Taiwan's bicycle industry A‐Team battles Chinese competition with innovation and cooperation

Abstract

Purpose

This case aims to examine how Taiwan's bicycle industry has persevered against increasingly severe competitive challenges from Chinese companies. The Taiwan firms have created innovative, high value‐added products and transformed the organization of production through a new version of cooperative competition. The case seeks to show how established producers may counter‐attack when faced with the strong challenges of low‐cost competitors.

Design/methodology/approach

The authors, all experts on Taiwanese manufacturing and business processes, examine the characteristics of an integrated, co‐innovative, cooperative supplier network, named the A‐Team.

Findings

The paper finds that, broadly speaking, integrated, co‐innovative supplier networks have two basic features that differentiate them from traditional modular, symbiotic supplier networks. First, whereas traditional supplier systems have emphasized cost control, integrated, co‐innovative supplier networks appear to be more focused on value creation through co‐innovation. Secondly, by adopting a more integrated network structure, such supplier networks appear to have a greater ability to resist imitation.

Practical implications

Based on Taiwan's bicycle industry, there seem to be five basic conditions for establishing a successful integrated, co‐innovative supplier network. There must be: a strong awareness of industry risks and/or prospects; trust among network members; long‐term interactive cooperative relationships; a desire to learn, and extensive communication, including substantial face‐to‐face communication.

Originality/value

For producers faced with the challenge of coping with the threat of low‐cost competition, co‐innovation within an integrated supplier network may be quite helpful. By working to coordinate the innovation efforts of assemblers and suppliers, Taiwan's A‐Team has laid a good foundation. While some initiatives are still in the early stages, as a result of the A‐Team's work to date, A‐team membership has increased and the group has received considerable recognition both at home and abroad.

Citation

Brookfield, J., Liu, R. and Paul MacDuffie, J. (2008), "Taiwan's bicycle industry A‐Team battles Chinese competition with innovation and cooperation", Strategy & Leadership, Vol. 36 No. 1, pp. 14-19. https://doi.org/10.1108/10878570810840643