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Japan must rethink customs on product quality: Toray chief

Practice of accepting inferior goods used as cover in materials scandals

Toray Industries President Akihiro Nikkaku spoke with The Nikkei on Monday after a subsidiary was found to have falsified product quality data.

TOKYO -- A Japanese business practice abused in a string of manufacturing scandals may need to be re-evaluated, the president of materials maker Toray Industries has suggested after a subsidiary contributed to the problem.

President Akihiro Nikkaku apologized once again Monday for the falsification of product quality data uncovered recently at the Toray Hybrid Cord unit. "Unpardonably, the sense of duty around abiding by contracts was weak," he said in an interview with The Nikkei.

The system of Japanese Industrial Standards lets manufacturers ship products that fall below specifications such as strength or dimensions with the consent of the buyer, in a practice known as tokusai.

But this practice apparently was used as a cover at several Japanese manufacturers, which were found lately to have faked quality data and sold the inferior products without the client's permission. Such abuses were exposed at Kobe Steel in October, and more recently at Mitsubishi Materials subsidiaries.

Two successive product quality overseers at a Toray Hybrid Cord plant in Aichi Prefecture were found to have doctored data on tire cord, a strength-reinforcing material for automobile tires. The products were shipped to clients despite lacking the agreed-upon quality.

The unit's actions did not affect product safety and thus were not illegal. But overseeing product quality is "the most basic of basics," said Nikkaku, who added that selling products lacking the specified quality "cannot be tolerated." Toray Hybrid Cord's president was replaced Friday by Masahiro Aoki, who was sent over from the parent. The company aims to establish steps this month to remove human involvement between the stages of testing quality and issuing inspection certificates.

In Japan, "trusting relationships" between suppliers and clients allowed for tokusai to arise, Nikkaku said, because buyers thought they were receiving good-quality products even if they missed agreed-on levels. But in the West, he said, such practices "give the appearance of using low-quality products."

It may be necessary to "come up with some kind of new yardstick," the president said.

For instance, products could have separate purchase terms for different quality grades in aspects such as strength and durability. Clients would contract with suppliers based on absolute standards and accept nothing less. That would eliminate gray areas around acceptable levels, making quality easier to manage.

Masaaki Tsuya, CEO of tire maker Bridgestone, said changes are on the way for such hazy areas in the Japanese system. His company does business with Toray Hybrid Cord.

"Vague relationships are difficult to maintain," Tsuya said.

(Nikkei)

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