Perfecting the Catching-up: The Case of Taiwan's Motorcycle Industry

The final stage of the catching-up process has formidable hurdles. This paper examinesthe case of Taiwan’s motorcycle industry and shows how latecomers overcame thehurdles. In the early 1990s, the two largest motorcycle makers in Taiwan, Sanyang andKwang Yang, had completed the catching-up process and became independent fromHonda, on which they had technologically depended since the early 1960s. The requisitefor independence was acquiring the capacity for product innovation. The two assemblerscould cultivate technological capacity by investing abundant resources, which theyaccumulated in the protected market. It should be noted that although the market wasprotected and highly concentrated, it was also very competitive. Another condition wasthe solid local suppliers of parts and components. The local suppliers had also grownunder the government’s industrial policies. However, their development beyond imitatorscan be attributed to their own initiatives.