China Study Tour: Brother Machinery Co. Xi’an

Brother is a Japanese company that initially began a joint venture with a Chinese firm in Xi’an in 1993. In this location, they make low-end to high-end industrial sewing machines as well as machine parts for large machinery primarily located in the south of China.

Our presentation was made by a Japanese employee who was fluent in Chinese, and reasonably good at English, although he kept distrusting himself and switching to Mandarin and one of the Mandarin speakers in our group would translate, usually Derek. He said that there were 11 Japanese employees at the plant, and only one of them spoke Mandarin. Their upper level plant managerial staff all spoke Japanese, and workers could attend Japanese courses if they wished. We found this very interesting – this is something seen in France and Japan, I would say most, this sense of national pride and an unwillingness to compromise national culture in a multinational venture. This is in reality too broad an indictment of all Japanese and French firms. However, I do believe that firms in China will either wish to speak their own language, or expect to conduct business in English. I feel that the Chinese have not yet attained a level of status in the world that would force those who wish to do business here to learn their language. Until then, I will be pleased that my language is now the language of the world, making my life much easier when traveling.

Our presenter wasn’t actually prepared for us when we arrived. He said that Chinese people are usually 1-2 hours late, and thus he didn’t expect us to be on time (we were five minutes early). Thus, some of the charts weren’t in English, and he seemed very flustered and unsure of how to structure what he had to say.

The most surprising part of visiting Brother was in hearing how not lean the processes at the plant were. Brother is headquartered in Nagoya, the same city as Toyota, and they ascribe to lean principles and the Toyota manufacturing method, and yet the volume of work in process inventory just sitting on the factory floor was staggering. The workers also weren’t wearing hard hats or safety equipment, but that is probably beside the point. The company’s core values, dress code, and team metrics were posted in prominent places in the factory. But, I just couldn’t get over the volume of inventory lying about – it was clearly not a just in time sort of operation.

The most interesting part of the presentation to me was the discussion of profit, or lack thereof, in the operation. Brother already makes virtually no profit on their lower-end sewing machine, which retails for $300, and is primarily intended for markets such as Bangladesh. They do quite well on their high end machines, but the presenter was saying that wage increases and logistics difficulties in transporting parts and finished goods were seriously eating into the potential profits of the business.

I really appreciate the time that Brother gave us in Xi’an. This was a real business tour, not a sanitized version for public consumption. We got a real picture into difficulties running an outsourced manufacturing business in China, something China is famous for in business worldwide, and the ways in which it wasn’t a successful venture, and the ways in which it was.