2021 Q1 Report on China's Vaping Industry Development and Market Research

E-cigarettes have become an innovative consumer electronic product that is becoming increasingly popular around the world. According to iiMedia Research, the size of China's e-cigarette market in 2013 was 550 million yuan. In 2020, the market size increased to 8.38 billion yuan. The eight-year compound annual growth rate reached 72.5%, and it is expected to exceed 10 billion yuan in 2021.

core point of view

China has a large number of potential e-cigarette users and broad development prospects for the industry

China's e-cigarette market has expanded rapidly. Data shows that the size of China's e-cigarette market in 2013 was 550 million yuan. By 2020, the size of China's e-cigarette market will increase to 8.33 billion yuan, with an eight-year compound annual growth rate of 72.5%. Analysts at AiMedia Consulting believe that China currently ranks first in the world in terms of the number of smokers, but the penetration rate of e-cigarettes is less than 1%, indicating that China's e-cigarette industry has broad development space, and the market size is expected to exceed 10 billion yuan in 2021.

E-cigarette users are mainly young and middle-aged men, and smoking cessation is the main purpose of use.

According to iiMedia Research survey data, in 2021Q1, e-cigarette users in China are mainly male, accounting for 64.9%; the age group is mainly young and middle-aged, accounting for nearly 70%. More than half of users believe that e-cigarettes can alleviate their dependence on nicotine and smoke, and the diverse flavors of e-cigarettes are also an advantage that attracts users. In addition, battery life, convenience of oil changes and price are the main directions that users expect to improve e-cigarette products.

Heating non-burning e-cigarette equipment has obvious advantages and is expected to become a new growth point in the industry.

Heated non-combustible e-cigarette equipment is a product that is less harmful than traditional tobacco and has the closest taste, and is very popular among users. According to iiMedia Research survey data, in February 2021, 35% of e-cigarette users in China preferred heated non-burning e-cigarettes. User demand drives the development of the product market. It is estimated that the market size of China's heated non-combustible e-cigarettes will reach 2.30 billion yuan in 2021.

Excerpts from the report

Comparative analysis of e-cigarettes and traditional tobacco
 
2014-2022 Data analysis of global e-cigarette industry market size in 2009

E-cigarettes have become an innovative consumer electronic product that is becoming increasingly popular around the world. Judging from the development of the market size of the global e-cigarette industry, the overall scale of the e-cigarette industry shows an upward trend. Market sales of the global e-cigarette industry continued to rise in 2020, reaching US$42.4 billion, a year-on-year increase of 15.6%. Although countries have successively introduced regulatory policies on e-cigarettes, the enthusiasm for the development of the e-cigarette industry has not diminished. The strong growth in the global e-cigarette market is mainly due to the increasing consumer acceptance of e-cigarette products, the active marketing activities of tobacco companies, and the accelerated innovation and product development process of e-cigarette manufacturers.
 
Data analysis of sales structure of global e-cigarette market in 2019

From the perspective of the global e-cigarette market, the current e-cigarette market is highly concentrated, mainly concentrated in the U.S. e-cigarette sales market. In 2019, e-cigarette sales in the United States reached US$16 billion, accounting for 48% of global total sales, making it the world's largest consumer of e-cigarettes. Secondly, countries such as Britain, France and Germany account for more than 5% of the market share of e-cigarette sales. Global e-cigarette culture is gradually becoming popular, and new tobacco products such as e-cigarettes are highly sought after by consumers.
 
Analysis of the development history and characteristics of China's e-cigarette industry

China's e-cigarette industry began in 2003. China pharmacist Han Li applied for the first patent for modern e-cigarettes, ushering in the era of modern e-cigarettes in China. my country's e-cigarette industry has gone through three stages: initial development, rapid expansion and industry reshuffle. During these three periods, my country's e-cigarette industry has continued to expand, and the state's supervision of e-cigarettes has gradually become clear, and the e-cigarette industry has entered a reshuffle stage., the industry will develop more orderly in the future.
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2013-2021 Analysis of the market size of China's e-cigarette industry in

Data shows that the size of China's e-cigarette market in 2013 was 550 million yuan. In 2020, the market size increased to 8.38 billion yuan. The eight-year compound average annual growth rate reached 72.5%. It is expected to exceed 10 billion yuan in 2021. The size of China's e-cigarette market has expanded rapidly. Analysts at AiMedia Consulting believe that China ranks first in the world in terms of smokers, but the penetration rate of e-cigarettes is only 0.6. The successive introduction of tobacco control regulations across the country is also expected to accelerate the increase in penetration rates. Therefore, as the penetration rate of the e-cigarette market increases in the future, the scale of China's e-cigarette market is expected to increase significantly.
 
Analysis of the number of enterprises in the e-cigarette industry in China in February 2021

The vast market development space of e-cigarettes has attracted many companies to enter the market. Data shows that the number of e-cigarette companies in China has grown rapidly from 45457 in 2013 to 168452 in 2020. As of February 4, 2021, there are a total of 174399 e-cigarette companies in China. In terms of growth rate, the growth rate of the number of e-cigarette companies in China is accelerating, reaching 30.27% in 2020, and continues the momentum of rapid growth. It is foreseeable that the number of companies in the industry will continue to increase significantly in the future, and the industry track will become more crowded.
 
Jinjia Shares, a typical upstream enterprise in the e-cigarette industry: Profitability

In 2019, Jinjia achieved operating income of 3.99 billion yuan, a year-on-year increase of 18.4%, maintaining accelerated growth for three consecutive years; net profit for the year reached 880 million yuan, a year-on-year increase of 21%. In the first three quarters of 2020, the company achieved revenue of 3.01 billion yuan, an increase of 4.5% compared with the same period last year. Business expansion in 2020 slowed down; During this period, the company's net profit showed negative growth, reaching 660 million yuan, a decrease of 1.6% compared with the same period last year. The main reason for the decline in performance came from the outbreak of the epidemic in the first quarter. The comprehensive unfavorable factors caused by the epidemic led to various businesses of the company. There are varying degrees of phased delays. With the domestic epidemic being effectively controlled and the company's good progress in the new tobacco industry, the company's overall operating situation has shown a stable trend.
 
Analysis of driving factors for e-cigarette consumers in China in 2021Q1

The reasons why consumers choose e-cigarettes mainly focus on health and environmental protection, such as helping to quit smoking and withdrawal reactions. Data shows that the main reasons for attracting consumers to use e-cigarette products, which can alleviate dependence on nicotine, have multiple flavors and reduce withdrawal reactions, accounting for 55%, 46% and 38% respectively. Analysts at AiMedia Consulting believe that e-cigarette brands tend to highlight the health and environmental protection functions of e-cigarettes when promoting their products. E-cigarette merchants can also highlight the taste and other characteristics of the product, making it a product selling point.
 
Perceived analysis of experience problems in China's e-cigarette products in 2021Q1

Data shows that the biggest concern for e-cigarette users when using products is short battery life (46.8%), followed by continuous high temperatures, poor material quality, oil leaks and short battery circuits. Analysts at AiMedia Consulting believe that there are currently no relevant national standards that define the nature of e-cigarettes, and product positioning can easily become an obstacle for consumers to use products. In addition, the development of the industry is not yet mature, there is a lack of companies with outstanding comprehensive strength in the market, no brands with good reputation have been formed, and consumers lack confidence in product quality assurance.
 
Distribution of willingness among respondents in China to recommend e-cigarette products in 2021Q1

Data shows that more than half of the users surveyed believe that e-cigarettes have a smoking cessation effect, and 54.1% of them said they would recommend e-cigarette products to others and have a high willingness to recommend them. Overall, the proportion of users interviewed who chose to recommend was relatively consistent with the proportion of users who agreed that e-cigarettes had a smoking cessation effect, with more than half, which shows that smoking cessation effect is the prerequisite for users to recommend products.# p#pagination title #e#
 
Analysis of typical e-cigarette enterprises in China: Fog Core Technology: Enterprise Introduction

Founded in 2018, Wuxin Technology is a leading electronic atomizer company in China. The company has opened more than 2500 specialty stores across the country and settled in more than 100,000 retail stores; and has opened 8 specialty stores in Canada, Indonesia and other countries., customers in more than 40 countries and regions around the world.
 
Analysis of typical e-cigarette enterprises in China by Simore International: Introduction to Enterprises

Founded in 2009, Simor International Holdings Co., Ltd. is a global leader in providing atomization technology solutions; according to Frost and Sullivan's 2019 report, the company is currently the world's largest manufacturer of electronic atomization equipment. In 2015, the company launched its own brand Vaporesso in the United States and expanded the market to Europe and Japan. In 2016, it launched the first generation of ceramic heating technology and applied it to its brand FEELM.
 
Yingqu Technology: Analysis of typical e-cigarette enterprises in China: Introduction to the enterprise

Based on the independently innovative UDM model (also known as ODM intelligent manufacturing model), Yingqu Technology mainly provides customers with the research and development and production of intelligent control components, innovative consumer electronics and other products, and provides intelligent manufacturing solutions for small and medium-sized enterprises. The company is also a second-level supplier to HNB e-cigarette giant IQOS. It mainly provides plastic components such as charging boxes (MU) and heating rods (TSH), and provides assembly parts to IQOS first-level suppliers Venture and Flex.
 
Development trend analysis 1: Industry regulatory policies are becoming stricter

In November 2019, relevant national departments began to tighten control over e-cigarettes. The introduction of a ban on online sales of e-cigarettes caused major e-commerce platforms to remove e-cigarette products overnight. Before the online sales channels were cut off, e-cigarette brands used online channels to ship, which could avoid profit-sharing among stores and dealers and reduce product costs. Therefore, under the influence of the ban, e-cigarette companies can no longer conduct online marketing, and the publicity effect has been greatly reduced. At the same time, standards from various places have been introduced one after another, causing e-cigarettes to usher in a fierce reshuffle.
 
Development Trend Analysis 2: E-cigarette companies expand overseas

With the strengthening of online sales supervision, some e-cigarette companies have begun to expand overseas. On December 5, 2019, domestic e-cigarette brand Doo and Indigo, an e-cigarette channel company under the Kali Group in the United States, stated that they would establish a joint venture company in the United States. In the same year, Yueshi also began to go to sea and achieved good results in a short period of time. Analysts at AiMedia Consulting believe that e-cigarette companies going abroad is a good way to avoid policy risks, but they will also face different regulatory policies and issues such as cultural differences, environment, and youth addiction. Therefore, companies need to carefully study the domestic market and overseas market differences, accurately position brand strategies, and lay a solid foundation for future global market layout priorities.