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1 Introduction
Recently, the emergence of Chinese motorcycle industry has made international competition change. Business architecture was dichotomized into close-integral and open-modular models, which present to Japanese and Chinese styles, respectively, ([13] Ulrich, 1995; [4] Fujimoto et al. , 2001; [7] Hoang, 2005). Vietnamese motorcycle market has become a significant ground for fierce competition between Japanese and Chinese competitors since the penetration of Chinese motorcycles into the country. It led to considerable changes in the domestic industry and widely impacted on all existing motorcycle makers as well as consumers and suppliers. Among foreign firms, Honda Vietnam stands out as showing significant story about subsidiary development in emerging market. Although there were big challenges to Honda, the company has effectively responded to the changes in the local environment and expanded to higher value activities (Table I [Figure omitted. See Article Image.]).
This case study emphasizes on Honda's motorcycle business in Vietnam. Therefore, it addresses some questions: what were impacts of Chinese phenomenon on Honda Vietnam Company? - described the emergence of Chinese motorcycle into Vietnamese market and the effects on Honda Vietnam business; what did local factors play role in driving Honda strategy? - referred to the characters of main determinants which shaped the strategy of making local specific product in Vietnam; how did Honda respond to integrate internal and external resources in order to develop manufacturing capability? - focused on Honda's activities to take advantages in the local environment.
The paper is organized as follows. Section 2 reviews the Vietnamese motorcycle industry and the changes in industrial structure after the penetration of Chinese motorcycle. Section 3 explains the specific impacts of local environment on Honda Vietnam. Section 4 focuses on Honda product strategy in Vietnamese market. Finally, the paper closes with a discussion of overall case study in Section 5.
2 Chinese motorcycle emergence and the changes in market structure
Prior to 1990s, Vietnamese motorcycle industry did not exist as demand for motorcycle was quite small and all motorcycles were imported. It only started to develop in early 1990s when there was a presence of foreign companies in the country. The first one was VMEP, a Taiwanese firm, who invested in Vietnam in 1992. Japanese companies entered the motorcycle industry later: Suzuki in 1996, Honda...