended.

 

7.2         Government Support

 

Instead of just laying down policies and regulations, the government should provide more support, such as financial support for R&D, implementation of quality improvement, investment in human resources training and education, and recognition of quality achievements through national awards. Organizations should be allowed to repeatedly win the awards for superior and continuously quality management achievements. Moreover, the government should continuously monitor the role of technology support as an enabler of quality improvement and business process reengineering.

 

7.3         Market Orientation - Improvement on Strategic Thinking of Organization

 

It is recommended that the organizations should adopt a contingent approaches. The scope and pace of quality management improvement should be adjusted according to the organizational goals and strategies, resources available, and the market positioning of the organization. A Plan-Do-Check-Act improvement cycle is suggested. Organizations should constantly review the market requirements - how appropriate are the existing processes to provide products and services for the market.

 

7.4         Top-down Encouragement - Continue Emphasis on Quality at the Top

The appraisal and reward systems should be designed to align the goals of workers with the organizational drive to continually improve quality. A well design reward system should reduce job-hopping by managers, another “deadly disease” identified by Deming. Investments in the use of statistical tools such as SQC should be promoted in order to avoid making decision with little or no consideration given to what is not known or cannot be known.

 

7.5         Sustain Effort with Bottom-up Concern and Cultural Enhancement

The emphasis on quality is part of the Japanese culture.  The concept of quality is achieved through education.  It is a long process but it has brought Japan great success in quality management. The quality concept should be built in our education. We should enhance Chinese culture with a personal dedication to quality. Young people should be taught to be serious about the things they do and learn to deliver quality work.

 

8.                Conclusions

 

Although China has implemented quality management since the 50s, the concept of quality management has been weak and the quality of many manufactured products remains poor.  On one hand, The centrally planned economy had a lot to account for, which only required managers to meet quantity and not quality.   On the other, the Chinese culture and values have also generated unfavourable factors such as too much respect for the authority, face saving attitude, unquestioned obedience, which have hindered the development of quality management.  However, since her open door policy, a lot of foreign companies have come to do business in China.  They have brought in quality management standards and practices, which facilitate the development of quality management in China.  Trading with the west has also forced China to face up to the issue of quality.  To continue to flourish in export  trade, China has to meet international quality standards.  

 

Quality is a concept that takes time to develop.  China has started with rules and regulations for managers to follow.  But to be really successful, China has to instill the concept to her people at a young age.  Education is a key factor.  If China starts building in the concept of quality to her education system now, in the not too far future, China can share with Japan the reputation of being a country that guarantee quality products.

 

Appendix                Chronology of Quality Management in China Since 1949

 

Early 1950s

Industries were mainly manual operations. Delegated inspectors and professional quality inspection mechanisms were only observed in military industry.

 

Management models of Soviet Union were introduced. Mainly focused on quality control by inspection only.

 

Some machine and apparel industries started using SPC.

 

With the strong emphasis on socialism, nearly all prefer quantity rather than quality, and the idea of SPC is rejected.

 

The phenomenon of "1 year of production, 3 years of rework" appeared.

 

1957

The first quality control research group was founded in China, offered courses about SQC.

 

Early 1960s

The Sino-Soviet relationship was broken.

 

The management system "two participations, one reform, three-way combinations" was established.

 

1966-1976

Cultural Revolution

 

1976

Mr. Yuanzhang Liu lead a SQC experiment at Beijing's Qinghe Wool Yarn Factory.

 

1978

Beijing Internal-Combustion Engine Company introduced the concept of TQC and QCC from Japan.

 

Ishikawa lead a visit of Japanese quality management delegation in China.

 

The first Quality Month was started in September 1978.

 

The national China Quality Control Association (CQCA) was established.

 

1980

The National Council of Economy issued "Temporary Provisions of Total Quality Management in Industrial Organizations", and stated that all industrial organizations should start to implement TQM.

 

1982

The programme of the State Quality Management Prize was started.

 

December 1988

Adopt GB/T10300 that was equivalent to ISO 9000 series.

 

1990

With the success of Wuhan Steel Factory that was later known as a "quality-efficiency model" organization, the link between quality and efficiency were confirmed and promoted.

 

August 1992

The State Council issued the "Decision on Further Strengthening Quality Management".

 

September 1993

The National People's Congress passed the Product Quality Law.

 

October 1993

The National People's Congress passed the Consumer Rights Protection Law.

 

December 1993

The State Economic and Trade Commission, State Science and Technology Commission, and the State Technical Supervision Bureau jointly issued "Regulations of Adoption of International Standards and Foreign Advanced Standards".

 

1998

The Chinese ISO 9000 accreditation body, CNACR, signed the MLA with other 16 countries.

 

 


References

 

1.            Hofstede, G. 1994. Cultural constraints in management theories. International Review of Strategic Management Vol. 5, pp 27-48.

2.            Fernandex, D.R., Carlson, D.S., Stepina, L.P. and Nicholson, J.D. 1997. Hofstede's country classification 25 years later. The Journal of Social Psychology Vol 137, no. 1, pp 43-54.

3.            Yu, C.S., Cochran, D.S. and Spencer, B. 1998. Quality Management Practices in China. Quality Management Journal, no. 2, pp 91-106.

4.            Li, C.K. and Cheung, F.S. 1996. ISO 9000 and Chinese Management Culture. Hong Kong Economic Journal Monthly Vol 228, pp 70-75.

5.            Wang, Y.W. 1998. Brief Discussion on Corporate Culture and Product Quality in China. Quality & Management Aug/Sep 1998.

6.            Juran, J.M. 1990. China's Ancient History of Managing for Quality. Quality Progress, Jul 1990, pp 31-35 and Aug 1990, pp 25-30.

 

Copyrighted  19 September 1998

 

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