China

Chinese e-cigarette companies have two major advantages

At present, there are approximately one billion traditional cigarette consumers in the world. However, with the increasing strictness of tobacco control in various countries and the awakening of consumers’ health awareness, the traditional cigarette market has continued to decline. At the same time, the market size of electronic cigarettes based on “harm reduction” shows a good development trend.

Traditional tobacco giants actively transform and lay out new e-cigarette markets

On the whole, the global e-cigarette (including e-cigarettes and heat-not-burn e-cigarettes) market is expanding. The growth rate slowed down in 2019, but the proportion is still increasing. According to Euromonitor data, global e-cigarette product sales in 2019 were approximately US$48.55 billion, a year-on-year increase of 19.40%, and the growth rate was significantly slower than in 2018. But at the same time, the penetration rate of e-cigarette products has continued to increase, and its proportion of all tobacco products has increased from 2.29% in 2014 to 5.94% in 2019.

Specific to vapes, the global sales of electronic atomized cigarettes reached US$20.2 billion in 2019, a year-on-year increase of 28.43%. At present, the consumption of electronic atomization cigarettes is mainly concentrated in the United States, the United Kingdom and other European and American countries, which account for 47.77% and 13.40% respectively, while China’s 6.85%. This is related to the relatively late development of China’s e-cigarette market.

However, despite the influence of policy and regulatory tightening factors, the global e-cigarette market is currently showing a good development trend after undergoing adjustments. In a sense, this is because e-cigarettes provide more choices for traditional cigarette consumers. In the current market structure, electronic cigarette products represent the future global mainstream development trend in this field. This can be seen from the active and rapid deployment of the four major tobacco companies in the electronic cigarette market.

The four major tobacco companies in the world, Philip Morris International, British American Tobacco, Japan Tobacco, and Imperial Tobacco occupy the market by acquiring and launching its own brands; its e-cigarette products (including e-cigarettes and heat-not-burn e-cigarettes) account for revenue Reached 18.7%, 4.36%, 3.17%, 3.56% respectively, showing a rising trend.

The dual advantages of China’s e-cigarette industry chain

Although China’s e-cigarette market has developed late and the market scale is small, Chinese e-cigarette companies can still use the two-wheel drive of industrial chain status and brand development to enhance the value and position of Chinese e-cigarette companies in the global e-cigarette industry chain.

First of all, Chinese e-cigarette companies are in an absolute leading position in the middle and upper reaches of the industry chain. China is the world’s largest e-cigarette production base. In 2019, 218 countries and regions around the world purchased e-cigarettes from China. On the whole, China’s e-cigarette industry has formed a complete industrial chain from upstream raw material suppliers to midstream e-cigarette designers and manufacturers, and downstream sales companies. This is a big advantage for Chinese e-cigarette companies. This is conducive to its rapid iteration of products and the construction of a whole industry chain barrier integrating R&D, design and production.

In particular, e-cigarettes are technology- and product-driven products, which are obviously driven by market demand. Therefore, the product experience has a great influence on consumers, which determines whether the product can be welcomed by the market and consumers.

In addition, although Chinese e-cigarette manufacturers mostly use the OEM/ODM model to produce for international brands, these models help domestic companies to accumulate rich technology and supply chain experience. In other words, long-term foundry experience, technological precipitation, and industrial supply chain aggregation have enabled domestic companies to have advantages in cost control and management, rapid product iteration and innovation, and technological breakthrough and innovation advantages compared with international companies. Conducive to the transformation of some e-cigarette manufacturers to build their own brands.

In addition to manufacturing advantages, Chinese e-cigarette companies have another advantage in brand building. In addition to the cost-effective advantages brought by a complete supply chain system, because Chinese companies tend to pay more attention to consumer experience, especially the experience accumulated in the consumer electronics and fast-moving consumer goods market, this will be able to transform into the advantages of Chinese e-cigarette companies and gain insight into overseas The needs of consumers of different economic levels and cultural environments have created e-cigarette products that better meet the needs of local consumers.

Explore new paths for Chinese brands to go overseas

What’s more noteworthy is that among the sources of e-cigarette brands in my country, some companies come from Internet companies in other fields. Based on Internet thinking, these companies are driven by innovative technologies and user experience from the perspective of users. They are good at industrial chain integration, and their products can also be iterated quickly. RELX is now the leader in this regard. RELX is currently the largest e-cigarette brand in China. As of the end of 2019, it has entered 43 countries including Canada, the United Kingdom and New Zealand, and its overseas income has reached 25%, and it is still growing.

In addition to RELX, whether more Chinese e-cigarette companies can open the international market is of special significance to the Chinese e-cigarette industry. Yao Jianming, a professor at the Business School of Renmin University of China, believes that a brand cannot be cultivated without a consumer market. In the current domestic policy, it is unrealistic for e-cigarette brands to cultivate strong brands in China first. This is also the difference between e-cigarettes and smart phone brands such as Xiaomi and Huawei. These brands have strong consumer markets and crowds in China, and they have mature brand advantages before going overseas.

Therefore, in this case, if proper control and Chinese e-cigarette brands can create well-known brands equivalent to Xiaomi and Huawei in overseas markets, it will be a good reference for other Chinese brands to go overseas. This means the formation of new routes for technological products to go to sea.

On the whole, if China’s e-cigarettes are to gradually increase their value and status in the global industrial chain, they need to rely on its advantages in the industrial chain, as well as domestic independent brands that are catching up, and achieve the goal with the “industrial chain + brand” two-wheel drive The goal of enhancing the value of the industry.

VAPE HK

A professional vape news media that knows everything about vaping. Welcome to follow us for the latest news in the vaping industry. DISCLAIMER
Subscribe
Notify of
guest

0 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
- Advertisement -
Back to top button