Six-month survey on vape expansion overseas: low labor efficiency, high freight costs, expensive mat

in the previous"First quartere-cigarette industryBig inventory: Big factories roll inside, small factories overcome disaster, and the era of lying and making money comes to an end "In this article, Gewu Consumption talked with many practitioners to restore China in the first quartere-cigarette enterprisesThe opportunities and challenges we face,The answer we got at that time was that the industry was not so much picking up, but rather that it was getting more and more turbulent." rdquo;

So now four months have passed, and after experiencing a wave of waves around the worldE-cigarette exhibitionAfter going to sea to build a factory,#p#pagination title #e#e-cigarettesIs the situation facing companies getting better?Have some new trends and changes emerged in the global e-cigarette industry?With questions, Gewu Consumption once again had a dialogue with several sales directors of e-cigarette companies and heads of foreign trade companies.

This is the first in a series of tweets, talking to Lao Wang, a foreign trade practitioner in the e-cigarette industry.In his view,The cost advantages of investing in and setting up factories in Southeast Asia are not available to everyone;Faced with further intensified competition, both product forms and cooperation models have changed compared to last year. For traders without factory support, their living space is being further compressed.。

Exhibitions have exploded sharply, and factories have already established one-stop service.”

First half of 2023,vape ExpoThere will be a full recovery.According to incomplete statistics from Gewu, Las Vegas in February, Paraguay in March, Germany, Britain and Italy in May, Spain, Russia and Dubai in June, and Morocco and South Korea in July.So far, more than 10 large-scale professional e-cigarette exhibitions have been held around the world, counting the number of other comprehensive exhibitions, it can even double.

In addition to the large number of exhibitions held, the prosperity of the industry is also reflected in the establishment of a large number of overseas factories.Simore, who was the first to announce investment and factory construction in Indonesia,jinjia, Hongfu,huabao、Meishenwei, Changhan,Honeycomb FactoryIt has gradually entered the next stage. For example, Indonesia's Jinjia has started trial production and is expected to enter the stage of capacity climbing and yield improvement in the second half of the year.

According to relevant sources,The destination of setting up factories is also undergoing gradual changes，This is not only reflected in the fact that Malaysia's Malacca region and Ho Chi Minh in Vietnam attracted the attention of more China e-cigarette companies in the first half of the year. The overseas enterprises have also expanded from being dominated by established companies, large factories, and production companies with stronger financial strength in the early days to include more small and medium-sized enterprises.# p#pagination title #e#

Relevant sources said that one of the reasons is the gradual improvement of supporting services and facilities.In the early days of going out to sea, obtaining qualifications, leasing factories and warehouses, the construction of suppliers required a lot of manpower and material resources. However, now there are many professional consulting and agency agencies in the local area to provide faster implementation services.。Many experienced practitioners with different strengths have also begun to enter the local area in small teams.

However, behind the prosperity, there are many turning points and challenges.In Lao Wang's words,：The total amount is there and the growth is there, but the industry has begun to divide, and gold everywhere has long become a thing of the past.

Low human efficiency, expensive raw materials, small factories have no cost advantage

Take Southeast Asia, the current mainstream overseas factory destination, as an example. The traditional view is that this region has a large population base and relatively low wage levels and price levels, making it very suitable for labor-intensive industries.But in Lao Wang's view, this article is not fully valid.

“The production cost in Southeast Asia is actually not low at all. Lao Wang firmly told us:“First of all, labor costs are not low.On the one hand, the efficiency of workers here is far less than that in China, only Vietnam may gradually approach domestic efficiency, but if it is Indonesia, it may be more expensive.In addition, technical personnel and management personnel need to be transferred from China., this part of the cost is not low.# p#pagination title #e#”

”Second, transportation costs are high。We used to make a batch of products here, and the air freight cost even reached 120 per kilogram, and the cheapest one was at least 80 per kilogram.If you want to save this cost and choose shipping, it will take at least 20 days on the road, plus subsequent scheduling production, and then shipping to other European and American countries. The time will be very long, and customers will not wait for you at all.“

“Third, raw materials are expensive.In fact, there are some local supporting suppliers, but now e-cigarettes are being replaced very quickly, and only some easy-to-sell materials can be prepared here, and the more unique ones are often difficult to find.Even those that developed earlier heresmoke oilThe price is not low either.Therefore, only if the factory has its own materials, or if the quantity is particularly large, can it do this business here.”

“Flexibility is at the core of attracting small businesses to go out to sea

From this perspective, the so-called cost advantage is more aimed at medium and large enterprises with economies of scale, rather than the small and fast model.So how to explain that many companies still come to Southeast Asia?Lao Wang believes that part of the reason is that Southeast Asia has higher flexibility:

First, some companies (or teams) have not obtained relevant qualifications in China, but Southeast Asia, which has been practicing for many years and has ready-made resources and relatively loose supervision, is a compromise choice;Second, Southeast Asia has more relaxed control over intellectual property rights and product quality. Some products that cannot be produced domestically but have huge market demand have to be produced by Southeast Asian factories.

Lao Wang mentioned the concept of a radius of rights protection.The domestic e-cigarette industry has a shorter radius of rights protection. Whoever makes a replica may spread if it takes a casual pat or accidentally mentions it, and the infringed company can crack down on its rights protection from the source.butIn Southeast Asia, determining whether a product is a replica and who made the replica is very troublesome.

“You know, current regulations around the world are different. Some foreign buyers come for imitations, and as a stakeholder, they will definitely not take the initiative to report them;Coupled with the high cost and long duration of overseas litigation, it is simply unrealistic to summarize it to us.

The local market in the Middle East is limited and has not yet ushered in an outbreak

Judging from the circles of friends of various manufacturers at that time, the popularity of the Dubai exhibition can undoubtedly rank among the top three. Does this mean that the Middle East is about to take over from Southeast Asia and become the next hot spot in the e-cigarette consumer market?Lao Wang seems to be relatively conservative on this issue.

“Under the current circumstances, hot markets are still mainly in the United States, the United Kingdom and other European countries. These mature mainstream markets will be more stable.In fact, in my opinion, the Middle East market is currently more like a small spring.“Lao Wang said.

“Take Dubai as an example. You may see that the entire Shenzhen e-cigarette manufacturers have gone to Dubai. There are more products and more customers, but local sales are not that high. It actually radiates to the entire Arab countries, and the overall sales have not There is a real outbreak.”

“From a micro perspective, it is indeed true that more and more customers in the Middle East are starting to look for products, and many brands are also experiencing more or less growth.。But as far as I know, there is no explosive growth like the United States.For example, a certain L brand had no hot products before, but now it can produce more than 10 million products.But there is no such thing in the Middle East. A certain Y brand that used to sell well was previously claimed to be three to four million yuan, but last year it could only sell for one to two million yuan.”

A safe haven under a one-time internal roll for universal ammunition replacement”

In the inventory of the previous quarter, Gewu mentioned that due toCompetition is fierce, and in order to achieve overtaking in corners through differentiation, an arms race has begun at one time:Dual engines, fuel displays, various LED lights, and displays emerged one after another. This trend also continued throughout the first half of the year, but during this competition, many manufacturers also began to reduce risks as much as possible.

“For example, if I open a mold for 150,000 yuan, the customer may not like it and it may be scrapped.However, you can see that many stickers can be changed at one time nowadays. They can not only change styles to satisfy different users, but also add some local elements for different markets.# p#pagination title #e#In this way, a product actually has various tricks, the cost of mold opening can be reduced, and the life cycle will be longer.”

“It's still because it's too rolling at one time.In Southeast Asia, there are many Chinese people with deep roots, small circles, friendly supervision, and communication on the effectiveness of delivery.The rates are very high, which leads to not only not only the price not going up or even falling quickly, but a mold may be eliminated in two or three months after it comes out.“

According to Lao Wang, instead of risking hundreds of thousands of people being eliminated and opening the mold, it is better to simply replace the bullets and make the small wealth safe.The iteration of changing bullets is slow. Follow the R, Y or S brand. As long as you follow the taste trend and find local customers with certain strength to bundle them, even if you order tens of thousands of bullets, it will be at least relatively stable.Secondly, there is a base for bomb replacement, and there is more or less a refund order so that it will not be broken.

“As for the European and American markets, promoting the one-time transition to bomb replacement in the name of environmental protection is still more slogans, which is not clearly reflected in shipments.The disposable advantage was still too strong. In addition to convenience, after the mesh core became popular, the disposable taste was indeed very good. Compared to changing the cartridge, there was not much advantage. In a short period of time, disposable was still mainstream.”

5 minutes to talk about business, if there are too many emails, you will directly block them

With this kind of involution, you can imagine how difficult it will be to conduct business.In this regard, Lao Wang summarized it in one sentence:“The original ceiling has become the current starting point”。He used the debit period as an example:“It used to be an advantage, but now that everyone releases it, it has become a vicious cycle. You can't do it and you must do it, otherwise you won't be able to enter this market. It is equivalent to a starting point.”

In Lao Wang's view, manufacturers are currently facing the situation of asking customers to sell their goods.”。He described to us the scene of visiting customers today:“After coming to the door, there are usually four or five groups of people waiting to communicate with the customer. Even if the customer only asks for five minutes to chat, the other party will be very impatient.It is daily routine to send emails that cannot be read back. If you send too many emails, you may even be blocked.”

“The customer was very tired. Lao Wang sighed:“In fact, it's not like there's no chance.Some of them are more willing to sell easy-to-sell products with traffic, or knockoffs that are popular, so that the risks will be lower;Some may prefer to make their own brand, make some differentiated appearance and taste, match your own good business model, and build your reputation and circle.”

Lao Wang believes that overseas markets are already oversupplied:“They are not as anxious now as before.”

The future of traders: layout supply chain + localization?

From this point of view, the living space of traders seems to be further compressed:aSome factories tend to accept O orders from customers;Another part of the factory wants to earn money from both O orders and brands;However, brands/traders without their own factories have very low gross margins, and they cannot cultivate one more competitor. It can be said that not only do they not want to, but they cannot even take orders.

Faced with this trend, Lao Wang frankly introduced his plan to us:“In the short term, based on customer conditions and other interest points, we will form a mutually supportive bundle with three to four selected factories. Instead of relying on the previous top-down model, we will slow down the action and start from one store to another. Increase the scale, launch a b-end customer and then replace the national customer, and prefer local promotion.”

“In the past, it was a trade model, with one order not one.The future is a localization model, with higher investment. It requires local warehouses, goods, people, and land to promote it. Use this method to do infiltration little by little and do it from the bottom up.Why do we need local people?The information gap will be even smaller. Go chat and read every day, find the packaging, colors, styles, and flavors that local people want, and quickly update and iterate.”

“In the long run, I may stillIt is necessary to control and infiltrate the entire industrial chain by itself. In the future, I will definitely spend some money to buy a factory. In this way, the factory will carry out production, research and marketing together, so that I will have a moat.”Lao Wang summarized his plan.

last

An interesting detail is that when we asked Lao Wang if other traders had plans similar to his, he didn't seem to be worried that his plans would be stolen.In his view, for one thing, this model cannot find big customers, and it is too slow for most people, and everyone cannot afford to wait;Secondly, this localization model will invest a lot of energy, manpower and money, and the risks are not low.

He believes that the way to find a big player to build his own products has been close to the ceiling. The cognitive ability, financial strength, and radiation radius of big players may not be a problem to cope with four or five products, but in today's oversupply environment, big players are not enough.

“You can't always borrow other people's channels to do things. You should think of being able to build your own network and supplement your customers 'network. In the end, you will have me and you will have me.”Lao Wang concluded that in his view, the localization model is not subversion, but more like a win-win situation.