China—From Cost to Quality in Less Than a Decade

How many of you—readers that is—think China is kicking our rear because of low costs. Well, guess what…you’re right. But you’re wrong, too. That’s because while China IS kicking butt with lower cost manufacturing, it’s long since turned its attention to quality. That’s because any able-minded Chinese business person or politician knows that the more successful they are, the sooner their success will run out. That is to say that the faster they grow, the sooner cost will no longer be a competitive advantage. That’s why Chinese companies have already begun taking quality very seriously. They know that in the future, quality is how they will compete—just like the Japanese figured out in the 50’s and 60’s.

Every time I travel to China I have a mini-awaking upon my return. That’s because I’m always astonished at how much Americans underestimate what’s going on in China. I guess it’s no surprise in a country where 70 percent of the population doesn’t even hold a passport, much less travel abroad, but you’d think television and the internet would fill the gap. Not so.

The rate at which improvements are happening in China—technically, politically, socially—is simply amazing. And what that means in the near term is that there will be no American company will have a competitive advantage simply by virtue of being an American—or western—company. The number of competitors we have to deal with is growing exponentially. Even in my own industry (if you can call it an industry), we’re already finding ourselves competing with Indian consultancies coming here—to the US. They’re not outsourced providers. They’re competitors in our own darn market. How soon will it be before Chinese companies come here to open up factories—much the way Japanese automakers have? The answer…not long.

I encourage every business person, whether you do business internationally or not, and whether you have foreign competition or not, to make an effort to study what’s going on internationally and to be ready for the coming Chinese and Indian quality boom. It’s not far off.