Some Global Manufacturers Remain Committed to China, Tainted Products or Not

China still preferred destination for outsourcing manufacturing

The majority of several dozen consumer products manufacturers questioned about their confidence in their existing supply chain in China said they are in fact confident that their management procedures are more than adequate. Less than 25% of respondents had reviewed their supply chain management practices after recent product recalls, according to a survey conducted by the smart cube, a business research and analysis firm based in Chicago.

Only one in five respondents said they were considering changes to their quality control process. The research sample was comprised of top companies (annual revenue more than 90 percentile) from key consumer product sectors, including Apparel, Electrical Appliances, Furniture and Toys.

"Despite the extensive publicity involving lead-tainted products from Chinese facilities, survey findings indicated that manufacturers still perceive China as the preferred destination for outsourcing manufacturing," said Omer Abdullah, managing director of the smart cube. "Despite some expressed concern, most manufacturers regard the recalls as being isolated supplier-specific incidents and not part of a systemic wide problem or trend. China's position as an attractive location for inexpensive labor and raw materials hasn't been diminished and manufacturers don't believe that relocating to other developing countries would guarantee immunity from similar supply chain breakdowns."

Abdullah said manufacturers doing business in China rank the country's perceived lax oversight and enforcement of intellectual property rights as a bigger issue in outsourcing to the country than quality control. "More so than risks to the supply chain, intellectual property protection was the least desirable reason to outsource manufacturing to China," he said.

Other survey findings include:

  • Vendor selection process perceived as adequate: Less than 20% of respondents said that developing more stringent vendor selection processes was a key lesson from the recent product recalls.
  • On-site personnel not the primary solution: Only 12% of manufacturers said maintaining an on-site presence is a key factor to ensuring quality of outsourced products and preventing product recalls.
  • More U.S. Government regulation not the answer: Only 35% of respondents agreed that U.S. government initiatives would help eliminate or reduce product recalls while 51% believed the Chinese government could have a positive impact.

Fundamentally, survey respondents were very explicit that the onus was on them to ensure effective supply chain management and quality control and that, at the end of the day, it is the individual company's responsibility to ensure the safety and quality of the end product.

For more information and analysis on the smart cube survey, please visit www.thesmartcube.com/blog.

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