The economic rise of China and the transformation of Vietnam's motorcycle industry

Abstract

This submission consists of a collection of four papers. Each paper stands on its own and makes a specific contribution to knowledge. However, the four papers are also closely connected, each providing a building block for understanding how China’s economic rise has affected Vietnam’s industrial development. Taken together, these papers show that the conclusion reached on how China’s rise affects its neighbours depends fundamentally on understanding the changing dynamics over time. So as to unravel these dynamics, this collection focuses on the motorcycle industry and covers a period of a decade. At the beginning of that decade China’s economic rise seemed to be a disaster for Vietnam’s industrial development. By the end the decade, it turned out to have transformed Vietnam’s industrial development and production capabilities.

At the heart of this intriguing dynamic is the competition between two models of industrial organisation. The first paper conceptualises the two contrasting models of industrial organisation that underlie the Japanese dominance and the Chinese catch-up in the Asian motorcycle industry. The second and third papers present the findings of the empirical research on Vietnam’s motorcycle industry covering a period of a decade. The second paper shows that China’s economic rise brought about repeated rounds of competition between the Japanese and Chinese models of industrial organisation attempting to gain supremacy in the third country market of Vietnam. The third paper shows that local component suppliers were able to build up considerable production capabilities in the course of the decade as the changes in industrial organisation created new learning opportunities for these suppliers. Drawing together the findings of the research, the fourth paper argues that the impact of China’s economic rise on the development of Vietnam’s motorcycle industry changed over a decade and that the changing impact can be explained in terms of successive changes in industrial organisation.