The Chinese service sector - How do we compare?

Historically most marketing strategy research has tended to concentrate on physical goods rather than services. In this regard China is no different, except that there has been considerably less research conducted in the entire Chinese marketing arena. To that end, as China continues to expand and develop at a pace not seen before, there is a need to critically examine the service sector and the relative performance of those firms. As theories developed in the goods sector are increasingly being adapted for services this paper reports on a convenience sample of 80 Chinese service firms performance based on the `Services Competitiveness Research Model" adapted by the Marketing Performance Centre (MPC) at the University of Otago, Dunedin, New Zealand. The methodology used in China has been modified from the methodology employed by MPC to take account of the nuances of the Chinese marketplace. The MPC study investigated the key sources of competitive advantage of successful service enterprises. Services have become an increasingly important contributor (up to three quarters) to GDP in many developed economies as they shift from a reliance on the manufacturing sector to one focused on the service sector. Research conducted in New Zealand suggests that in order to compete successfully in the service sector, firms should address a number of critical business issues in the following areas: market environment, approaches to marketing, brand equity and corporate image, firm performance, new service development, computer based communications. MPC results indicated that the top performing firms could be differentiated by their practices and investment in market orientation, investment in brands, new service development and use of IT. They have more formal processes to gather market information, disseminate it through the organisation and undertake new or incremental service development. Additionally top performers were using web-based technologies in a more strategic way rather than using them as a tactical sales tool. In the light of these results, the researchers sought to carry out a comparative study of Chinese service firms. This paper highlights key differences and similarities between the two countries and offers some explanations.