Avoiding trap of the Toyota dream

0 CommentsPrint E-mail Global Times, March 3, 2010
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To the Chinese public, the high point of Toyota's dramatic crisis seems to be the company chairman Akio Toyoda's public, and much publicized, apology to Chinese consumers. But Chinese enterprises would do well to carefully study every stage of this crisis. The worst crisis ever faced by Toyota is replete with lessons for Chinese factories.

Pursuing growth faster than the speed at which the company could develop manpower and the organization is to blame for Toyota's quality flaws in the US, Akio Toyoda admitted at a US Congressional hearing.

For long, Toyota symbolized the essence of Made-in-Japan: impeccable quality. With such a record, Toyota was crowned the world's No.1 automaker in 2008. Obsession with quality also explains the success of other Japan-made products that have long been favored by consumers worldwide for their durability and reliability.

The setback to Toyota has become an overall crisis for other Japanese manufacturers, in so far as it has endangered Japan's national image as a world-class producer of quality goods. Toyota's fall appears to indicate a weakness in maintaining national competitiveness.

Overgrowth has been common among Chinese enterprises, which are often blindly lured by market potential and the splendor of being a "globalized" company. Without the premium of brand power, Chinese products often resort to price advantage to get market share, which creates loopholes in quality due to excessive cost cutting.

Chinese manufacturers face particular challenge in their attempts to gain global acceptance as "Made-in-China" is associated with shoddy quality. From tainted pet food to toxic children's jewelry, each recall not only brings damage to the manufacturers, but also sullies China's national image, which is the sum of every individual product's image.

For winning back consumer trust, quality remains the key. The South Korean carmakers are a positive example in this regard.

In the 1980s, South Korean carmakers Hyundai and Kia gained some quick successes through low costs in the US market. But soon, they were driven out of the market because of quality problems. They returned 10 years later with a better commitment to quality, including offering unrivaled warranty to keep the consumers they won over. As Hyundai and Kia regain markets, they also enhance the image of South Korean products.

Toyota's disaster has enabled Volkswagen, another brand known for sustained quality, to emerge as the new auto king.

The world "No.1" is a coveted crown for every ambitious manufacturer, but solid and lasting commitment to quality is the only way to ensure holding on to it.

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