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Low-cost strategy through product architecture: lessons from China

Author

Listed:
  • Chris Kimble

    (Euromed Marseille - École de management - Association Euromed Management - Marseille, CREGOR - Centre de Recherche sur la Gestion des Organisations - UM2 - Université Montpellier 2 - Sciences et Techniques)

  • Hua Wang

    (Euromed Marseille - École de management - Association Euromed Management - Marseille)

Abstract

Purpose – The article shows how changes in product architecture have become the driving force behind a breakthrough strategy that has enabled Chinese carmakers to produce vehicles that are broadly equivalent to the products of western carmakers but at a fraction of the price. Design/methodology/approach – The article presents an analysis of the development of a strategy based in an innovative product architecture used by a Chinese carmaker. The analysis covers the period between 1998 and 2006 and presents the results of a longitudinal study carried out by one of the authors in China between 2002 and 2007. Findings – The article uses the literature on product architecture and breakthrough strategy to describe a quasi-open modular product architecture used by Chinese carmakers. It provides an historical account of one company's approach to car making using this strategy and describes how it has allowed it to move from being a manufacturer of refrigerators to the ninth largest carmaker in China in period of ten years. Practical implications – The article highlights the strategic potential of innovations in product architecture in general and that of quasi-open modular architectures in particular. It also highlights the role of the emerging markets in China as the source of potential drivers for breakthrough strategies and as a threat to the current position of western carmakers. Originality/value – This article uses evidence based on direct observation to describe a novel approach to product architecture that has been pioneered in the emergent markets in China.

Suggested Citation

  • Chris Kimble & Hua Wang, 2010. "Low-cost strategy through product architecture: lessons from China," Post-Print halshs-00487368, HAL.
    • Handle: RePEc:hal:journl:halshs-00487368
    DOI: 10.1108/02756661011036664
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    Citations

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    Cited by:

    1. García-Fernández, Jerónimo & Gálvez-Ruíz, Pablo & Fernández-Gavira, Jesús & Vélez-Colón, Luisa & Pitts, Brenda & Bernal-García, Ainara, 2018. "The effects of service convenience and perceived quality on perceived value, satisfaction and loyalty in low-cost fitness centers," Sport Management Review, Elsevier, vol. 21(3), pages 250-262.
    2. Marta Borowska-Stefańska & Michał Kowalski & Paulina Kurzyk & Miroslava Mikušová & Szymon Wiśniewski, 2021. "Privileging Electric Vehicles as an Element of Promoting Sustainable Urban Mobility—Effects on the Local Transport System in a Large Metropolis in Poland," Energies, MDPI, vol. 14(13), pages 1-24, June.
    3. Cecília G. da Rocha & Carlos T. Formoso & Patrícia Tzortzopoulos, 2015. "Adopting Product Modularity in House Building to Support Mass Customisation," Sustainability, MDPI, vol. 7(5), pages 1-19, April.
    4. Hua Wang & Chris Kimble, 2013. "Innovation and Leapfrogging in the Chinese Automobile Industry : Examples From Geely, BYD, and Shifeng," Post-Print hal-02313424, HAL.
    5. Chris Kimble & Hua Wang, 2013. "China's new energy vehicles: value and innovation," Post-Print halshs-00859484, HAL.
    6. Hertenstein, Peter & Williamson, Peter J., 2018. "The role of suppliers in enabling differing innovation strategies of competing multinationals from emerging and advanced economies: German and Chinese automotive firms compared," Technovation, Elsevier, vol. 70, pages 46-58.

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