The Real Situation of Japan’s E-Cigarette Market: Transcript of a Major Distributor’s Speech

 　　On January 19, 2018, the "Seminar on Efficiently Expanding the Japanese E-Cigarette Market" hosted by the organizing committee of the March Japan International E-Cigarette Exhibition was successfully held at the Qilin Mountain View Hotel in Shenzhen.

  　　At this seminar, the organizing committee invited Mr. Liu Yuquan from Equal Co., Ltd. (whose VapeVillage is one of Japan's three major distributors) as the speaker and representative of the Japanese market to share insights on the analysis of the Japanese e-cigarette market, current demand analysis, market data interpretation, customer demand analysis, trade considerations, and relevant laws regarding e-cigarettes in Japan.   　　To help more e-cigarette companies understand the Japanese market, CECMOL has compiled Mr. Liu's speech into text to share with everyone.   　　Speaker: Mr. Liu Yuquan, head of Equal   　　Below is the transcript of Mr. Liu's speech.   　　Equal is based on three physical stores and four online sales platforms, using social media like Facebook and Youku to build the VapeVillage brand, while continuously developing proprietary products to meet the needs of large domestic buyers in Japan. We also hope to have more cooperation opportunities with everyone involved.   　　According to national statistics, the total output value of the entire Japanese e-cigarette market in 2016 was 250 billion yen, making it the second-largest emerging industry after Pokémon. The official forecast estimates that by 2024, it will peak at a total output value of up to 5 trillion yen. The reasons for this include the continuous encroachment of e-cigarette users on the cigarette market share; from 2016 to 2017, the smoking population in Japan decreased by two percentage points in just one year. Additionally, due to the impact of the 2020 Tokyo Olympics, nationwide anti-smoking campaigns have been launched, resulting in fewer smoking places. Health consciousness, environmental awareness, and increased taxes on cigarettes are among the reasons that have made e-cigarettes increasingly popular in Japan, establishing them as the most promising emerging industry in the country.   　　Here are the actual data statistics from our online department and physical stores:   　　Equal operates online sales through its official website, Rakuten, Amazon, and Yahoo Shopping. The official website mainly sells high-end limited products from around the world, while Amazon focuses on consumables like e-liquid and e-cigarette accessories, serving as a terminal for low-priced products. Rakuten caters to entry-level kits and various tools for mid-range customers, while Yahoo Shopping attracts a younger, fashion-conscious demographic. Each platform has its own advantages and disadvantages, but they also share commonalities.   　　First, the primary sales demographic is the middle class aged 30 to 50.   　　Second, the Kanto region, including Tokyo, Osaka, Nagoya, and Yokohama, has the highest awareness of e-cigarettes, while other regions are developing in parallel.   　　This indicates that the target demographic for e-cigarettes is stable-income white-collar workers with a certain level of purchasing power, who choose e-cigarettes not merely for fashion or fun, but for practicality.   　　The analysis results from physical stores show that Japanese physical stores have a fixed customer base, which constitutes the main consumer group, with a high proportion of non-smokers at 10%. It can also be seen that first-time e-cigarette users become the second layer of consumers, indicating that there are more potential customers among e-cigarette users in Japan, making widespread adoption not just a fantasy. This is a market we should explore together.   　　We also conducted a simple survey, revealing that 75% of e-cigarette users do not intend to stop using only e-cigarettes and are willing to purchase new products.   　　Regarding the products demanded in the Japanese market, I can only briefly state that popular colors for fixed-demand products are black, silver, white, and deep blue. If new colors are to be added, we recommend pink and red.   　　Compact products that are easy to carry and simple to operate are what the Japanese market needs, while overly complex features and power levels do not have much market appeal.   　　The demand for e-liquid flavors is highest for pure mint, followed by tobacco, energy drink flavors like Red Bull, dessert flavors, and fruit flavors. The green mint apple flavor from biso sells over 10,000 bottles per month on Amazon.   　　Product development is a lengthy topic, and we hope that those involved can personally visit Japan, meet their partners at trade shows, and understand Japanese culture and the demands of the e-cigarette market through long-term cooperation.   　　Suggestions for the feasibility of business cooperation in Japan and considerations during the exhibition:   　　In our view, the most important aspect of Sino-Japanese cooperation and communication is the establishment of mutual trust, followed by quality, speed of goods transportation, inventory, pricing, and after-sales service.   　　I will detail the matters that the Japanese side considers important:   　　We believe that as the Japanese e-cigarette market continues to expand, how the Japanese government will respond is a major factor we need to consider together, and corresponding solutions need to be developed for these potential factors.   　　I can provide a few simple examples:   　　(1) The issue of PSE certification for batteries (in Japan, conventional 18650 batteries exceeding 1680W capacity are not legally permitted, and although the law has not yet been enforced, this will certainly be a challenge. Many e-cigarette vendors in Japan have already removed high-capacity, high-current batteries exceeding 1680W from their shelves).   　　(2) The issues of atomizer leakage, operability, and oxidation (how to simplify operations for older adults to make e-cigarettes easier to use).   　　(3) The issues surrounding e-liquids (various safety checks, nicotine labeling; in fact, Amazon has been enforcing the removal of e-liquids and e-cigarettes for the past few months, simply because the TPD packaging included permissible phrases and wording).   　　These issues require both Chinese and Japanese parties to consider strategies to solve challenges. Only through one-on-one cooperation between Chinese and Japanese companies can problems be identified and addressed in real-time, allowing for mutual development with partners, such as the symbiotic model between PINKU and Japan's biso, VapeVillage and egobuy. This is the path to establishing a century-old brand, rather than a temporary, one-sided, localized effort.   　　In the future, the Japanese e-cigarette market will have further demands, but it will also face a brutal elimination mechanism. Japanese tobacco companies will also develop diverse products to compete. The competition in the Japanese e-cigarette market will ultimately evolve into competition with the traditional cigarette industry, so we need to view things from their perspective and invest more effort than they do. If we do not do this, in less than ten years, we may not be able to maintain the status quo and will gradually be eroded.   　　Our requirement for Chinese companies is not price, but rather a search for partners who can grow together and withstand potential future shocks without being crushed, supporting each other to face challenges. Such companies, regardless of size, can grow over ten or twenty years.   　　We are very grateful for the help and support from the Chinese battery manufacturer EFEST, and for their collaboration with us on battery testing for PSE certification. We will also obtain more qualifications in Japan, including medical certifications.   　　We are very thankful for the assistance from our partner EGOBUY, who has established various stable channels and relationships for us in China.   　　We are also very grateful to E-Cigarette Online for giving us the opportunity to promote ourselves and explain Japan.   　　Thanks to these collaborative efforts, we can achieve our corporate goals. Only through the cultivation of Japanese companies by Chinese enterprises can the Japanese e-cigarette industry develop healthily and sustainably.   　　I cannot guarantee what the outcome for Japanese e-cigarette companies will be, but I can assure you that regardless of whether it expands or contracts, we will always be here, and it is our mission to ensure the development of this industry.   　　These are my suggestions. I believe everyone present will participate in the first Osaka exhibition in Japan, which will have many Japanese companies and people attending. Most of the companies newly entering the e-cigarette market will seek their fixed partners, just like us, hoping for assistance from the Chinese side for mutual development. Of course, VapeVillage will definitely participate in the exhibition, and we look forward to meeting everyone again there.   　　Finally, carrying nicotine at the exhibition is strictly prohibited. The sale of nicotine e-cigarettes and the use of nicotine e-liquid during the exhibition, as well as giving nicotine e-liquid to others for free, are also violations of the law. Please be sure to comply.   　　We will prepare replacement e-liquids at the entrance for everyone to enjoy.   　　Thank you all for listening, and I am happy to answer any questions.

March Japan International E-Cigarette Industry Series Events

The second stop is about to begin

March 2, 2018

Tokyo, Japan

Japan E-Cigarette Industry Summit Forum and New Product Launch

200+ Major Japanese Distributors

Leaders of Chinese, American, and Japanese E-Cigarette Companies

On-site participation

Sharing the future trends of the e-cigarette industry

Discussing the market prospects for e-cigarette companies

The Japanese market is so hot!

Why not come and see it with us!?