Abstract: Competition in markets for manufacturing companies is growing more intense and fierce.Nearly all companies are confronted with the need to respond to ever-faster communication and price pressure.To respond to the decreasing product margins,manufacturing companies have developed a growing interest in extending the service business as a source of generating additional revenues and profits.Extending the service business leads to a step-wise transition from products to services.In this paper,we present the main findings of our empirical study on over 30 Swiss and German machine and equipment manufacturing companies.We depicted systematically the causes and processes of the transition while analyzing the finance,marketing and strategic opportunities of services business,and analyzing the transition line from product manufacturer to solution provider.With the consideration of why many companies have not yet gain corresponding high service revenue since services have potentials in financial,marketing and strategy,we drew the conclusion that there are cognitive factors on managerial motivations,which constrained the extending services business.Through this paper,we attempt to provide theoretical and practical guidance to successfully extend the service business for Chinese manufacturing companies since they must face the global competition after China's entrance into WTO.

Key words: industrial service, manufacturing companies, cognitive factors, and managerial motivation