January 27, 2008 Addendum: One nice feature of distance learning that takes place in the form of a blog, is that others from around the world with different perspectives can jump in and assist the learning process.  See Dan Harris of the China Law Blog’s response to my/this post (Why Paying More Is Good China Business), and the comments thereto.  His post raises some important distinctions (that my post did not go into in terms of detail, but much of which I agree with), and the comment thread thereto also raises some good opposing and similar views on this important topic.

A while back we had some nice discussion on the Choose Your Economic Poison post I made. Some suggested that we could solve the problem of too many defective products coming from China by paying more to the Chinese suppliers that make this stuff. I questioned that assumption, and still do.

One example I gave in that discussion thread was that if paying people more solved the problem, then why does paying most good employees more still result in good performance, but not superior performance? (See Comment No. 29.) And why does paying most bad employees more money still get you bad performance, and not good performance? (If you feel that more money correlates to higher performance, come see me after you have hired, managed and fired more than a few people, and let’s compare notes.)

Paul Midler, who coined the phrase, “quality fade,” has a blog called The China Game where he discusses China product quality issues (a hat tip to Dan Harris at the China Law Blog for this lead).

Midler has a post titled, The New Bugaboo: Low Prices, where he points out the illegitimacy of blaming China’s quality control problems on foreign companies seeking low prices.

Midler contends that the goal of buying low and selling for what you can get is nothing new — it’s business and the way business has always been done and the way it will always be done. Midler takes issue with those who contend that we can make all our problems go away by paying Chinese factories more for their product and service. Midler also notes that paying more money to a supplier who has behaved unethically sends that supplier the wrong message. He is also skeptical that those who behaved unethically at $1.00 per unit will behave ethically at a $1.10 per unit.

Your thoughts on this? I won’t let you off the hook by throwing out the ol’ business school canned, safe and easy answer that many give of, “Aw shucks. If we all buck up and pay more these issues will be solved, and I am willing do so.”

And if paying more to Chinese suppliers is not the solution, then what is? Discuss.