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Quality Risks in the Growth of China’s Private Automotive Aftermarket Manufacturers

Since China's entrance into the WTO, auto parts manufacturing in China has rapidly developed, and various types of manufacturing enterprises and business entrepreneurs are constantly emerging. In general, there are two groups of Chinese private entrepreneurs with previous background in the automotive industry: many used to work in sales for some automotive companies and left once gaining enough customer resources, while others are former technical or quality engineers or managers at those companies who left after accumulating sufficient knowledge and experience.

International buyers tend to prefer factories run by owners who know the technologies and understand the quality. Such enterprises, usually small at the early stage, easily become the first choice for many international buyers because of their low overall cost and competitive prices. The buyers believe in the factories’ products, because other than the price advantage, quality can usually be guaranteed without the need for costly factory audits or inspections.

At the early stages of growth, these business owners spend most of their time and effort on product development and quality control. Their personal attention is critical in ensuring product quality. In general, the factories’ product qualities are indeed quite reliable at this stage.

As the companies expand, however, the owners gradually come to realize that they have to constantly secure more orders in order to survive and continue to grow. So, they start to focus on getting more customers and orders. But new problems come up once orders start to come in: the lack of capital, production sites, capacity and production and testing equipment, the worker shortage and the management challenges.

Now, the owners become completely pre-occupied with finding solutions to daily operational issues, and have no time left for product development or quality control, let alone the production sites. The tasks of quality management and control are completely dependent on friends or relatives who joined the business at the beginning, while the owners only exercise limited quality management based on their relationships and past experiences. Any personal issues or sub-performance of these people would immediately lead to potentially serious quality problems.

How can international buyers take notice of such changes within their trusted private entrepreneurs?

Order confirmations start to drag on, deliveries begin to get delayed, a few issues here and there start to appear, such as incorrect goods are shipped or packaging labels are printed wrong, then various complaints start to come in from the customers.

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Strengthen the communication with the suppliers and go to the factories for claims processing;
Audit the suppliers’ quality management systems;
Send QCs for more factory pre-shipment inspections;
Start looking for alternative suppliers;
When appropriate and justified, set up offices in China, recruit product and technical engineers, SQE, QCs, and establish regular supplier audit and QC inspection programs.

Manual Slack Adjuster

Primary failure mode:

Slippery

Main causes:

Key preventive measures:

Automatic Slack Adjuster

Primary failure mode:

failure to adjust the gap automatically

Main causes:

Key preventive measures:

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Control the incoming material quality

Understand the effects of various defects and process parameters on products

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Understand the effects of various stamping processes (blanking / stretching / bending) on measurement

Control the thickness and performance of the stamping material based on standards

Observe the impact on the assembly (Take into account whether gauges are used on-site)

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Understand the effects on measurement with various machining processes (lathing, milling, grinding, etc.)

Check the compliance with standards of the dimensions and material from previous processes

Observe the impact on assembly

Cost of raw materials:

Exchange rates:

The above information is for reference only

According to a recent report of the “Top 100 International Trade Shows 2017” published by the media company Sail by Exhibition, while the German exhibitions have remained stable, the major Chinese exhibitions are growing faster. The changes of the top 100 exhibitions over the past 10 years have clearly shown the eastward shift of worldwide exhibitions.

SHENTOU SUPPLY CHAIN MANAGEMENT CO. LTD. is a Shenzhen, China, based company serving international automotive clients in the implementation of their China strategies and programs. CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING is a monthly newsletter published by Shentou to address the specific and unique quality challenges and concerns international automotive companies face with suppliers in China. Comments are welcome at qms@shentou.com. Click here to subscribe.