WenniGregg

Opportunities and Challenges: Globalization of Chinese Service Companies : 

Opportunities and Challenges: Globalization of Chinese Service Companies Greg Turkanik Wenni Xiong Eximuse Global Group LLC

Slide2: 

“Services are going to move in this decade to being the front edge of the industry.” - Louis V. Gerstner IBM’s former CEO

Service Industry in the World: 

Service Industry in the World The Service industry has become a major contributor to World’s GDP In a “flat” world, service industry is a driving force behind the growing economy

Service Industry in China: 

Service Industry in China Rapid growth of Service Industry in China Opening Up Policy China’s Accession to WTO Three most growing sectors Wholesale, retail and catering Transport, post and telecom Real Estate

The Eleventh “Five Year Plan” related to service industry: 

The Eleventh “Five Year Plan” related to service industry Plan for 2006-2011 Objectives: Develop service industry Make and improve the policies to accelerate the development of service industry Pay more attention to finance, insurance, logistics, information and law services Develop the service sectors which have great potential demand, such as culture, tourism and community service Increase the percentage of the service industry rate in GDP Big cities should put service development in priority and try to make service industry as the supportive/main industry

Case: China International Travel Service: 

Case: China International Travel Service

China International Travel Service: 

China International Travel Service Founded in 1954 No.1 brand-name in China’s tourist industry, valued at 10.4 billion yuan Has hosted more than 10 million tourists from overseas Business grow at an annual average of 40% Has 13 subsidiary companies in more than 10 countries and regions overseas

CITS History: 

CITS History 1954 – foundation 1957 – 19 branches in China 1958 – 35 branches in China 1966 – 46 branches in China 1989 – China International Travel Service Group foundation 2000 – join World Travel Organization 2002 – the only tourist enterprise on the list of China’s top 500 enterprises

CITS International Expansion: Mode of Entry: 

CITS International Expansion: Mode of Entry Japan - Tokyo (1989) USA - Los Angles (1991) (First Joint Venture) (First Subsidiary)

Opportunities & Challenges: 

Opportunities & Challenges Capitalize on being one of the earliest ones allowed to expand overseas Capitalize on domestic and international needs of customers Access to capital Target large Chinese populations overseas State-owned and government influenced Loosing control over subsidiary Cross-culture communication Building brand overseas

Case: Spenor International Consulting Corporation: 

Case: Spenor International Consulting Corporation

Spenor International Consulting Corporation: 

Spenor International Consulting Corporation Founded in 1985 by Mr. Kong Fanren One of the oldest professional local consulting company in China Services include market research, brand building, marketing, management consulting, advertisement, etc. Have 6 branches in Shanghai, Beijing, Hangzhou and Shenzhen

History of Spenor: 

History of Spenor 1985 - introduced Dell Carnegie training program to China 2000 - established the “Golden Triumph Reward" and the related forum 2000 - cooperated with Mr. Philip Kotler and Mr. Don E Schultz to push the China consulting and marketing internationally

Spenor International Expansion: 

Spenor International Expansion

Opportunities & Challenges: 

Opportunities & Challenges Grey’s international network and reputation Training Know-how Synergy Cultural differences Communication challenges Differences in conducting business

Opportunities & Challenges for Service Companies in China: 

Opportunities & Challenges for Service Companies in China

Opportunities: 

Opportunities Services follow manufacturers: Chinese companies that expand globally (Lenovo, Haier, TCL, Huawei, CNOOC, Nanjing Automotive) need global services Growth of IT, Financial and Consulting services Cost-advantage Growing from being a provider of outsourcing to providing services internationally

Challenges: 

Challenges Lack of skill workforce “In China, international accountancy firms are scrambling to fill thousands of posts in a country where qualified bean counters are almost as rare as democratic elections.” Financial Times, June 13, 2006 60%-70% of service industry GDP belongs to Traditional service sectors

Challenges: 

Challenges Government limitations Reputation of “world’s factory” makes it difficult for service companies to gain international recognition Competition from India Character of Services (intangible, inseparable, heterogenous and perishable)

Thank You: 

Thank You