Although I have a more optimistic view on the outlook for the company, I suspect there may be some truth in what you say.
In the recent announcement, the weaker Chinese sales are blamed on consumer nervous due to new regulations in many cities in this country. However, I believe part of the problem is also increased competition in China. For example, there is a Chinese scooter company called Niu which seems to be doing quite well at the moment. This is from an article about the company last week:
... Crowdfunding pre-sales campaigns for Niu’s first full sized e-scooter and mini-scooter have been major successes: 72,022,526 RMB and 81,380,425 RMB, respectively — that’s around $10.5 million and $11.75 million.
Even with prices that are 40-130 percent higher (3399 to 6899 RMB), sales are growing along with its fanbase. To date, Niu has sold over 90,000 units of its latest full-sized model, the N1S, and 60,000 units of the M1.
It wouldn't surprise me if this Niu company was partly to blame for the recent fall in sales in China.
That said, I didn't like Vmoto's focus on China in the first place. The tougher conditions in China appears to have prompted Vmoto to place a greater focus on customers in other countries, and so in the long run the difficulties in China may prove to be a positive.
China is the most populous country in the world, and so it is unsurprising that all and sundry want to get a piece of the China pie. In particular, for large US or European companies looking to grow, it is the logical place to expand.
But Vmoto has a market cap of less than 20 million, and given this I just can't see where the logic is in focusing on China.
It makes more sense to focus on the niche markets around the world, which other players are ignoring either because they think they are too small, or too risky. This is what the Vmoto strategy seems to be at the moment, and my feeling is that it will prove to be a sound strategy, hence my optimism.
VMT Price at posting:
7.6¢ Sentiment: None Disclosure: Held
(20min delay)
