U.S. Media: Pneumonia Outbreak Exposes Gaps in the U.S. Vaping Supply Chain
Analysts estimate 90% to 95% of vape components are made in factories in Shenzhen, China, with only 5% to 10% sourced in the U.S. When the 2019 pneumonia outbreak shut factories down, supply chains were badly hit.
Industry analysts estimate that 90% to 95% of all components that make up vaping devices are produced in factories in Shenzhen, China, with only 5% to 10% sourced from the U.S. As a result, when the pneumonia outbreak began in December 2019 and ultimately led to the closure of all factories, vaping companies had little choice but to wait for the factories to resume operations.<\/span><\/div>
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Today, some factories have reopened, but they are still not operating at full capacity, as some workers are reluctant to return to work while others remain in quarantine. Arnaud Dumas de Rauly, founder and CEO of The Blinc Group in New York, said: "We will consider delays in raw materials of a few weeks." He added that some of his Chinese partners have at least been able to ship him some equipment.<\/span>
Sadly, U.S. vaping companies looking for local suppliers have felt pressure over their choices, as U.S. hardware companies struggle to keep up with Chinese innovation and automation. Despite many setbacks, Dumas de Rauly added that if each supplier has a few weeks of delays, domestic sales will decrease, and for him, due to his connections in China, he will be able to ensure the necessary hardware.<\/span><\/div>
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However, his competitors may not be so lucky. Mark Scatterday, CEO of Tilt Holdings and its subsidiary Jupiter Research, stated: "The outbreak of the coronavirus has caused production delays across all industries, including ours, which produces products in Shenzhen and other manufacturing hubs." "Customer orders are in production and transportation."<\/span>
Similarly, last month, the Australian vaping industry expressed concerns about dwindling stocks of vaping hardware, with some having already run out of certain items, while others worried that their supplies could only last a few weeks. Chris Monchgesang, COO of major distributor Vape Traders, said: "We are feeling the pinch on our more popular devices." "This is not the most pleasant time."<\/span><\/div>
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The shortage of vaping accessories is just one example of the "second wave" of economic disruption caused by the coronavirus outbreak, which is wreaking havoc on global trade. The first wave naturally affected most of the travel and airline industries.<\/span><\/div>
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Monchgesang pointed out that the next most viable step for the Australian industry would be to start importing from the U.S. and the U.K. "It all depends on whether the coronavirus starts to fade or continues to flare up. Importing from the U.S. and U.K. markets, which have large hardware inventories, is a last resort. However, they are also running low on stock and will run out at some point."<\/span><\/div>
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