Crisis at the Bally Wedding Dress Company

Description

Capitalizing on low-cost manufacturing in China, Bally Wedding Dress Company (Bally) had grown quickly by exporting inexpensive wedding dresses to customers in Western countries. However, due to a rise in labour costs, currency appreciation, and increased prices of raw materials, the low-cost advantage in the manufacturing industry had by 2014 been seriously eroded. Competition had intensified together with a shortage in qualified labour. As both the sales volume and turnover decreased, Bally had to consider how to survive. The crisis that it faced represented a common issue for many Chinese manufacturing enterprises.

Learning Objective

This case can be used in courses on strategic management, entrepreneurship and international business. The crisis for Bally reflects a current challenge in the evolution of small- and medium-sized manufacturing enterprises in China. The case emphasizes how enterprises with initial competitive advantages will need to adapt to changes in the economic environment in order to be viable in the long term. In an international business course, the case can be used in an early internationalization section that focuses on market-seeking export behaviour. Bally internationalized very quickly after its establishment — arguably too quickly, since it did not have the ability to meet the rapid growth in export orders. This case can help students understand the development and transformation of traditional Chinese manufacturing enterprises and how Chinese small and medium-sized enterprises need to establish and maintain a sustainable competitive advantage. It also deals with issues of vertical integration and copyright violation.

Keywords

China Copyright Environmental Change Labour Costs Vertical integration