With the continuous improvement in consumer consumption levels and changes in consumption concepts, consumers are increasingly concerned about product quality rather than only considering price. Product quality is usually determined by manufacturers upstream in the supply chain. Under this circumstance, ways to improve product quality in the supply chain through different methods of cooperation to maximize the enterprise′s and supply chain′s profits have become the focus of decision makers′ research. “Cross-shareholding”, in which two or more companies hold a certain proportion of each other′s shares to improve their own or overall performance, is a relatively common form of strategic alliance. Cross-shareholding in the supply chain refers to a situation in which companies with up-and downstream supply chain relationships hold each other′s shares. Based on cross-shareholding′s positive supply chain impacts, studying whether this strategy will promote product quality improvement in the supply chain is of great practical significance.Most of the existing quality design literature discusses how enterprises′ upstream and downstream contracts in the supply chain can improve product quality and affect the supply chain′s performance level. This article diverges from previous literature by adopting a general approach for discussing quality design, and-on the basis of previous research on the positive impact of cost-sharing contracts on the supply chain′s product quality design-explore how cross-shareholding will affect the supply chain members′ decision-making behaviours on product quality, price, and supply chain performance. This article also discusses the impact of the shareholding ratio on consumer surplus and social welfare.This article assumes that a supply chain consists of an upstream manufacturer and a downstream retailer. The manufacturer determines a product′s quality and wholesale price, and then the retailer determines the product′s sale price and provides it to consumers. First, resorting to the consumer′s utility analysis, the consumer′s utility model regarding quality and price is proposed. Then, a cross-shareholding mechanism based on the traditional decentralized supply chain model of cost-sharing contracts was introduced. Based on the Stackelberg game model, the pricing strategy, product quality design, profit, consumer surplus, and social welfare of supply chain members when there is no shareholding or cross-shareholding are solved and compared. It also analyses the cross-shareholding ratio′s influence on the above-mentioned optimal decision-making and performance. The main conclusions are as follows:1) In the supply chain′s product quality design, cross-shareholding between companies will increase product quality compared to non-cross-shareholding. Product quality will always increase in tandem with downstream companies′ shareholding, and when upstream shareholding is above a certain threshold, product quality will also increase.2) The impact of cross-shareholding on product wholesale and retail prices shows similar trends. Leading manufacturers always leverage being the first mover to set the optimal wholesale price under the current shareholding ratio, and can obtain more profit on the premise of maintaining a cooperative relationship with the retailer. Retailers can only follow the manufacturer′s decision to set retail prices to make up their own profits.3) Cross-shareholding benefits both the enterprise′s and supply chain′s economic performance. As the manufacturer′s profit first increases and then decreases with the growing proportion of its downstream shareholdings, when the upstream company holds the downstream company′s shares above a certain threshold, its profit is always better than when it does not hold shares. However, the retailer′s profit first increases and then decreases with the growth of upstream shareholding. Therefore, when the upstream shareholding is below a certain threshold or the retailer owns fewer upstream shares, the retailer′s profit is better than when it does not hold shares.4) Cross-shareholding helps improve consumer surplus and social welfare compared to no shareholding. Social welfare always increases after cross-shareholding with the growth in the proportion of the manufacturer′s shares in the retailer, and it first increases and then decreases with the increase in the proportion of the manufacturer′s shares held by the retailer. Furthermore, when the cost-sharing ratio is below a certain threshold, the cross-shareholding behaviour between enterprises will always increase the total societal welfare when compared to non-cross-shareholding situations.In summary, this article′s research results show that cross-shareholding can optimize product wholesale and retail prices, as well as improve optimal product quality, corporate profits, consumer surplus, and social welfare on the basis of cost-sharing contracts.