102 JOURNAL OF SMALL BUSINESS MANAGEMENT Introduction The economic achievement of China during the last two decades has been impressive. The manufacturing industry has made the most significant contri- bution to the spectacular economic growth in China (Lee and Yu 1997). However, the Chinese manufacturing industry is now in a critical stage of its development. The business environment in global markets is very turbulent, reflecting keen competition both in price and in product advantages. Manufactur- ers in the developed nations provide high-quality products at reasonably low prices, while other developing countries’ manufacturers are challenging Chinese firms seriously by producing the similar products at a lesser cost. Furthermore, consumers from all over the world are becoming more quality-conscious. The new wave of quality awareness and em- phasis has given a significant impact on business operations in the world. These recent developments force Chinese firms to consider quality management prac- tices to enhance the quality of their products. China must move away from its reactive, low-cost-based strategy that relies on cheap labor. Chinese firms must develop a new competitive edge based on quality. To meet these challenges, Chinese firms have been paying more attention to quality management (Lee and Yu 1997). Actually, many Chinese firms now try to implement quality management practices, such as total quality manage- ment (TQM), as a part of their manu- facturing/business strategies (Lee and Zhou 2000; Zhao, Young, and Zhang 1995). Investment for quality improve- ment is being made mostly in large cor- porations in China. However, there are few studies about TQM implementation in Chinese small manufacturing firms even though most of the Chinese manu- facturers are small or medium-sized firms (Lee and Yu 1997). Small firms are still dominant in many areas, such as ser- vices, trade, construction, textiles, and satellite suppliers to the larger firms in China. This research will provide analysis of TQM implementation in Chinese small manufacturing firms by investigating how TQM was introduced to them and how it was perceived. It examines the present status of TQM practices and its development and impacts on organiza- tional performance in Chinese small manufacturing firms and makes sugges- tions for the successful implementation of TQM. Even though this study is focused on Chinese small manufacturing firms, most of the considerations and suggestions can be applied to small man- ufacturing firms in other countries. Although the United States Small Business Administration (SBA) defines a manufacturing firm with fewer than 500 employees as a small firm, this study con- siders firms to be small in size if they employ less than 300 workers. This def- inition of small business size is based on Lee and Yu (1997). Journal of Small Business Management 2004 42(1), pp. 102–115 Perception and Development of Total Quality Management in Small Manufacturers: An Exploratory Study in China by Choong Y. Lee