Estimated reading time: 4 minutes

EPTE Newsletter: When "Made in USA" Means Trouble

A DKN Research newsletter released a couple of years ago commented on the quality of products made in China, reporting that most do not trust the quality or workmanship of anything labeled “Made in China." But, if a foreign brand name is printed on the package, consumers assume the manufacturing is controlled by foreign standards. Even manufacturing companies that outsource to China do not completely relinquish control of the manufacturing process due to quality issues. The Chinese consumer prefers more expensive foreign made brands for the same reasons. 

The shoe may be on the other foot now. News media in China and Japan are reporting on an American company charged with selling subpar food products. Apparently, an American meat dealer in China has been selling expired meat to distributors. Instead of pulling the outdated product from the supply line, thecompany is re-labeling the meat with a new expiration date. Many restaurants and food companies use this American-based supplier because of price and product availability. A manager from a meat distributor was recently interviewed by a local newspaper and said, “We have doing business this way for years. Everybody in China does business the same way and no one has been killed eating our meats.” Unfortunately, consumers have no choice when purchasing meat products if they want to save money.

The news sent shock waves throughout the food industry in Japan. Companies are reevaluating their purchasing habits from distributors in China and the parent company of the American supplier in question has ordered them to stop shipping expired products. Many customers have stopped purchasing products from the American dealer and are looking for alternative vendors in China.

One of my business associates trades frequently with Chinese companies and shared his experiences with me. He is the president of a mid-sized electronics company in the U.S. All their products are custom designed based on customer’s requests. The company has no manufacturing facility in the U.S. and relies on sub-contractors in Asia. They prepare detailed drawings with exact specifications, including a strict quality assurance process and test method, and have branch offices in China to assure a level of quality control from their sub-contractors. Even with all these safeguards in place, his company still tests every product that arrives at their plant in the U.S. My friend showed me several large trash bins filled with NG parts that could not pass the quality control testing process. These are the additional costs needed to maintain quality and are priced into the products bottom line.

The “Made in China” label can be found on almost every item in the world, not just products from the electronics industry. Still, Chinese manufacturers pay little attention to putting out a quality product. Foreign companies in China maintain the same quality level as their parent companies, but are overwhelmed by the low-cost business culture in China. Price still drives sales in China. The bottom line is this: If you pay cheap, you get cheap!

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

*To view past issues of the newsletter, click here.

Headlines of the Week

(Please contact haverhill@dknreseach.com for further information of the news.)1. NGK (Major ceramic product manufacturer) 7/11The manufacturer will expand manufacturing capacity of NOx sensor device 50% to 10 million units per year to satisfy growing demands in automobile applications. 2. Kyoto University (Japan) 7/11The university has developed a new metallic magnesium-based secondary battery with increased energy density, improved safety, and at a lower cost than a lithium ion battery.3. Sumitomo Corp. (Major trading company in Japan) 7/14The company plans to build a new biomass power generation plant with 75 MW capacity in Aichi Prefecture. Commercial operation will begin in 2016.4. Tohoku University (Japan) 7/14The university has co-developed a new porous silicon powder with an open cell structure as the anode material with a large relative surface. 5. FDK (Major device manufacturer in Japan) 7/15The manufacturer has developed a new tiny power inductor, “MIPSKZ1608G,” (1.6 x 0.8 x 0.3 mm) with an LGA package for wearable and mobile devices.6. J Touch (Major touch screen manufacturer in Taiwan) 7/19The manufacturer will begin the volume supply of a metal mesh-type touch screen to Japanese customers in the fourth quarter. The company invested NT $1 billion for the manufacturing line last year.7. FDK (Major device manufacturer in Japan) 7/22The manufacturer has commercialized the smallest insulation type DC/DC power module “KD Series” for both of SMT and TH mounting. 34.28 x 22.8 x 8.5 mm.8. University (Japan) 7/22The university has co-developed a new nano-granular film material with giant dielectric and magneto-electric responses at room temperature.9. Furukawa Electric (Major cable manufacturer in Japan) 7/25The manufacturer has developed a new tin plating process, “Anchor Fou,r” for the lead frame soldering process as an alternative solution to gold plating. It has a longer life in avoiding surface oxidation.10. TANAKA Holdings (Specialty metal product supplier) 7/29The supplier will provide MEMS CORE, a patterning technology with sub-micron gold powder. MEMS CORE will subcontract the packaging for MEMS manufacturers.

Recent Articles from DKN Research

To view recent articles, click here.