E-Cigarette Manufacturers May Relocate Overseas, CEO Says
On July 16, a tobacco department delegation visited a Shenzhen vaping technology company for research and discussion. Ao Weinuo, vice chairman of the Electronic Cigarette Industry Committee of the China Electronics Chamber of Commerce and secretary-genera
On July 16, a delegation from the tobacco sector conducted research at Shenzhen Electronic Cigarette Technology Co., Ltd. The Vice President of the Electronic Cigarette Industry Committee of the China Electronic Commerce Association and the Secretary-General of the Electronic Cigarette Committee, Ao Weinuo, engaged in thorough discussions with the responsible officials from the tobacco department regarding the current trends and issues in the electronic cigarette industry. This was a positive exchange between the traditional tobacco industry and the emerging electronic vapor industry, which will serve as a valuable reference for the regulated development and regulatory policies of electronic cigarettes.
Current Status of the Electronic Cigarette Market
During the meeting, it was pointed out that electronic cigarettes have been invented for over a decade. As an emerging industry, it has taken root in Bao'an, Shenzhen, contributing to tax revenue, job creation, and exports. As early as 2015, Bao'an gradually formed a complete electronic cigarette industry chain from upstream raw materials (electronic components, batteries, e-liquids, etc.) to manufacturing, sales, and exports, involving over 800 companies and approximately 400,000 related workers, with an export value of about 20 billion yuan. The industry has been growing at an annual rate of 30%, making it the largest production and export hub for electronic cigarettes globally.
The Market Relationship Between Electronic Cigarettes and Traditional Tobacco
It was emphasized that there is no conflict between the two. Traditional tobacco is subject to monopoly regulations, which must be adhered to, as it contributes significantly to the economy and market dynamics in our country, and we must strive to protect national interests. The regulation of electronic cigarettes should differentiate based on their functional structure and e-liquid ingredients. Vapor-type electronic cigarettes will not attract old smokers due to their distinct flavors and usage habits compared to traditional tobacco, which old smokers are not accustomed to. On the other hand, heated tobacco products are gaining significant traction in Japan. Statistics show that tobacco sales in Japan have been declining, with a 10% drop in 2017, marking the largest decrease since 1989, while electronic cigarettes have captured nearly 20% of the Japanese tobacco market, with popular brands like IQOS, glo, and Ploom TECH leading the way. Notably, glo electronic cigarettes surpassed 1 million units sold just 10 months after their launch in December 2016. Therefore, based on the sales data and distribution of heated tobacco products, they may become a new force in the market in the future.
Regulatory Issues for Vapor-Type Electronic Cigarettes
Looking ahead to industry policy, there are concerns about the potential for overly strict regulations. If national regulatory bodies impose blanket bans on vapor-type electronic cigarettes or implement ambiguous regulations, the hard-won international market advantages of Shenzhen will face significant challenges. Many electronic cigarette manufacturers will likely choose to relocate their factories to Southeast Asian countries, diminishing the competitiveness of Chinese manufacturing.
In recent years, many companies in China have begun to expand overseas, particularly in lower-tech industries, establishing new factories in Southeast Asia as a supplement to their operations in China. The reasons for relocation primarily include labor costs, material costs, and favorable policies.
Currently, 90% of the global electronic cigarette production capacity is in Shenzhen, China, which holds a certain degree of influence and pricing power. If a favorable business environment cannot be created, this advantageous resource will gradually dissipate. The market share of electronic cigarettes is negligible compared to traditional tobacco, and it is unlikely to pose a fatal threat to it. However, any misstep in policy could spell disaster for the electronic cigarette industry. Therefore, it is crucial to conduct thorough analysis and discussion before reaching conclusions. If necessary, reference can be made to international classification regulations and age restrictions on sales. Government regulatory bodies should encourage Chinese enterprises to participate more in international competition, increase export trade, and strengthen the international influence of Chinese manufacturing.
Current Status of the Electronic Cigarette Market
During the meeting, it was pointed out that electronic cigarettes have been invented for over a decade. As an emerging industry, it has taken root in Bao'an, Shenzhen, contributing to tax revenue, job creation, and exports. As early as 2015, Bao'an gradually formed a complete electronic cigarette industry chain from upstream raw materials (electronic components, batteries, e-liquids, etc.) to manufacturing, sales, and exports, involving over 800 companies and approximately 400,000 related workers, with an export value of about 20 billion yuan. The industry has been growing at an annual rate of 30%, making it the largest production and export hub for electronic cigarettes globally.
The Market Relationship Between Electronic Cigarettes and Traditional Tobacco
It was emphasized that there is no conflict between the two. Traditional tobacco is subject to monopoly regulations, which must be adhered to, as it contributes significantly to the economy and market dynamics in our country, and we must strive to protect national interests. The regulation of electronic cigarettes should differentiate based on their functional structure and e-liquid ingredients. Vapor-type electronic cigarettes will not attract old smokers due to their distinct flavors and usage habits compared to traditional tobacco, which old smokers are not accustomed to. On the other hand, heated tobacco products are gaining significant traction in Japan. Statistics show that tobacco sales in Japan have been declining, with a 10% drop in 2017, marking the largest decrease since 1989, while electronic cigarettes have captured nearly 20% of the Japanese tobacco market, with popular brands like IQOS, glo, and Ploom TECH leading the way. Notably, glo electronic cigarettes surpassed 1 million units sold just 10 months after their launch in December 2016. Therefore, based on the sales data and distribution of heated tobacco products, they may become a new force in the market in the future.
Regulatory Issues for Vapor-Type Electronic Cigarettes
Looking ahead to industry policy, there are concerns about the potential for overly strict regulations. If national regulatory bodies impose blanket bans on vapor-type electronic cigarettes or implement ambiguous regulations, the hard-won international market advantages of Shenzhen will face significant challenges. Many electronic cigarette manufacturers will likely choose to relocate their factories to Southeast Asian countries, diminishing the competitiveness of Chinese manufacturing.
In recent years, many companies in China have begun to expand overseas, particularly in lower-tech industries, establishing new factories in Southeast Asia as a supplement to their operations in China. The reasons for relocation primarily include labor costs, material costs, and favorable policies.
Currently, 90% of the global electronic cigarette production capacity is in Shenzhen, China, which holds a certain degree of influence and pricing power. If a favorable business environment cannot be created, this advantageous resource will gradually dissipate. The market share of electronic cigarettes is negligible compared to traditional tobacco, and it is unlikely to pose a fatal threat to it. However, any misstep in policy could spell disaster for the electronic cigarette industry. Therefore, it is crucial to conduct thorough analysis and discussion before reaching conclusions. If necessary, reference can be made to international classification regulations and age restrictions on sales. Government regulatory bodies should encourage Chinese enterprises to participate more in international competition, increase export trade, and strengthen the international influence of Chinese manufacturing.
