The origins of the term, “The China Price” dates back to when China was the absolute low price on almost anything.
Most writers have moved to writing about the death of the China Price in recent years, but one thing is still unchanged. Let me give you an example.
We were talking with a fast moving electronics company, and the owner said, “Don’t propose a Chinese Quality Director to us. They can only see the cost and nothing more!”
Today, China is not always the cheapest place to make a widget, but the Chinese are still very cheap people and that goes back thousands of years. I have been preaching to Chinese workers to think about value since the 90’s, but the flood of cost control thinking has not abated. Even Senior Quality people who are Chinese cannot think value according to that beleaguered owner. I agree in almost all cases.
The China Price Mindest Can Hurt You
Chinese Managers do not believe in value that costs money. OK, that stereotype goes too far, but we should not forget how much cost saving is in the Chinese culture.
I often see Chinese managers who are penny smart and pound foolish.
Chinese led teams will change out a key part for a cheaper one that is clearly not as stable because they can save 5 mao a part. OK, 1 million parts is 500,000 RMB in savings. However, the increase in missed opportunities, recall risk, and harm to reputation is beyond the field of vision of most Chinese.
The China price still lives and breaths in the heart of China people. That is good if you want to push down price, but it is bad when value gets shoved under the rug. Often the line is way to blurry, and Chinese people tend to default to cheaper.
I know a Chinese finance manager who daily bleeds the life out of her operation as she maintains hold of the owner’s thinking and ruins his company culture in China. Seems she has never considered value.
My office make very good use of A4 paper. We print the paper and then use the back side again for internal use paper, and then sell the paper once it is printed on both sides. That has nothing to do with environmental concern. It is the China price at work in my Chinese staff in a good way even today.
Assume that any manager you hire has a lot more thought on cost control than value creation than you would see in your home country. If you do not want that, then you need to specifically search for it and make it a goal of your hiring.
China Price thinking is in your China operation today. It is there, and you need to make sure it does not hurt you every day or in one big way one day. You may need to start hiring to reduce it.