#46 Steiff pulls out of China
German toymaker Steiff, famous for its teddybears and other stuffed animals, announced that it will pull out of the Chinese market soon. Like many other companies, Steiff entered China (in 2004) in an effort to reduce costs and remain competitive with its range of high-quality toys that are often more collectors items rather than toys. From the outset Steiff was battling with low quality manufacturing. Workers didn’t seem to be capable or willing to adhere to Steiff’s strict strict quality standards. Even intensive (and expensive) training has not shown much effect because of high turnover among workers which is quite common in China. When, in addition, wages began to rise, the venture simply didn’t seem to hold its initial promise and Steiff decided to leave China.
December 30, 2011 @ 11:04 am
In my opinion producing such complex products like this teddybears it not easy in a country like China. Steiff’s teddybears consist of at least 40 pieces. The seamstresses have to pay a lot attention to precise processing. Otherwise the animals’ stare looks unappealing or even mean. Due to this it takes an average of eight to 12 months for a seamstress to learn how to assemble the complicated Steiff patterns at the desired quality level. This is of course very expensive. The CEO of Steiff said that the workers were not used to these strict processes and trainings and many of them left the company after a few days. It seems like this workers had little loyalty to Steiff. An article said that “these workers are as disloyal to their company as their company is to them”. If another employer offers them better pay, workers tend to move on, of course.
China is a country with low Individualism (20). The low Individualism ranking can be seen in the close and committed relationship between members of a group (family, extended family or extended relationships). China has a loyal in a collectivist culture; by contrast, the Germans do not have this. People in Germany are more independent and individual. Maybe Steiff did not consider these differences. Possibly they wanted to change the Chinese people into independent actors in a changing working environment. As a consequence, wages drove up over times and lead to significant increase of labor cost. This low-wages venture became increasingly expensive.