China’s e-cig enterprises monopolize 90% of the global supply with the problem behind the overseas market

After Ruyan, instead of falling down, China’s e-cigarette enterprises have monopolized the global e-cigarette market by virtue of their strong production capacity. In the rapidly expanding market, the key point for new tobacco enterprises to compete is the capacity monopolist and the delivery volume.

Even in front of the big four tobacco companies, they have enough strength and courage. No longer like domestic clothing, electronic products and other factories, nervous and cowering to foreign brand merchants.

The overseas electronic cigarette market grow rapidly , but in the electronic cigarette industry chain, the most beneficial is not overseas electronic cigarette start-ups, nor the four major international tobacco companies, but domestic electronic cigarette OEM factories.

On the one hand, domestic electronic cigarette manufacturers launch their own brand of electronic cigarettes, on the other hand, they undertake the global brand of electronic cigarettes.

China's e-cig enterprises monopolize 90% of the global supply and the problem behind the overseas market

According to statistics, there are thousands of electronic cigarette enterprises in China, including trade, agency, design, etc. More than 500 electronic cigarette manufacturers in Shenzhen have formed a complete industrial chain.

China and even Shenzhen have become the global e-cigarette supply center. At present, three of the top five brands of e-cigarettes sold in the US market are produced by China e-cigarette company, while the top five brands of mod vapes sold are all produced and exported by Chinese companies.

But unlike other OEM industries such as mobile phones and computers, Chinese electronic cigarette enterprises have global electronic cigarette technology. As long as you go to Shenzhen’s OEM, you will find that Logic, Vuse, Blu and JUUL that are the top overseas electronic cigarette brands. They may all be produced from one factory with different production lines.

China's e-cig enterprises monopolize 90% of the global supply and the problem behind the overseas market

And this industry supporting capacity can not be replicated, from shape design, to battery, covering every link of electronic cigarette production, all related accessory parts can be found in a street in Shenzhen .

Some people say that consumers mainly value the taste of electronic cigarettes. Whoever masters the formulation technology of pods and e-liquid will master the core of electronic cigarettes. Four tobacco giants master the formulation of e-liquids. Chinese enterprises are only low-end assembly and manufacturing factories.

But in fact, China is at the top of the e-cigarette industry:

First of all, real cigarette enthusiasts don’t smoke e e e-cigarettes at all. They dislike it. Therefore, new users have no loyalty to tobacco company’s tobacco formula. Instead, because they are young, they are more willing to try new flavors besides tobacco and mint, such as strawberry, red beans, coffee and so on.

China's e-cig enterprises monopolize 90% of the global supply and the problem behind the overseas market

Secondly, because most users focus on a few flavors, there are only a dozen main flavors of electronic cigarettes at present. The only change is that the fragrance blender slightly changes the blending ratio.

With the rapid growth of global demand and supply is less than demand, capacity is the basis. At present, 90% of the global e-cigarette production capacity comes from China, who has no OEM, who can not have sufficient supply to seize the market.

For the invisible giants of electronic cigarette OEM factories, according to the public statements, in 2016, Smok and Smoore’s business revenue were 915 million and 716 million respectively, up 199.89% and 146.59% year-on-year, and their net profit was maintained at about 20%.

As Smok chose to delist on the new third board in 2017 and did not disclose its earnings, there was no performance data for 2017. Smoore’s annual report in 2017 and 2018 reported business income of 1.566 billion yuan and 3.433 billion yuan respectively, up 11.564% and 11.93% year-on-year, and realized net profit of 220 million yuan and 785 million yuan.

China's e-cig enterprises monopolize 90% of the global supply and the problem behind the overseas market

Mastering all the technology and strong spare parts supporting ability endows domestic enterprises with super manufacturing ability. Chinese electronic cigarette enterprises lack the last link in overseas expedition: retail channel.

Although it occupies 90% of the global e-cigarette market, few enterprises have their own sales channels overseas. Once the retail gates are opened, domestic electronic cigarette manufacturers will sweep the world!

In this view, the development of electronic cigarettes is exactly the epitome of Chinese manufacturing industry. From the past assembly and processing to industrial coordination, and then to the mastery of core technology, it will eventually lead the brand and monopolize sales channels. This change is expected to be completed in the next decade.


Related: A summit to discuss solving the problem:

2019 VPXSL International Summit on Electronic Cigarette Market and New Technology Application

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