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Don't just put lipstick on China's exports - ensure good lipsticks
By John Gong |
December 3, 2009, Thursday
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Print Edition
Print Edition
ACCORDING to a Shanghai Daily report on Monday, the Ministry of Commerce has launched a global advertisement campaign to promote "Made in China" as a brand to boost the nation's international image.
The ad uses the clever slogan, "Made in China, Made with the World," highlighting the way Chinese companies cooperate with foreign multinationals in producing high-quality goods.
That "Made in China" needs a face-lift is long over due. Having lived in the West for nearly two decades, I think I am entitled to say that Chinese goods do sometimes have a stigma, not enjoying a particularly good reputation among quality-conscious consumers in the West.
A series of scandals associated with Chinese exports to the US in recent years has wreaked havoc with the "Made in China" image.
These include toys made with lead paint, melamine contaminated pet food, poisoned toothpaste, and more recently sub-par quality drywalls - although charges against Chinese producers may not always be fair.
Corporate America has its share of guilt in Chinese exporters' cutting corners.
These off-shoring companies routinely insist their suppliers in China reduce prices every year in what is called the race to the bottom, but don't bother to care how those costs are cut or what standards are violated.
Those might be isolated incident, but they whet the appetite of news editors at many Western media outlets with a penchant for blowing things out of proportion when it comes to unpalatable news about China.
Imports are different from goodies manufactured domestically, and they tend to have a spillover effect on all exports as a whole.
If a supplier loses export business because of nonconformance to the foreign buyer's quality requirements, this affects not only that company's future, but also the image of the exporting country.
For example, when the news gets out that the Sesame Street toys used lead paint, people first think of it as Sesame Street toys from China, as opposed to Sesame Street toys from Mattel, which is an American toy making company based in El Segundo, California. That bad reputation spills over to all toys of all brands manufactured in China.
Microeconomics theory predicts market failures when there's a buyer-seller information asymmetry.
The issue is particularly exacerbated in the export sector, where one bad apple can rot the reputation of the whole shipload crossing the Pacific. And here is where the government needs to step in and play a more active role.
China's export regulators must insist that all businesses in the export sector - Chinese and foreign - maintain high standards by increasing their quality controls and inspections.
The Ministry of Commerce already has a foreign trade credit system that monitors and punishes violating companies. But there's a lot to be improved in terms of quality controls and inspections, particularly at a national level.
One country that China may learn from is India. India enacted a comprehensive law in 1963 to ensure an appropriate level of quality for exports.
It has developed infrastructure to provide third-party quality control measures for all exports, which effectively minimizes the possibility of company nonconformance.
So, in addition to putting lipstick on China's exports with ad campaigns, China needs to make sure that the lipsticks themselves are also made with the kind of quality that deserves the "Made in China" label.
(The author is an associate professor of economics at the University of International Business and Economics. His email: johngong@gmail.com)
The ad uses the clever slogan, "Made in China, Made with the World," highlighting the way Chinese companies cooperate with foreign multinationals in producing high-quality goods.
That "Made in China" needs a face-lift is long over due. Having lived in the West for nearly two decades, I think I am entitled to say that Chinese goods do sometimes have a stigma, not enjoying a particularly good reputation among quality-conscious consumers in the West.
A series of scandals associated with Chinese exports to the US in recent years has wreaked havoc with the "Made in China" image.
These include toys made with lead paint, melamine contaminated pet food, poisoned toothpaste, and more recently sub-par quality drywalls - although charges against Chinese producers may not always be fair.
Corporate America has its share of guilt in Chinese exporters' cutting corners.
These off-shoring companies routinely insist their suppliers in China reduce prices every year in what is called the race to the bottom, but don't bother to care how those costs are cut or what standards are violated.
Those might be isolated incident, but they whet the appetite of news editors at many Western media outlets with a penchant for blowing things out of proportion when it comes to unpalatable news about China.
Imports are different from goodies manufactured domestically, and they tend to have a spillover effect on all exports as a whole.
If a supplier loses export business because of nonconformance to the foreign buyer's quality requirements, this affects not only that company's future, but also the image of the exporting country.
For example, when the news gets out that the Sesame Street toys used lead paint, people first think of it as Sesame Street toys from China, as opposed to Sesame Street toys from Mattel, which is an American toy making company based in El Segundo, California. That bad reputation spills over to all toys of all brands manufactured in China.
Microeconomics theory predicts market failures when there's a buyer-seller information asymmetry.
The issue is particularly exacerbated in the export sector, where one bad apple can rot the reputation of the whole shipload crossing the Pacific. And here is where the government needs to step in and play a more active role.
China's export regulators must insist that all businesses in the export sector - Chinese and foreign - maintain high standards by increasing their quality controls and inspections.
The Ministry of Commerce already has a foreign trade credit system that monitors and punishes violating companies. But there's a lot to be improved in terms of quality controls and inspections, particularly at a national level.
One country that China may learn from is India. India enacted a comprehensive law in 1963 to ensure an appropriate level of quality for exports.
It has developed infrastructure to provide third-party quality control measures for all exports, which effectively minimizes the possibility of company nonconformance.
So, in addition to putting lipstick on China's exports with ad campaigns, China needs to make sure that the lipsticks themselves are also made with the kind of quality that deserves the "Made in China" label.
(The author is an associate professor of economics at the University of International Business and Economics. His email: johngong@gmail.com)
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