Chinese supplier quality

Quality still remains the No. 1 criteria for any outsourcing activity. Imports from third-party suppliers account for greater than 80% of APIs (active pharmaceutical ingredient) in the United States and 40% of medicinal products, yet the FDA (US Food and Drug Administration) continues to conduct far fewer foreign compared to domestic inspections (Mullin, 2011). Contaminated heparin was judged as the cause of 81 deaths in the United States in 2008. FDA traced the contaminated API to a Chinese supplier (Changzhou SPL Co.). 

Unprepared for cut-throat competition. As we mentioned earlier, Chinese companies are ruthless in their efficiency, and foreign players trying to emulate this can run into major hurdles. In particular they are at threat from a weak intellectual property environment, disappointing supplier quality, and unreliable local distributors. 

First, quality Chinese suppliers quickly replace imports for major foreign OEMs in China. The Motorolas, GMs, DuPonts, etc. in China would all rather buy locally than import because it brings down costs and makes them more competitive. Most have formal policies stating as much. In some cases (e.g. Boeing), local content is required by the Chinese government in return for major purchases. (Such offset contract clauses are not Chinese inventions, incidentally. They have been common in the West for decades.) In other cases, it is pure... 

Access to technology and information was also generally constrained. Some firms relied on hard-pressed CEO s visits to trade fairs, and on established suppliers, for technical information, for training and upgrading support, and sometimes for trade credit. Ensuring quality of inputs from Asian suppliers was a constant challenge. Machinery suppliers -predominantly Indian or Chinese - installed, trained and provided spare parts and advice. Two firms had gained external donor support for... 

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