Read the following paragraph and answer the questions given below. Over the past several years, even the most casual observer will have seen a number of media articles and telecasts decrying significant quality failures stemming from Chinese-made goods toys decorated with lead-based paint, milk products tainted with melamine, contaminated pet food, poorly made counterfeit knockoff products, defective drywall, and many others. For every significant Chinese quality failure reported in the media, how many more are overlooked, ignored, or not even recognized. Like their domestic counterparts, many Chinese suppliers have long been tempted to ignore quality-related issues unless they are required to address them by their foreign customers. Chinese suppliers face the same severe pressures for cost reduction and ever-increasing product performance in terms of quality, lead times, and delivery. Ask a senior manager from a typical Chinese supplier about these quality failures, and you are likely to hear how well-meaning, but overly aggressive, overseas buyers continue to unrealistically demand ever lower and lower prices while simultaneously seeking even quicker turnaround times. These suppliers often feel like they have to say “yes” to these demands to keep their factories loaded. If affected workers feel like their employer is facing a potential cutback because of fewer orders, they may leave for another company where they can receive a steady paycheck. Because of this pressure, there can be a substantial bullwhip effect that develops within the typical Chinese supply chain. For example, if a Chinese OEM is facing severe cost pressures from its overseas customers, then it has to pass along those demands for ever lower prices back through its supply chain, or else it will eventually become unprofitable and go out of business. At some point, one or more suppliers in the supply chain will be unable to meet these lower cost targets without making some kind of shortcut in terms of the quality of purchased materials or product specification reduction. When one link somewhere in the supply chain is unable to perform satisfactorily, then the entire supply chain is usually affected adversely. Paul Midler, author of Poorly Made in China: An Insider’s Account of the China Production Game, indicates that part of the problem often stems from miscommunication between the buying and supplying companies in terms of each company’s expectations and requirements. Chinese suppliers are under the gun to reduce costs by reducing quality, whereas overseas buyers are striving for higher levels of quality at “fire sale” prices. He also implies that these quality failures may originate from this asymmetry in expectations. Chinese suppliers often understand the quality ramifications of the severe cost pressures placed on them but may be unwilling to pass along this information to their foreign customers. Without good data and accurate information, the astute buyer must assume that there are significant potential risks to product quality but can only surmise where the corners are being cut. On occasion, Chinese factories have been known to make specification changes on their own, sometimes known as “quality fade,” without sharing this knowledge with their foreign customers. As a precaution, a number of importers of Chinese-made goods have adopted the time-worn slogan “caveat emptor” and taken a more proactive stance to improve the visibility of the Chinese suppliers’ production processesa) Why cost reduction pressures affect supplier’s quality?b) How can supply managers prevent quality issues when dealing with Chinese suppliers?

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Introduction:
The term Business refers to an exchange of goods and services between the buyer and…