As an exploratory study, this paper explores the process of service development of Shangu and the core capabilities development during the process of strategic change. The case study results indicate that a manufacturer may experience an incremental pattern from productbased services to services based on customer actions. And during the above process, it will develop the technologybased capability, and capability of integrating all resources. Our results may not only enrich service theory, but also provide practical suggestions for Chinese manufacturers.