International Trade in Services 国际服务贸易 With the rapid economic development Services Goods Services Services Developing trend of trade in services 90 80 70 60 50 40 30 20 10 0 goods trade service trade primary middle nowaday Preface ※ With the rapid development of the world service economy, the core of the international trade is turning from the traditional trade in goods into the one in services. ※ Though China trade in services started in the low point, it has improved rapidly with great potentiality. ※ In order to enlarge the trade scale, improve the trade structure in services and promote the world competitive power of trade in services, international trade in services will be a new increase in the will-be economy in our country. ※ Compared with trade in goods, the theory of that in services falls behind of its practical development. ※ The aim of our class in bilingual education is to adapt to new development of business and trade in our country. Schedule: 9 chapters lasting 64hrs for two semesters 4 6 6 6 6 6 4 6 4 one two three four five six seven eight nine Examination mode Usual quiz (40%) One quiz one chapter, Class interaction, presentation Final quiz (60%) Oral examination(40%) Final paper quiz(60%) Chapter one Introduction to Service Economy （服务经济导论） Learning objective Explain the basic concept of international service trade: ※ Service ※ Service industry ※ Service trade 1.Understanding of service What is service? (1)Service products 服务产品 (2)Service industry 服务产业 (3)Service occupations 服务职业 (4)Service functions 服务职能 Illustration Goods to satisfy human needs in economics 经济学满足人类欲望的物品 Free goods 自由物品 Economic goods 经济物品 Physical form: goods 实物形态：商品 Nonphysical form: services 非实物形态: 服务 • Goods can be divided into two kinds: ① free goods to satisfy the desire of human being. ② economic goods • Free goods---you don’t need to try your effort to obtain; such as sun, air, sea, mountain. • Economic goods– you have to show your effort to obtain them, which are so important and limited in this society. They can be divided into two: tangible goods and intangible services. 1.1 Definition of service Service: “work or duty done for someone” or “An act or job done in favor of someone” ※ History of service definition 1. ＊ ＊ ＊ ＊ Before the World War Ⅱ: Definition of services were not clear. British economist-Adam Smith （亚当 ·斯密，1723～1790 ） French economist— Jean Baptiste Say (萨伊，1767-1832) French economist— Claude Frederic Bastiat (巴斯夏,1801-1850) Karl Marx (卡尔·马克思，1818-1883) 2. After the World War Ⅱ: Services have been defined as an activity to sell to be benefited and satisfied. ＊ Marketing expert—Philip Kotler (科勒特，1967) ＊ V.Fuchs (V.富克斯，1968) ＊ T.P.Hill (希尔) ＊ Gronroos (格鲁诺斯) Evolvement of service 1.Adam Smith: service product is inclined to disappear, so it is difficult to reserve 2.Jean Baptiste Say：Transaction theory Labor service is one effort. 3.Karl Marx: special value-in-use service is not stockpiled (reserved). Evolvement of service 4.V.Fuchs: service disappears at the moment of its production. It can be only supplied at the presence of consumers. 5.Hill: service is produced and consumed at the same time; Once produced, the service must be acquired by consumers without warehousing. • Conclusion: • Service is a job or a kind of economic activities done by the individuals or social organizations for the customers with the help of some tools, facilities, equipments and mediums; • it is an activity and benefit provided for individual consumer or enterprise to meet their specific needs, whose production may or may not be related to material products; • it is the added value for individuals, goods or service in other economic units, and has the value-in-use or utility represented in the form of activities. 1.2 Characteristics of service ▲ Intangibility (无形性): The shape goods is visual, but the form of service is invisible. Reason: first, on most occasions, service can not be touched and felt; Second, the customers’ feelings after being served is hard to measure or the benefit is felt some time later. ▲ Intangibility (无形性): This is the basic feature of service and it is the core and essence of service. With the development of science and technology, embodied service have come into being. Example: disc, software, etc. ▲ Inseparability (不可分离性): The process of consumption is the process of production. Example: teachers and their students, doctors and their patients, etc. Exception: long-distance education bank service abroad ▲ Perishability (不可储存性): The accomplishment of production is the end of service process. If the service is not in use, the consumers can not enjoy the value of service. Example: the absent seat of a plane or a restaurant, etc. Exception: cover insurance ▲ Heterogencity (异质性): The quality of service covers large elasticity. It depends not only on service suppliers but also consumers. Example: ① one travel agency to different tourists; ② one doctor to different patients ▲ Absence Ownership (所有权的不可转让性): In the process of production and consumption of service, the ownership of any goods is not transferred. Example: deposit in banks. This is the root of service risks. Illustration Heterogeneity 异质性 Perishability 不可储存性 Intangibility 无形性 Absence ownership 所有权的不可转让性 Inseparability 不可分离性 ▲ Features of experiences and trust ( 经验特征与信任特征)： Different products tend to be expressed in different quality feature, which are evaluated by different experiences and trust of consumers. Illustration • • Easy to evaluate visible 服 珠 家 房 汽 装 宝 具 屋 车 stronger features regular service 餐 度 理 幼 饮 假 发 儿 护 理 special service 电 视 机 维 法 律 服 务 牙 齿 保 健 汽 医 车 疗 修 理 on searching stronger features on experiences stronger features on trusting Difficult to evaluate 1.3 Classifications of service (6 ways) ★ By tangible degrees of service The more visible---the weaker service Examples: costume, soap, fast-food The less visible--- the better service Examples: baby care, law service Illustration Intangible factors Tangible factors Baby care Education Law services Air travel Fast-food Cosmetics Soft-drinks Costume Candy ★ By degree of customers’ involvement The more participant process of production---the more services. Examples: cinemas, entertainment centers, libraries, schools, message and mail services. ★ By realistic effectiveness to consumers ⑴ Additional service(追加服务)： Example: feasibility study（可行性研究）, market research（市场调研）, product design ⑵ Core service(核心服务): It can be divided into face to face service and long distance service. Example: tour service, internet bank service and internet shopping service. ★ By functions of service ⑴ Group service: government services ⑵ Financial service: bank service, insurance service ⑶ Sale service: goods transport, goods storage, passenger transport ⑷ Special economic service: accountant, law, advertisement ⑸ Telecom and information service: telephone, telegram, electronic data ⑹ Construction service: construction scheme, consultant ⑺ Other services: renting, repairing, maintaining, news publishing and printing, etc. ★ By strategy of sales management ⑴ essential service ⑵ relation service ⑶ content service ⑷ supply service ⑸ extending service ★ By comprehensive factors of service ⑴ based on the supply tools ⑵ based on needs of individuals or enterprises ⑶ based on aim of organizations ⑷ based on customers whether appearing on the spot 2.Understanding of service industry Definition: Service industry is the assembly of economic departments or enterprises that produce or provide various services. Aim to develop service industry ★ To increase the utility value of goods, surrounding the production, circulation and consumption of physical products. ★ To improve the general quality of the country people. 2.1 Service industry and the third industry There are great differences between service industry and the third industry both in the thinking method and theoretical logic. What is third industry? The primary industry: ● means the departments of products that people can obtain directly from the nature by the effort of labor. ● The second industry refers to the departments that process the products from the primary industry. ● The third industry includes all the departments except that from the above two industries. Three industries Industry Classification Range of Industry The primary industry Agriculture农业, animal husbandry畜牧业,forestry林业,fishery渔 业, huntery狩猎业 The second industry Manufacture制造业, construction建筑业, running water自来水 ,electric power电力, gas煤气,mining矿业， excavation采掘业 The third industry Business商业，restaurant餐饮业，storage仓储业，transportation 运输业，traffic交通，post-mail邮政业，telecommunication电信业 ,finance金融业，insurance保险业，real industry房地产业， renting租赁业，technical service 技术服务业，occupation introduction职业介绍，consulting咨询业，advertisement广告业， accounting business会计事务，lawyers business律师事务， tourism旅游业，decoration装修业，entertainment娱乐业， cosmetology美容业，repairing修理业，laundry and dying洗染业， family service家庭服务业，arts and culture文化艺术，education 教育，scientific research科学研究，news media新闻传媒，press 出版业，physical culture体育，medical care医疗卫生， environment hygiene环境卫生，environment protection环境保护， religion宗教，charities慈善事业，government organization政府机 构，military军队，police警察，etc. → Different definitions(界定不同) ﹟All the economic activities excluding the first and second industries are called the third industry. ﹟Service industry is decided by whether it supplies or produces all kinds of services. → Different objects(面向对象不同) ﹟The third industry mostly refers to the domestic economy. ﹟The service industry is facing to both domestic and international market. → Different intentions(含义不 同) ﹟The concept of the third industry implies the traditional economic logic. It is a single-way relying. ﹟The concept of service industry expresses the modern economic soul. This shows the mutual relying relationship between the service industry and other economic industries. The primary industry The second industry The third industry The primary industry The second industry The third industry Service industry 2.2 Service industry and manufacturing industry ★ Mutual promotion The development of service industry is based on manufacturing industry. The development of service industry promote manufacturing industry. ★ Mutual integration ﹟Mixed development inside enterprises Example: American General Electronic Corporation, Lenovo China ﹟Mixed development of industrial chain Example: before-production, in-production and after-production ﹟Mixed development inside the region Example: China Shoe Town in Wen Zhou, China Costume Town in Dong Guan , World flash-lighter kingdom in Zhe Jiang R&D 研发 Products design 产品设计 manufacture 制造 Distribution 配送 Wholesale 批发 retail sale 零售 Repair 修理 Service 服务 Service intermediary 服务中介 Business service customers 商业服务 用户 customers 顾客 Private enterprise service to support manufacture (accounting, law, consultation, software maintenance) 支持制造的私人企业服务 （财会、法律、咨询、软件维护等） Government supporting service (waste water processing, road repairing, education, health supporting, standard, police, and fire control, etc.) 政府的支持服务 （如废水处理、道路维修、 教育、健康支持、标准、警察和消防） What’s the relationship? 1). Service industry accompanies industrial progress of manufacturing. They exist and develop mutually. 2). Service industry has the relationship of fusion and intergrowth with manufacturing industry. 2.3 Classifications of service industry ◆ Traditional service industry (3 kinds): ※ Life service: (in the range of life consumption) Function: To maintain and promote the individual and family consumption Example: repairing, catering trade, hairdressing and beauty, medical care, tour and accommodation, etc. ※ Productive service: (in the range of manufacture) Function: To impel the development of social technique, improve the production development, promote the productive efficiency and to maintain the normal operation of production Example: information consultant, productive material repairing, scientific and technical research, facility installing, etc. No Type类别 1 Capital service 资本服务类 2 Accounting service 会计服务类 3 Information service 信息服务类 4 Managing organizing service 经营组织类 5 6 Productive service Basic details基本行业 Bank银行, trust信托, insurance保险, pawn broking典当，assessment 评估, investment投资, auction拍卖， credit资信， guaranty担保, Accounting agency会计代理，audit business审计事务，capital management 资产管理，credit management信用管理，accounting company财务公司 Exhibition会展，electronic business电子商务，strategy consult战略 咨询，information consult信息咨询，brand agent品牌代理，public relation公共关系，advertisement广告 Enterprise trusteeship企业托管，logistic物流，distribution 配送， wholesale产品批发，goods agency商品代理,supervisor监理，broking 经纪，leasing租赁，environment protection环保 Research and Products research产品研发，technology transfer技术转让， technological service software development软件开发，intellectual property exchange知 研发技术类 识产权交易 Human resource service 人力资源类 Talent recruitment人才招募，talent training人才培训，human resource dispose人力资源配置，occupation ability examination岗位 技能鉴定 7 Law service法律服务 类 Lawyer business律师事务,law agent诉讼代理，justice公正， conciliation调解 ※ Sales service: Function: To promote the image & function of products and to ensure the quality and credit of products by various means. Example: retail, wholesale, promote sales, banking, insurance, trust business, etc. ◆ Modern service industry kinds): ※ Producer service (priority): special service productive business & Example: financial and insurance service, real estate; ※ Circulation service: (4 retail & distributive service Example: whole-sale and retail, transportation, telecommunication service, etc. ※ Consumer service: individual service Example: hotel service, catering service, entertainment service, tourism service,etc. ※ Social service: public service supplied by government and non-government Example: health & medical care, education service, national defense, etc. Chapter Conclusion 1. Service is a special invisible goods with its added value in the form of activities to satisfy the needs of economic individuals. It is different from the tangible goods in economics. Compared with the learnt concept: • Service is a job or a kind of economic activities done by the individuals or social organizations for the customers with the help of some tools, facilities, equipments and mediums; • it is an activity and benefit provided for individual consumer or enterprise to meet their specific needs, whose production may or may not be related to material products; • it is the added value for individuals, goods or service in other economic units, and has the value-in-use or utility represented in the form of activities. 2. Relatively to tangible goods, service regularly has the features of intangibility, inseparability (space-time consistency between production and consumption ), perishability, heterogeneity, and absence ownership. Among all the above features, intangibility is the basic one and is the core and essence of service, which derives other features. 3. Service can be divided into several kinds by tangible degree, customers’ involvement degree, realistic effectiveness to consumers, function of service and strategy of sales management. 4.Service industry has different definitions and intentions from third industry but has the relationship of mutual promotion and integration with manufacturing industry. Chapter Quiz • Please explain your understanding of service and service industry? • What are the basic features of service? Please provide examples if possible. • What are differences between service industry and the third industry? • What are the relationship between service industry and manufacturing industry?