142 IN THE SHADOW OF THE DRAGON Lessons Learned In the cases of both Kangnai and Haili, it was unlikely that a low- cost business model would be able to keep up with market changes for very long. Moving factories out of China to find cheaper labor might have worked for a while, but it made more sense to move up the value chain. The Kangnai Group survived precisely because its products established brand recognition for their reliability at a time when price competition was driving the competition out of busi- ness. As more of its competitors were driven into bankruptcy, Kangnai was able to capture market share and absorb the assets of its competitors. As for Haili Toys, instead of blindly trying to produce a greater quantity with thinner resources, the company analyzed its own processes and detected market opportunities. It moved into these new market areas at a time when it was possible to maximize prof-