VDF Workshop No. 17
September 9, 2004

The Motorbike Workshop was held with the presentations of three motorbike researchers who traveled from Japan for this event. Experts from MOI, IIPS, Vietnam Bicycle Motorcycle Association (VBMA), Institute of Economics, NEU, and representatives from Vietnamese and Japanese motorbike producers participated.

Prof. Hirofumi Ueda (Osaka City University) discussed two alternative business architectures: the Japanese model which was integral and closed; and the Chinese model which was modular and open. How Japan and China developed these models was explained historically. For Vietnam, he recommended the hybrid production system where the Japanese model with high quality was combined with the orientation toward low price.

Mr. Kohei Mishima (Tohoku University) compared the development stages of the motorbike industry in Thailand, Indonesia and Vietnam. There were five steps: (1) CKD, (2) in-house parts production by assemblers, (3) increasing subcontracting, (4) all parts produced, and (5) R&D. Mishima noted that Thailand was currently at stage 4 or 5, Indonesia at stage 4, but Vietnam at stage 2. This evaluation was based on the number and capability of suppliers, localization rate, and so on. However, all countries continued to import raw materials. For Vietnam, (i) establishment of mass production skill and (ii) ability to cut cost with uniform quality were called for.

Mr. Pham Truong Hoang (Yokohama National University) analyzed the current Vietnamese motorbike market in terms of price and style (traditional or fashionable). Vietnamese producers were basically modular and open, but different companies had adopted different strategies for survival after the "China shock." Some firms focused on internal production while others were boosting marketing effort. Still others had shifted to parts production. However, while Honda had moved to more "open" procurement for non-core parts only, the architectural shifts of Vietnamese producers exhibited no clear pattern between core and non-core parts.

Some asked whether the Vietnamese motorbike market would shrink as income rose. But most participants predicted further robust growth of the market, especially in rural areas. It was pointed out that the Japanese business model had significantly affected the behavior and tastes of the Vietnamese consumers. Honda's strategy of focusing on customer demand and satisfaction was appreciated. At the same time, after the China shock, Honda also realized that there was a huge potential demand for low-priced motorbikes, which led to the introduction of Wave Alpha.

As two business models (Japanese and Vietnamese/Chinese) continued to coexist in Vietnam, the problem of intellectual property rights would become an important issue. Simply copying Honda models would not be tolerated forever. Some possible solutions were suggested.

As to the development of supporting industries, it was noted that Japanese producers would purchase any parts from any sources if the quality, cost and delivery requirements were met. If competitiveness was attained, it would also become possible for assemblers and parts makers to export parts. It was argued that Vietnamese producers should initially focus on low-end markets and fundamental parts production, while foreign producers should supply high-end products. But some noted that low-end market strategy would inevitably face serious Chinese competition, so becoming the suppliers of fundamental parts (casting, forging, stamping, heat treatment, etc) to foreign producers would be a more desirable strategy for upgrading technology.

All agreed that the current registration restriction of new motorbikes was ineffective. Since the transportation system of Vietnam was dominated by motorbikes unlike any other country, the solution to the traffic problem should not be copied from another country. Vietnam should first study the facts in detail, then devise its own solution to reduce traffic congestion and accidents. 

Documents & Slides