My daughter returned to college in New York this fall. During the summer she kept many of her belongings in an off-campus storage facility. Everything was secured with a new "Made in China to U.S. quality specifications" lock from a well-known U.S. company.

When we went to retrieve her stuff at the beginning of the semester, the lock wouldn't open. Though we couldn't detect anything wrong with it, we were afraid she might have accidentally bent the key. So we tried the key on another lock nearby manufactured by the same company, just to see if the key was bent. Surprisingly, not only did my daughter's key fit, it opened the other lock, giving us access to somebody else's stash. We immediately closed the other lock, since it wasn't ours, and left to deal with our problem.

Fifty dollars later, with newly purchased bolt cutters in hand, we liberated my daughter's belongings.

I later called the lock company's customer help line and was told they had received other such complaints about this same model of lock. They offered an apology and a brand-new lock of the same model. I accepted the apology but turned down the replacement. When we need another lock, we'll get it from another company.

QUALITY MATTERS

There is a simple lesson here: Quality matters, even when you're talking about a simple, everyday keyed lock costing just a few dollars.

Many companies have successfully outsourced production to China, achieving cost savings of 30% or more and quality standards equal to or even exceeding their U.S. production. These successes have not always come easy. They often have involved significant investments in quality control—building quality into the entire production system, from design to manufacture, assembly, and inspection.

Some companies have focused excessively on cost savings, shortchanging quality. And as sure as Monday follows Sunday, it will eventually come back to haunt them.

Two years ago, after a spate of alarming news reports and product recalls, the U.S. Consumer Product Safety Commission (CPSC) and its Chinese counterpart, the General Administration of Quality Supervision, Inspection & Quarantine (AQSIQ), concluded an agreement intended to resolve many product-safety concerns, such as the use of lead paint in Chinese-manufactured toys exported to the U.S.

The then-acting chairman of the CPSC hailed the September 2007 agreement as "an important signal from the Chinese government that it is serious about working with CPSC to keep dangerous products out of American homes."

The agreement also produced, according to CPSC's announcement, a Chinese pledge "to increase their inspections of consumer products destined for the U.S. and to assist CPSC in tracing hazardous products to the manufacturer, distributor, and exporter in China."

SERIOUS PROBLEMS REMAIN

Two years later, the safety issue is no longer in the daily headlines as it was in 2007—squeezed out, perhaps, by bigger issues—but serious quality problems remain. In August of this year, for example, more than 60% of all CPSC recalls—24 of 39—were for products made in China.

The problem goes to the heart of globality. As CPSC Commissioner Nancy Bord told delegates to the OECD Conference on Corporate Responsibility this past June in Paris, "…21st century consumers everywhere find themselves using products imported from everywhere. Boundaries no longer have any meaning as far as consumer expectations are concerned. Sound corporate practices…[are needed to] protect the consumer regardless of where the consumer is, regardless of where the product was made."

Christopher Tang, professor of management at the University of California at Los Angeles (UCLA), estimates that U.S. corporate outsourcing increased some 70% over the last decade. Despite the global recession and the wishful thinking of Western labor unions and protectionists, the globality trend will continue.

Source: Bloomberg Business Week