Nowadays, it seems any business strategy is incomplete without accounting for China. Just take a look at the latest performance from Dominos and Papa John's for examples of China's positive influence. So there's no reason why American Hogs can't get in on this game, right? That's what Harley-Davidson (NYSE:HDI) believed when it recently announced the agreement to have its first hog dealer in Beijing.
The international market has already been a strong one for the motorcycle manufacturer. According to its first-quarter conference call, total international revenue increased 11.6%, significantly outpacing net sales growth of 4%. The Asia-Pacific arena has been particularly strong for Harley, as it witnessed 16.3% growth in Japan. And outside of Europe, Canada, and Japan, all other international sales increased a whopping 34.4%. The kind of growth it's achieving in new markets has to be considered a very good omen for its new entry into China.
It is important to note that the volume of its exports to international markets is nowhere near the volume of sales here in the U.S. In the most recent period, units of Harleys exported overseas were just 24.2% of total motorcycle shipments. So, while the impact of this tremendous growth overseas is relatively muted, the recent growth in international markets makes it conceivable that the majority of sales will one day come from regions like Latin America and the Asia-Pacific region.
CEO Jim Ziemer said in the conference call that they see "good, long-term potential" in these newer markets. Based on the turnout that its new dealership witnessed in Beijing on the first day of opening last Saturday, he added, "There is little doubt that the Harley-Davidson experience and the products translate well in China."
Shareholders shouldn't expect any substantial top-line impact from this first step into China. That said, when prospective investors are looking at Harley-Davidson's stock, it's hard to not put a lot of weight on the company's future potential in these new markets. If Harley-Davidson interests you, continue tracking its efforts in China in the coming quarters -- there may be a golden investment opprtunity ahead.
More on the recreational vehicle biz:
- Ducati Motor's (NYSE:DMH) bikes may burn up the track, but the company lacks that sizzle.
- Get a snapshot view on the latest performance from Marine Products (NYSE:MPX).
- Polaris' (NYSE:PII) growth appears to be stalling.
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Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.
