Cultural differences in servitization: Nordic manufacturers in China

The purpose of this study is to examine the challenge of cultural differences in servitizing manufacturing. The focus is on services that the representatives of small, developed and open economies (exemplified by Nordic countries) provide in a large, developing and centralized economy (exemplified by China). Along with internationalization, cultural differences in business practices have become a topical issue. They may be particularly challenging when the business area is new and the cultures of business parties include opposing characteristics.

A multiple case study approach is applied, including five case companies from Finland and Sweden. They are all manufacturing companies in metals and mechanical engineering industries, offering product services, process optimization and consultancy services. Empirical data have been collected from both Nordic service providers and their customers in China.

The data reveal that services including tangible elements (e.g. spare parts) are successful in China. However, there is also a growing demand for total solutions. Customers’ buying behavior is not only influenced by the Chinese business culture, e.g. “guanxi”, but it also varies according to the ownership of companies (state-owned, private, foreign) and to the geography. A prerequisite for success is a shared understanding of central business concepts – in this case, the interpretations of “tangibility” and “added-value” turned out to be particularly important.

This study indicates that generalizations based on the experience of developed countries may be misleading in developing countries, as they may “jump over” some steps on their way toward advanced services. In China, services as offerings are newcomers, but service culture in a “tacit” form is embedded due to the Confucian influence. The recent view of service-dominant logic that highlights the mutual benefit as the core of service business may actually be quite near to the original Chinese thinking.