The Chinese government acknowledged widespread quality-control and safety problems for domestically sold goods ranging from food to baby clothing to grass-cutting equipment, a reminder of the toll on its own consumers at a time of increasing foreign scrutiny of imports from China.Next up is a feature on the diminishing cost-competitiveness of India's information technology (IT) outsourcing industry as wages spiral upwards, especially for highly trained engineers in short supply in that country. Some American firms now figure that, factoring in the friction costs related to distance and time zone disparities, they may be better off hiring people back in the US of A instead of outsourcing:Beijing's statistics-filled assessment had a sobering main finding: Nearly one-fifth of the sold-in-China products that were studied failed to meet the country's quality standards.
In the first half of 2007, the General Administration of Quality Supervision, Inspection and Quarantine, the quality-control watchdog, reviewed 114 types of products made by more than 6,300 companies and found that 19.1% of them were substandard, according to a statement on the watchdog's Web site. Larger companies had a better quality record, with 93.1% of their goods passing muster. It was unclear what qualified as a "large" company...
The watchdog's report singled out 26 categories of products for low quality, including bottled water, canned fruit, dried fish, linens, grass-cutting equipment and other goods. In the case of canned fruit, dried fish and vermicelli noodles, "major quality problems exist" because of high levels of bacterial contamination and excessive amounts of additives. According to the statistics, grass-cutters were among the products with the most problems.
"Small-scale, low-level production and safety problems haven't been solved fundamentally," the government statement said. "Safety items fail to meet the standard, and instructions omitted major safety items." On the other hand, the quality of beer, fruit and vegetable drinks, electric fans and wooden floorboards, among others, had improved, the agency said...
Chinese officials and media have been sending mixed messages on the safety of China's products since late March, when U.S. authorities first linked the death of pets there to tainted pet food imported from China. The pet food contained the industrial chemical melamine.
Yesterday, the state-run Xinhua news agency quoted Li Yuanping, a senior official in charge of imported and exported food safety at the quality-control watchdog, as saying that "99% of food exported to the United States was up to safety standards over the past two years, which is a very high percentage."
At the same time, an editorial in the state-run China Daily newspaper said food exports have sometimes failed foreign guidelines "not because the food itself was of low quality but because the standards we use may be lower." The editorial went on to assert: "It is becoming increasingly urgent to raise food safety standards to international levels."
Since the melamine incident, which prompted a recall of millions of cans of pet food, Chinese goods have faced mounting scrutiny overseas as a string of problems with exports have been uncovered, from toys with lead content to poisoned toothpaste to bad seafood. The latest quality report comes on the heels of the Chinese government's announcement last week that it had closed 180 food manufacturers found to have used industrial chemicals and additives in food products.
"These are not isolated cases," Han Yi, director of the watchdog's quality-control and inspection department, said at a news conference at the time, according to a report in the China Daily.
Silicon Valley has helped power India's outsourcing boom by shifting technology jobs to that country. Three months ago, Munjal Shah reversed a bit of that shift.
Mr. Shah, who leads a California start-up called Riya Inc., had opened an office in India's technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.
Then Indian salaries soared. Last year, Mr. Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. "Taking into account the time difference with India," he says, "we weren't saving any money by being there anymore." In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas.
Across Silicon Valley, some technology companies, particularly start-up and midsize ones, are beginning to turn away from India for low-cost labor to do sophisticated tech work. Kana Software Inc. of Menlo Park, Calif., eliminated 100 software-development jobs in India in late 2005 and expanded its U.S. hiring instead. Teneros Inc. shut down a 30-member India office and brought 12 of the people to its headquarters in Mountain View, Calif. Some tech start-ups are choosing other low-wage foreign locales, such as Romania and Poland.
Overall, India's tech and outsourced-services industries continue to boom. The industries' revenues rose by almost a third to $39.6 billion in the fiscal year ended in March, says the country's National Association of Software and Service Companies, or Nasscom. U.S. tech companies continue to shift basic work like software coding to India, where big outsourcing companies such as Infosys Technologies Ltd. and Wipro Ltd., hire tens of thousands of new Indian employees each year. Silicon Valley giants Cisco Systems Inc., Google Inc. and Adobe Systems Inc. are expanding their staffs in India.
They often have other reasons besides pay to be there, such as to be closer to customers. But even some of the large tech companies are reconsidering India. Apple Inc. shelved plans to build a technical-support center in India last year; a spokesman declined to say why. Intel Corp. is stepping up hiring in Vietnam -- which has cheaper labor than India -- and says it isn't significantly adding to its Bangalore staff of about 2,400. "The wage inflation rate for engineers in India is four times what it is here" in America, says Intel's chief executive, Paul Otellini.
It's a new twist on the globalization debate. Around the century's turn, when U.S. companies first began flooding to India for its cheap labor, pundits warned that the subcontinent could increasingly rob the U.S. of high-end white-collar jobs. Debate was especially sharp in Silicon Valley, then in a slump, because India annually turns out nearly 500,000 engineering graduates.
I have some interesting material stored on the contemporary debate of whether there is a shortage of skilled engineers in America or not that I hope to post in the near future. Stay tuned.
