Vietnam's Motorcycle Industry: the Development of an Import-Substitute Industry in the Age of Globalization

Abstract

This paper investigates the import-substitute development process in Vietnam's motorcycle industry. The reason for such development was that the competition was very fierce between local firms and foreign firms. Local firms focused on the assembly of imported components for motorcycles and took advantage of the foreign first movers' "static competitive advantages." Foreign firms internalized the "dynamic competitive advantage" of incremental improvement. This competition resulted in a very large market expansion, product innovation by foreign firms, and, subsequently, quality improvement in the entire industry.