The Honda motorcycle businessin the Vietnamese emergingmarket
Nguyen Duc Tiep
Graduate School of Economics, Kyoto University, Kyoto, Japan
– To explore subsidiary development in emerging markets and highlight the role of localfactors on driving foreign ﬁrm business strategy.
– This study builds upon the diamond of competitive advantageframework with regard to determinants in the local environment. Chinese motorcycle penetration intoVietnamese market has made considerable changes from which Honda has upgraded manufacturingcapability, moved to higher value activities. It shows a conﬁdent process of subsidiary development.The analysis is supported by interview data in three ﬁeld trips.
– The penetration of Chinese motorcycle into Vietnam has brought more opportunities.Honda can utilize for long-term investments than challenges the ﬁrm hadto temporarily deal with. Theeffect of changes in the local market was quite speciﬁc to Honda business. Consequentially, localfactors have driven the ﬁrm emergent strategy into low-price model which is considered as Honda’slocal speciﬁc product in Vietnam.
– Selective environment disadvantages play an important role in makingpressures on ﬁrms to engage in more sophisticated activities. The distinctive competence is obtainedfrom co-evolution between external and internal resources rather than one itself. Continuousimprovement, ﬁnding discontinuity, and reconciling resources are necessary for ﬁrms, especially whencompeting in international emerging markets.
– The case study reﬂects an interesting picture of competition in motorcycleindustry under the new stage of international competitive environment. Honda Vietnam case showsdifferent features from Honda in the past and other subsidiaries in the region as the ﬁrm exists toharmonize the two dichotomizations of motorcycle business architecture: Japanese and Chinese model.
Motor cycles, Emerging markets, Vietnam, International investments, China
Recently, the emergence of Chinese motorcycle industry has made internationalcompetition change. Business architecture was dichotomized into close-integral andopen-modular models, which present to Japanese and Chinese styles, respectively,(Ulrich, 1995; Fujimoto
, 2001; Hoang, 2005). Vietnamese motorcycle market hasbecome a signiﬁcant ground for ﬁerce competition between Japanese and Chinesecompetitors since the penetration of Chinese motorcycles into the country. It led toconsiderable changes in the domestic industry and widely impacted on all existingmotorcycle makers as well as consumers and suppliers. Among foreign ﬁrms, Honda
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This study is a part of a dissertation conducted at Graduate School of Economics, KyotoUniversity. The author is particularly grateful to Professor Sugiyama for his helpful commentsand suggestions. Thanks are due to Japan International Cooperation Agency (JICA) for ﬁnancialsupport.
International Journal of EmergingMarketsVol. 2 No. 3, 2007pp. 298-309
Emerald Group Publishing Limited1746-8809DOI 10.1108/17468800710758413