Empirical Study of TQM in China

An empirical study of TQMpractices in Japanese-owned

manufacturers in ChinaMasahiro Miyagawa and Kosaku Yoshida

Aoyama Gakuin University, Tokyo, Japan

Abstract

Purpose – The main purpose of this study is to explore the relationship between TQM practices andthe business performance of Japanese-owned manufacturers in China.

Design/methodology/approach – In this study, 200 companies out of the universe 1000 werechosen by random sampling in June 2002.

Findings – A total of 52 usable questionnaires were received and the overall response rate was 26percent. The survey results show that TQM practices influence overall company performancesignificantly in Japanese-owned manufacturers in China. This implies that TQM is an effective methodto improve business performance regardless of where the company might be operating as long as theTQM practices are implemented appropriately. In addition to the research data, findings from a fieldstudy also provide supplementary evidence to support this conclusion.

Originality/value – The findings based on the empirical research would be useful to both decisionmakers and researchers who are interested in this growing “factory of the world”.

Keywords Total quality management, Japan, China

Paper type Research paper

IntroductionQuite a number of organisations have tried to implement total quality management(TQM) practices but have failed to achieve their goals, while many other organisationshave implemented TQM with great success (Douglas and Judge, 2001). Much literaturein the early 1990s discussed how Japanese manufacturers used TQM implementationto improve their competitive positions in the global market place and how their successin quality management influenced many firms in other countries (Yavas, 1995;Yoshida, 1989).

Although the Japanese economy has suffered a long recession in the past decade,there are still many successful Japanese manufacturers like Toyota, Honda and Canonwho have a strong background in both quality management and global operations(Japan Management Association, 2001). For example, Toyota is one of the mostsuccessful companies in the world and has used quality-focused policies together withstrategies aimed at improving performance, reliability and safety through theimplementation of TQM practices (Nikkei News, 2003). Thus quality management isstill regarded as a fundamental and vital business strategy in the competitive globalmarket place.

The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at

www.emeraldinsight.com/researchregister www.emeraldinsight.com/0265-671X.htm

The authors would like to express our sincere appreciation to Dr Hongyi Sun from Hong KongUniversity and Professor Rao at Toledo University who kindly granted us to use the frameworkof the research and the questionnaire originally developed by Raghunathan et al. (1997).

IJQRM22,6

536

Received January 2003Revised February 2004

International Journal of Quality &Reliability ManagementVol. 22 No. 6, 2005pp. 536-553q Emerald Group Publishing Limited0265-671XDOI 10.1108/02656710510604872

www.emeraldinsight.com/researchregister

www.emeraldinsight.com/0265-671X.htm

It is now often highlighted that Chinese industries have been growing rapidly andthat the quality of products “made in China” has improved dramatically. Since Chinabegan the “open-door and reform policy” in 1978, the planned economy has beentransformed to a market economy. China’s new policy has accelerated the rate offoreign direct investment since 1980 (Sun, 2000).

According to the statistics published by the Foreign Trade Department of theChinese government in 2002, foreign direct investment increased from US$6.6 billion in1990 to US$69.2 billion in 2001 and the accumulated amount was US$734.8 billion.Japanese enterprises invested an accumulated amount of US$44.1 billion during thesame period. Moreover the statistics show that the accumulated number of investorsduring the same period reached 367,700 including 22,000 Japanese investors. Usingthose direct investment resources, many joint ventures and foreign owned companieshave started operations in China. However, it was found that there were many qualityproblems in the operations. Many operations suffered due to the lower quality level ofChinese materials and products compared to international standards, and could notmanufacture their own products to a satisfactory quality level. It is reported that one ofthe biggest business risks for Japanese owned companies surveyed in 1995 was the“quality problem” (Huang, 2003). Sun (2000) pointed out that Norwegian joint venturesin Shanghai area also experienced quality problems and revealed following reasons:

. the Chinese side normally adopted a low quality and low price strategy;

. enterprises were not well adapted to the new market economy system and tomodern quality management methods; and

. quality consciousness based on meeting customer needs was weak.

How did foreign-owned manufacturers in China resolve the quality problems and howdid they implement quality management ?

In this study, an attempt was made to find how Japanese-owned manufacturers inChina transferred management methods from their mother plant in Japan to theirChinese plant, and to explore the relationship between TQM practices and businessperformance in their organisations in China. Despite the large number of studies andarticles on TQM practice and its implications, very few articles concerning qualitymanagement in Japanese-owned manufacturers operating in China have beenpublished. So the authors believe that their findings based on the empirical researchwould be useful to both decision makers and researchers who are interested in thisgrowing “factory of the world” (Saraph et al., 1989).

Development of quality management in JapanThe foundation of quality management in Japan was established in the 1960s (Deming,1986; Juran, 1989). Ishikawa was one of the core members who learnt qualitymanagement philosophies and methods from Deming and Juran in the 1950s and thenspread the techniques of the Japanese quality management system (TQC) to othercountries (Ishikawa, 1981). The success of Japanese business in the global market placefrom the 1970s to the 1980s was the result of various factors, including stronggovernment leadership, a significant inflow of technology, capital investment from theUS and quality management practices directly instructed by top management whounderstood the quality gurus’ management philosophy (Yoshida, 1989).

TQM practices inJapanese-owned

manufacturers

537

It is also observed that through quality control (QC) circles operators can realisewhat the problem is and how to resolve it. Only those who do the job every day andknow the job well can improve the operation (Yoshida, 1993). According to the reportpublished by JUSE the number of QC-circles in Japan was 425,119 with 3,257,777members registered as of August 2001, providing evidence of penetration of qualitymanagement in Japan (JUSE, 2002).

The essence of the Deming management philosophy which has contributed to theimprovement of the Japanese products and services is summarised as follows: first ofall, to improve quality by reducing machine troubles and mishandling that enables costreduction. Secondly, achieving more market-share with better quality and competitiveprices, resulting in increasing sales, profitability and employment (Walton, 1987).Deming’s quality management philosophy was examined in light of business practicesin Japan (Yoshida, 1995).

This survey of TQM practices and business performance in Japanese-ownedmanufacturers in China shows that the Japanese quality management principlesreflected in Deming management philosophy have guided manufacturers in a betterdirection even in a different environment.

Development of quality management in ChinaZhao et al. (1995) emphasized that quality improvement efforts in Indian, Chinese andMexican companies were not much lower than those in the developed countries such asCanadian, German, Japanese and US companies and that such benchmarking of qualitymanagement was vital for international business.

Yu et al. (1998) stated that the visit of the Japanese quality management delegationled by Ishikawa in 1978 stimulated Chinese people to learn modern quality controlmethods. They realised that Chinese industries needed to improve the quality of goodsand services to become competitive in the international market place. Therefore theChinese government issued a series of instructions to improve quality and tried topromote TQM widely and strongly. In 1986, the Chinese government decided that allmedium and large state-owned companies should implement TQC (Sun, 2000). It ispointed out that modern technology and the management know-how from foreigninvested companies have spilled over into Chinese companies and that Chinesegovernment has implemented a campaign of introducing TQM activities and theISO9000 series (Tuan and Ng, 1998).

MethodologyThe survey instrument adopted in this research is a pre-tested questionnaire that hasbeen used in similar earlier empirical studies. Research through the distribution,collection and analysis of a questionnaire was conducted in Japan and China in June2002. The theoretical framework by Raghunathan et al. (1997) was adopted in thissurvey in cooperation with Sun (2000). The questionnaire was previously used incomparison of quality management practices in different countries such as the USA,India, Mexico, Norway and China. The questionnaire consists of 118 related questionsin nine categories as shown in Figure 1. These categories correspond to the USMalcolm Baldrige National Quality Award (MBNQA) criteria, which has been used forthe evaluation of quality management in many of US organisations (Pannirselvamet al., 1998).

IJQRM22,6

538

Evans (1997) proposed a causal model of the key linkages in the Baldrige Awardframework addressed as linkages between management practices and business results.Namely the critical link between the fundamental management process of leadership,strategic planning, customer and market focus, information and analysis, humanresource development and management, and process management – all leading to theachievement of ever improving business results. As it is difficult to prove the causalrelationship between TQM practices and the business results by a simple data process,the correlation analysis with appropriate content, construct validity and reliability, themethod proved by Evans and Sun in the past was adopted in this research.

Sun conducted the study of 71 Shanghai manufacturers in 1998 and used stepwisemultiple regression analysis to discover the relationship between TQM practices andbusiness results. As there were no differences stated between state-owned companiesand joint ventures in his sample, it is mentioned that the comparative studies of TQMimplementation between Chinese state-owned companies and foreign investedcompanies would be interesting to explore in future research (Hua et al., 2000; Sun,2000). Therefore, this research targeted Japanese-owned manufacturers in Chinaincluding joint ventures invested by Japanese companies moderate to conduct a further

Figure 1.Questionnaire categories


manufacturers

539

investigation of the relationship between TQM practices and business performancesusing the same instrument.

Five-point scales from 1 (very low) to 5 (very high) were used for the total 118questions to measure the responses. Moreover 24 questions regarding the turnover,number of employees, and ISO certificate status etc. were also asked additionally inthis questionnaire.

SurveyThere were 18,000 companies invested in by Japanese enterprises according to Chineseforeign trade department as of year 2000 (Mitsubishi Research, 2001). A total of 4,154companies out of 18,000 were listed in data book published in 2001 (Sousou-sha, 2001).Finally 1,000 manufacturing companies who were invested by Japanese companies inBeijing, Shanghai, Jiangsu and Liaoning were selected as the universe. The breakdownof 1,000 companies in the universe and profiles of samples are shown in Figure 2.

A total of 200 companies out of the universe were chosen by random sampling inJune 2002 and questionnaires were sent to the CEOs of the parent companies in Japan.As a result, 52 out of 200 responded and the overall response rate was 26 per cent.

Data analysis methodsFactor-analysis using SPSS was conducted by analysing the data collected. As 20reliable and valid factors are identified, multiple regression analysis was conducted inorder to explore the relationship between TQM practice and business performance.Generally a relationship analysis is based on correlation coefficients, however in our

Figure 2.Basic information aboutsamples

IJQRM22,6

540

analysis, t-value with two-tailed tests were used for testing hypotheses along the line ofearlier similar research (Douglas and Judge, 2001). Theory and research suggest thatthe greater the extent to which, a set of TQM practices is adopted by a Japanese-ownedmanufacturer in China, the higher business performance is achieved.

Validity and reliabilityThe validity and reliability tests by Cronbach’s alpha test were conducted to establishconstruct validity and the reliability of this research, with the result shown in Table I.The alphas coefficients range from a minimum of 0.70 to a maximum of 0.93, whichindicates that the scales are reliable (Sun, 2000).

In total, 20 factors (17 TQM practices and three performance factors) are classifiedand labelled respectively in Table I. For example, three factors are identified forcategory factor no. 7 in the questionnaire that consists of 14 questions as listed inFigure 1 and two questions of category no. 9 related to quality management results ofthe company. The first factor is labelled “internal performance” because of the showinghigher loading coefficients of questionnaire items such as cost reduction (7k) andincrease of profit (7j) and employee’s satisfaction (9h). The second factor is labelled“quality performance” because of the showing higher loading coefficients ofquestionnaire items such as reduction of scrap levels (7a), rework level (7b) andwarranty costs (7c). The third factor is labelled “external performance” showing higherloading coefficients of questionnaire items such as market share (7f) and thecontribution to expanding business (7g).

Table II shows the results of multiple regression analysis using three businessperformances as the dependent variables and TQM practices as independent variables.Utilising factor analysis with Varimax rotation, it was found that each category had asingle factor or several factors which were formed by grouping variables based on therotated loading coefficients.

Douglas and Judge (2001) tested hypotheses by hierarchical regression analysis andindicated the result that the degree of TQM implementation in hospitals was positivelyand significantly related to the financial performance of a hospital. The score of eachfactor is used as explanatory variables in the regression analysis that follows. Toclarify the relationship between implementation of TQM practices and organisationalperformances such as internal performance, quality performance and externalperformance, the following seven hypotheses are offered in our study:

H1. The extent of the implementation of the leadership is significantly related tothe business performance. Leadership represents three factors such asleadership by top management (V11), middle management (V12) and publicresponsibility (V13).

H2. The extent of use of the quality information (V21) is significantly related tothe business performance.

H3. The extent of implementation of TQM strategy (V31) is significantly relatedto the business performance.

H4. The extent of development of human resource is significantly related to thebusiness performance. Development of human resource represents six factorssuch as employee involvement (V411), training (V412), employee


manufacturers

541

Qu

esti

onn

aire

item

san

dlo

adin

gco

effi

cien

tsN

o.C

ateg

ory

fact

ors

Rel

iab

ilit

yte

stC

ron

bac

h’s

a1

23

45

67

89

10E

igen

val

ues

Per

cen

tag

eof

exp

lain

.

Tot

alp

erce

nt

ofex

pla

in.

1Leadership

0.87

951d

1a1c

9d1h

1i9b

9a9c

V11

Top

man

agem

ent

0.81

0.69

10.

654

20.

088

0.35

50.

291

0.22

0.00

90.

248

5.55

142

.697

42.6

97V

12M

idd

lem

anag

emen

t2

0.01

90.

20.

252

0.73

90.

736

0.69

20.

201

0.3

0.13

21.

672

12.8

6555

.562

V13

Pu

bli

cre

spon

sib

ilit

y0.

174

0.98

50.

273

0.37

60.

335

0.23

40.

872

0.86

40.

808

1.10

38.

485

64.0

472

Inform

ation

0.89

52d

2f2g

2h2c

2e2b

2aV

21Q

ual

ity

info

rmat

ion

0.85

50.

815

0.79

80.

791

0.75

30.

719

0.70

40.

639

4.64

558

.058

583

Strategy

0.93

943b

3a3g

3j3d

3h3c

3e3i

3fV

31S

trat

egy

0.87

60.

851

0.84

80.

840.

818

0.81

60.

785

0.76

20.

740.

711

6.5

6565

,002

41Humanresource

0.92

2341

f9f

9e41

d41

b41

c41

l41

hV

411

Em

plo

yee

inv

olv

emen

t0.

80.

790.

764

0.76

30.

134

0.20

80.

356

0.11

17.

343

52.4

5252

.452

V41

2T

rain

ing

0.40

70.

281

20.

050.

158

0.85

40.

821

0.74

62

0.00

81.

483

10.5

9563

.047

V41

3E

mp

loy

eere

spon

sib

ilit

y2

0.01

80.

008

0.35

40.

216

0.04

82

0.08

10.

070.

925

1.01

87.

271

70.3

1842

Employee/union

0.93

4942

m42

n42

l42

q42

c42

b42

d42

i42

g42

hV

421

Un

ion

inv

olv

emen

t0.

893

0.89

10.

878

0.84

30.

390.

435

0.32

0.12

70.

303

0.31

28.

851

.766

51.7

66V

422

Par

tici

pat

ion

0.11

10.

083

0.19

60.

139

0.79

30.

764

0.74

50.

186

0.20

70.

344

2.39

114

.062

65.8

25V

423

Com

pan

yru

nac

tiv

ity

0.26

30.

273

0.26

40.

006

0.18

32

0.00

80.

326

0.81

40.

769

0.74

71.

277

7.51

473

.341

5Qualityassurance

0.92

645f

5l5j

5e5h

5a5d

5i5c

V51

Pro

cess

con

trol

0.76

60.

758

0.75

50.

724

0.70

60.

330.

310.

121

0.55

26.

717

5655

.975

V52

Des

ign

app

lica

tion

0.36

40.

235

0.25

10.

211

0.32

90.

835

0.82

60.

763

0.62

61.

094

9.12

165

.096

6Supplier

0.77

966b

6a6h

6g6j

6d6c

6f6e

V61

Rel

iab

ilit

y0.

865

0.75

80.

720.

632

0.60

82

0.03

30.

178

20.

038

0.21

83.

865

38.6

5238

.652

V62

Inv

olv

emen

t0.

026

0.08

60.

236

20.

366

0.43

0.89

10.

837

0.06

30.

367

1.82

218

.222

56.8

74V

63R

elat

ion

ship

20.

018

0.06

20.

061

0.48

20.

286

0.18

20.

011

0.92

90.

775

1.42

214

.225

71.0

997

Perform

ance

0.92

977j

7k9h

7b7c

7a7d

7f7g

7eV

71In

tern

alp

erfo

rman

ce0.

857

0.76

10.

683

0.29

70.

299

0.33

42

0.02

20.

101

0.21

10.

249

7.67

347

.954

47.9

54V

72Q

ual

ity

per

form

ance

0.14

30.

066

0.30

20.

846

0.76

60.

762

0.71

80.

182

0.21

0.24

51.

674

10.4

6158

.416

V73

Ex

tern

alp

erfo

rman

ce0.

232

0.18

12

0.10

50.

127

0.34

50.

277

0.12

30.

875

0.86

20.

825

1.53

89.

615

68.0

38

Custom

er0.

9243

8p8n

8l8q

8a8d

8g8h

8j8f

V81

Ben

chm

ark

ing

0.92

0.82

20.

809

0.28

80.

177

0.11

70.

093

20.

001

0.09

70.

324

7.30

640

.589

40.5

89V

82C

ust

omer

’ssa

tisf

acti

on0.

098

0.33

70.

128

0.75

80.

740.

718

20.

021

0.22

40.

415

20.

044

2.41

613

.424

54.0

14V

83F

eed

bac

k0.

025

20.

040.

188

0.36

42

0.16

30.

353

0.82

40.

775

0.11

50.

478

1.37

17.

619

61.6

32V

84M

onit

orin

g0.

137

0.15

40.

062

0.06

10.

376

0.08

90.

150.

148

0.79

30.

713

1.04

75.

819

67.4

51

Table I.Reliability and constructvalidity tests

IJQRM22,6

542

Inte

rnal

per

form

ance

,V

71.

Qu

alit

yp

erfo

rman

ce,

V72

.E

xte

rnal

per

form

ance

,V

73.

Hy

pot

hes

esV

aria

ble

sT

QM

pra

ctic

es(v

aria

ble

s)b

RR

2t-

val

ue

F-v

alu

e

Sig

nifi

-

can

ceb

RR

2t-

val

ue

F-v

alu

e

Sig

nifi

-

can

ceb

RR

2t-

val

ue

F-v

alu

e

Sig

nifi

-

can

ce

0.62

60.

392

9.33

20.

001

0.72

80.

530

16.3

620.

000

0.63

50.

403

20.2

300.

000

H1

1Leadership

V11

Top

man

agem

ent

20.

197

21.

287

0.07

40.

514

20.

104

20.

618

V12

Mid

dle

man

agem

ent

0.16

80.

997

0.10

30.

662

0.04

30.

258

V13

Pu

bli

cre

spon

sib

ilit

y0.

071

0.42

90.

012

0.81

02

0.06

22

0.42

3

2Inform

ation

H2

V21

Qu

alit

yin

form

atio

n0.

206

0.94

40.

656

3.38

20.

002 *

*2

0.29

52

1.39

8

3Strategy

H3

V31

Str

ateg

y0.

056

0.28

92

0.39

42

2.16

20.

039

0.63

54.

498

0.00

0 **

H4

41Humanresource

V41

1E

mp

loy

eein

vol

vem

ent

0.33

22.

160

0.03

9 *0.

075

0.43

52

0.12

42

0.71

7

V41

2T

rain

ing

0.01

00.

635

0.03

00.

222

0.05

20.

329

V41

3E

mp

loy

eere

spon

sib

ilit

y0.

156

0.98

12

0.10

92

0.78

82

0.18

82

1.33

5

42Employee/union

V42

1U

nio

nin

vol

vem

ent

0.24

01.

663

0.13

81.

133

20.

038

20.

261

V42

2P

arti

cip

atio

n0.

121

0.65

90.

030

0.18

50.

133

0.79

0

V42

3C

omp

any

run

acti

vit

y0.

100

0.65

40.

015

0.11

52

0.14

32

0.97

8

H5

5Qualityassurance

V51

Pro

cess

con

trol

20.

168

20.

936

0.48

53.

606

0.00

1 **

20.

023

20.

154

V52

Des

ign

app

lica

tion

0.12

80.

737

0.30

11.

848

0.13

20.

726

H6

6Supplier

V61

Rel

iab

ilit

y0.

194

1.07

52

0.00

72

0.04

52

0.02

12

0.13

3

V62

Inv

olv

emen

t0.

080

0.52

22

0.01

82

0.12

70.

196

1.24

2

V63

Rel

atio

nsh

ip0.

193

1.34

30.

052

0.42

50.

063

0.44

0

H7

8Custom

er

V81

Ben

chm

ark

ing

0.25

11.

774

20.

133

21.

004

20.

133

20.

879

V82

Cu

stom

er’s

sati

sfac

tion

0.43

12.

804

0.00

9 **

20.

096

20.

608

20.

042

0.02

7

V83

Fee

db

ack

0.12

00.

751

0.01

90.

135

0.28

01.

786

V84

Mon

itor

ing

20.

146

20.

862

0.22

01.

563

0.02

30.

148

Notes:

*tð0:0

1Þ.

t^

tð0:

05Þ¼

1:96

0;**

t^

tð0:

01Þ¼

2:57

6

Table II.Regression analysis

between TQM practicesand performance


manufacturers

543

responsibility (V143), union involvement (V421), union participation (V422)and company run activity (V423).

H5. The extent of implementation of quality assurance is significantly related tothe business performance. Quality assurance represents two factors such asprocess control (V51) and design application (V52).

H6. The extent of relationship with supplier is significantly related to the businessperformance. Relationship with supplier represents three factors such asreliability (V61), involvement (V62) and relationship (V63).

H7. The extent of implementation of customer’s satisfaction is significantlyrelated to the business performance. Customer’s comparative satisfactionrepresents four factors such as benchmarking (V81), customer’s satisfaction(V82), feedback (V83) and monitoring (V84).

Research resultsAs the result of regression analysis, the following findings were obtained. The researchresults are shown in Table II:

. H1 was rejected. The importance of leadership in TQM implementation is vital,however in this research t value of this category is comparatively low.

. H2 was accepted. The extent of use of the quality information (V21) issignificantly related (t ¼ 3:382, p , 0:01** ) to the quality performance (V72).

. H3 was accepted. The extent of implementation of TQM strategy (V31) issignificantly related (t ¼ 4:498, p , 0:01** ) to the external performance (V73).

. H4 was accepted. The extent of employee involvement (V411) is significantlyrelated (t ¼ 2:160, p , 0:05* ) to the internal performance (V71).

. H5 was accepted. The extent of implementation of process control issignificantly related (t ¼ 3:606, p , 0:01** ) to the quality performance (V72).

. H6 was rejected. The extent of relationship with supplier is not significantlyrelated to the performance.

. H7. The extent of implementation of customer’s satisfaction is significantlyrelated (t ¼ 2:804, p , 0:01** ) to the internal performance (V71).

Discussions and implicationsThe data sample of Japanese-owned manufacturers in China shows following qualitymanagement statistics:

. 90 per cent of the sample have implemented TQM for more than three years;

. 80.7 per cent of the sample marked a “high” and “very high” rating of assessmentto the question that TQM was considered in the company strategic plan;

. 75 per cent of samples marked a “high” and “very high” rating of assessment tothe question that TQM has contributed to keep the company in business; and

IJQRM22,6

544

. 61.5 per cent of samples marked a “high” and “very high” rating of assessment tothe question that TQM has contributed to improving business performance ofthe company.

Thus this research found that most of Japanese-owned manufacturers in China haveimplemented quality management and that TQM practices have contributed to theiroperations. Our findings support the earlier literature indicating relationship betweenTQM practices and organisational performance in changing environments (Douglasand Judge, 2001).

Research results shown in Table III indicate the comparison between Sun’s researchin 1998 and ours in 2002. In earlier research, Sun investigated the differences in qualitymanagement between Chinese manufacturing companies in the Shanghai area andNorwegian manufacturing companies located in Norway. It was described that qualitymanagement practices in Shanghai companies were still at the stage of quality control,with some distance to TQM, as they neglected customer satisfaction and qualityassurance. The pattern in Norwegian companies was that customer consideration andquality assurance contributed to the improvement of business performance. Shanghaicompanies showed that strategy and employee involvement contributed directly to thebusiness performance (Sun, 2000).

While in our study it is concluded as follows: first, TQM practice of employeeinvolvement and customer’s satisfaction in Japanese-owned manufacturers in Chinasignificantly related to internal performance such as cost reduction and increasingprofit. Second, the strategy related to external performance such as increasing marketshare and competitiveness. Third, both quality information and process control relatedto external performance such as reducing rework, warranty cost and scrap.

Through these investigations we could summarise that Japanese-ownedmanufacturers in China are “strategic management and employee involvementoriented” against Norwegian companies described as “customer’s satisfaction andquality assurance oriented” and the Chinese companies described as “quality controland strategic management oriented” (Sun, 2000). Notably it is pointed out thatemployee involvement has a positive effect on TQM results as three different companyorigins support this practice.

Internal performance Quality performance External performance

Norwegian company Leadership Employee improvementCitizenship Quality assuranceSupplier Customer’s satisfaction

Supplier cooperationChinese company Strategy Employee involvementJapanese-owned company Employee involvement Quality information Strategy

Customer’s satisfaction Process control

Notes: Result of multiple regression by step-wise methods; data of Norwegian and Chinese companiesare from earlier literature (Sun, 2000)

Table III.Research results


manufacturers

545

Field researchIn addition to the survey data, findings from a field research provide supplementaryinformation which were obtained from some Japanese-owned manufacturers when oneof the authors visited Dalian China in July 2002.

Contribution. The Chinese government have appreciated the contribution ofJapanese owned manufacturing company like Toshiba to the promotion of both thequality management and export business in China. They were evaluated as asuccessful model of foreign-owned company who had contributed to introducingJapanese quality management and to export promotion for China.

Technology transfer. Many Japanese-owned companies in China played animportant role as a bridge between foreign and Chinese companies and the roles oftransferring Japanese technology and management know-how to companies in China.They have achieved a higher quality level and better productivity in meetingdemanding customer’s requirement. For example the productivity of Toshiba Dalianhas been improved to 1.5 times better than its mother plant in Japan. The defect rate oftheir products was also improved, ranging from minimum 2/3 to maximum 1/16compared with the rate of its mother plant.

Motivation. The management of Japanese-owned manufacturing company tried tomaximise the motivation of employees and let them realise the “joy of work”.

Dalian model in Toshiba. It is reported that Toshiba called the successfulmanagement method in Toshiba Dalian as the “Dalian model” and has been applyingthe method to their overseas operations in the Philippines, Germany and France(Arakawa, 1998). The former managing director of Toshiba Dalian repeated that thekey words of the successful management were quality management, development ofhuman resources and transference of Japanese management system to the Dalian plantby using well-organised manuals. He emphasized the importance of respecting humanresources and that this model was also adopted successfully to a joint venturecompany with Chinese partner in Liaoning, China.

Our survey results indicate that the Japanese quality management principles whichwere reflected in Deming management philosophy, have been transferred toJapanese-owned companies guiding them in a better direction even in a differentenvironment.

Limitations and future researchWe state several limitations of this study for future research. First, the sample size ofthis survey was relatively small. For future research, larger sample sizes of more than70 are to be expected. Second, performance measures in this study rely not on objectiveevaluations like financial statements but on subjective evaluations.

Lastly, as this study was cross-sectional, the causal relationship of findings mightbe reinforced by a longitudinal study.

ConclusionsBased on the results of data analysis in this study and the field research information, itis concluded that TQM practices in Japanese-owned manufacturing companies inChina are positively and significantly related to the performance of the organisations.The study findings are summarised as follows: the TQM practice of employeeinvolvement through company-wide program and total commitment to improving

IJQRM22,6

546

customer’s satisfaction in Japanese-owned manufacturers in China significantly relatesto internal performance such as reducing cost, increasing profitability and improvingemployee’s satisfaction. Strategic planning process of quality management includingoperational plan to improve customer’s satisfaction relates to external performancesuch as increasing market share and competitiveness.

Using quality information and implementing process control such as preventiveequipment maintenance and standardisation of work instructions relates to qualityperformance such as reducing rework, warranty cost and scrap. Quality managementis one of operations management methods that respects human resources and providesemployee motivation. Through the implementation of quality management theorganisation can improve the quality level of their products and services and thusachieve competitiveness in global market place. Ishikawa (1981) indicated that thebetter quality made less rework and better productivity. He also commented thatquality management method like QC activity was adaptable in any other countries.Many of Japanese manufacturers realise how important quality management is, andthey have transferred the management methods to their overseas plant to improve thequality level successfully.

Porter stated that creating and sustaining superior competitiveness is achieved byestablishing better value-chain techniques such as superior marketing and designwork, higher quality and productivity, lower cost of materials and logistics thancompetitors (Porter, 1985). It is said that a prosperous country can be built when itpossesses superior industries formed by successful companies which are highlycompetitive in global market place (Porter, 1992). Therefore we believe that it isworthwhile to explore the relationship between quality management and businessperformance that is relevant to the global competitiveness of a country.

In summary, our finding is that TQM is an effective method to improve businessperformance regardless of where the company might be operating, as long as the TQMpractices are implemented appropriately. It is expected that these findings of qualitymanagement in this study will help quality people in manufacturing companies andindustries, not only in China but also in other developing countries.

References

Arakawa, N. (1998), Toshiba Dalian no Cho-sen, (The challenge of Dalian Toshiba), Mita Press,Tokyo, pp. 11-17.

Deming, W.E. (1986), Out of the Crisis, MIT Press, Cambridge, MA, pp. 488-90.

Douglas, T.J. and Judge, W.Q. (2001), “Total quality management implementation andcompetitive advantage: the role of structural control and exploration”, Academy ofManagement Journal, Vol. 44, pp. 158-69.

Evans, J.R. (1997), “Critical linkages in the Baldrige Award criteria: research models andeducational challenges”, Quality Management Journal, Vol. 5 No. 1, pp. 13-25.

Hua, H., Chin, K.S., Sun, H. and Xu, Y. (2000), “An empirical study on quality managementpractices in Shanghai manufacturing industries”, Total Quality Management, Vol. 11 No. 8,pp. 1111-22.

Huang, L. (2003), Shinko Shijyou Sennryakuron, (New Marketing Strategy), Chikura shobo,Tokyo, pp. 344-6.

Ishikawa, K. (1981), Nihonteki Hinshitu Kanri, (Japanese Quality Management System),Nikkagiren (JUSE) Press, Tokyo, pp. 2-29.


manufacturers

547

Japan Management Association (2001), Monozukuri Keiei Kakushin, (Management Innovation ofJapanese Manufacturing Companies), JMAM Center, Tokyo, pp. 72-190.

Juran, J.M. (1989), Juran on Leadership for Quality: An Executive Handbook, The Free Press, NewYork, NY.

JUSE (2002), QC Circles, No. 493, Union of Japanese Scientists and Engineers Press, Tokyo.

Mitsubishi Research (2001), Nikkei Chugoku Shinshutsu Kigyou, Mitsubishi Research Inc.,Tokyo.

Nikkei News (2003), “Toyota Motor Industries announced consolidated financial results as ofMar 2003, turnover was about US$141 billion and gross profit was about US$12.8 billion”,Nihon Keizai Shinbun (Japan Economic News), 19 June.

Pannirselvam, G.P., Siferd, S.P. and Ruch, W.A. (1998), “Validation of the Arizona Governor’squality award criteria: a test of the Baldrige criteria”, Journal of Operations Management,Vol. 16, pp. 529-50.

Porter, M.E. (1985), Kyoso-yuui No Senryaku, (Competitive Advantage: Creating and SustainingSuperior Performance), Diamond Press, Tokyo, pp. 45-7.

Porter, M.E. (1992), Kuni No Kyoso-yuui, (Competitiveness of a Country), Diamond Press, Tokyo,pp. 123-5.

Raghunathan, T.S., Rao, S.S. and Solis, L.E. (1997), “A comparative study of quality practices:USA, China and India”, Industrial Management & Data Systems, Vol. 97 Nos 5/6,pp. 192-200.

Saraph, J.V., Benson, P.G. and Schroeder, R.G. (1989), “An instrument for measuring the criticalfactors of quality management”, Decision Sciences, Vol. 20, p. 811.

Sousou-sha (2001), Chugoku Shinshutsu Kigyou Ichiran, Sousou-sha Press, Tokyo.

Sun, H. (2000), “A comparison of quality management practices in Shanghai and Norwegianmanufacturing companies”, International Journal of Quality & Reliability Management,Vol. 17 No. 6, pp. 636-60.

Tuan, C. and Ng, L.F.Y. (1998), “System building and implementations of TQM in Greater China:an overview”, International Journal of Quality Science, Vol. 3 No. 2, pp. 171-86.

Walton, M. (1987), Deming shiki Management, (Deming’s Management), President sha, Tokyo.

Yavas, B.F. (1995), “Employee perceptions of quality: survey results”, International Journal ofQuality & Reliability Management, Vol. 12 No. 5, pp. 8-17.

Yoshida, K. (1989), “Deming management philosophy: does it work in the US as well as inJapan?”, The Columbia Journal of World Business, Vol. 24 No. 3, pp. 10-17.

Yoshida, K. (1993), “The joy of work: optimizing service quality through education and training”,Quality Progress, Vol. 26 No. 11, pp. 29-33.

Yoshida, K. (1995), “Revisiting Deming’s 14 points in light of Japanese business practices”,Quality Management Journal, Vol. 3 No. 1, pp. 14-30.

Yu, C., Cochran, D.S. and Spencer, B. (1998), “Quality management practices in China”, QualityManagement Journal, Vol. 5 No. 2, pp. 91-105.

Zhao, X., Maheshwari, S.K. and Zhang, J. (1995), “Benchmarking quality practices in India, Chinaand Mexico”, Benchmarking for Quality Management & Technology, Vol. 2 No. 3, pp. 20-40.

IJQRM22,6

548

Appendix

Figure A1.International comparative

study of qualitymanagement practices


manufacturers

549

Figure A1.

IJQRM22,6

550

Figure A1.


manufacturers

551

Figure A1.

IJQRM22,6

552

Figure A1.


manufacturers

553

Documents

Empirical Study of TQM in China