VDA-QMC planning to offer membership in China

  Gasgoo.com: Please give us a brief introduction of VDA-QMC's business in China.

  Helmut Stein: VDA-QMC (Quality Management Centre of the German Automotive Industry Association) conducts training of quality  management system auditors and other quality related trainings in the automotive industry. We host common industry events in China and develop new ways of quality related trainings and standards. Our business here commenced since the beginning of 2006. In China we offer service and additional benefits to support those German companies that are already VDA members in Germany and have active business in China. Also we're planning to offer membership for local companies from early 2009.

Two ways to support German Automakers' local business

Gasgoo.com: So before offering membership for local companies in China, you now only have the existing members "transferred" from Germany. How did you support them?

Helmut Stein: Many German companies already have had a long-time presence in China. In Germany, we have highly-elaborated networking within the automotive industry, coordinated by VDA and QMC. The first of our aim or mission is to create similar networking for German automakers and suppliers, as well as their joint ventures in China. We make efforts to increase cooperation and efficiency of their internal processes. This is one big approach of the operation we carry out.

The next approach is to organize and improve the efficiency of the supply chains. We help identify and qualify suppliers. Automotive market in China is a fast growing market. We've seen that the production volume topped 9.04 million vehicles in 2007, up 22.9 percent year on year. This good development also leads to problems and some additional activities. To cater for the market's rapid growth, you need to enlarge your supply chain, to increase your production capacities; to develop high-quality parts at lower cost and faster speed--both the OEMs and suppliers have to do so. Of course, more capable suppliers are added. The key point is to keep the quality of the parts with decreasing costs.

We can not only see in China, but also in other markets, that the quality of the processes is not as good as it could be. Maybe you could produce high quality parts, but your effort to reach this high-quality level is too high, because your process is not efficient enough. So, better internal process can equal to higher quality parts at lower cost. This is a relation that many people don't really see. Even they've found that, it is still difficult to do, or follow the right approach.

The competition never stands still. As the OEMs and the suppliers try to keep in pace with the competitive society, all the participants have to move forward. One of the main points you have to keep in mind is to decide such an approach of improvement. The top management must keep the right attitude and people in practical application should also have the right thinking--the management alone is not enough to support and keep up the quality level of the process. You ought to do all the aspects together.

Gasgoo.com: Besides the German companies, you also help qualify those potential Chinese suppliers for German automakers, right?

Helmut Stein: it's quite clear that VDA-QMC is a German company, of course we have strong links to German automakers in China; also we never turn down those Chinese companies that ask for help. China is the "host land" for our company and our industry. Also we carried out lots of activities to help the joint ventures, to build its supply chain; many of the suppliers are Chinese companies and they play a specific role in the supply chain. Thus we must help qualify these Chinese companies.

Reason for "substandard products"

Gasgoo.com: According to your working experience in China, what're the reasons for any occurrence of substandard products and service? Is it because of lack of standard or lack of inspection?

Helmut Stein: I think there is not only one simple reason and that's specific for China. Cars are the result of many complex technologies. Chinese no longer produce or buy simply cars, but high technology cars. A normal car requires 6,000 to 12,000 different parts depending on the types. All these parts should work without any problems for a long period of time. So you must make sure that all the parts fit perfectly, the entire production process meets the requirements, and every procedure is kept and controlled.

Sure, you have many chances that one thing is not well controlled, and then you'll have problems. Either early or late delivery of your production lines could bring problems of your parts. So the reason behind problems is very broad.

However, the real reason, in my point of view, is the attitude of the management. The attitude of the management decides the culture and specifics of a company. If you think "things will be Okay and no need to have a look", definitely you'll have problems. If you have a straightforward and quality-oriented management, who will install good and transparent organization, processes and check routines, qualified personnel…all things being put together, then there will be desirable results. So the core problem is the attitude of management.

Gasgoo.com: Do you think some of the Chinese automakers and suppliers are in a rush to roll out new products, but paid insufficient attention to quality?

Helmut Stein: I can't say it in general as China is a developing market. There are many companies which are already high-quality companies; on the other hand, many don't reach the requirements--maybe they just don't like or want to reach, or maybe the market is Okay with the low quality products. But to develop a company sustainable, you must make sure that your products are marketable and profitable. In the automotive industry, there is no real alternative to the approach of high quality, because not only in China, but all over the world, customers don't like low quality cars which breaks down every day or every week. Nevertheless the management has to decide how fast to develop new products in accordance with the market demand.

How to be a real qualified supplier

Gasgoo.com: If the management of a company is determined to be high-quality, but they are still low in capability, then how could they improve themselves?

Helmut Stein: Maybe they need help from consulting or training companies, say from VDA-QMC. They have to know what to do, how to do and the sequence to do. To develop into a high quality company takes time, which depends on the level it starts. This is a mid-term strategy that you can't decide within one day. Also you cannot shorten the necessary time-you have to change the attitude and thinking of the workers in the company and this takes time.

You know in Germany, for an already high-quality company to become an excellent company ("excellent" means higher than high-quality) needs at least 3-5years. You have to invest into human resources and processes, which probably takes 2 years. And this is what many management people don't like to do.

Gasgoo.com: As for those potential suppliers, how to become a real certified supplier to the German automakers?

Helmut Stein: Again it depends on the level they've achieved. In Germany, we distinguish them into three levels-A-rated, B-rated and C-rated. A-rated means the best and highest level and C- rated means the lowest level. There are companies which are below the C-level, and we don't deal with such companies.

To develop a company from B to A, we have activities running in average of 5-6 months. Those companies are really willing to change and the success needs specific improvement. If you'd like to move from C to B level, it's a big gap. I think it may take more than half a year, as C means you have real discrepancies to the requirements and you need to do the basic work. You need knowledge from a consulting company and the management needs to have independent control over the company operation.

A real high-quality company has the ability to give early warnings to their customers. You should be able to make every procedure under control and when the problematic parts come out, it's clear where the problems rise and you could give your customers the explanations. When the complaints come from your costumer's side, it's already too late. This is one criterion to be a high-quality company. 

In Germany, the car manufacturers, tier-one and tier-two suppliers all have these internal statistics: they observe their production line and use the error data to communicate within their supply chain. These statistics are not published to other companies. 

Gasgoo.com: By the way, does VAD-QMC make some modification when the standards being introduced into China?

Helmut Stein: The standards and requirements here and in Germany remain the same. It's not necessary to establish two quality requirement systems-by which the performance may look better, but it doesn't help at all.

We don't invent the standards by our own, but the competition of the world market develops the standards. If you have lower standard, then you can't meet the requirement of the market. If a manufacturer cannot meet the local requirements, they could decide another suitable target market. So changing the requirements or the measurement of the performance doesn't help at all.

Thus it's very important to understand where your performance is positioned related to the same standard. Then you can decide whether or not or where to improve depending on your target market. You can change your segment in the market, or change to another marketing strategy, or address the quality problems-anyway, you need to meet the standards.

Attitude toward exports by Chinese automakers

Gasgoo.com: It's reported that Brilliance Auto, Chinese partner of BMW AG, has started to ship its sedans to Germany last month which was behind the schedule due to unfavorable crash test. Other Chinese automakers suffered similar backlashes in overseas markets too. So what's your advice for them, and could VDA play a positive role?

Helmut Stein: I don't think VDA-QMC (China) can play a big role in this game. Because to meet these requirements means they need to have a really strong design, research and development department. And if the design doesn't meet the market, then nothing more could help. To provide qualified design, they need to make enough research or analysis of their future or target market.

You have to study the requirement of the market. Also you have to distinguish what's the legal requirement and what's the market requirement. In many cases, the market requirement is higher than the legal requirement. For example, you have to know the crash requirements very well, as in Europe, especially in Germany the deadly crash behavior of a car model could deny any possibility to sell it, even it could meet the legal requirements. An unsuitable car could waste your money and time, and the brand image could be severely destroyed.

So I think this is not only experience for this company related to the production but more related to the design of this car. You can't start to develop the product until you make sure this product is really able to meet market. Also you have to look forward to the requirement in two or three years and ask "what the requirement might be when my product is entering this market?"

Eager to help more Chinese companies

Gasgoo.com: VDA-QMC opened its Shanghai branch in Anting this June while the National Export Base of Automobiles and Components (Shanghai) was inaugurated there. So could you please tell us why you came to Anting?

Helmut Stein: Anting Auto Town has a ten-year history already, where there's a strong presence of the German auto industry, also. Now we moved our Shanghai office to Anting. There are over 200 suppliers in Anting, so moving to Anting will bring a closer contact with our customers. Our main task is to deal with networking of the automaker and qualification of the suppliers--this is the reason that we moved to Anting.

Gasgoo.com: What's your plan for the upcoming several years of development in China? Have you a clear target for the upcoming membership?

Helmut Stein: We have a clear target but here I can't give out the specific numbers. We have to calculate the input, and plan what kind of benefits we can offer. I'd like to say that VDA-QMC is open to every company, which has interest in quality topics, and eager to improve the quality performance; this is the main goal.

I think our main focus is on automotive-related industry, but we have no limitation for the membership. You know cooperation between Haier Washing Machine and MBtech Group (Mercedes-Benz Technology, a Germany-based international engineering and consulting company) has proved the standardization, modularization and systemization of the manufacturing process can be applied to different industries. We don't expect this new membership could be our main income source in years, but we must make sure that our activities benefit the members.

Finally I would say, the competition is going on, and those who don't improve themselves will fall behind. Good company performance means profit. At the beginning, you have time to improve and if you don't improve before the competition gets tough, then the improvement could be more difficult.