Abstract: The opening up of the service industry to the outside world has provided a new perspective from the non physical factor input for the issue of how Chinese manufacturing enterprises can transform from relying on the quantity of exported products to the quality. By introducing product quality into the consumer preferences and the production and export decisions of the manufacturing enterprises, this study constructs a local equilibrium model that includes consumers and both of the service and manufacturing enterprises to explain the impact of improving the level of service industry openness on the quality of exported products of manufacturing enterprises. Based on the policy texts, this paper constructs an impact index of service industry openness and conducts an empirical study of the relationship between the service industry openness and the quality of export products of the manufacturing enterprises. The findings show that service industry openness mainly improves product quality by reducing production costs and increasing productivity of the manufacturing enterprises. The improvement effect is related to the types of the service industry opening to the outside world, and is not related to the geographical characteristics, ownership attributes, and the degree of service factor dependence of the manufacturing industry. The theoretical and empirical evidences suggest that China should further eliminate foreign investment barriers in the service industry to expand its level of opening up to the outside world. In the process of opening up to the outside world, it is necessary to focus on guiding foreign investment and advanced production technologies to flow into productive service industries, but there is no need to overly focus on the geographical layout, production technology, and ownership differences of the manufacturing enterprises.

Key words: opening up of the services industry, the quality of export products, cost of manufacturing enterprise, productivity of manufacturing enterprise