Map: After Sales Service Networks

Sunday, September 3, 2006 9:08
Posted in category Uncategorized
For years, China and Chinese companies have often been known for poor service levels.  However, for the largest Chinese companies, outside of brand image and product innovation, there are few other areas that are being focused on like the after sales service networks of a company.    

Whether it is a manufacturer of heavy equipment (trucks, cranes, or oil equipment), high technology equipment (routers, hubs, or antennae), or services (IT , logistics, product innovation), some of the most successful companies have learned the critical value of after sales service.

Minimizing down time by establishing service centers China-wide (See map), establishing close ties to client and assisting in product innovation, and managing returns of damaged good are all areas where Chinese companies are improving, and this has multinationals worried.

Traditionally priding themselves on a higher standard of service, many multinationals were able to close deals solely because their brand carried an image of higher quality of product and service, even when the price was 2 to 3 times higher..

As Chinese companies begin to put in the network necessary to support their customers, International firms will need to make sure that their networks are able to compete or risk loosing customers.

We hope you enjoy this week’s map that shows just how different the service networks between international and domestic companies is becoming for one sector.

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4 Responses to “Map: After Sales Service Networks”

  1. chinalawblog says:

    September 4th, 2006 at 5:44 am

    Richard —

    I would love to see Freightliner and Paccar on this map. Any chance of that?

  2. rbrubaker says:

    September 4th, 2006 at 10:13 am

    Hi Dan.  How was your weekend? 

    Looking at Paccar, their entire sales network is through agents rather than in-house, and each of those agents are small/ regional in scope . Even if they had claimed a large network (neither agent does), I would find it hard to believe that they would have fully trained a service team or have all the parts necessary on hand.

    As for Freightliner, there is no mention of China anywhere on their website and a search of other databases turns up nothing as well (not even a sourcing office)…. so I would say they have yet to enter.

    When interviewing the executives earlier this year, the numbers are pretty staggering in favor of Dongfeng and FAW. Both essentially split 80-85% of the market with a small percentage going to other companies. the internationals have yet to make a real dent through their own brands (some have local partners that are doing well) as they are seen as too expensive.

    Long run, there are channels for international providers, but it will come down to targeting specific areas and providers, making sure they have the service network in place, and making sure that they have a solid pricing regime in place to close the deal.

  3. chinalawblog says:

    September 4th, 2006 at 9:39 pm

    Richard —

    That’s very interesting about Freightliner. I used to do the legal work for Western Star Trucks before they were bought out by Freightliner, which in turn was bought out by Dailer Benz, now Daimler Chrsyler. Even then, they would occasionally sell a truck to China. Their trucks are considered ultra heavy duty trucks (great for mining and bad roads — very popular in Australia) so I just assumed they were in China by now. But, now that I think about it, just about every American or EU truck I saw in China was a Volvo. So do you think the Americans/Europeans are conceding this market? Hope I’m not boring you with all this, but like every boy who grew up in Michigan, I have a car and truck thing.

    Weekend was good. Really nice weather. Thanks. You?

  4. rbrubaker says:

    September 4th, 2006 at 11:39 pm

    Weekend was great.

    I once saw a MAC truck here, but only once, and there are Benz trucks here (more and more)

    There are opportunties here for foreign truck makers, but their competitive pressures will be different than back in the States or EU. The fact is that nothing Dongfeng or FAW produce comes close to a rig from MAC, Benz, or others, and in the future people will pay for that higher level (see CAT as an example).

    Have a good week