For many years, the Taiwan paper industry has faced outsourcing of its domestic
paper production through the global positioning strategies of high-tech facilities. One
of the main reasons is that when design orders are placed in Taiwan, they are actually
manufactured and packaged in China and shipped directly to the final destination.
Another reason for decreased demand is that the prevalence of the internet is changing
people‟s reading habits, thus reducing the demand for hardcopy printed materials.
In addition to this, international economic growth slowed in 2008, leading to a
weaker expansion of the paper industry due to rising energy costs. Under the effects
of this sluggish, international economy and an unstable political environment, the
domestic economy became stagnant and remained weak.
It is therefore necessary for domestic paper producers to find strategies to
strengthen their stance. While most service recovery studies have focused on the
service industry, medical industry, tourism industry, banking industry, and catering
industry, very rarely have there been studies of service recovery focusing on the
southern Taiwanese paper industry.
This case study focused on the industry paper product deficiencies and services
recovery in the southern Taiwan. In order to gain a better understanding of common
paper product deficiencies and recovery strategies, a total of 37 in-depth interviewswere conducted with industry experts. Content analysis and grounded theory were
then adopted.
The research found that the most common service failures are (1) Applying the
wrong service recovery process (related to employee behavior); (2) Not being able to
provide products requested by customers that are outside the scope of offering (related
to reaction to customer demands); (3) Not delivering on-time, delivery method issues,
and insufficient products (related to delivery system).
Customers‟ two top priorities when selecting providers are getting the lowest
possible price while getting the required level of quality. However, this research
found that the biggest issue regarding product deficiencies was that products were not
of stable quality. This has been an issue in the industry for the past few years.
However, this study found that as long as the provider is able to promise and deliver
an improving level of quality, the customer can be satisfied and the company will
retain the customer.
In terms of compensation strategies, intrinsic compensation such as apologizing
and providing reasonable explanations were shown to be more effective than "face" compensation. Based on the above findings, the researcher developed a model for the
general service recovery and product deficiency compensation.

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