QUALITY IS SHANGHAI’S LIFEBLOOD1
DECEMBER 1, 1988
German expert Werner Gerich has offered many excellent suggestions regarding quality management in Shanghai’s factories. He’s in his 70s now and has worked in factories for decades. He is very experienced, and his suggestions are well worth paying attention to. His impression of Shanghai’s factories is that they are “dirty.” The windows in some factory shops are left open, their glass isn’t wiped, and there is dust everywhere. How can good products be made in such a dirty environment? Even the equipment is ruined. We are not rigorous in many areas of enterprise management. I think we must carefully study Mr. Gerich’s suggestions one by one and adopt forceful measures to improve our work. Our spirit should manifest itself in the details, and we should be meticulous about making products of good quality. Quality is Shanghai’s lifeblood.
The insufficient supply of raw materials greatly threatens the continued growth of Shanghai’s industries. If they cannot get past this difficulty, they will shrink or even fail to survive. What should we do? On the one hand, we still hope to keep receiving support from the central government and other regions; on the other hand, we must engage in large-scale importing and exporting. If we do not do so, nobody will be able to rescue Shanghai.
Given how difficult it has been to obtain raw materials for Shanghai this year, why is it that we accomplished our industrial production tasks even better than expected? The growth rate for the whole year might reach 8% because to a large extent we engaged in large-scale importing and exporting, and we imported raw materials in a timely way. But imports require us to spend forex, so we must export to earn forex—it won’t do to borrow and not repay. That’s why it will be hard for Shanghai to survive unless it works hard to export, but to earn forex through exports, products must be of high quality.
At present, the price of raw materials continues to rise, yet we cannot raise the price of finished products. If quality isn’t improved and we just have the same old products, how can we raise prices? When materials go up by so much, your same old products go up by a similar amount—this isn’t going to work. You must have good quality at good prices, you must develop new products and new types of products. This year, the city government has resolved to start 14 key industrial breakthrough projects that integrate sci-tech with production. The purpose is to promote the integration of sci-tech and production at thousands of enterprises. New products will offer good quality at good prices, they will be more profitable than old products, and the money they make will be enough to offset the losses from old products. After a while, the old products will be eliminated, you will only be producing higher-grade new products, and the state of your enterprise’s operations will take a turn for the better. Then you keep introducing better products, constantly upgrading and updating them. This is the sort of operational strategy we should adopt.
The quality I speak of includes the product’s functions and technical level—not the quality of some second-rate substitute. Shanghai’s products must be manufactured to international standards. If we use lower standards, even if quality management is very good, the products still won’t sell. We must produce according to international standards, we must produce to export, we must produce according to the customer’s needs. If any national standards are unfavorable for exports, they should be revised according to procedure to suit the needs of exporting. We shouldn’t have two sets of standards because then it would be very hard to make strict demands of the workers.
Since our goal is large-scale importing and exporting, we must first be able to export. A factory director must have an awareness of quality. A person who does not recognize that quality is Shanghai’s lifeblood, who does not have such a high awareness of quality, cannot be a factory director. Moreover, factories must institute strict systems for the inspection and supervision of product quality. Under the current circumstances, we won’t be able to ensure quality unless we have people who give no special consideration to friends or family, who play no favorites, and who are not self-interested. Strengthening inspections and implementing total quality control are one and the same. A factory must also have a Party secretary who is both resolute and patient, who can firmly uphold the director’s authority and not compromise on issues of quality. Furthermore, the union and Youth League must not be accommodating or compromise on issues of quality.
Shanghai’s position as the domestic leader in technology is now being seriously challenged. We must loudly proclaim that we will retain and maintain our position, and we must have the drive to fight to be number one in the nation. On a visit to the Shanghai Watch Factory with Huang Ju, I said that the factory will have no future if it still fails to restructure its product lines in a timely fashion, and that it must hurry up and make quartz watches and indigenize parts. Since then, this factory has developed quartz watches and done so very quickly—it produced a million of them in short order. However, the repair rate is as high as 6%, and I hear that this is an “advanced level” for this country. We cannot be satisfied with such an “advanced level.” You must understand that even if your repair rate is 1%, to the customer it’s still 100% substandard. I made this suggestion to the watch factory: all substandard watches that stop working after they have been sold should be replaced. The most important thing for a factory is its reputation. Production should be organized according to international standards. If quality declines, it won’t matter no matter how much quantity increases. To reiterate, quality is our lifeblood, quality is performance. If you cannot ensure quality, you should refuse to accept any high targets.
Inspecting the Shanghai Wristwatch Factory, June 16, 1988, with factory director Qi Delin.
Of course some will say, you can’t focus on just one sector if you want to improve quality. What if raw materials and parts are substandard? This is indeed a difficult problem. I think we should look at it this way: Shanghai’s industries have a fairly strong ability [to produce the needed parts]. Provided all our factory directors strengthen their awareness of quality, we will be able to solve these problems. I demanded that the indigenization of the Santana be done entirely according to German standards. It has now been shown that no corners were cut in indigenizing the Santana, that standards were not lowered for indigenization. The indigenization rate this year has reached 25% and it will reach 50% next year. By the year after next, we will have basically achieved full indigenization. The current phenomenon in China of disregarding quality and being lax is only temporary. Our people have a fine tradition of always trying to do better and being meticulous. From the 1950s until the eve of the “Great Cultural Revolution,” our factory management produced excellent results. The 1964 movement to learn from Daqing made very strict demands of factories. At that time, factories held technology competitions, and equipment was polished until it gleamed. Provided we maintain the spirit of doing solid work, being meticulous, and always trying to do better, hope for Shanghai will be great.
1. On December 1, 1988, Zhu Rongji invited German expert Werner Gerich to give a presentation on strengthening enterprise management and improving quality to an assembly of directors and managers from over 1,200 large and medium enterprises. These are part of the remarks he made after listening to Gerich’s presentation.