·MacauStudiesinManagementSeriesNo.5QualityManagementandChineseCompaniesinMacauAntonioTeixeira

MACAUSTUDIESINMANAGEMENTSERIESN0.5BYTHEFACULTYOFBUSINESSADMINISTRATIONUNIVERSITYOFMACAUQUALITYMANAGEMENTANDCHINESECOMPANIESINMACAUAntonioTeixeiraFacultyofBusinessAdministration,UniversityofMacauPUBLISHEDBYMACAUFOUNDATION

TitleAuthorSeriesSeriesEditorPublishedbyQualityManagementandChineseCompaniesinMacauAntonioTeixeiraMacauStudiesinManagementNo.5NelsonJosedosSantosAntonioMacauFoundation(Apartado3025,Macau)July,1996ThecopyrightofthispublicationisjointlyownedbytheMacauFoundationandtheauthor.Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans,electronic,mechanical,photocopying,recordingorotherwise,withoutthepriorwrittenpermissionofthepublisher.PrintedbyDistributedbyPriceTipografiaWelfareLda.CulturalPlazaMacauLtd.MOP$70ISBN972-8147-52-X

QUALITYMANAGEMENTANDCHINESECOMPANIESINMACAUAntonioTeixeira

AcknowledgementsvACKNOWLEDGEMENTSThisbookisbasedonaMBAdissertation,productofninemonthsofresearchduringwhichIhadthegenerousandpreciousassistanceofseveralpeople.AcknowledgmentofthisassistanceisoftendifficultandriskybecausethereisalwaysthefearthatImightleaveoutsomepersonsorforgettoemphasizetheinvaluablehelpgivenbyothers,thuscreatingasituationofinjustice.However,IamcertainthatmyfirstgratefulacknowledgmentmustgotomybossatthetimeIenrolledintheMBAcourse,Mr.AlmeidaSantos,fortworeasons.First,hewasoneofthemastermindsthatmadepossibletheorganizationoftheMBAprogramme;andsecond,heinsistedonmyparticipation,allayingmyinitialdoubts.IthankMr.AlmeidaSantosforhisdecisiveinterventionatthetimeofmyenrolment,butatthesametimeIregretthatMacaucannolongercontinuetocountonhissupporttoitsdevelopmentprocess.AlltheotherbossesIhadinthemeantimewerealsoverysupportiveandfacilitatedmyparticipationinclassesandinthewritingofthedissertation.IherebyexpressmydeepappreciationtoMr.AntonioRodriguesJuniorofMacauFoundation,Mr.RufinoRamosofMacauUniversity,andMr.CastanheiraLouren~oofGADA.ThenextnoteofthanksmustgotoalltheprofessorsoftheMBAprogrammethathelpedmeopenknowledgeinroadsinnewthemes,especiallytoProfessorNelsonAntonio,whoagreedtobemytutor,alwaysgivingmeunreserved.supportandadvice.Ithankallmycolleaguesinthecoursethatcontributedtoenlargingmyknowledgeduringthediscussionsheldinandoutofclass.InthiscaseIoweaparticulardebttoMissVirginiaTrigo,who

VIAcknowled~entsworkedwithmeintheclassgroupassignmentsandhelpedmeovercomesituationswheregivingupwasatemptation.Imustalsothankallthepeoplethatgavetheircollaborationinthedevelopmentofthestudy.Thedecisiontokeepconfidentialthenamesofthepeopleintervieweddoesnotallowmetolisttheirnames,evenifconfidentialitywasnotalwaysasked.Itwouldbeinconvenienttomentiononlysomeofthenames.Butareferencemustbemadetothosewhohelpedmetogettheappointments,andsometimesevenactedastranslators-MissCarolinaSam,MisterLouren~odoRosario,MisterLanceloteXavier,MisterCardosoAlves,andMisterRaimundodoRosario,alsotothosewhohelpedinthebibliographicresearchtask-MisterRudolfoAzedo,theUniversityofMacaulibrarian,MisterAlvaroRosa,fromtheMacauUniversity,andanMBAstudent,andMissSaraFeatherfromtheUniversitybookshop.ThecontributionofMr.BrunoSoareswasdecisiveindrawingsomeofthefigures,andMissSylviaIeongmadeasuperbjobreviewingthefinaltext.AlastandspecialreferencemustbemadetomyfamilythatsharedwithmetheinconveniencesassociatedwithmyparticipationintheMBAToallthesepeopleandtothosethathavehelpedtomakeMacauwhatitistoday,Idedicatethisbook.

ContentsvuCONTENTSINTRODUCTION15PARTI-QUALITYMANAGEMENTChapter1FROMINSPECTIONTOTOTALQUALITYMANAGEMENT231.1TheJapaneseEra261.1.1TheIntroductionofQualityControlinJapan261.1.2TheInfluenceoftheAmericanMasters271.1.3TheDevelopmentandCharacteristicsofthe28JapaneseSystem1.1.3.1Kai.zen311.1.3.2Kai.zenPractices391.2TheAmericanPost-JapaneseEra40

VlllContentsChapter2QUALITY-WHAT,WHY,WHENANDHOW452.1WhatisQuality?452.1.1DifferentApproachestoDefiningQuality462.1.2TheMultipleDimensionsofQuality522.2WhyEmbarkontheQualityTrain?532.3WhenMustQualitybeAdopted?552.4HowtoImplementQuality?552.5TheQualityMasters60PARTII-QUALITYANDCHINESECOMPANIESINMACAU.ANEXPLORATORYSTUDYChapter3CONCEPTUALFRAMEWORKANDMETHODOLOGY67Chapter4THEOVERSEASCHINESEMANAGEMENTSYSTEMINTHELIGHTOFQUALITYMANAGEMENT73PRINCIPLES4.1OverseasChineseFirmsasaTypeofFamilyBusinessesinGeneral734.2CharacteristicsoftheOverseasManagementSystem824.2.1Ownership,Siz.eandLifeSpan864.2.2ManagementIdeology,LeadershipStyleandDecisionMakingProcess914.2.3OrganizationalStructure944.2.4EmploymentPolicy96

Contents1x4.2.5Characteristics,SelectionandTrainingofManagers984.3OverseasChineseandQualityManagement99SystemsChapter5EXPLORATORYSTUDYOFTHEOVERSEASCHINESECOMPANIESOPERATINGINMACAU1055.1IndustriesWheretheOCCSurveyedOperate1055.2FamilyInvolvementinManagement1075.3LocationandSharingofDecisionPower1075.4TrainingandEducation1085.5PersonnelTurnoverRatio1105.6MonitoringofCompetition5.7Suppliers'Policy5.8MinimizingPublicDisturbance1111111135.9QualityVersusProfit1155.10AttitudesTowardsImplementingSuggestion116Schemes5.11AttitudesTowardsHearingtheCustomer1175.12QualityControl5.13KnowledgeAboutISOStandardsPARTIDCONCLUSIONSChapter6CONCLUSIONS6.1AModelforQualityManagement6.2TheOCMSandQuality117119125125133

xContents6.3TheOCMSNowandintheFuture137APPENDIXA-CHARACTERISTICSOFTHE141COMPANIESSURVEYEDAPPENDIXB-DANGERSANDLIMITATIONSWHENADOPTINGISO9000153NOTES159BIBLIOGRAPHY169

ContentsxiLISTOFFIGURESJapaneseandWesternQuality:AContrast161.1ChangingForcesandResponsiveStrategies241.2HistoricalEvolutionofQualityControl251.3TheQualityErasinAmericaandJapan261.4ComparativeValuesofAmericanandJapanese29Management1.5MajorConceptsintheComparativeAnalysisoftheU.S.andJapaneseManagement301.6ChronologyoftheJapaneseQualityMovement321.7JapanesePerceptionsofJobFunctions341.8WesternPerceptionsofJobFunctions341.9FeaturesofKaiz.enandInnovation351.10HierarchyofKaiz.enInvolvement361.11TheFourMajorQualityErasAccordingtoGarvin432.1FivePrincipalApproachestoDefiningQualityandFour47CompanyOrientationsTowardstheMarketplace2.2Shuster'sApproachestoDefiningQuality492.3ThreeApproachestoDefiningQuality492.4DefinitionsofQuality5ff2.5AnswerstotheQuestion:"WhendoyouConsiderthatyouAreMakingaGoodQualityProduct?512.6TheEightDimensionsofQualityAccordingtoGarvin542.7TheQualityMastersAccordingtoSeveralAuthors61

xiiContents2.8ReadingsaboutQuality3.1OverseasChineseThroughouttheWorld4.1CategoriesofFamilyFirms4.2StagesofDevelopmentofFamilyFirms4.3CulturalConfigurationofaFamilyFirm4.4CulturalPatternsoftheFamilyBusiness4.5CulturalPatternsintheBoard4.6CulturalPatternsintheFamily4.7ValuesUnderlyingtheTraditionalOverseasManagementSystem4.8OrganizationalTypeofOCCAccordingtoRedding.4.9ConcentricCirclesinOCCAccordingtoLau4.10OCCVis-a-VisQuality4.11ComparisonoftheOCMSwiththeAmericanandJapaneseSystems5.1MainPointsDiscussedintheInterviews5.2AttitudesTowardsHearingtheCustomer6.1TheQualityFirmMacromodel6.2TheCompanyinTunewiththeCustomer6.3TheFightfortheCustomer6.4HowtofaceChaos6.5IntermediateModelofQuality6268747577788081838486101102106118127130130131133

Contentsxiii6.6TheOCC137AlIndustriesWheretheFinnsSurveyedOperate143A.2FamilyInvolvementintheBoardandManagement144A.3LocationandSharingofDecisionPower145A.4TrainingandEducation146A.5PersonnelTurnover147A.6MonitoringCompetition148A.7Suppliers'Policy149A.8MinimizingDisturbancetothePublic150A.9QualityVersusProfit151A.10KnowledgeAboutISO9000152

Introduction15INTRODUCTIONJapan,whichattheendofWorldWarIIwasacompletelydevastatedcountry,hassincethenbecomealeadingindustrialnation.UnlikeGermany,whichwasalsoinruinsattheendofthewarandachievedequallyapowerfulpositioninworldindustry,theJapanesemanufacturedproductswereknown,beforeandduringthewar,asshoddy.Despitetheactivityregisteredinhightechnologyindustries,mostofthemdefense-related1,theJapanesescientific,technologicalandindustrialcapabilitieslaggedfarbehindthemainindustrializedcountries.WhileitcanbesaidthatGermanyhasregaineditsnaturalpositionamongthemostadvancedindustrialnations,Japanhasbecomeanewentrantintheclub.ItwouldseemthatthesituationexistentinJapanatthetimewassuch,thatitwouldnoteffectsuchadevelopment.Theenvironmentalfactorsseemedtobe,inthelightoftheprinciplesacceptedthen,extremelyunfavourabletosupporteconomicdevelopment.Atthesametime,thescarsofwar,notcompletelyhealedeventoday,wereanadditionaldisadvantagethatwasreflectedinhostilityinforeignmarkets.Themilitaristicfactionsofpowerhadseenearlierexpansionism,thatledtocolonialismandwar,asthesolutiontothelackofnaturalresources,atthetimeconsideredindispensabletoasoundbasisofanadvancedindustrialsociety,andtothecreationofabigmarketwhereJapaneseproductscouldbeimposedinspiteoftheirpoorcompetitiveness.Theresultsprovedtobedisastrous,andotherwayshadtobefound.Somearguethatanewwar,thistimeweaponlessandfoughtintheeconomicarena,beganthen.Thisrisefromscratchtoatoppositionwasachievedthroughanuniformandcontinuousprocessofsmalladvances,onlyperceivedbythecompetitorsinastagetoolatetoavoidtheJapanesetakingover.Figurei,whichrepresents

16QualityandChineseCompaniesinMacautheevolutionofquality,measuredastheproductsaleability,intheWestandJapan,showsverywellhowfarbehindwasJapanattheendofWorldWarJIandthecontinuousrateofincreaseachieved.~:::;iii<...I~l-o::)C0a:a.19501960197019801990Figurei-JapaneseandWesternQuality:AContrast(Source:Juran,JuranonQualitybyDesign,p.19)ThefirstWesternreactionsweremuchtheonestoexpectasinefficacious,andwerebasedinthreatsofprotectionismandcriesoffoulplay:theJapanesewereaccusedofnotfollowingtherulesofthegame:ManyanalysesweremadeinordertofindthedeterminantsofJapanesesuccess,andonlylatertheotherhighlyindustrializednationsbegantounderstandthatJapanwasplayingacompletelydifferentgame,withanewsetofrules.Thissituationisnotyettotallyclarified,andmutualincomprehensionstillpersists,althoughatalesserextent.Theanalystsdon'ttotallyagree,butthemostcommonlycitedfactorsare:•excellenceoftheJapanesemanagementsystem•protectionismofthehomemarket•closecooperationbetweenGovernmentandindustry•highstandardoftheeducationsystem•unfairpractices,suchasdumping•disregardforthewellbeingofJapanesecitizens,whoare,willingtobearagreaterdegreeofsacrificethanthecitizensofotherindustrializednations(socialdumping)•groupcohesion•Confucianistethics

Introduction17Itwouldbeextremelyinterestingtoanalyseindetailthevalidityofthesearguments,butthisisnotourpurpose.Itmust,however,benotedthatthelistingofallthesefactorsdoesnotnecessarilymeananagreementwiththem.EventhewideacceptanceofthesuperiorityoftheJapanesemanagementsystemmustberegardedwithgreatcaution.Infactitmustbetakenintoaccountthatmanagementsystemscannotbeexportedblindlytodifferentsituations,eveninthesamecountry.Whatworksinacertainindustrydoesnotnecessarilyfitanotherone.Infact,notalltheJapaneseindustriesandcompaniesaresuccessful,whileAmericanmanagement,forexample,subjecttoagreatdealofbashinglately,hasproducedcasesofhighlycompetitivefirms.Withallthesecautionsinmind,weintendtodealwithonewidelycelebratedvectorofJapanesemanagement,QUALITY,whichisaconceptdevelopedintheUnitedStatesandintroducedinJapanbytheAmericanoccupationforcesandtheleadingAmericanexpertsinthefield.TheJapaneseindustryintegratedwhattheylearnedintheirmanagementsystemsincetheearlystepsofthereconstructionprocess,developingqualityinitsfullpotential.ItcanbesaidthatthirtyyearsafteritsintroductioninJapan,theWesternersrediscoveredthereanupgradedconceptofquality,fullyintegratedinthecorporateactivityandinitsoperatingandremoteenvironments.2ThisrediscoveryledtotheappearanceofmanystudiesemphasizingitsimportanceandpointingtothechangesthattheWesternmanagementsystemsshouldundergoinordertointegratequality,seenasafundamentalstepintheprocessofupgradingcompetitivenessandlongtermsurvival.AtthesametimetheAmericanearlyqualitymastersgainedaneverincreasinghomeaudiencetotheirtheories.InviewoftheincreasingrecognitionoftheimportanceofqualityandthelackofstudiesaboutthesubjectinMacau,itwasdeemedimportanttomakeacontributiontostimulatingthedevelopmentofthedisciplineintheTerritory.Macau,likeallcountriesaroundtheworld,facesasituationofcontinuouschange,towhichthetraditionalmodelsdonotapply.Severalauthors,suchasPeterDruckerandMichaelPortirrecogni.zetheneedtodevelopnewparadigmsthatwillhelptointerpretenvironmentalsituationsandanticipatethedirectionsthemarketswilltake.Meanwhile,managementwilloperateinwhatPeterDruckercalls"turbulenttimes."5Thetransnationalizationandglobalizationofmarketsandcompanies,eithergiant,middle-si.zeorsmall-si.ze,contributeddecisivelytoturningobsoletethetraditionalrulesofinternationaltrade.Oncemore,asitusuallyhappenswiththeeconomicandmanagerialdevelopmentssinceWorldWarII,theevolutionofthesituationwasextremelyinfluencedbytheJapanesedevelopmentprocess.PeterDrucker6considersthatJapanintroducedanewformoftrade-adversarialtrade.Whilethepreviousforms,complementarytradeandcompetitivetrade,aimedatestablishingapartnershipandcreatingacustomer,adversarialtradeseeksthedominanceof

18QualityandChineseCompaniesinMacauanindustry,smashingcompletelythecompetitionintheprocess.Itcanbesaidthatadversarialtrade,combinedwiththerestrictionstoexportstoJapan,contributedtotheactualtendencyofcreationofeconomicblocs.Inallthisprocess,"managementhasemergedasthedecisivefactorofproduction.Itismanagementonwhichcompetitivepositionhastobebased."7Macanesemanagersmustfacealsoaspecificsetofcircumstancesderivedfromtheterritory'sconditions.Whilecertainareasoftheservicesectorhavebeendevelopinginrecentyears,themanufacturingindustryislosingitscompetitiveadvantages.Itsexport-orientedcharacteristicsmakethemheavilydependentonextra-regionalmarkets,USandWesternEuropeinparticular,.andtheconditionofHongKongsatellitesofmostoftheMacanesefirms,turnsthemdependentoncondemnedcomparativeadvantagessuchascheaperlabour,quotasandpreferentialtariffsofferedbykeymarketsunderagreementssuchastheGSPandtheGATI.8Thisexportingdependenceofdecliningmanufacturingindustriesfromexternaleconomicblocs,alliedtothefactthatitisstillnotclearhowthisgeographicalareawillevolveintheprocessofregionalisation,totheuncertaintiesoftheperiodoftransitionoftheadministrationtoChina,andtogethertothepotentialinstabilityassociatedwiththepoliticalevolutionofthePeople'sRepublicofChinaitself,confrontsMacanesemanagerswiththenecessityofreformulatingtheirstrategies.Thissituationextendsalsotoserviceindustries,socentredaroundgambling,thattheymustfindwaystotakeadvantageofthenewopportunitiesarisingfromtheMacauairport.Thisisacomplexprocessinvolvingmanyaspects,oneofthembeingquality.The.studyofthecompetitiveadvantagesofMacau,withconclusionsabouttheindustriesmostadequatetotheTerritory'senvironment,thereconsiderationofthemarketstoserve,thestudyofthebetterwaystomakejoint-ventureswithmainlandChineseenterprisesandtheanticipationofthewayregionalisationwillshapethisarea,arecornerstonesoftheprocessofoverhaulingtheexistingstrategies.ItisinthesecircumstancesthattheMacaumanagersmustrethink.theirfutureactions.However,underlyingallthenecessarysteps,appearsqualityinitsbroadestsense.Qualitybyitselfisnottheanswertotheproblemsfaced,butisindispensableinanysolutionandthequestforqualityisaprocessthatwillallowthediscussionofallthefunctionsoftheoperationofcompanies,leadingtothesearchforthemostadequateanswersineveryrelevantfield.AlthoughthemainroleintheimprovementofthequalitystandardsinMacaubelongstothetopmanagers,itisimportanttostimulate,byeverymeansavailable,theirinterestinthedisciplineandshowthemitsimportanceforthefutureoftheirenterprises.Thisisoneoftheobjectivesofthisstudytobecomplementedwithotheractionsthatarebeingprepared.Anyinterventioninthequalityareamustbebasedon:

Introduction19•characterizationoftheoperating,industry,andremoteenvironmentsofMacau'sindustries;•clearideasaboutwhatqualityreallyis;•thewayMacanesemanagersperceivequality;•identificationofthecurrentmanagementpractices,inordertodiagnosetheirconsonancewithqualitymanagement.Tuenecessitytolimittheextensionofthepresentbookdeterminesthatthefirstitemwillnotbedetailedbeyondthepreviousconsiderations.Thefocuswillbemadeinthelastthreeaspects.ThereareseveraltypesofcompaniesoperatinginMacau,withWestern,MainlandChinese,andOverseasChinesebeingthemostimportant.Duetotheimportanceofsmallenterprisestothelocaleconomy,9thestudywillfocusonthemthat,basedonempiricalknowledgeoftheMacanesemarket,aremostlyownedandmanagedbyOverseasChinese.InviewoftheserealitiesitwasdecidedtohearthetopmanagementofsmallenterprisesoperatinginMacauandownedbyOverseasChinese.Concurrently,theopinionofcommunityleaderswassought,inordertogetanexternalviewoftheactivityofcompaniesandhelptosupportsomeoftheconclusionsarisingfromthestudy.Thisway,besidesstudyingtheMacanesesituation,atentativesuggestionwillbemadetoanalysetheimplicationsofqualitymanagementintheOverseasChinesemanagementsystem,whichisamodelwithapastimageofsuccess.Thisbookhasthreeparts.Inthefirst,arevisionoftheliteratureaboutqualitywillbemadeinordertopresenttheevolutionofitsconceptsthroughouttimeandtheactualtrends.ThesecondreferstotheexploratorystudyalongwithananalysisbasedonaliteraturereviewoftheOverseasChineseManagementSystem(OCMS)inthelightofQualityManagementprinciples.Finally,thesetofconclusionstotakefromthefirsttwopartswillbepresented.

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MACAUSTUDIESINMANAGEMENTSERIESEditedbyNelsonJosedosSantosAntonioQUALITYMANAGEMENT:100QUESTIONSANDANSWERSQualityResearchGroup,FacultyofBusinessAdministration,UniversityofMacauISBN972-8147-71-6164pagespaper1995QUALITY:THEORYANDPRACTICENelsonJosedosSantosAntonio,FacultyofBusinessAdministration,UniversityofMacauISBN972-8147-61-9100pagespaper1995CONSUMERVALVESANDMARKETSEGMENTATIONINCHINA:ISSUESANDIMPERATIVESFORMARKETINGMANAGERS-ANEXPLORATORYSTUDYLeonardoAnthonyNajarroDioko,FacultyofBusinessAdministration,Universityof-MacauISBN972-8147-53-8187pagespaper1995THEDYNAMICIMPACTOFCULTUREONORGANIZATIONSTadashiUmezawa,DepartmentofBusinessAdministration,TokyoKeizaiUniversitySiewHuatKongandCarlosNoronha,FacultyofBusinessAdministration,UniversityofMacauISBN972-8147-76-7152pagespaper1996Forfurtherinformation,pleasecontact:MacauFoundationP.O.Box3052MacauTel:Fax:(853)345977(853)345979

ABOUTTHISBOOK"TheOverseasChineseManagementSystemcontainsasetofvaluescontrarytosomebasicQualityManagementprinciples,andalthoughitisundergoingaprocessofchange,inMacauthedegreeofchangeisfarfromputtingthetwosystemsinconsonance."Byperforminganexploratorystudy,theauthorintendstogiveafirstcontributiontothediscussionofthissubject.WiththeOverseasChinesebeingthemajorityofthecompaniesoperatinginMacau,thisdiscussioniscloselylinkedtotheroleofQualityManagementinthefutureoftheterritory.DoestheimageofsuccessusuallyassociatedtoOverseasChinesecompaniesmeanthattheirlongtermsurvivalcanbefacedwithoptimismorthesystemmustreevaluateitselfinordertoremaincompetitive?Theseandotherquestionsliketheonesrelatedtothestepstotaketoimplementaqualityprocessarealsoanalysedinthetext.THEAUTHOR'AntonioFranciscoNunesdosSantosTeixeiraisagraduateinCivilEngineering(lnstitutoSuperiorTecnico-Lisbon1975)andlivesinMacausince1976.DuringthemostofhisstayinMacauheworkedforthePublicWorksDepartment.AftergettinganMBAdegreefromtheUniversityofMacauinSM&EDin1994hehasbeenlecturingattheFacultyofBusinessAdministrationofthesameUniversity.Heisalso:amemberoftheQuality·ResearchGroupofthefaculty,beingcoauthorofthefirstbookpublishedinthepresentseries,QualityManagement-I00·QuestionsandAnswers.,!''1$BN972-8147-52-X'i''I,!/;',,I,,'1iIl(I