My last role in China found me in the manufacturing industry, specifically, the quality control (QC) industry.  The QC industry is a unique subset of the manufacturing industry, and while it is fairly complex, a simple explanation should suffice.  A QC company will usually be hired by a retailer to go and inspect a shipment for defects.  The QC company will then send employees (inspection teams) to a factory to inspect a shipment.  If a defect is found, the employee is supposed to report it so that the retailer can make a decision on whether to accept the shipment or not (rejecting a shipment causes the factory to incur financial penalties from the retailer). 

In an ideal world, this happens without any complications - the QC industry’s main purpose is to inspect shipments of goods for defects and report any defects to the customer, providing a neutral and trusted third party opinion on the quality of the product.  Unfortunately, we live in a not so ideal world - there are many opportunities for corruption along the way, which is why the QC industry came to be in the first place.  Retailers learned that they could not trust a manufacturer or vendor to deliver a quality product all the time.  The retailers needed a third party on-site that they could trust; retailers needed the quality control industry.

My duties were to add an additional level of scrutiny onto the industry; I investigated inspection teams.  I followed a team to a factory and looked for signs of corruption by checking to see if the:

1. necessary number of items were inspected
2. shipment was at a certain completion level
3. factory was trying to hide things from me
4. team and the factory’s stories were the same or different (what was the sequence of events? did the two sides have the same sequence?)
5. team tried to extort the factory
6. factory tried to bribe the team

At the same time, I also learned all about the various methods and procedures required to inspect a variety of goods, ranging from hard goods to soft goods.  A soft good is something like a towel, some linen, or some clothing, while a hard good is something like a desk, a chair, a light, a CD player, or a children’s toy.
But perhaps the most exciting part of this job was the travel; I was able to go to over 40 cities in China, including first, second and third tier cities as well as villages and towns.  Some of the more memorable cities I ventured to are as follows (in no specific order):

• Shanghai
• Shenzhen
• Guangzhou
• Dongguan
• Hong Kong
• Langhi
• Hesan
• Xinde
• Nanling
• Zhuhai
• Zhangwen
• Zhuzhang
• Gaoming
• Zhongshan
• Foshan
• Nanhai
• Xinhei City
• Jiangmen
• Longshan
• San Xiang
• Shun de
• Dongfeng
• Chungshan

I’ve been a little quiet over the past few months as I’ve been a little busy.  I returned to Canada about 2 months ago and have since secured a position working for a North American company in Asia - so I’ll be returning to Asia in the not too distant future.  I’ve also been working on a market research and consulting project for a Canadian enterprise; overall the project was successful, and I’ll be sharing a few things I’ve learned from my research.

On another front, The Economist ran a “special report” on China in the March 31, 2007 edition.  If you didn’t pick up a copy at your local newsstand you can view all 14 pages of the report online here, here, here, here, here, here, here, and here (if you don’t have an economist.com account, try searching for the article title on google).  Overall I think the report was fairly informative, and gave people a good basic understanding of the current state of China.

Perhaps my favorite part of the report was in the first article, Reaching for a renaissance.  The article goes on to discuss the rise of China, and how the Olympics will start the “reaching out” of China to the rest of the world.  Traditionally, the world has come to China for business, but this trend is changing, as China is now pursuing a “Going Global” strategy - taking its enterprises to a global level, investing in global economies and going after global sales and revenues.  The article goes on to discuss “misperceptions” about China’s current economic power, noting that China isn’t necessarily playing “dirty”.

But what is the nature of China’s rising economic power now? There is room for misperceptions. Policymakers in Washington, DC, are alarmed by China’s export strength and its ballooning trade surplus. China is lambasted for having mercantilist policies that artificially boost exports, depress the Chinese currency, restrict imports and widen America’s trade and current-account deficits.

In several respects that view is wrong. With a trade-to-GDP ratio of around 70% and a sea of foreign investment, China is one of the world’s most open economies. Much of the growth in America’s bilateral deficit with China reflects a shift in low-cost manufacturing from other parts of Asia to the Chinese mainland. Certainly China’s currency is undervalued, having followed the dollar down since 2002. But that is reinforcing inflationary pressures, particularly in wages, so China’s advantage as always the lowest-cost producer can no longer be taken for granted.

America’s emphasis on exports misses the point about China’s economic power. That power comes not so much from being a seller of things but increasingly from being a buyer, an investor and a provider of aid, in Asia and beyond. One Chinese diplomat puts it thus: “Imports: that’s real diplomacy, because it means you’re attractive to others. It means other countries need you, not that you need them.” This subtle understanding sets China in stark contrast to how Japan viewed the world during its post-war rise.

China has undergone a dramatic growth since 2002, and previous notions of what China is and is not doing are not necessarily valid anymore.