By John Goss (China Daily)
Updated: 2007-08-31 07:16

The foreign media have recently been full of stories about the perceived poor quality of goods and products from China. This perception can and must be effectively challenged and proved to be an incorrect assumption and charge on their part.

In fact, the original fault lies with an irresponsible few foreign buyers who are continually driving down the factory prices they are willing to pay. This state of affairs can result in the factory involved making a loss as their slice of the cake gets smaller, so in the end there is no cake to eat.

I am British and have been living in Hong Kong for five years. I am married to a Chinese lady and consider myself half-Chinese now. I have tremendous respect for China and China's development into a significant world power. My company works with many Chinese people and over time I have developed a high opinion of the work ethic in China.

Many of my Chinese friends and contacts have factories in China or are involved with trading companies acting as middle-men between foreign buyers and factories in China. Their already low prices for the foreign buyers are based on good quality at competitive prices and short-term deliveries.

But these competitive prices are never low enough for some of the buyers, who continue to drive the price down until the price they are willing to pay bears no reflection of the original brief for quality items. Then they demand shorter turnaround even when they are buying less than the stated minimum quantity.

Many of my Chinese friends have tales of woe about this very real situation that exists today because of some foreign buyers' unrealistic expectations and price demands. I hasten to add that not all foreign buyers are cast in this role, as many, like myself, have grown to love China and value their time here with their new Chinese friends and colleagues.

The fact is that some factories will say "yes" to the low price as they need the orders to keep their workers busy, or they will leave for another factory where they can get regular work. If the buyer drives the factory price too low then the factory must pass these lower prices to their suppliers who in turn pass them on to their suppliers and so on.

It is inevitable that in that supply chain there will be people who cannot take a loss and need to make a profit so they can survive, which is understandable. This will mean that the process may well be hurt and even damaged by quality reductions along the way.

So, I believe it is in fact a few unrealistic foreign buyers who have created the "quality" problem in China, and elsewhere in Asia, as they seek to make ever-larger profits at the expense of the final product. They seem to forget that the factories must purchase the materials that will be used to make the final items, and that lower customer prices may well affect their buying power.

It is essential that buyers take a step back and think about their responsibility and understand just how important their function in the whole process is, and that their decisions will affect thousands of people in China and Asia today. If all sections of the process work together to create the correct balance between price and quality, the cake will be large enough for all concerned.

This situation is a reality in today's trading world, and China should be highlighting the problems being created by the few irresponsible buyers who wish to make an even larger profit than before. It is of course possible that the retail stores that sell the items to the public are unaware of the hard bargains that are being driven by the buyers.

Of course China's authorities must play their part in ensuring the quality of all goods exported from China. The recent moves being implemented to establish a quality trademark for manufactured and processed Made-in-China goods must be applauded as this proves the authorities' determination to provide a long-term solution to the problem.

The author is managing director of Ceejay International Ltd

(China Daily 08/31/2007 page11)