Proceedings of The 5th International Research Symposium on Branding in Emerging Markets (

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1 Proceedings of The 5th International Research Symposium on Branding in Emerging Markets ( 第五届国际新兴市场学术品牌研讨会 ), Nanjing University of Finance & Economics, Nanjing, China Date: December 2015 (Venue: Building F6, Auditorium) Authors: Dr. Pamela M. H. Kwok PolyU Hong Kong Community College, Division of Business Dr. Xu Dong-li Nanjing University of Finance & Economics, School of Marketing & Logistics Management Conference Paper Title: A Closer Look of Mianzi Influences on Perceived Interactional Justice by Chinese Customers during Service Recovery Process, Proceedings of The 5th International Research Symposium on Branding in Emerging Markets ( 第五届国际新兴市场学术品牌研讨会 ), Nanjing University of Finance & Economics, Nanjing, China p Abstract Service Recovery has been one of the imperative issues for cultivating positive brand image and customer loyalty in long-term for service firms. The three dimensions of perceived fairness in service recovery processes have been suggested as one of the essential area for management attention when handling customer complaints (Tax and Brown (1998)). Marketing or service managers have put attention and resources to handle service failure such as offering complaint hotlines or having customer service department to handle customer matters. Managements in service firms attempt to response service failures promptly in order to prevent any negative impacts or negative word-of-mouth on their brand names. Past studies showed that customers would feel dissatisfied if complaints had not been treated fairly. The perceived fairness in terms of handling complaints has influences on the customer reactions or behaviour (Seiders and Berry (1990)). However, it is difficult to control the perceived fairness by any service firms. The emotions of angry customers tend to be complex because negative emotional towards the service failure and service recovery management are influenced by various factors including cultural aspects. Past study reported that cultural values have influences on perceived justice perception in complaint handling (Mattila and Patterson (2004)). Nowadays, Chinese consumers are better informed and have more disposable income to spend for services based on their preferences. Mianzi (or saving face ) has been one of the important cultural values that influence perception, buying behaviour and counter responses of Chinese consumers. As a result, this conceptual paper attempts to discuss and explore the possible impacts of Mianzi (or saving face) on perceived interactional justice during the

2 service recovery process by Chinese consumers. Research finds that Mianzi (or saving face ) has both positive and negative impacts on service recovery. Key Words: Chinese Consumer, Complaint Behaviour, Interactional Justice, Mianzi (saving face), and Service Recovery Process A Closer Look of Mianzi Influences on Perceived Interactional Justice by Chinese Customers during Service Recovery Process Introduction- Changes of Disposable Incomes - Chinese Consumer The recent economic growth in China has stimulated both business opportunities and challenges to both local and overseas business organizations. Nowadays, Chinese consumers have more disposable incomes to spend and demand for more choices and quality services or goods. The Gross Domestic Product (GDP) per capita has been significantly increased by 52.7% from Reminbi 30,567 (USD4,799) in 2010 to Reminbi 46,652 (USD$7,324) in 2014 in according to the statistics provided by the China's National Bureau of Statistics ( in September Figure 1 shows that the disposable incomes for both urban and rural residents have been increased significantly by 51% and 77% respectively. Figure 1 Growth of GDP and Disposable Income in China (Urban and Rural Areas) During 年份 GDP (per capita) - Reminbi (yuen) Disposable Income of Urban Residents (per capita) -Reminbi (yuan) disposable income of rural residents (per capita) -Reminbi (yuen) (USD4,799) (USD3,000) 5919 (USD929) (USD5,655) (USD3,424) 6977 (USD1,095) (USD6,208) (USD3,857) 7917 (USD1,243) (USD6,801) (USD4,232) 9430 (USD1,481) (USD7,324) (USD4,529) (USD1,647) Remarks: 1) Currency Unit: Reminbi (yuen) 2) 1RMB = USD Source: China's National Bureau of Statistics ( Increasing Trends of Consumer Complaints in China by Top Ten Industries The changes in disposable incomes lead to changes in consumer expectations and their buying behaviour. The needs of Chinese consumers have become more sophisticated compared with past decade. For instance, they look for not only good value for money but also some psychological benefits such as personal status and self-image when making purchases. The statistics provided by State Administration for Industry and Commerce of the People s Republic of China (SAIC) in Figure 2 shows that there is an upward trend in terms of the Chinese consumer complaints by the ten industries in 2013.

3 Figure 2: Consumer Complaints in China (2013) Top Ten Industries Industry Goods or Services Complain Details No. of Units (10,000) 1)Smartphone and mobile phone & Repairing Charges Goods Quality of mobile phone handset (4.31 units) Services After sales services (3.84 cases) 2)eCommerce, eshopping (TV and Internet), and Direct Mail Services Several reasons: - broken or over promises in promotional activities, fake products, late delivery etc. (main category: Internet eshopping 1.7 cases) 3)Telecommunications Services Games, download, telephone, Internet access -service quality (1.08 cases) -contract (1.85 cases) -advertising (0.06 cases) 4)Personal Computer and Peripherals 5)Home Renovation Services Goods Personal computer, ipad and peripherals -quality (0.89 units) -after sales services (0.78 cases) Annual Increase in 2013 (%) % % % % Services Service quality and contracts (0.4 cases) % 6)Repairing Services Services Household electronic appliances ( % cases) Services Repairing of motor vehicles (0.86 cases) Services Telecommunication devices (0.78 cases) Goods Personal Computer (0.19 cases) 7)Agency Services Services Property (0.5 cases) % 8)Motor Car and Goods Quality (1.28 units) % Accessories/Parts Services After sales service (1.09 cases) 9)Internet Services Services Internet access (3.55 cases) % 10) Fashion and Shoes Goods Fashion % Goods Shoes -quality (4.54 units) -after sales service (1.62 cases) % Source: State Administration for Industry and Commerce of the People s Republic of China (SAIC) Report on National Top Ten Consumer Complaint Industries in Research Objective Past study showed that only five to ten percent dissatisfied customers make complain and many dissatisfied customers switched to other providers without making any noise (Tax and Brown (1998)). Service recovery provides an opportunity for service firms to regain customers confidence, trust, and loyalty (Johnston (1995)). This may lead to positive effects on word-ofmouth (WOM) and brand image. On the other hand, perceived justice has been increasingly discussed in service recovery management to portray fairness to the complaint customers (Goodwin and Ross (1989)).

4 Perceived justice consists of three major components. They are (1) distributive justice, (2) procedural justice and (3) interactional justice (Tax et al., (1988)). The focus of this paper is on the interactional justice of which relates to the operational approach adopted for implementing service recovery process and the outcomes presentation to complaint customer. Interactional justice component is selected for the current study because lots of interactions or touch points exit between service firms and the complainers throughout the service recovery process. These interactions seem to be a puzzle of which leads to different levels of perceived justice and customer satisfaction or dissatisfaction. Previous study reported that customers cultural orientations have influenced the evaluation of service failure and recovery (Becker (2000)) and perceived fairness of service recovery management (Mattila and Patterson (2004)).Furthermore, Figure 2 has indicated that there is an upward trend of customer complaints in China so that it is worthwhile to discover more insights about customer complaint of service failures in China. Mianzi (saving face) is a rooted culture in the Chinese society and many studies were conducted in this area during the past seventy years (Hu (1944), Cheng (1986), Chiu et al (1987), Chang and Holt (1994), Leung and Chan (2003), Li and Su (2007), and Zhang et al (2011)). Within the Chinese society, saving face is a crucial element to represent respect, individual status and ability to influence others in particular in front of others or in public areas. With regard to perceived justice, only limited studies were conducted in the area of service recovery strategy effectiveness (Hoffman and Kelley (2000)). Mishandling customer complaint always leads to customer dissatisfaction and negative word-of-mouth (WOM) (Becker and Wellins (1990)). This paper attempts to discover the influences of Mianzi (Saving face) on perceived justice in terms of interactional justice during service recovery process. Chinese Culture Mianzi (saving face) and Service Recovery Mianzi (saving face) represents to respect others, particularly in public settings. For instance, Chinese people attempt to avoid inappropriate behaviour or comments that may create embarrassments and disappointments of others. Chinese have been very face conscious in social interactions (Chiu et al (2001)).Westerners may focus on seeking fairness treatments in service recovery, however from the Chinese culture perspective, handling the matter in a peaceful manner and keeping all parties dignity are essential (Crawford (2014)). Nowadays, Chinese consumers are better informed and have more disposable income to spend for services based on their preferences, needs and status. Mianzi (or saving face ) has been one of the important values that influences perception, buying behaviour and counter responses of majority Chinese consumers. Face has been perceived playing an important role in service recovery and customer emotion is found to have a significant relationship with customer recovery satisfaction (Du et al (2010)). Face itself may enhance the interpersonal relationship between people (Cheng (1986)). Face plays a role in consumers psychology and behaviour during service failure and recovery

5 encounters (Du et al (2010), p.585).as a result, it is suggested to explore the possible impacts of Mianzi (saving face)) on implementation of interaction justice. Perceived Justice Interactional Justice Perceived by the Chinese Consumers Interactional justice is one of the core elements for perceived justice and it refers to the interpersonal treatment (Tax and Brown (1998)) received by the customer during the complaint handling process. The perceived justice affects the customer loyalty via emotions (Chebat and Slusarczyk (2003)). Past study has attempted to cluster the emotions of losing face into six different categories. They are anger, embarrassment, shame, remorse, despair, and moodiness (Zhu (1987)). As a result, the emotions of losing face customers may have impacts on both customer satisfaction and perceived justice. Success in recovery strategy enables firms to enhance revenue and profitability. Nowadays, frontline employees have played a significant role to communicate with customers directly, discover customer needs and facilitate service failure recovery process. Many global service firms such as Federal Express and Ritz-Carlton have used the collected failure data for service improvement in order to improve service quality and enhance customer satisfaction in long-term. A past study reported that majority of customers were not satisfied with the approaches that companies handle their complaints and had negative feelings regarding the service recovery process (Tax and Brown (1998)).It would be difficult for service firms to regain trust and customer satisfaction if they have a negative perception and losing face feelings of interactional justice. Method and Data Collection Past studies indicated that both quantitative and qualitative methods may be adopted for studying service recovery management (Kelly et al (1993), Keaveney (1995)). The details of qualitative methods allow researchers to obtain more insights and better understanding about the perception and buying behaviour of the Chinese consumer in terms of perceived justice. Secondary research was conducted during summer 2015 by the researchers of the study. Information was collected from Internet, online newspaper in China, and discussion eforum. In brief, two types of secondary data relating to Chinese consumer complaints were collected. The first type was decision-making situations relating to Mianzi (saving face) (Figure 3). The second type data (Figure 4) was real-life customer cases covering both Mianzi saving face and losing face consumption situations in China. The collected information was translated from Chinese into English language and was validated by the researchers. Key Findings by Secondary Research The two types of secondary data relating to consumer complaints in China were collected for the exploratory study. They are (a) selected purchases or decision-making situations relating to

6 Mianzi (saving face) (Figure 3) and (b) complaint cases in China and approaches adopted for handing the complaints with or without consideration of Mianzi (saving face). a) Selected purchases or decision-making situations relating to Mianzi (saving face) Figure 3 shows that some Chinese consumers may make purchase decisions mainly based on Mianzi (saving face) instead of the benefits providing by the services itself such as comfortability, good value for money and other benefits that perceived by the marketers or business managers. The economic growth in China (Figure 1) allows Chinese consumers to look for symbolic value more than monetary value (Bian and Forsythe (2012)). Despite of Mianzi (saving face), there are about 50% of the selected consumption situations(figure 3) relating to the performance of frontline employees of which may lead to either positive or negative customer experiences due to face issue. The attitudes of employees always hurt customer feelings directly (Du et al (2010)) and this is also supported through the findings of our secondary research (Figure 3 and Figure 4). Figure 3: Selected Purchases or Decision-making Situations relating to Mianzi (saving face) Selected Purchases or Decision-making Situations (1) -Having Dinner with Friends in a Restaurant (i)prefer having dinner with friends in a separated room in the Chinese restaurant instead of having dinner in the open areas of the restaurant (ii) When ordering dishes, Chinese consumers tend to order more expensive dishes and in large quantities. (iii)enjoy being a VIP customer of a particular restaurant because he/she is able to receive free dishes or free desserts provided by the restaurant (iv) Frontline staff provides respectful services (v) Bad surrounding environment or dishes has hygienic problems (vi) The manner of frontline employee is arrogant and indifferent including unresponsive behaviour. (vii) Requests made (e.g. refill water, tracing orders, checking for the bills) to waiters or waitress of the restaurant but the customer requests have been ignored or the employees are unresponsive to the request. (viii) Making payment via coupons or discount vouchers Selected Purchases or Decision-making Situations (2) -When Making Purchases in a Retail Store (i)the frontline employees makes a high praise of customer regarding his/her purchase decision in front of others then he/she will make purchase accordingly. (ii) Various attentive services are provided by frontline employee(s) due to an expensive purchase transaction. (iii) Being look down by the frontline employees because the customers are perceived that the Chinese customer cannot afford to make expensive purchases. (iv) Frontline employee(s) has/have poor service attitudes in terms of indifferent expression and unresponsive manner. Selected Purchases or Decision-making Situations (3) Perceived Having Mianzi (Saving Face) Yes or No Yes Yes Yes Yes* No No* No* No Perceived Having Mianzi (Saving Face) Yes or No Yes* Yes* No* No* Perceived Having Mianzi

7 -Travelling by Cruise (Cabin) and Hotel Accommodation (i) Some Chinese consumers prefer taking first class cabin instead of economy class when travel by cruise. This is because the first class cabin allows them to have Mianzi (saving face) in terms of social status instead of comfortability benefits. (ii) Prefer selecting 5-Star hotel accommodation because the 5-Star hotel itself already provides prestige image for having Mianzi (saving face). (Saving Face) Yes or No Yes Remark: * relating to frontline employee s behaviour or attitudes (Source ( 来源 ) Adapted and translated from: 陈效林, 张道成, 毛志娟, 李伟,2015 年 , 消费者访谈 (in Chinese)) (b) Real-life complaint cases in China and approaches adopted for handing the complaints with or without consideration of Mianzi (saving face) The following Figure 4 summaries four customer complaint cases covering both positive and negative customer experiences using different handling approaches. Figure 4: Summary of Four Consumer Cases in China: Saving Face or Losing Face Case Consumer cases relating to Mianzi ( saving face ) or losing face consumption situations 1 Cashier insists to reject issuing invoices for customers after payment! A Chinese customer was provided with three discount vouchers to dine in a restaurant located in Xiamen in The customer was told that only one voucher was allowed to be used for each service transaction. When the customer made payment with the discount voucher then the customer was told that no invoice would be issued. This was because the customer did not indicate using the discount voucher when placing orders. However, this company policy had not been printed on the discount voucher so that the angry customer kept on asking for an invoice regarding the cash amount paid for the meal. The angry customer thought that this was the consumer right to collect invoice. Yes Mianzi (saving face) and Overall customer experiences -Losing face in front of others -poor staff attitudes -angry customer -negative word-ofmouth -high level of customer dissatisfaction -overall, negative customer experiences However, the responses received from the cashier were rude, unfriendly and impolite. The cashier told the customer This is our policy and no matter whether you are going to make your complaint or not! If you want to have your invoice then you must pay the original prices for your meal instead of our promotional prices! Furthermore, the reply received from the manager of the restaurant was also poor and inattentive. The customer was very angry, disappointed and shared the complaint with public in an eforum. Source Adapted from: 服务员态度强硬拒绝开发票 ( 天天 315 在线消费投诉平台 ) 2 Customer traces the order with the waiter but leading to losing face! A small group of Chinese customers were rushed into a restaurant for a quick lunch in a busy commercial district in China. They were in hurry because they had to attend a meeting after their lunch. When entering the restaurant, they told the waiter that they were in rush and need to have quick lunch. The waiter replied that they could serve lunch quickly. Unfortunately, the service was very slow and the customers were hungry and asked the waiter to trace their orders. The waiter gave -Losing face in front of others -overpromise -unreasonable slow service -poor staff attitudes -angry customer -negative word-ofmouth -high level of customer

8 an impolite reply of All customers here need to have lunch in hurry, you are not the only one group! After waiting for about half hour, nothing was served on the table. They traced with the waiter again but the waiter was inattentive with poor attitudes and gave no response to the customers. Finally, all dishes were served with a rude manner. The customers were in rush so that they did not want to have any conflicts and arguments with the waiter. They left immediately after their lunch. However, they shared their negative service experiences with others in eforum. Source adapted from: 催菜反被服务员甩脸子, 呛话 ( 来源 : 天涯论坛 ) 3 Creatively use the praise tactic of saving face to deal with an uncooperative customers who did not follow the parking rules! A security guard of a restaurant noticed an uncooperative customer who parked his car in a prohibited area. The security guard had use his creative solution of saving face to persuade the uncooperative customer to park his car in the provided area. The creative saving face statement made by the security guard was Sir, you have an excellent driving skills. You are a greatest driver that I have ever seen for the past 3 years. Quick and accurate driving! I wished you were my driving teacher so that I could learn one more skills for my livings. Excuse me, teacher! Could you do me a favour to park your car over there? This is because other drivers might not have excellent driving skills like you! The customer was very pleased and happy after listening to the wonderful statements and parked his car in the provided areas. Source adapted from: 懂得利用赞美, 给足客人面子 ( 来源 : 搜狐旅游 ) 4 Hai Di Lao Hot Pot Restaurant wins customers hearts through superior and creative services - respect all customers leading to saving face, meticulous caring and value-added services that help to reduce service recovery incidents Chinese consumers enjoy having hot pot in Hai Di Lao Hot Pot Restaurant because the restaurant provides excellent and unique customer service. The customers feel being respected and have face throughout the service delivery process. For instance, several valueadded and innovative services are provided to customers while they are waiting for the services as well as during the whole service delivery process: (i)drinks and refills, fresh fruits and dim-sum which are provided to customer free-of-charge (ii)shoes shining services, Internet and nail services are provided (iii)entertainment services like play cardsand chess are provided to customers (iv) Allow customer ordering half portion of the dish from the provided menu (flexibility is provide based on customers needs) (v) Variety of special caring services for different customers: - free elastic hair band for ladies with long hair - cushions are provided to pregnant women -eyeglass cleaning cloths are provided to customers who wear glasses -toothpastes are provided in toilet for customers to clean their teeth Source adapted from: 骨汤门 依旧无法阻止海底捞续写神话 ( 来源 : 中国食品科技网 ) dissatisfaction -overall, negative customer experiences -Saving face in front of others - good staff attitudes - happy customer -positive word-ofmouth -high level of customer satisfaction -overall, positive customer experiences -Saving face in front of others -respect customers - good staff attitudes with proper training - good level of attention - happy customer -positive word-ofmouth -high level of customer satisfaction -overall, positive customer experiences through the proactive caring services provided by the restaurant

9 Conclusions Dealing with customer complaints requires a positive internal recovery culture. Senior management of service firms needs to pay more attention and cultivate an appropriate corporate culture to implement the interactional justice carefully during service recovery process. Treating customers fairly during the service recovery process is a moment of truth that help service firms to enhance customer loyalty and reinforce customer relationships. As a result, the frontline employees play a strategic role in facilitating the success of interactional justice. In addition, customer complaints offer opportunity for service firms to conduct root causes analyses of their service failures and provide valuable inputs on future service strategy. Management of service firms should attempt to response service failures promptly in order to prevent any negative impacts or negative word-of-mouth on their brand names. Provide training to the frontline employees, the cultural issue of Mianzi (saving face) should be taken into consideration throughout the implementation of interactional justice because this seems to have impacts on the customers emotion and perceived fairness by the Chinese consumers. Developing lifetime customer relationship is strategic importance for pursuing long-term success and brand loyalty. The interactional justice consists of lots of touch points with customers during the service recovery process including moment of truth. Handling with care and having high level of sensitivity to the cultural aspect of Mianzi (saving face) is essential for service firm to sustain their leadership in the dynamic and highly competitive business environment. Senior management of service firms should pay more attention and effort for the implementation of the interactional justice of which have both positive and negative impacts on sustaining customer loyalty and brand image in long-term. This paper attempts to discover the impacts of the rooted Chinese culture of Mianzi (saving face) through secondary research. The primarily findings through secondary research provide some useful insights for future study. Further investigations in this area regarding the perceived fairness and Mianzi (saving face) through the eyes of Chinese consumers are highly recommended. References Becker, W.S. and Wellins, R.S. (1990). Customer-service Perception and Reality. Training and Developmental Journal, March, pp Becker, C. (2000) Service Recovery Strategy: The Impacts of Cultural Differences, Journal of Hospitality and Tourism Research, 23(3), pp

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