Juul, Pioneer of Pod Vapes, Takes on Chinese Brands

Recently, it was reported that JUUL, the pioneer of pod vapes based in San Francisco, USA, has reached a strategic partnership with JD.com, indicating that JUUL will officially enter the Chinese market. By October at the latest, JUUL electronic cigarette products will be available on the JD.com e-commerce platform. Meanwhile, JUUL plans to invest at least $100 million in brand building and marketing within the next 15 months.
 
In 2007, when James Monsees and Adam Bowen were pursuing their master's degrees at Stanford University, they co-founded the electronic cigarette company Ploom, which they sold to Japan Tobacco eight years later, renaming their company Pax Labs. Around the same time, they launched a USB flash drive-shaped electronic cigarette called Juul.

Juul began to emerge in 2015.

In 2017, Juul officially spun off from Pax Labs and quickly became the leader in the U.S. e-cigarette market, with its market share skyrocketing from 13.6% at the beginning of 2017 to over 75% last month.

In 2018, after a strategic investment of $12.8 billion from Altria, JUUL's valuation reached $38 billion, making it the highest-valued e-cigarette unicorn in the world and gradually establishing its position as the largest e-cigarette brand globally.
Regarding JUUL's entry into the Chinese market, what attitudes do industry insiders in the domestic e-cigarette sector hold? Let's hear what 16 industry leaders have to say!

1. RELX CEO Wang Ying: "After working so hard, the media attention doesn't even compare to a single news article from an American brand?? But I do feel that when American companies come in, the media suddenly thinks the e-cigarette industry has a higher status. In fact, RELX has never lagged behind foreign companies in product, research and development, and social responsibility. Since everyone wants me to 'defend the homeland'??, I sincerely say: Uber's firsthand experience teaches me that fighting on home turf is more enjoyable and allows for a more thorough performance!?? I need your help and hope to grow together with everyone.
 
2. LINX CEO Zhang Jinyuan: "Welcome Juul to enter the Chinese market; this is something we expected. Juul's entry into the Chinese market means that domestic policy prospects are becoming clearer and more favorable. The Chinese market has become a battleground for international e-cigarette companies and will inevitably nurture world-class e-cigarette companies. LINX will further integrate advantageous resources to welcome the upcoming market competition.

3. MOTI CMO Zhou Jie: "In the context of global trade, Juul's entry into the Chinese market is something we believe is inevitable. MOTI actually entered the European and American markets quite early, with subsidiaries in the U.S. and the U.K., achieving impressive results in overseas markets. From an industry perspective, although e-cigarettes originated in China, compared to the mature European and American markets, the Chinese market is still in its early stages. Juul's entry will undoubtedly lead to a series of market education initiatives, and we believe that educating the market together is beneficial for the entire industry.

4. SnowPlus co-founder Wang Sa: "Juul's entry into China is a significant boon for the harm-reduction e-cigarette industry, as it will not only bring more mature products but also more choices. It will rapidly bring this industry into more intense and comprehensive competition, attracting more talented individuals and capital to enter. Competing with a global market focus will provide Chinese e-cigarette companies with opportunities for comprehensive improvement in products, channels, and brands. To some extent, it is also about educating the market together. However, localization is still very difficult; it requires accumulation and understanding of the market and many other things. SnowPlus will have more efficient supply chain support and a deeper understanding of Chinese consumers. We are confident that we will stand out and go global.

5. Bode CEO Wang Zeqi: "Bode welcomes our old rival Juul to China, which means that the Chinese market is receiving more international attention. Juul's core advantages are its efficient nicotine delivery and extensive advertising in the U.S., which are the two key factors for its success. However, in China, both of these core advantages will be lost. First, the high-concentration nicotine salts that Juul relies on for success will lose their advantage in China due to non-compliance with national standards. Secondly, while there are no clear regulations on e-cigarette advertising in China, the immense administrative power makes it far more difficult to advertise e-cigarettes in China than in the U.S., with restrictions exceeding those in the U.S. by more than ten times. The second factor that Juul relies on for success is also difficult to replicate. Finally, Juul has never proven its hardware development capabilities; in this regard, companies like Bode are far more balanced in their capabilities than Juul. Bode welcomes Juul's entry into China and is prepared to gradually eliminate Juul together with other friendly competitors.

6. VPO co-founder Qu Feiyu: "The market is favorable, and the legalization of the e-cigarette market is further advancing. The e-cigarette market is entering a three-way competition: private, foreign-funded, and state-owned tobacco companies. It is expected that state-owned tobacco companies will accelerate their layout in the vapor e-cigarette sector. However, Juul faces enormous challenges; domestic e-cigarette companies will definitely retaliate. Juul has no advantage in offline channels, and from the perspective of e-commerce, it means that e-commerce channels are a reasonable and legal sales route. Juul's flavor localization and price positioning face challenges. Juul's testing in South Korea has spurred greater capital and major players to enter the e-cigarette market. The layout of the Chinese e-cigarette market is rapidly entering the second half, and industry capital giants will join the fray.

7. Yishuang CEO Gong Zijia: "Juul is an excellent company. After establishing a foundation in North America, it is actively expanding into overseas markets, indicating that not only our domestic brands but also overseas brands see the vast potential of the Chinese market. However, the differences with Juul's growth stage in the U.S. market are significant. Although it has the strong partnership with e-commerce giant JD.com, we are filled with anticipation for how things will unfold. The Chinese market will present a completely different situation compared to the U.S. market. We welcome Juul with an open attitude and hope for more in-depth communication opportunities with international brands. Due to its unique capital background, it may face different circumstances. Overall, the future of this industry, aside from channels, also depends on product strength. Based on Juul's previous pricing and flavors, we believe the future market will be very exciting.

8. iLAX COO Wei Lu: "The name Juul and the capital value behind it are undoubtedly a significant name for industry insiders both domestically and internationally. However, in the context of the enormous growth potential of the Chinese market and users, it remains a relatively unfamiliar image. It needs to undertake user education work that is not easier than any Chinese brand. Moreover, regarding Juul's product style and category, it is still relatively singular. In the context of the Chinese market, e-cigarettes are both electronic products and fast-moving consumer goods. The tastes and demands of Chinese consumers differ greatly from those in the U.S. market, as evidenced by the rapid iteration of many multinational brand products. Additionally, due to the rich and diverse layers of the Chinese consumer market, the sales channels for e-cigarettes also have strong localization characteristics. Therefore, Juul faces considerable challenges in these two aspects. Furthermore, when a new brand enters a new market, the marketing budget must be substantial. However, the standards and regulations for the Chinese e-cigarette industry are on the way. Under the current circumstances, Juul's space for marketing is limited. Although it may raise the overall marketing costs of the market, in the short term, it faces similar challenges in innovation, channels, and brand education as many local brands.

9. Bink CEO Zhong Yunzhao: "I think it's great; there will be fewer smokers again.

10. FLOW CEO Zhu Xiaomu: "Welcome international big brands to come in and explore the market together. We can also learn from how they operate and engage in healthy competition.

11. IJOY Chairman Wang Xizhi: "I believe they are testing the situation in the Chinese market and the government's attitude. They definitely want to enter the Chinese market, but in the future, they should not be able to compete with Chinese brands, just like Uber cannot compete with Didi in China. However, Juul's entry indicates an open attitude, and their presence will accelerate the maturity and reshuffling of the Chinese market. Domestic capital markets will also accelerate their entry. I believe Juul's entry into the Chinese market is a good thing.

12. TEREA Chairman Pan Junhui: "I think this is a good thing. China currently does not lack e-cigarette brands; what it lacks is user growth. From the beginning of the year until now, hundreds of new brands have entered, but one very obvious point is that the user base for e-cigarettes has not expanded. Under the continuous negative media exposure, the actual user base may even have decreased compared to last year. The mainstream tobacco companies from Europe and America, which are branded as technological unicorns, entering the Chinese market can at least bring some positive influence, making the general public feel that this product is not a knockoff but a technologically advanced, best-selling product from the U.S. As for whether they can overcome the regulatory environment of Chinese tobacco and adapt to local conditions, those are not important. If they truly have a promotional budget of $100 million, helping us educate more users would be worthwhile for the entire industry. Welcome JUUL's capital to our market.

13. Whale Light CEO Qiu Yiwu: "Unless Juul makes localized products, it will have no advantage. Its biggest advantage is its financial resources.

14. Niwei CEO William: "The entry of big players will accelerate the growth of the e-cigarette market, but I hope Juul will not continue to run ads targeting young people.

15. Former TCL O2O General Manager, KooYou Technology CEO Dan Xiaopeng (preparing to enter the e-cigarette market): 1. Accelerate the market education and popularization of e-cigarettes, allowing more people to view e-cigarettes objectively; 2. Bring high standards of values, international teams, and international product concepts; 3. Accelerate global capital's entry into the Chinese e-cigarette market. At the same time, domestic companies do not need to worry too much,

Because: 1. The tastes in China and the broader Asia-Pacific market are diverse. From the global traditional tobacco and JUUL's current flavor combinations, domestic manufacturers still have an advantage in flavor; 2. It must be acknowledged that domestic e-cigarette manufacturers have certain gaps in hardware details and craftsmanship (disassemble JUUL, and you will know about IQOS), and the quality of nicotine salts and e-liquids still has a certain gap, but this gap is narrowing, and there is a future opportunity to catch up or surpass; 3. Historically, foreign companies entering China have often started strong and then stabilized, and many domestic companies have risen as latecomers. Domestic companies' ability to learn from and surpass their mentors is not lacking. It is only suggested that domestic companies should have a more international perspective. Today, there are not many domestic companies that enjoy a good reputation. To establish a value system and capability that can shine on the global market, we should thank JUUL for helping accelerate the education and popularization of the Chinese market while humbly learning from it. Once the strength reaches a comparable level, everything can be resolved through cooperation. Moreover, with over 30 million new smokers each year in China and 360 million old smokers, and 1.1 billion smokers globally, if everyone can contribute a little to help reduce harm, it would be truly meaningful. With such a large market, as long as we do not compete with vested interests for profits and help optimize both incremental and existing users, there is no worry about the future. The timing, location, and people are not yet aligned for success. However, the timing has already shown signs, the location is lacking, and the people are globally prosperous. JUUL's entry is a boost from the people, which can help land the location.