China Vape Orders Decline; Industry Committee Urges Firms Not to Panic Sell

Since November 1, the National Tobacco Monopoly Administration and the State Administration for Market Regulation issued a notice on “Further Protecting Minors from E-Cigarette Harm,” the e-cigarette industry has undergone a significant change, with internet sales channels being banned, sales declining, and merchants accumulating large inventories, putting unprecedented pressure on the entire industry.<\/p>

On the afternoon of November 15, the first second executive council of the E-Cigarette Industry Committee of the China Electronic Commerce Association was held in Shenzhen, where it was revealed that the domestic e-cigarette industry is experiencing a downturn, and companies are facing pressures to lay off workers<\/strong>. They urged companies not to panic sell products<\/strong>, which could lead to a collapse of the pricing system and create a “stampede” phenomenon, calling for companies to avoid layoffs as much as possible<\/strong>. <\/p>

The meeting revealed that the Chinese e-cigarette industry has 500,000 direct employees and 2 million indirect employees<\/strong>. From 2016 to 2018, the total sales of private e-cigarette companies in China amounted to 65.14 billion yuan, with an export total of 52.09 billion yuan and domestic sales totaling 13.06 billion yuan, 90% of the products are exported to Europe and America<\/strong>. E-cigarette factories are mainly located in the Sha Jing and Fu Yong streets of Bao'an District, Shenzhen.<\/p>

It is understood that the e-cigarette ban coincided with the prelude to the Double Eleven shopping festival, and many merchants' inventory has become a burden that is difficult to digest. In addition, China's e-cigarettes are mainly export-oriented, and there has also been a decline in sales in Europe and America, leading to significant layoffs in factory-based companies, causing massive unemployment and unrest.<\/p>

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Previously, the president of the E-Cigarette Industry Committee of the China Electronic Commerce Association, Ou Junbiao, described the current plight of small and medium-sized e-cigarette companies as “corpses everywhere.”<\/p>

He roughly estimated that over ten thousand people have lost their jobs, and he believes this situation is very serious because leading companies previously did not take small and medium orders, but now due to insufficient orders, they have to fulfill hundreds or thousands of orders. If leading companies are not saturated, small and medium enterprises can only be “corpses everywhere.”<\/p>

The industry meeting believes that companies should avoid layoffs as much as possible, and if layoffs are ultimately necessary, they should dismiss workers according to the provisions of the Labor Law to avoid large-scale labor disputes<\/strong>. <\/p>

The meeting concluded that China’s exported e-cigarettes have an absolute market advantage, while developed countries like Europe and America have gradually introduced relevant laws and regulations to raise market technical entry thresholds, aiming to reclaim the international market, which has greatly impacted the export of China's e-cigarette industry. Meanwhile, the unclear product attributes and regulatory positioning of China's e-cigarettes have also affected domestic companies' ability to grow stronger.<\/p>

Additionally, the meeting decided that to ensure quality control, a testing center for e-cigarettes will be established under the leadership of the China Electronic Commerce Association, providing a testing platform for the quality and safety of e-cigarette products, which will better serve companies and promote the quality and safety of e-cigarette products. Physical stores are advised to have warning signs stating “Do not sell to minors”; age verification should require ID for purchase; and e-cigarette physical stores should not be located near schools.<\/p>