Why Build an E-Bike Factory in Vietnam?

TL;DR

Jack O'Sullivan, founder of Modmo, chose Vietnam for its favorable trade agreements with Europe, which offer lower tariffs compared to China and Taiwan. This decision, coupled with the local talent pool, has allowed Modmo to establish and grow its e-bike production in Vietnam, despite initial challenges in finding suppliers.

Transcript

[Applause] what's up guys it's your host how tran here the ceo of etc and of course your ever present host for the vietnam innovators english edition of course for those of you that are listening that may not be aware we have a vietnamese edition recently released that's hosted by our chief operating officer ruby newing and that one's in vietnamese... Read More

Key Insights

• Vietnam offers favorable trade agreements with Europe, reducing tariffs on e-bikes to between 2.5% and 6%, compared to 68% from China.
• Modmo's founder, Jack O'Sullivan, was initially drawn to Vietnam by its trade agreements but stayed due to the local talent and favorable living conditions.
• Vietnam lacks a centralized marketplace like Alibaba, making it challenging to find local suppliers without personal connections.
• Modmo's e-bikes are designed with modular accessories and smart features, appealing to urban commuters seeking convenience and sustainability.
• The company has achieved significant pre-sales in Europe, particularly in Germany, and is expanding its production capabilities in Vietnam.
• Modmo is focusing on sustainable manufacturing by eliminating single-use plastics in its supply chain.
• The Vietnamese market presents a potential growth area for Modmo, despite initial assumptions about price sensitivity and cycling infrastructure.
• Modmo is actively hiring in Vietnam, looking for passionate individuals to join their engineering and marketing teams.

Questions & Answers

Q: Why did Modmo choose Vietnam for its e-bike production?

Modmo chose Vietnam for its e-bike production primarily due to favorable trade agreements with Europe, which offer significantly lower tariffs compared to China and Taiwan. This strategic decision was also influenced by the availability of skilled local talent and the appealing living conditions in Vietnam.

Q: What challenges did Modmo face in setting up manufacturing in Vietnam?

Modmo faced challenges in finding local suppliers due to Vietnam's lack of a centralized marketplace like Alibaba. Instead, the company had to rely on personal connections and attend events to discover potential manufacturing partners. Despite these challenges, Modmo has successfully increased its local production content.

Q: How does Modmo ensure sustainable manufacturing practices?

Modmo ensures sustainable manufacturing by eliminating single-use plastics from its supply chain. The company has designed reusable packaging that is sent to suppliers, significantly reducing plastic waste. This initiative reflects Modmo's commitment to environmentally friendly production practices.

Q: What features make Modmo's e-bikes appealing to urban commuters?

Modmo's e-bikes are designed with urban commuters in mind, featuring modular accessories that can be easily attached without tools, such as baskets and trailers. Additionally, the bikes are equipped with smart technology, including Bluetooth and GPS for tracking and security, making them a convenient and sustainable choice for city dwellers.

Q: What is the current focus of Modmo's business strategy?

Modmo is currently focused on ramping up its production capabilities in Vietnam to meet growing demand, particularly in Europe. The company is also exploring opportunities in the Vietnamese market and is committed to sustainable manufacturing practices. Additionally, Modmo is investing in technology development, aiming to become a leader in bike tech innovation.

Q: How has Modmo's sales performance been in Europe?

Modmo has achieved significant pre-sales in Europe, with over a million euros in pre-orders last year. The majority of sales have been in Germany, where the company is expanding its test ride locations and aiming to produce over 4,000 bikes this year. This strong performance highlights the growing demand for Modmo's e-bikes in the European market.

Q: Is Modmo planning to expand its presence in the Vietnamese market?

Yes, Modmo is planning to expand its presence in the Vietnamese market. The company is in discussions with a large motorbike distributor and plans to open showrooms in major cities like Saigon, Da Nang, and Hanoi. While the market is still developing, there is significant interest in premium e-bikes among Vietnamese consumers.

Q: What opportunities are available at Modmo for potential employees?

Modmo is actively hiring in Vietnam, seeking individuals passionate about e-bike innovation. Opportunities are available in engineering, marketing, and content creation, with a focus on mechanical, electrical, and IoT engineering roles. Modmo values ambition and creativity, encouraging applicants to share ideas for product improvement.

Summary & Key Takeaways

• Jack O'Sullivan chose Vietnam for Modmo's e-bike production due to favorable trade agreements with Europe, which offer reduced tariffs compared to China and Taiwan. This strategic move was further supported by the availability of local talent and a conducive living environment.

• Vietnam's lack of a centralized supplier marketplace posed initial challenges for Modmo, but the company has successfully navigated this by leveraging personal connections and investing in local manufacturing capabilities. This has allowed Modmo to increase its local production content significantly.

• Modmo's e-bikes are designed to address common cycling issues, featuring modular accessories and smart technology. The company has achieved strong pre-sales in Europe and is now exploring opportunities in the Vietnamese market, supported by its commitment to sustainable manufacturing practices.