After China became a member of the World Trade Organization (WTO) in December2001, it became obvious that all Chinese firms, including the state-owned and thosecollectively owned, would have to adapt to a new competitive environment. Manyfirms have undertaken initiatives to enhance their competitiveness so that they canmeet the global challenge. Quality improvement has often received the highest priorityconsideration. Understanding how these Chinese firms operate is both important andchallenging to academics and practitioners. It is important because China representsthe largest and fastest growing transitional economy in the world. China is currentlythe largest producer and exporter of many consumer products and its future marketpotential is equally large given the sheer size of its population. It is also challengingbecause the transition of China’s economy has been largely planned by a governmentthat still maintains an active involvement in basic business affairs.
In the light of all this, the ways products are manufactured are still coming under scrutiny and criticism by several firms. This impending problem can have only one wholesome solution i.e. to deploy firms that offer inspection services who in turn test the quality and durability of products right from the get go.
A company’s Shipments often represent thousands of products. Checking 100% of the quantity would be long and expensive. A solution is to select samples at random and inspect them, instead of checking the whole lot. But how many samples does one have to select? On the one hand, checking only a few pieces might prevent the inspector from noticing quality issues; on the other hand, the objective is to keep the inspection short by reducing the number of samples to check.The relevant standards propose a standard severity, called “normal level”, which is designed to balance these two imperatives in the most efficient manner.This type of inspection is necessary if you want to check the raw materials or components that will be used in production. Buying cheaper materials can increase a factory’s margin considerably, so you should keep an eye on this risk.