Adaptation of Lean Production in China: The Impact of the Japanese Management Practice

The purpose of this paper is to examine the adaptation of the lean production system in China. In a large context of worldwide Japanization, the Chinese firms paid more attention to and introduction the Toyota production system earlier than American and European firms. First Automotive Works(FAW), the prototype of the Ford production system in China, began to introduce the philosophy of Toyota production system under the direct technological instructions by Taiichi Ohno, one of the earliest proponents of the Just-in-Time method in Toyota in late 1970s. also built a typical Toyota-style transmission plant which received technological assistance from Hino Motor Co. of Toyota Group in late 1980s. These efforts have been contributing to a great extent the evolution of the production system in FAW. FAW invited Taiichi Ohno, who was born in China, to conduct seminars and on-the-spot technological instructions in 1977 and 1981. In FAW, Ohno not only harshly criticized the existing mass production system of FAW, but also taught FAW by showing the example of changing the lay-out of production line. Besides, FAW also sent an observation mission to learn Japanese management methods and visited ten Japanese automobile companies for five months in 1978. The FAW Transmission Plant, which introduced Just-in-Time(JIT) method, is viewed as one of the best plants in China. FAW has attempted to adopt the lean production system that characterizes Toyota. FAW is in the middle of learning the lean production, and the transmission plant has become a typical model of this system. Every person above manager level in FAW has the book "The Machine that Changed the World"(MIT, IMVP). By 1995 thirteen seminars focused on lean production had been held at the FAW Academy of Communist Party. Technology transfer between plants is one of the serious problems in FAW. There is a unique coexistence of different production systems including those former Soviet Union, Japan, US and Germany because of the different adoption time. In general, the evolution process of production system of FAW shows and example of worldwide Japanization and a good direction for the reform of state-owned firms which are in the labor pains of building up competitiveness in an increasingly market-oriented economy in China. Shanghai Automotive Industry Corporation(SAIC), which is viewed as one of the most successful holding company in the Chinese automobile industry, is another typical case for adopting lean production system in China. In order to reach the quality regulation of Shanghai Volkswagen(SVW), a core joint venture company under Shanghai Automotive Industry Corporation, SAIC first established unique system 'Special Production Zone' within its subordinated factories. While it was Japan Koito Manufacturing Company that actually brought lean production into Shanghai. The largest overseas investigation delegation consisted of top managing staff from 16 makers of SAIC was assigned to Japan by the invitation of Koito Manufacturer for almost one-month actual investigation in 1992. From 1994, SAIC selected Shanghai Automobile Gear Works and other 4 factories as a breakthrough to practice 'Team Work Method', 'Just-In-Time Production', 'JIT Delivery System of Components' and 'Systematic Supply'. In the beginning of 1995, SAIC drafted a 'New Strategic Prospect' for the forthcoming 5 or 6 years, so called 'Up and Down'(development capability-up, product cost-down). To realize cost reduction and enhance the crisis consciousness, SAIC began its promotion of lean production thoroughly. While in the establishment duration of lean production, the conflicts existed between the traditional identity of mass production & Chinese-style production management and the identity of Toyota's JIT. The resolution of mechanism degree of technique transformation among factories, that is the degree of the lean production introduced within the whole company serially has become the biggest touchstone to test the evolution capability of FAW. On the other hand, SAIC's introduction and promotion of lean production resulted in the mutual function of inner & outer elements with the privilege of capacity improvement. This paper implies one realistic problem that is the breaking away from former management system and traditional mass production under the present planned economic system.