ZongshenCase
From Imitation to Innovation: Zongshen Industrial Group
Introduction and Challenges Facing Zongshen
The Zongshen Industrial Group case is a very interesting one. Zongshen has come a long way from its beginnings in the 1990’s where it began doing assembly of motorcycle engines to now being a leader in designing and manufacturing some high quality motorcycles, differentiating its designs from the competition, making the company one of the top global manufacturers of motorcycles and small gasoline engines. Zongshen started out as a pure knockoff company. They manufactured cheaper, lower quality versions of the products offered by their Japanese competition, essentially copying exactly what the competitors were doing by reverse engineering their products and rebuilding them using cheaper, lower quality parts. Due to the lack of differentiation, Zongshen had to also use a lower price strategy in order to move their products. Their components went into products such as motorcycles, portable generators, and outdoor power equipment like lawn mowers and tillers. Some of the challenges facing Zongshen became crystal clear after their first generation of motorcycles had been sold. Customers quickly figured out Zongshen’s imitation strategy and that they were a cheaper and lower quality version of the other options out there. In general, the customers who had purchased the first generation were unhappy with the quality of the Zongshen brand and therefore spent their money elsewhere for their next bike purchase. This was the major challenge for Zongshen. There was nothing setting them apart from the competition, and everyone knew it. Something must be done to come up with and implement a strategy which restored the consumers’ confidence in the brand. Zongshen knew that he must re-think and change the strategy if he wanted his company to survive. The cheap copy exact imitation strategy only work on some products and doesn’t always work long-term. It definitely
Introduction and Challenges Facing Zongshen
The Zongshen Industrial Group case is a very interesting one. Zongshen has come a long way from its beginnings in the 1990’s where it began doing assembly of motorcycle engines to now being a leader in designing and manufacturing some high quality motorcycles, differentiating its designs from the competition, making the company one of the top global manufacturers of motorcycles and small gasoline engines. Zongshen started out as a pure knockoff company. They manufactured cheaper, lower quality versions of the products offered by their Japanese competition, essentially copying exactly what the competitors were doing by reverse engineering their products and rebuilding them using cheaper, lower quality parts. Due to the lack of differentiation, Zongshen had to also use a lower price strategy in order to move their products. Their components went into products such as motorcycles, portable generators, and outdoor power equipment like lawn mowers and tillers. Some of the challenges facing Zongshen became crystal clear after their first generation of motorcycles had been sold. Customers quickly figured out Zongshen’s imitation strategy and that they were a cheaper and lower quality version of the other options out there. In general, the customers who had purchased the first generation were unhappy with the quality of the Zongshen brand and therefore spent their money elsewhere for their next bike purchase. This was the major challenge for Zongshen. There was nothing setting them apart from the competition, and everyone knew it. Something must be done to come up with and implement a strategy which restored the consumers’ confidence in the brand. Zongshen knew that he must re-think and change the strategy if he wanted his company to survive. The cheap copy exact imitation strategy only work on some products and doesn’t always work long-term. It definitely