The Chinese Bittersweet Cake in Orbea’s Internationalization

Abstract

Orbea is the oldest and biggest bicycle manufacturer in Spain and one of the most recognized bike brands in the world. With more than 175 years in the market, in the year 2007 Orbea decided to set up its third manufacturing plant in the Industrial park of Kunshan. After 8 years with activity there, in 2015 the company decided to close down the factory and reallocated its resources closer to the Headquarters. Some of the reasons that influenced its entry and exit decisions had their origin in the specific context of investment (place): China and the country-of-origin (COO) cluster in Kunshan. Other reasons of the reshoring and backshoring were related with the evolution of the sector, public support services (space) and market positioning in Asia-Pacific. However, as a result of that process, the company has acquired some knowledge and experience that will shape the strategy of Orbea. The objective of this case study is to analyse the role of the place and the space in the international relocation strategy of Orbea. This will involve studying the main decision factors as well as the major organizational adjustments related to the linkage between the structure and the location. The chapter compares the main literature on entry reasons, location mode and offshoring with the interviews conducted to Orbea's managers during the period 2013-2016. This work will guide business practitioners in their international manufacturing strategy and academics to contribute to the study of the advantages generated in specific contexts such as COO clusters.