QualityStocks SUBMIT AN ARTICLE

This stock is an object lesson in a new way of doing business. It treats losses as investments. The company operates in China, though it is listed on NASDAQ. Do not heap scorn on the practice of accumulating losses for market share, because contrary to business management theory, it seems to work.

It may have something to do with the nature of the business of lithium-ion batteries. Look around and you will find that we all use them. Electronic devices cannot be portable without lithium-ion batteries. They power laptops, cellular telephones, and music players.

You might expect that something which is so ubiquitous in modern living would be produced in a market of nearly-perfect competition. The truth is that only a handful of Japanese and South Korean corporations have ever thought of producing these essential batteries.

This Chinese company seems to have figured out that lithium-ion battery production is ripe for picking in terms of world dominance. It has forged a nearly monopolistic market share of this segment. It operates with a Gross Margin of less than 12%.

Why is this a worthy business route? How can stock investors gain by this seemingly self-destructive form of industry? The answer lies in electric automobiles. They are all the rage of environmentalists. Every electric car needs a lithium-ion battery, albeit a bigger one than used in our CD/MP3 players. This company is on the verge of an era of surging profits.

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