China Tobacco competes for the e-cigarette market in 2020
New heat-not-burn products to attract smokers
On August 20th, the Shenzhen International Electronic Cigarette Industry Expo was held at the Convention and Exhibition Center. This exhibition ushered in two subsidiaries of China Tobacco: Yunnan China Tobacco and Henan China Tobacco. These two companies both produced their own heat-not-burn products, attracting many participants to watch and try. These products have been exported overseas.
New products immersed in competition
Yunnan China Tobacco owns well-known brands such as Ashima and Hongtashan, which are well-known in the country. Many people are interested in the heat-not-burn products they produce. According to the exhibitor Chen Manman, their products have been exported to many countries such as Arabia. Very popular abroad.
A reporter from the Securities Times·e company saw on the spot that China Tobacco Yunnan has a tobacco tasting session. The staff will record customer feelings and solicit opinions from visitors. A senior smoker handed IQOS catridges to Chen Manman for a try. Chen Manman said while smoking, “IQOS cigarettes are more gentle and lighter, and our cigarettes are strong and rough.” The same heat-not-burn Ashima cigarettes are used, and different kits have different flavors.
There are several companies under China Tobacco, all of which are developing their own e-cigarette products. “There is not much communication with each other, and each has its own understanding and its own formula.” Chen Manman introduced. Traditional tobacco companies see the aggressive development trend of e-cigarettes, and naturally have a sense of crisis. They hope that research and development can also participate in it, so as to avoid China’s opening up of this market in the future and being at a disadvantage.
The government is actually encouraging traditional tobacco companies to develop heat-not-burn electronic cigarettes. A staff member introduced that they are exempt from exporting this type of products overseas. In order to develop e-cigarettes, China Tobacco Yunnan established Shenzhen Huayu Technology Development Co., Ltd. in Shenzhen through a Hong Kong company. Huayu Technology produces various smoking sets and atomized electronic cigarettes. However, China Tobacco Henan adopted a cooperation model. They and Shenzhen Yuyan Electronic Industry Co., Ltd. cooperates and only produces cigarette cartridges, and the other is handed over to the partner.
The industry is waiting to recover
Perhaps due to the epidemic, the number of e-cigarette exhibitions has declined compared with last year. The exhibition that was originally scheduled for April has been postponed. It has been 492 days since the last Expo organized by Shenzhen IECIE. The impact of the epidemic is still there. Few manufacturers said that the industry has not yet recovered to last year’s prosperity.
The atmosphere of the exhibition is a little different from the past. The once-popular smoke culture has retreated. The smoke booth is rarely seen on the scene, and there are no models swallowing the clouds. Only a few platforms have DJs playing manic music. , Leaving the mark of that period of smoke culture. Many emerging e-cigarette brands, such as Bode, Xiwu, Ono, Snow Plus, etc., were seen at the scene. Many brands were attracting investment on site, opening offline chain stores, and all of them were posted in conspicuous locations. The maximum subsidy for a single store reached 300,000.
After the government introduced policies to restrict online sales of e-cigarettes last year, China e-cigarettes have fully turned to offline, and e-cigarette manufacturers with physical channels have an advantage. This also forces e-cigarette manufacturers to open stores if they want to survive.
On-site reporters also saw two listed companies participating in the exhibition, among which Jinjia (002191) brought the e-cigarette brand foogo to the exhibition. According to the staff, they have a series of cooperation with China Tobacco Yunnan, and the two sides also established a joint venture company. The company also provides R&D services to many China Tobacco customers. Skole, a subsidiary of Yinghe Technology (300457), participated in the exhibition. Yinghe Technology acquired 51% of the shares of Skole in November 2018. In that year, Skole realized a net profit of 38.567 million yuan and realized deduction of non-net profit of 52.720 million yuan in 2019.
