1. Service Business in China Optimized spare parts logistics for improving the service performance in the Chinese marketPD Dr Heiko Gebauer, Eawag 29. November 2013

2. Over 15 years of experience on service business in manufacturing companies International service management Service strategy Service organizationCommercializing industrial services Service offerings & value propositions Service innovationControlling industrial services 19962013 3. Experiences on service business in China as part of the international service managementFocus groupTopics Chinese culture / negotiation styles Service offerings Human resource management Participants Kuka Robotics, Bhler Diecasting, Jakob Mller Machine AG, Studer .Action researchTopics Commercializing service offerings Service process documentation Human resource management and Participants Witschi Electronic, Oerlikon, Bystronic, Bosch Packaging Individual projectsTopics Setting up of a spare parts logistic hub in China Participant GFAgieCharmilles 4. AgendaWhat makes services in China so complex?What are typical service requirements of Chinese customers?How can spare parts logistics be organized in the Chinese market? 5. East meets WestBossHandling problemsContactsOpinionsSource: Yang Liu (2010) 6. Chinese characteristics influencing business cultureForces shaping Confucian valuesCommunist ideologies Chinese business cultureGuanxi, Mianzi, Renqing are embedded in a social hierarchy system (limo), which provides internal harmony Long-term orientation versus short-term orientation, High power distance versus low power distance, Collectivistic versus individualistic, uncertainty avoidance versus risk seeking, masculinity versus femininity Working hard (chngzhng), volunteering for working tasks, family orientation, Work-units (danwei)Western valuesSource: Gebauer (2007)Expatriate executives, Chinese managers trained in international business, individualistic attitudes (e.g., breaking with the harmony orientation, team diversity, individual preferences, performance based salary and bonus systems 7. Chinese business culture shapes the service managementService revenue as a percentage of total revenue (%) 2521.220 1510.310 5 0EuropeanChineseSales companies of Swiss manufacturing firmsSource: Gebauer (2007)Service managersdeliberatelyuse "free" customerservicesforestablishing a guanxinetwork and "giving face" to theircustomersThe high power distance in China limits the empowerment of service managers and service technicians to offer product-related services proactively. Service managers and service technicians are highly reluctant to change their mindsets. The fact that the base economic actor is the family rather than the firm leads to a high fluctuation among service staff. 8. AgendaWhat makes services in China so complex?What are typical service requirements of Chinese customers?How can spare parts logistics be organized in the Chinese market? 9. Service growth in China China as a hyper market for services >40% annual sales growth and installationsHigh staff requirements to keep up with the marketMedical equipments (e.g., Carl Zeiss Medical) China as a continuous growth market for services 20 to 40% annual sales growth and installationsLarge installed base and long-term historyHigh staff requirements to keep up with the marketTextile, printing equipments (e.g., Rieter, Heidelberger Printing Machines) China as stagnating market for services