Is Your Quality of Service a Sustainable Advantage?

Tuesday, January 2, 2007 2:24
Posted in category Going to Market, The Big Picture
Comments Off on Is Your Quality of Service a Sustainable Advantage?

Every time I return home, I go through varying degrees of culture shock, and each time the things that I notice are always different.

During my first return trips, it was very superficial. I would wonder why CNN called it World News when 90% of the content is U.S.? At the super market I was overwhelmed by the choices of products available. All the street signs were in English. People held doors open and people didn’t rush me when I got off the elevator. No on was spitting on the street…. and so one.

As a consumer this was much the same. Coming from Beijing to San Francisco / St Louis was like night and day. Whether in a restaurant or in a shopping mall, I was always under the impression that the U.S. had a higher quality of service. That somehow the person behind the Macys counter was genuinely trying to help while the all of the salespersons at Beijing’s Kempinski Mall were really trying to avoid me.

And it seemed at the time that others were experiencing the same as everyone was talking about how the quality of service in their home country was vastly better than the quality of service in China.

It is an issue that I have to pay attention to as often I am working with foreign companies to design China strategies, and understanding the customer service issues related to a product or service is important

In China there is a belief among foreign executives that the service provided by foreign companies is the best service in the world, and that because of their superior service quality levels customers will continue to pay a premium for foreign goods. Companies like Volvo offer 24 hours servicing of trucks in China, retailers like Nike offer similar return policies as those found elsewhere, and service staff in western restaurants are trained to believe the customer is always right.

Over the last few trips back to the States though, I have come to realize that the difference in quality levels between China and the U.S. is not all that different anymore, and that the gap that existed 5 years ago has closed at a very fast rate.

Maybe I am getting cynical, maybe my expectations are too high while I am in the U.S or maybe I have just grown so used to the level in China that I cannot judge clearly, but I cannot help to think that the difference is not that large and that it could have consequences in the future for foreign companies trying to compete in China.

In one project we studied the service infrastructure in China’s telecom industry and the results were interesting. The service quality of foreign telecom manufacturers was viewed as being worse than Chinese manufacturers like Huawei. Of course Alcatel Lucent are able to offer high product quality and service standards, but Huawei was as well, and their services were often thrown in with the sale, and in the case of one deal the manufacturer placed a team inside the telecom on a full time basis. The Chinese manufacturers were much more willing to develop new programs and take the risk to so, and it resulted in their ability to take business away from the large multinationals.

Another case study can be seen in the trucking industry as Volvo and other foreign manufacturers look to sell heavy trucks into the China market. One of the most difficult hurdles for them is not the quality of their trucks, but the fact that their service network is only a fraction of the size of their major competitors (FAW and Dongfeng) is the biggest hurdles. FAW and Dongfeng have service centers everywhere (PDF Map), and more importantly mechanics around China know how to perform necessary repairs.

These two case studies 5 years ago would have been exceptions to the rule, however as more and more Chinese firms are preparing to go overseas, the number of exceptions is growing. Add to that the fact that many local chinese have studied abroad and been trained by large foreign multinationals the importance and techniques of customer service, and the speed by which programs can be put in place increases.

With the issue of service being an important one to all, it is a topic that we will continue to cover in our posts, and for the most famous meltdowns look in the BRAiNDamage section of the site

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