30 September 2008 - Chinese Quality

Chinese Quality
Tuesday 30 September 2008

Today's other news, not the Stock Market dropping 777 points, is that Cadbury is recalling many of their chocolate products due to contamination with melamime attributed to Chinese milk products.

I have travelled to China and absolutely enjoyed the country and the people. However like any other country, there is a distinction between a people and their institutions. What I am about to write is based upon my personal experience and observations. I have no animosity or prejudice towards the Chinese people. However I have a commitment to the truth and at the risk of being considered as biased, I will share my experience.

On my last project with Bechtel, literally and figuratively, I was the Project Field Engineer for the construction of a coal fired power plant in Vietnam. The power plant was being engineered, procured, and constructed by Chinese companies. The Vietnamese government wanted an "international class" power plant so they had contracted a European firm to develop bid documents and specifications for the project.

When the Chinese submitted a proposal that was approximately 50% of what a western company would bid for the project, the Vietnamese required that a recognized international Engineering and Construction (E&C) firm become involved in the project. Bechtel became involved in the Project as a subcontractor to the prime Chinese contractor. Bechtel's written scope of work was to be Construction Management Consultant to the Chinese contractor.
The first Bechtel team did not get along well with their Chinese bosses and were replaced. I was part of the second team assigned to the Project although my position as "Project Field Engineer" was a newly created position.

As a Project Field Engineer for over 30 years with Bechtel, I was responsible to ensure that the construction of facilities conformed to the contract technical requirements, drawings and specifications. I supervised various field discipline engineers to resolve technical issues, witness tests, and inspect the ongoing installation work to ensure quality met specification, code, and contract requirements.

Soon upon arrival at the site it was apparent to me that Bechtel was "lip stick". "Lipstick" is a rather derogatory term for a woman who is represented as the girl friend of a gay man who wishes to hide his sexual preference. The girl serves no purpose other than to make the man look better - just as Bechtel was expected by our Chinese bosses to do in Vietnam.

More disturbing than the Chinese attitude towards Bechtel, were their actions related to the contract and specifications. There was very little, if none at all, commitment to follow the contract, code, or specifications that they had agreed and signed to follow. What was demonstrated everyday was their fixation and obsession to "build it the way we build it in China".

The Chinese prime contractor and their Chinese subcontractors basically did what they wanted, how they wanted, and when they wanted to irrespective of the OWNER, the Contract, or specifications.

Any attempts to identify non-conformance with contract requirements, effort to correct non-compliance, and to prevent reoccurrence was viewed as being "non-supportive" and "causing the Chinese to lose face"

I will not go into a technical discussion or analysis as to the merits the way they build it in China. It really doesn't matter because the way the Project was to be designed, and built as defined in the contract documentation for this particular Project.

One day my office mate, the prime contractor's Deputy Project Manager, and I had a conversation. He initiated the conversation by asking about how people were promoted with in Bechtel and in the USA in general.

I stated that it was not always the case in Bechtel or in other US companies but in a vast majority of the cases, people were promoted and rewarded based upon the quality of their work. I added that a boss did not have to like a subordinate in order for the employee to be rewarded or even continue employment. Most bosses consider the amount and quality of an employee's work product in making personnel decisions.

Very tellingly, he told me that things were not that way in China. In Chinese companies, bosses consider loyalty to be most important and the determining factor for promotions, compensation, and continued employment. I respect this man and he is very intelligent. He is studying for his MBA so I have no reason to doubt or question the information that he shared with me.

He added that a Chinese manager wants to have people around him that will support him in all situations - even when he is wrong. More disturbing, the employees are always expected to agree with him. It is not the responsibility of a Chinese employee to keep their boss out of trouble.

Conversely I pointed out to him that I expected my subordinates to keep me out of trouble. That might involve them disagreeing with me and telling me of their disagreement and explaining why they disgree. After discussion, I would make an informed decision considering their position after which I expected them to follow through on my decision. Apparently Chinese supervisors do not value that type of employee feedback and involvement. There is also a cultural bias for employees to not to speak their minds. To speak up is to stand out. To stand out runs the risk of perhaps being wrong and losing face. It is considered better to be part of the group than to stand out and excel for someday you could be wrong and have to be held accountable.

My observation of Chinese companies is that all efforts are made to obscure accountability. Everyone is part of the faceless mass of the group. If the error can not be ignored, which is the preferred course of action, then the problem is corrected with not a great deal of effort made to ensure that it does not happen again.

We had a serious problem with high strength structural steel bolts at the Project. In accordance with the US specifications contained in the contract, if one bolt of a random sample fails a test, the entire lot fails and is rejected. This means that if 5,000 bolts are delivered to the job, about 15 bolts are pulled and tested. If one of the 15 fails the test, all 5,000 are rejected and can not be used.

The Chinese wanted to use a Chinese specification which allows all of the 5,000 bolts to be used if the average of the test results meets the test requirements no matter the number of failures. If the average of the test results do not meet the test minimum requirements, the 5,000 bolts can still be used if the low test results are within one standard deviation or some other hocus pocus requirement.

Even under the flexible requirements of the Chinese specification, there were three lots of defective bolts detected on the Project from the same Chinese vendor.

As was the custom whenever there was a problem that could not be ignored, a special meeting was held. Each special meeting followed a script. The Chinese Project Manager would talk about 20 minutes about what a great company they were, how well they have done building these types of facilities in China, how important quality is, how everyone must be aware of quality, what great quality they use in building these projects, and how everyone must work hard, and cooperate to finish the project on time. All this is said in flowery and sonorous words as well as demeanor. After some short remarks by the American Project manager to attempt to focus attention and identify the problem of the bolts, we went around the table for each Chinese representative - Superintendent, Field Engineer, QC Manager, Procurement Manager. and so on - ad nauseum. Each one of the Chinese representatives basically started by stating "Yes, I agree ..." and then continued to paraphrase what the big boss, the Chinese Project Manager, had stated. After between 1-1/2 to 2 hours of this, one of the Chinese members would triumphantly state that the vendor has agreed to replace the bolts.
It was during the special meeting about the third incident of defective bolts, even by Chinese standards, that I lost it. My only regret is that I had not lost it at the meeting for the first incident of defective bolts. My presence at these special meetings was largely ignored and as the meeting for the third time of defective bolts was closing to almost everyone's satisfaction that the vendor had offered to replace the defective bolts once again, I demanded to be heard and required that my words be translated. I expressed my amazement that we were still dealing with this specific vendor, although I may have referred to him as "F**ker", who had already supplied defective materials three different times. I asked what assurance or confidence did we have that the replacements or any other bolts would not be defective. I got no answers or response and the meeting closed. Later I got word back that my comments were not appreciated and some mumbo jumbo regarding people losing face. It was at that moment that I developed my principle regarding Chinese companies ' If they want to quit losing face they need to quit making stupid decisions. Their sensitivity regarding me or anyone else identifying their mistakes and their consequential loss of face is not justification or a reason to ignore or accept a lack of quality or conformance."

I have many more examples of the difference between Western and Chinese commitments to contracts and specifications but do not want to bore you with them.

Many times, Western managers were spending their time looking for ways to accept the work as produced by the Chinese. In the case of the not so High Strength structural steel bolts - how strong do they really need to be for this particular application? I tried to determine that from the Chinese and could not get their cooperation even in that regard. I have corresponded with other expats who have dealt with Chinese companies in China and outside of China. Their experiences are very much the same - Chinese companies doing what they want, how they want, when they want regardless of specifications or contract requirements with Western managers looking for any and all excuses to accept the non-conformances in order to avoid "embarrassing" the Chinese.

So why should you care? What does this have to do with you?

Shortly after I left the Project (the Chinese felt that I was not being effective and since they paid the bill ...), there was an earthquake in China. The scandal was that several schools collapsed killing hundreds of school children. Further investigation revealed that the schools were constructed with less rebar and lower quality rebar than required. Next door to the schools, government buildings which apparently were built correctly were standing virtually unscathed. I was not surprised based upon my experience and observations in Vietnam.

So why should you care? What does this have to do with you?

Walmart is China's 8th largest trading partner. I am not talking about just in terms of companies that buy Chinese products. I am talking about COUNTRIES that purchase Chinese products - Walmart is 8.

Walmart stands between you and the Chinese companies, their QC performance, their manufacturing safety, as well as your and your family's safety.

The US government gets inovlved somewhat in the issue of Chinese product safety but at times it appears to be more political posturing than a legitimate concern over quality and safety. A while ago there was a spate of allegations over Chinese toys and seafood - just as trade negotiations were being conducted and the US was concerned over Chinese policy regarding the value of their currency.

Now the international news broadcasters have picked up on the contaminated milk problem in China with babies getting sick and dying over there.

Cadbury has determined that some of their candy made in China is contaminated and is recalling the products (distributed in Asia not the USA or Europe).

There are without doubt some good Chinese products but there is definitely a lack of trust in Chinese product safety. Trust is earned. To date the Chinese have not done all that is necessary to earn trust. The US government has not done all that is necessary to ensure consumer safety in light of the lack of trust in Chinese product safety - perhaps they are too concerned about the Chinese losing face.

Walmart continues to do very well selling the cheap Chinese products that may or may not be harmful to you and your family. You continue to buy the cheap Chinese products assuming that you are being protected.

Just as post-war Japan had to overcome cheap and shoddy manufacturing perceptions, the Chinese can and are well capable of producing safe as well as quality products - IF they are held accountable.

I do not advocate a boycott of Chinese products, but I personally use my observations and experiences with Chinese companies in making decisions of what Chinese products that I do buy - example 220v electric drill, Chinese made or German made for $35 USD more.

I have confidence in my new German electric drill - double insulated no need to be grounded.

Next blog – I promise no politics or consumerism – just adventure at the Phuket Vegetarian Festival