鬼佬眼中的中国 Exporting Lean to China: Know Before You Go

By Paolini, Anthony; Leu, Bekki; Chinn, Robert
PRTM's Insight http://www.prtm.com/insight/ar ... D6563
October 2005

Supply chain executives know that opening a manufacturing facility in China brings with it the opportunity for lower labor costs and increased profit margins. They also know that using lean concepts to fuel process efficiencies, reduce inventory, and eliminate waste is a proven strategy for pulling ahead of the competition.What executives are now trying to figure out is how to mesh the two. As the recent currency revaluation brings the potential of a stronger yuan—and higher manufacturing costs—minimizing waste becomes even more important.

It’s complicated issue. How can lean manufacturing concepts be rolled out successfully in China, where a massive political, economic, and social transformation is under way and workers are not as well-versed in current manufacturing standards? There are no easy answers, yet companies of all sizes—from large multinationals to small niche players—are increasingly testing the waters (Figure 1). They are finding that an understanding of China’s cultural philosophies, labor issues, and business climate will help provide the solution.

Figure 1: Leaner Machines
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While lean concepts aren’t novel, they are new in China. It is well known that lean concepts offer a proven, structured means to continuously increase quality and lower costs throughout the entire supply chain. When deployed in a manufacturing environment, lean often brings immediate improvements in cycle times, inventory levels, product quality, costs, asset performance, and scheduled-delivery targets. And though China is already known for low labor costs, the recognition by supply chain executives that the benefits beyond labor make it worthwhile has placed China on the doorstep of the lean revolution.

But implementing lean has its challenges regardless of where the implementation takes place, and China is no exception. Although China is a worldclass manufacturing hub, certain cultural practices can make a lean initiative more difficult. At the same time, China is not as experienced with modern production concepts. Executives must now find ways to address these differences if they want their companies to hit anticipated corporate milestones.

Cultural Differences

There are long-standing cultural and business ideals that must be acknowledged and managed for lean concepts to be successful in China. A core difference between Western and Chinese principles rests in the concept of guan xi, the Chinese practice of building relationships.

Under guan xi, business partners strive to work together and support one another. The prevailing rule of thumb lies in the old adage, “You scratch my back and I’ll scratch yours,” which essentially means swapping favors and developing long-term, mutually beneficial relationships while overlooking near-term weaknesses or vulnerabilities. That’s why, for example, it’s considered bad business to hold supply chain partners accountable for poor performance: it goes counter to guan xi.

Guan xi can slow down the implementation of lean concepts because it dilutes accountability. In a lean environment, when a potential line-down problem occurs, workers often decide to halt production, examine the cause of the problem, quickly report it to the appropriate parties, and fix it in a way that will prevent repeat occurrences. In a similar situation with guan xi, managers who want to avoid straining an established relationship may adopt a quick solution that does not address a problem’s root cause. This only serves to temporarily delay the inevitable; the problem will keep recurring until the root cause is addressed.

Managers implementing lean concepts will also have to contend with the perceptions of personal empowerment, and the differences that exist between Chinese and Western cultures. In the U. S. and other industrialized countries, there is a strong sense of project ownership and responsibility for results beyond individual work silos. This is less the case in China. Although employee empowerment is making inroads, traditional hierarchical structures are still the norm. Since rules are commonly dictated by the upper echelon of government or corporate leaders, the notion that an individual worker can foster change requires a major shift in fundamental thinking. Obedience to an established hierarchy is not limited to the formal management chain, but can also exist informally via guan xi, which makes individual empowerment difficult to achieve.

Without individual empowerment, continuous improvement isn’t possible. Lean operates on the notion that an end goal is never achieved—there is always more waste than can be eliminated and better quality that can be achieved. This kind of improvement has to be driven from the bottom up; a top-down directive simply won’t work. If employees are not given ownership, or are unwilling to accept ownership for continuous improvement, progress beyond the initial implementation is often lost.

Another cultural difference in China that may slow down the lean adoption rate is a tolerance for an untidy or disorganized workplace. This is counter to the principle of 5S (Sort, Separate, Shine, Standardize, and Sustain), a housekeeping program that’s essential to any lean initiative. Since China has only recently experienced an industrial transition compared to Western cultures, workplace tidiness does not get the level of attention it gets in other modern manufacturing hubs, nor is it an innate part of the daily routine. It’s acceptable to discard food debris on the street or toss cans into bushes—an inclination that can find its way into manufacturing facilities. Since workers may not focus attention on tidiness in other aspects of their lives, they have limited experience in maintaining a shipshape workstation and, likely, will not fully appreciate the performance improvement that can be achieved when tools, parts bins, and processes are organized in an exact way.

Ultimately, the tendency to prioritize stable relationships over accountability and top-down direction over empowerment, while accepting undisciplined work habits over efficient workplace standards, can lead to inattentiveness to process and product quality. By contrast, companies in other industrialized economies put a priority on quality—so much so that it is inherent in everything they do. The overriding emphasis in China on economics puts all other performance measures, like quality and waste elimination, at a severe disadvantage. This focus on output at the near exclusion of all other measures, coupled with the view that the product needs to be “just good enough” to satisfy the customer’s minimum requirements, will ultimately result in a workforce where there is little motivation to improve. For lean to take hold, there must be universal acceptance that higher quality is always possible—and desirable.