VMEP looks to female buyers to boost sales
Newly listed Vietnam Manufacturing and Export Processing (Holdings) (VMEP) has distinguished itself from its rivals by appealing to female customers in Vietnam's fast-growing motorcycle market, according to chief executive Chen Pang-hsiung.
'About 60 to 70 per cent of our customers are young ladies,' Mr Chen said - an advantage in a culture in which women generally control the family purse strings. 'Other competitors, whether Japanese or local suppliers, sell most of their products to male customers.'
Female consumers accounted for an even higher 80 per cent of VMEP's scooters, Mr Chen said.
The company's core products are scooters and 'cubs', or light motorcycles. Scooter sales in the first half of this year totalled US$77.2 million, about three times higher than the revenue from cubs.
Riders of cubs need to straddle the centre-mounted engine, while scooters have step-through frames that do not require riders to straddle the engine.
'Riding a cub defines a woman as a worker, while riding a scooter means she is a lady,' Mr Chen said.
He described Vietnam's women as smart, hardworking and motivated, and said that while their first motorcycles were normally cubs, VMEP's marketing approach was directed at their second purchases when they had more money and wanted more ladylike scooters.
At an average price of US$1,400, scooters are targeted at young, affluent customers while cubs are normally aimed at the mass market, priced at about US$500. VMEP, owned by Taiwanese motorcycle maker Sanyang Group, sold 226.92 million shares last week, raising HK$850.95 million in a public float to strengthen its sales network and research capabilities.
VMEP shares fell 16.8 per cent to US$3.12 on their trading debut on December 20, making the company the second worst-performing new listing this year after Pacific Online, whose shares slid 19.4 per cent in its first trading day. The shares climbed to US$3.64 on Friday.
However, Mr Chen said he was optimistic about the company's long-term development, which he said would benefit from Vietnam's fast-growing economy and consumers' stronger purchasing power.
About 70 per cent of Vietnam's population was aged below 40, he said, so the company would focus on introducing new scooter models with higher margins while attracting budget-conscious consumers to buy cubs with relatively lower prices to gain market share.
The gross profit margin on scooters was 37.4 per cent last year, while cubs had a gross loss margin of 3.2 per cent because of competition.
VMEP plans to launch three new scooter models and one modified cub model every year and aims for annual sales growth of 30 per cent.
The Vietnamese market was dominated by cub motorcycle sales, with scooters accounting for only 20 per cent of annual sales last year.
The company, the only wholly foreign-owned motorbike maker in Vietnam, lags behind Honda and Yamaha in terms of production.