China Factory Delays From COVID-19 May Cause U.S. Vape Shortages

On February 15, news broke that due to the outbreak of COVID-19, many factories in China remain closed, raising widespread concerns that it may not be until late April before various e-cigarette hardware products are shipped to the U.S., leading to shortages of e-cigarette products in the U.S.

E-cigarette shop owner Charles Harris is worried. He believes that Chinese companies manufacturing e-cigarette products will resume operations so that his e-cigarette shop can open. However, when he looked out at the empty streets of Shenzhen from his apartment on Wednesday morning, it was clear that the impact of the deadly coronavirus is far from over.

Harris owns and operates an e-cigarette shop called NicFit Go in North Carolina. At this time of year, he often travels to Shenzhen, where he has a second home. Shenzhen is commonly referred to as the e-cigarette capital of the world. However, the coronavirus has turned into a pandemic, and few people have returned to work.

As Harris spoke with the media, it became increasingly clear that the COVID-19 coronavirus will have a global impact on various aspects of the economy. However, its economic consequences may particularly harm those in the e-cigarette industry.

Shenzhen has about 1,000 factories producing approximately 90% of the world's e-cigarettes and e-cigarette hardware. If the current situation of factories remaining closed continues, even if there is not an absolute shortage, the shipping of e-cigarette products may be significantly delayed.

Large e-cigarette companies with facilities in Shenzhen, such as JUUL Labs, should have the resources to avoid problems. However, small and medium-sized enterprises have reason to worry about whether they will quickly recover from the virus. Compared to manufacturing giants like Foxconn that produce parts for Apple, many e-cigarette distributors do not prioritize export volumes, and thus may not be able to send inventory overseas again for months.

In mid-February, Scott Alwine, a senior account manager at wholesale e-cigarette supplier VaporBeast, informed his clients to prepare for the worst. In an email to clients, Alwine wrote: "We anticipate a nationwide hardware shortage starting from the end of February, lasting through March, with April possibly being a better time. We encourage you to stock up now to ensure you have products suitable for your customers."

Currently, some companies require government permits to reopen, and doing so requires adhering to strict safety measures.

Dimitris Agrafiotis, a consultant for e-cigarette manufacturers who frequently visits Shenzhen, stated: "The entire supply chain will be disrupted. This will definitely harm the entire industry. Everything is built on technology and the next new thing. If production is delayed, the development of these products will also be delayed."

Harris mentioned that some e-cigarette manufacturers have already begun considering other options.

He said: "I’ve heard that some are talking about opening factories in Mexico."

For e-cigarette companies, the outbreak of the coronavirus has come at an inopportune time. This year's Lunar New Year was on January 25, just before the virus news began making headlines. In China, the new year is followed by a 15-day holiday during which factories may close for up to two weeks, and many employees return to their villages to reunite with family and rest.

Due to the outbreak, the date for resuming operations has been further delayed. A manager at a large e-cigarette import and export company stated that this concern has been the focus of internal and industry discussions for weeks.

The manager added: "I have worked in China for several years, and policy uncertainty has always been the biggest issue."

Policy uncertainty is causing significant losses for an industry that has already been grappling with a series of recent crises. Last month, the Trump administration criticized the number of e-cigarettes available to teenagers and a series of vaping-related illnesses associated with illegal THC cartridges, followed by a partial ban on flavored e-cigarette products.

China has also currently banned the online sale of e-cigarettes.

Regarding contamination concerns, Stanley, a professor of microbiology and immunology in the U.S., stated that the coronavirus in China and the infected individuals in the U.S. are unlikely to contaminate e-liquids or devices themselves.

Palmer stated: "This virus may survive on inanimate surfaces for two to three days, but I think the likelihood of it surviving and transmitting to someone is almost zero."