After the 315 Gala exposed e-cigarettes, does the vaping industry still have a future?
After the 315 Gala exposed e-cigarettes, does the vaping industry still have a future? The program singled out e-cigarettes as harmful to health and ineffective for smoking cessation. In 2018, 17 vaping startups received venture capital, with funding rang
The 315 Gala exposed e-cigarettes, does the vaping industry still have a future? The 315 Gala exposed e-cigarettes, which have been named as harmful to health and ineffective for quitting smoking. In 2018, 17 e-cigarette startups received venture capital, with funding ranging from millions to billions of RMB. The once flourishing e-cigarette industry is now facing uncertainty. Does the vaping industry still have a future?
This year, venture capital has continuously entered the e-cigarette industry, but the prosperous scene of e-cigarettes cannot hide the anxiety of industry participants. On one hand, the current lack of standards and regulations for e-cigarettes in China has led to a flourishing industry; on the other hand, the uncertainty brought by unclear rules hangs like a sword of Damocles over investors and entrepreneurs, becoming a shackle for the industry's growth.
Under the changing policy landscape, e-commerce platforms like JD and Suning quickly removed e-cigarette products that night. Just two days later, e-cigarettes quietly reappeared online. Meanwhile, several e-cigarette-related companies listed on the New Third Board and A-shares quickly issued clarifications, stating that the issues pointed out in the reports mainly existed in the e-liquid, while most of these companies focus on electronic atomizers as their core products and primarily target overseas markets.
In fact, the e-cigarette industry mainly includes three core technologies: circuits and batteries, atomization cores and atomizers, and e-liquids. Currently, the mainstream companies in the domestic market are mainly production-driven processing enterprises transformed from traditional processing companies, focusing on the production of e-cigarette accessories, such as the New Third Board listed company, Micwell.
The public outcry following March 15 can be seen as a kind of "celebration" by "outsiders." Most of these people know little about the industry and are neither users nor potential users of e-cigarettes. For actual e-cigarette users, the safety and efficacy of e-cigarettes in helping to quit smoking have been debated for years without a conclusion, so they will not easily accept a definitive judgment. On the other hand, this has some benefits for the e-cigarette industry, as this extensive discussion serves to educate the public and cultivate the market and users.
From the perspective of user segmentation, e-cigarette users can be divided into two categories: one is older smokers looking for cigarette alternatives, often referred to as "small cigarettes"; the other is younger groups and enthusiasts who focus on entertainment and embrace "vapor culture," often referred to as "big cigarettes."
As the market matures, practical "small cigarettes" are becoming popular, which means that some smokers are starting to use e-cigarettes as a substitute for traditional tobacco.
Attempting to carve out a piece of the traditional tobacco market is akin to courting danger, which is a significant reason why the e-cigarette market is under attack. Essentially, this is a matter of profit distribution within the tobacco industry.
The importance of the traditional tobacco industry is self-evident. According to statistics from the National Tobacco Monopoly Bureau, the tobacco industry achieved a total tax revenue of 1.1556 trillion RMB in 2018, contributing 1 trillion RMB to the national treasury. E-cigarettes, as competitors to traditional tobacco products, currently bear a much lower tax burden than traditional tobacco products. The expansion of the e-cigarette market share means a shrinkage of the traditional tobacco market and a reduction in fiscal revenue.
Currently, heated non-combustible e-cigarette cartridges are regulated as "new-type cigarettes"; in the long term, there is strong policy momentum to regulate vaporized e-cigarette cartridges similarly to traditional tobacco products. However, for e-cigarette hardware, it is expected that the current stance of not regulating them as tobacco monopoly products will remain, but unified and stricter quality standards may be implemented, which would not be detrimental to the long-term healthy development of the e-cigarette hardware industry.
This year, venture capital has continuously entered the e-cigarette industry, but the prosperous scene of e-cigarettes cannot hide the anxiety of industry participants. On one hand, the current lack of standards and regulations for e-cigarettes in China has led to a flourishing industry; on the other hand, the uncertainty brought by unclear rules hangs like a sword of Damocles over investors and entrepreneurs, becoming a shackle for the industry's growth.
Under the changing policy landscape, e-commerce platforms like JD and Suning quickly removed e-cigarette products that night. Just two days later, e-cigarettes quietly reappeared online. Meanwhile, several e-cigarette-related companies listed on the New Third Board and A-shares quickly issued clarifications, stating that the issues pointed out in the reports mainly existed in the e-liquid, while most of these companies focus on electronic atomizers as their core products and primarily target overseas markets.In fact, the e-cigarette industry mainly includes three core technologies: circuits and batteries, atomization cores and atomizers, and e-liquids. Currently, the mainstream companies in the domestic market are mainly production-driven processing enterprises transformed from traditional processing companies, focusing on the production of e-cigarette accessories, such as the New Third Board listed company, Micwell.
The public outcry following March 15 can be seen as a kind of "celebration" by "outsiders." Most of these people know little about the industry and are neither users nor potential users of e-cigarettes. For actual e-cigarette users, the safety and efficacy of e-cigarettes in helping to quit smoking have been debated for years without a conclusion, so they will not easily accept a definitive judgment. On the other hand, this has some benefits for the e-cigarette industry, as this extensive discussion serves to educate the public and cultivate the market and users.
From the perspective of user segmentation, e-cigarette users can be divided into two categories: one is older smokers looking for cigarette alternatives, often referred to as "small cigarettes"; the other is younger groups and enthusiasts who focus on entertainment and embrace "vapor culture," often referred to as "big cigarettes."
As the market matures, practical "small cigarettes" are becoming popular, which means that some smokers are starting to use e-cigarettes as a substitute for traditional tobacco.
Attempting to carve out a piece of the traditional tobacco market is akin to courting danger, which is a significant reason why the e-cigarette market is under attack. Essentially, this is a matter of profit distribution within the tobacco industry.
The importance of the traditional tobacco industry is self-evident. According to statistics from the National Tobacco Monopoly Bureau, the tobacco industry achieved a total tax revenue of 1.1556 trillion RMB in 2018, contributing 1 trillion RMB to the national treasury. E-cigarettes, as competitors to traditional tobacco products, currently bear a much lower tax burden than traditional tobacco products. The expansion of the e-cigarette market share means a shrinkage of the traditional tobacco market and a reduction in fiscal revenue.
Currently, heated non-combustible e-cigarette cartridges are regulated as "new-type cigarettes"; in the long term, there is strong policy momentum to regulate vaporized e-cigarette cartridges similarly to traditional tobacco products. However, for e-cigarette hardware, it is expected that the current stance of not regulating them as tobacco monopoly products will remain, but unified and stricter quality standards may be implemented, which would not be detrimental to the long-term healthy development of the e-cigarette hardware industry.
