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1 Introduction
China's economic growth has been phenomenal for the past three decades. Its GDP in 2005 was $2.26 trillion with an estimated 9.9 percent growth rate, according to [17] US Department of State (2006). Its economy is now the fourth largest economy in the world. China's economy grew at an average rate of 10 percent per year during the period 1990-2004, the highest growth rate in the world. China's total trade in 2005 surpassed $1.4 trillion, making China the world's third largest trading nation after the USA and Germany.
Global companies have established many production facilities in China due to lower wage rates and the trend towards outsourcing. However, to stay competitive, enterprises should try to make their manufacturing facilities more efficient and lean. Traditionally, managers have relied heavily on accounting metrics to determine efficiency. However, such metrics alone are inadequate for managing a lean manufacturing operation. A profit and loss statement is the result of a long chain of decisions that may go back for years or even decades. Managing a lean factory requires key information that reflects what is happening upstream in these chains of events.
Several research studies have assessed operations of Chinese manufacturers. [8] Li (2000) performed an analysis of sources of competitiveness and performance in Chinese manufacturing firms. Li investigated the relationship between business performance (sales revenue, profit after tax, market share, and return on investment) and 42 competency items in four functional areas (marketing, product design and development, manufacturing, and human resource development). He collected 72 responses from manufacturing executives from a sample of 300 Chinese manufacturing firms. The respondent were asked to rate the importance of competencies and performance using a five-point Likert scale. Li's analysis showed that marketing competence was ranked high by Chinese executives, indicating the transformation from a state-planned economy to a market economy. Improving quality, sustaining on-time delivery, decreasing production cost, and reducing inventory level were among the top ten highest ranked manufacturing competences. Human resource competence was significantly correlated with performance. However, manufacturing competence regarding process reengineering was not emphasized as much by engineers, showing lack of commitment to lean production.
[9] Li (2005) assessed intermediate infrastructural manufacturing decisions that affect Chinese firms' market performance. [5] Hayes and Wheelwright (1984) describe infrastructural...