China’s Domestic E-Cigarette Market to Reach RMB 434 Million in 2017

E-cigarettes are electronic products that imitate conventional cigarettes, with similar appearance, aerosol, flavor, and sensation. They use atomization and other methods to turn nicotine and other substances into vapor for users to inhale. The World Health Organization has conducted dedicated research on e-cigarettes and reached a clear conclusion: e-cigarettes are harmful to public health, are not a smoking cessation tool, and must be more strictly regulated to prevent harm to young people and non-smokers.

Although e-cigarettes come in different styles and brands, they generally consist of three main parts: a tube containing nicotine solution, a vaporizing device, and a battery. Powered by the battery rod, the atomizer can turn the liquid nicotine in the cartridge into aerosol, giving the user a sensation similar to smoking when inhaling. Users can even add flavorings such as chocolate or mint to the tube according to personal preference.

Chinese e-cigarette companies mainly operate under an OEM model based on “procurement + manufacturing,” placing them upstream in the U.S. e-cigarette supply chain. We estimate that as much as 80% to 90% of U.S. e-cigarettes are contract-manufactured in China. Aside from Reynolds’ Vuse (made entirely in the United States and currently sold in Colorado and Utah), most e-cigarette brands in the U.S. are manufactured in China. For example, Blu-brand e-liquid is made in the United States, then shipped to China, assembled together with other China-made components, and exported back to the U.S.

Overview of domestic e-cigarette manufacturers

The China E-Cigarette Market Research and Development Trend Forecast Report (2016), published by the China Industry Research Network, stated that in 2013 the American E-Cigarette Association estimated total retail sales at US$1 billion, accounting for 40% of the global market. The rapid growth of the U.S. e-cigarette market was driven by two factors: on the one hand, rising consumer demand for health and environmental protection; on the other hand, after policies gradually loosened, e-cigarette companies launched large-scale advertising campaigns that quickly raised public awareness of e-cigarettes in the U.S., including among some non-traditional smokers. According to surveys by the CDC and Lorillard, the proportion of smokers who had tried e-cigarettes rose significantly from 8.5% in 2010 to 43% in 2013. In 2013, the number of e-cigarette users in the U.S. reached 2.5 million, accounting for 6.3% of all smokers.

U.S. e-cigarette market size reached US$1 billion in 2013

China’s domestic e-cigarette market reached RMB 266 million in 2012. As people’s demand for health increased and government tobacco control efforts strengthened, the e-cigarette market also became more active. More and more e-cigarettes quietly began appearing in front of consumers, with sales counters showing up in pharmacies, health product stores, and electronics shops, while e-cigarettes also became easy to purchase online. It is estimated that by 2017, China’s domestic e-cigarette market will reach RMB 434 million, an increase of 92% compared with 2012.

Market size of China’s domestic e-cigarette industry, 2012–2017

The China E-Cigarette Market Research and Development Trend Forecast Report (2016) provides in-depth analysis of the current state of China’s e-cigarette industry, its development changes, and its competitive landscape. It also offers a detailed explanation of future market trends and makes a prudent assessment of the industry’s future prospects based on its development trajectory, helping investors identify new opportunities in the e-cigarette sector.

The report concludes by outlining investment potential in the e-cigarette industry, indicating investment directions, and offering strategic recommendations from the researchers for the reference of decision-makers.