Shanghai, June 12, 2025 — Yema Battery (605378.SH) has announced plans for its Vietnam production base to commence operations in the first quarter of 2026, though the company warned that manufacturing costs at the overseas facility will exceed those of its domestic sites under comparable conditions. The disclosure came alongside the firm’s Q1 2025 financial report, which revealed a 50.27% year-on-year decline in net profit due to export tax rebate adjustments and falling product prices.
Key Challenges and Financial Impact
Vietnam Factory Cost Structure: While the new facility aims to expand global reach, Yema noted that higher labor, logistics, and regulatory compliance costs in Vietnam will result in elevated production expenses compared to its Chinese operations.
Export Tax Rebate Cut: The reduction in export tax rebates for battery products from 13% to 9%directly impacted profit margins. Combined with a decline in sales prices for certain items, the company’s net profit fell sharply to reflect these headwinds.
Strategic Response and Market Positioning
To address these challenges, Yema Battery outlined a three-pronged strategy:
Overseas Channel Development: The company will intensify efforts to build direct sales networks in international markets, aiming to reduce reliance on intermediaries and enhance pricing power.
Product Mix Optimization: Focus will shift toward higher-margin alkaline battery products, leveraging the company’s technical expertise to differentiate in competitive markets.
Operational Efficiency Gains: Yema plans to streamline processes at both domestic and overseas facilities to offset cost pressures, including adopting automated production lines and supply chain optimization.
Industry Context and Future Outlook
The move to Vietnam comes as many Chinese manufacturers seek to diversify production bases amid global trade uncertainties. However, Yema’s admission of higher overseas costs highlights the trade-offs of offshore expansion, particularly for labor-intensive industries. Analysts note that while the Vietnam factory may help avoid tariff risks long-term, near-term profitability will depend on the company’s ability to scale operations and absorb initial cost overruns.
With a focus on strengthening its alkaline battery portfolio and direct sales channels, Yema aims to stabilize margins and maintain its market share in a competitive global landscape. The company’s success will hinge on balancing overseas expansion with cost management while navigating evolving trade policies.
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