Tradeoffs in China

When working in the manufacturing industry, there are many variables to juggle. Three most common ones are the price of the product, the quality of the product, and the speed of delivery.

In the buyers’ opinion, of course, price should be the lowest possible, quality should be the best possible – and deliveries, the fastest possible.

In China, typically the first priority has been low price, even at the cost of quality. We have seen this very clearly in the wind industry during the past 5 years. This has unfortunately led to a situation where wind turbines have not been working as they should.

Therefore, a common opinion in the wind power industry, also in China, has started slowly to change towards buying better quality.

A second priority in China has been the speed and accuracy of the delivery. Because of this, quite many turbine manufactures have kept turbines in stock to guarantee fast delivery.
Consequently, the value of their inventories rose sky high. The combination of these two things led to a situation where a large number of low-quality goods needed to be sold.

We at The Switch have always focused on producing high-quality products and delivering them promptly. To do this, we have not built a big inventory. Instead, we have developed an agile production method in which we can very quickly set up a factory near our customers based on our Model Factory concept.

Of course, we have to follow the market price levels. But we are definitely not driving prices down by trading off on quality.

We strongly believe that our customers will ultimately reach the lowest cost of energy – and greatest profitability – from their turbines built with high quality products. And when combined with localized production, we can guarantee the best possible service.

Reijo Takala
Vice President, Markets