Lean Manufacturing in China: Opportunities and Challenges

As China’s market opened, companies flocked to get access to the largest market in the world.  They brought with them new technologies and new manufacturing methods like lean.  The opinion of a Toyota Production System (TPS) master trainer from Toyota is that China is “the easiest place in the world to teach TPS.”  Why would he say that?  Is China apt to become the global leader in lean?

Despite their conflicts, China and Japan are culturally similar as they share certain Asian religious and cultural heritages.  Religions like Buddhism and Confucianism have Chinese and Japanese versions and take a holistic view of the world, stress the importance of clearing our mind to be present in the moment, push us to strive for perfection, and push us to be teachers who are widening our sphere of influence to benefit others.  According to the Hofstede Centre, China and Japan are “collectivist” societies compared to the individualistic societies of the West. Those at the lower end of the socioeconomic ladder still accept their place and tend to obey those in power compared to the rebellious West.

Of course, there is a lot of variation around any central tendency. There are at least three categories of companies:

• Foreign Ventures-Joint Ventures:  Many brought lean practices to China and found a compliant work force
• Entrepreneurial Chinese Ventures: Culture depends on the owners and very large companies have mobile work force (e.g., 40% labor turnover)
• Large government companies:  Trying to shift from Chinese bureaucracy

Yet, many western companies can point to their Chinese manufacturing plants as global role models for best practice.  One example in Tianjin is the Energizer plant.  There T.S. Neo, originally from Singapore, was brought in as plant manager to build a culture of high engagement.  Shortly after he arrived, the Great Recession hit and sales plummeted.  He did, however, receive permission to retain the workforce to continue on with kaizen efforts toward the goal of getting equipment uptime from 60 percent to above 80 percent. 

T.S. Neo emphasized 5S to make the workplace organized and attractive.  He continues to walk through the plant every night with his team seeking kaizen opportunities. 

It is important to understand that training is non-stop.  Even the famous Taichi Ohno approach of standing in a circle and observing to see the waste recognizes that the effort must be constant.  Many forms of recognition and rewards for the community such as awards for best kaizen, annual family vacations for all, and putting ideas immediately into practice have led to a loyal workforce with less then 3 percent turnover compared to the norm in the area of 30 to 40 percent.

Energizer Plant Workforce in Tianjin, China

Energizer Plant, Tianjin, China

Examples of results in the Chinese plants include:

1. Awarded “Most Improved Lean Facility” in 2011 by Energizer Global Lean Office 
2. Reduced Maintenance Costs by 26%
3. Reduced Unplanned Downtime by 28%
4. Reduced Tooling Costs by 11%
5. Achieved Lowest Scrap Record in 2012
6. Received 1^st Class Harmonious Enterprise Awards by Binhai New Area in 2011 and 2012
7. Recognized with Increase in Manufacturing Capacity by Energizer 3 Times

Every culture has its strengths and weaknesses.  The individualistic and relatively rebellious culture of the United States, for example, leads to challenges that can improve the company and the high rate of business start-ups.  It is clear that China has great opportunities for the future, but only with the right type of leadership that can tap into the strengths of its rich cultural heritage.

Dr. Jeffrey Liker is professor of industrial and operations engineering at the University of Michigan and author of The Toyota Way.  He leads Liker Lean Advisors, LLC and his latest book (with Gary Convis) is The Toyota Way to Lean Leadership.