China’s Lean Journey


IndustryWeek : China's Lean Journey

Here's an eye-opening piece from “ ” online. I've heard similar reports from a number of people now, including a friend of the blog who will hopefully be contributing to the Blog or Podcast on this topic upon his return from China.

The author of the IM piece says, in part:

“I also expected to encounter, at best mild interest in, or at worst distain for Lean Manufacturing. I was wrong. Our workshop participants were all keenly interested in Lean Manufacturing. Some of their companies had active lean initiatives in place.”

You might ask, why does a low cost country need to be so worried about lean, they have cheap labor, right?

“…they told us they are losing their low cost labor advantage to Vietnam and India. Further, they said they had seen Mexico gradually lose its low cost labor advantage and they did not want China to lose its competitive position to other economies that can supply cheaper labor. They realize that their low cost labor advantage is temporary.”

There is always somebody cheaper. China is learning the lesson that Mexico apparently did not. You can't rely on cheap labor forever. Labor shortages are driving up wages in parts of China. Will the vagabond multi-nationals move on to Vietnam or other countries?

This pattern was repeatedly earlier by RCA, in their march across the country, eventually moving the Mexico. It was detailed in the book Capital Moves: RCA's 70-Year Quest for Cheap Labor. I read this book many years ago and it still has quite an impact on me today. RCA did nothing but chase cheap labor from state to state, from New Jersey, to Indiana, and then Tennessee, decimating a community each time they moved to a cheaper state and eventually Juarez. A more detailed review of the book is here.

I think it's still worth reading as a cautionary tale. RCA chased cheap labor. Where are they today? Are they even still around?

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1 Comment
  1. Kevin Carrelli says

    I also have seen the desire in Taiwan and China to become better manufacturers through lean education.
    China is being pulled in two directions. The desire for very cheap labor has actually driven wages up in many industrial provinces compared to Vietnam and India.
    There is also the pull for China to be able to build higher tech products. Taiwan has a booming semiconductor industry partly because China’s inexpensive manufacturing was seen not seen as being capable.

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