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Cultural Influences & Salary Trends in China: A Comparative Study by Michael Rychen

Explore the impact of culture on production quality & salary trends in China, with examples and historical influences discussed by expert Michael Rychen.

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Cultural Influences & Salary Trends in China: A Comparative Study by Michael Rychen

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  1. China 05.06.2015 Cultural Influence on Productionand Quality – Salary Trends Michael Rychen

  2. Agenda • Short introductionof CCS and Speaker • Cultural influences: Power DistanceandIndividualism • Cultural influences: Culture comparison • Influencesfromeconomichistory PR China • Examples of impact on operations (CCS China) • Salary and Wage Trends in China

  3. Name: Michael Rychen • Origin: Born andraised in cantonof Bern, Switzerland • Current Job: Set-upof EMS Operation in Slowakiafor CCS Group • Previous Jobs: • Managing Directorof CCS China 2010-2014 • Technical Sales Manager at CCS 2008-2010 (mainly in China) • NPI Engineer & Project Leader at CCS Schweiz AG

  4. System supplierwith 11 subsidiariesworldwide CCS Holding AG Adaxys SA CCS Schweiz AG Gohlke Elektronik GmbH AKAtech Kabel-konfektionierung GmbH AKAtech Produktions- und Handels GmbH AKAtech Kabel-konfektionierung GmbH CCS Slovensko s.r.o. CCS Lanka (PVT) Ltd CCS Asia Ltd. (Hong Kong) CCS China Ltd.

  5. Systemintegration - CCS Going-to-Market Model Market cultivation Customers Competencies Certification Transportation Medical Germany Austria Switzerland China International Elektronik Mechatronik Kabelfertigung Industrial Low-volume Consumer Target marketsD-A-CH + China International localsales System integration „focus on ressources“ „proximitytocustomers“ „One-stop Shop“

  6. Salesbyindustry low volume consumer(buildingautomation) Industrial(drivesystems) Transportation(automotivesupplyindustrie) Transportation(power electronics, railway industry) Transportation(agriculturalvehicles) Transportation(agriculturalvehicles)

  7. Facts & Figures CCS China Operation

  8. 2.) Cultural influences Power Index vs. Individualism low Most Asian, African, South Americancountries Individuality BRA, India, ARG, TUR, JP «Latin» Europe; F, I, E, B «Germanic» Europe; Scandinavia, DE, A, CH, NL Anglo-Saxon Countries; USA, GB, AUS, NZ, CAN Source: After Geert Hofstede high Power Distance high low

  9. Culture Comparison 3.) Cultural influences West • Grow up alone • „I“ • School, how to learn • Diploma, financial • Work, based on contract • Management, Individualist • Task prevails Relation East • Grow up in group • „WE“ • School, how to do • Diploma, status • Work, based on moral • Management, Group • Relation prevails Task

  10. 3.) Cultural influences Culture Comparison

  11. 4.) Influences from economic history (PR China) 1959 to1961: Big leapforward! • Nationalization of industry and commerce • Collectivization of agricultural sector • Centrally planned economy • 5 year plans • Management by quantity

  12. 4.) Influences from economic history (PR China) 1959 to1961: Big leapforward! • Meltingfurnaces in thecountryside • Quality ofsteel not important • Quotahastobemet • Bonus/punishmenttroughfulfillingofquotas

  13. 4.) Influences from economic history (PR China) 1979 to1992: Deng Xiao Ping reforms • More freedom in agriculture • Private ownedcompanies back tobusiness. Atfirstonly in specialzoneslater in whole China • SME cultureonlysinceearly 1990s

  14. 4.) Influences from economic history (PR China) Conclusion: • Lack of typical SME culture due to historic reasons • SMEs in China have often still quantity and not quality focus • Typical virtues like flexibility and quality, develop among Chinese entrepreneurs, but need time to evolve

  15. 5.) Examplesofimpact on Operations (CCS China) 95% ofproblemsoccurwithcustomizedparts Problematic: Generally unproblematic: • Standartparts • Usuallyproduced High Volume low-Low Mix,largecompany • Produced in Millions • Customizeditems • Designedbyusorcustomer • Usuallyproduced in High Mix- High Volume SME • Small Volume

  16. 5.) Examplesofimpact on Operations (CCS China) • Every incominglot will beexaminedby Quality department • IQC(Incoming Quality ControlSpecialists in different fields • Golden Samples ofeverycustomizedpart Total of 8 FTE for an organizationof 220 poepleonlyforProductquality!

  17. 5.) Examplesofimpact on operations (CCS China) • Fakes/Saving on raw material: • The suppliersaves on material toincreasehisprofitmargin • The productis not accordingtothespecification: • The supplierhas not understoodtherequiermentsorisunabletoproducethe part. • The product has been produced by the supplier without any problems in the past but suddendly quality is decreasing: • The supplier lacks process control/ suffers of high staff turnover • The supplierhas lost interestorhaslittlemotivationtofullfilltheorderbecauseoflowquantity/lowmargin

  18. 6.) Salary and wage trends in China

  19. The CCS Group would like to thank youfor your interest. CCS, yourcompetentpartnerfor electronic, cableassemblies, mechatronicandsystemintegration

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