Kimree

Liu Qiuming Interview – A most powerful boss in China vape industry

Speaking of Liu Qiuming, I’m afraid everyone knows about him. The chairman of Kimree, a Boton Group company, suddenly becomes popular early this year.

boton luo yonghao
Left Liu Qiuming; Right Luo Yonghao

A man with Luo Yonghao in photo

Luo Yonghao decided to enter the electronic cigarette industry after unloading his Hammer mobile phone. He went south to Shenzhen and went straight to Boton Group to meet Liu Qiuming, so he had this picture on network.

This photo was taken at that time to confirm the rumor that Luo Yonghao was going to make electronic cigarettes, and the first thing he saw was working with Kimree Technologies, a company owned by Boton with the whole industry chain of electronic cigarettes.

Who is Boton?

Boton is a diversified development international group company based on tobacco, food, daily flavors and fragrances, pharmaceuticals, bioengineering and electronic consumer goods. Its flavor and fragrance business was listed on the main board of Hong Kong in 2005.

Who is Kimree?

Kimree’s main business is the R&D, manufacturing and sales of electronic cigarettes and their accessories, with more than 40,000 square meters of international standardized production base.

When the outside world thought that Luo Yonghao was going to step on the electronic cigarette fast lane by way of Kimree, unfortunately, the two sides did not succeed in the end.

“At that time, Luo Yonghao’s electronic cigarette moulds’ orders were too urgent. The products in our hands were basically booked in advance by the Kimree Corps. There was no suitable product for Luo Yonghao’s electronic cigarette at the moment. Liu Qiuming had some regrets when he talked about the meeting in February this year.

Liu Qiuming said, “Luo Yonghao was anxious to launch the product as soon as possible, because of the above reason, we did not work together successfully.”

Although the first show of the two sides did not succeed hand in hand, it indirectly proves that Liu Qiuming’s position in the vape industry is not ordinary.

Some insiders told us that it has become an unwritten intra-circle practice to ask Liu Qiuming in Kimree before making electronic cigarettes.

Why is Liu Qiuming so powerful?

With these rumors and doubts, we decided to go south to the headquarters of Shenzhen Boton Group.

Boton Group is located in Boton Science Park in Nanshan District of Shenzhen. Liu Qiuming’s office and Kimree Science and Technology Research and Marketing Center are on the 15th floor of Boton A Block.

Liu Qiuming’s office has six display cabinets, which contain a variety of electronic cigarette products produced by Kimree. Judging from the warning sign “Any move will be regarded as a theft”, Liu Qiuming should value these items as treasures.

“At present, most of the disposable cigarette filling patents on the market are in my hands.” Liu Qiuming told us.

Liu further explained that it was difficult to bypass Kimree’s patented model if all the components were properly arranged in the long and narrow device.

“That means that most of the disposable cigarettes on the market now infringe Kimree’s patent right? ” We asked.

“You can say that. “Liu Qiuming answered.

“Why not defend rights? “We asked.

“The market is just beginning. Let’s make the cake bigger first.” Liu Qiuming answered.

We consulted the public information and found that as of January 2019, Kimree Technologies currently holds 43% of the patents in the electronic cigarette industry.

In a 2016 patent application ranking of PCT, a domestic technology company, Kimree ranked eighth, 95 internationally, ZTE ranked first and Huawei ranked second.

“We realized the importance of patents very early. Since the founding of Kimree, we have developed, applied for and protected the patented technology of electronic cigarettes. “Our e-cigarette supply chain is similar to Foxconn’s, with patented factories, rather than simple production and processing plants,” Liu said. ”

Liu Qiuming’s Pioneering History: The Development History of Electronic Cigarette in China

 Liu Qiuming young
Liu Qiuming when young

Liu Qiuming was born in Suining, Sichuan in 1976. He graduated from North China University in 1999, majoring in plastic forming technology and equipment. After graduation, he joined Jiangnan Molding Group. In 2000, he joined Bubugao Group. Apart from financial and marketing positions, he did almost all kinds of work in Bubugao, which gave him ideas on how to make electronic cigarette products and supply chain and laid the foundation.

But when it comes to Liu Qiuming’s real emphasis on patents, it’s also about one thing he did in Bubugao.

“At that time, Bubugao was going to make soymilk machine, but all kinds of patents were taken by rivals, so we began to wonder if there was any new breakthrough. Liu Qiuming recalled, “After many studies, we finally broke out of the rival’s patent encirclement, and then the Bubugao soymilk machine was born, which is a curve to save the brand and complete product development. ”

Ultimately, Bubugao did not continue to expand the soymilk machine business, but this reminds Liu of the importance of patent research and development.

Liu Qiuming worked in Bubugao for nine years, starting as an engineer, then managing quality, engineering, R&D, procurement, and later as a regional manager.

“Basically, I change my position every year. It’s not that I want to change my position on my own initiative, but that I go wherever my boss transfers me. Every time I get a new position, I can basically change from competency to excellence in three months, so I gradually develop self-confidence. At that time, I was very proud and felt that I was omnipotent in everything in the world.” Liu Qiuming recalled.

Employees who don’t want to be bosses are not good employees. Liu Qiuming is an ideal person. In 2006, Liu Qiuming began to think about doing some great things, such as creating his own brand and wanting Chinese brands to go overseas. So Liu Qiuming found three other business partners to initiate the establishment of the Kimree predecessor, with an average of four people. At that time, he was only doing foreign trade. His products included energy-saving devices, high-definition players and mobile phones, and electronic cigarettes were one of them.

But Liu Qiuming was still working in Bubugao at this time. As an excellent old employee of Bubugao, professional accomplishment was the most basic, and in order to avoid unnecessary disputes, Liu Qiuming only invested money at that time and did not participate in the daily management of Kimree. The operation of Kimree was mainly led by another founder, Xiang Zhiyong.

Liu Qiuming and his partner
Liu Qiuming and his partner

At the beginning of 2009, Liu Qiuming found that after three years, the company had not made great progress. The company had changed from four people to six people. Although its performance had increased to some extent, it was difficult to achieve a breakthrough in scale. So Liu Qiuming decided to quit his Bubugao job and began to invest in the operation of Kimree. Liu Qiuming’s first decision after entering Kimree was to focus on business and select 1-2 products from a wide range of products. It happened that there were serious health problems caused by smoking among his close family members at that time, which led Liu Qiuming to produce electronic cigarettes, which was much less harmful than real cigarettes. So Kimree began to focus on the foreign trade of electronic cigarettes.

In the short period of several months, Liu Qiuming found that the electronic cigarette products were not simple, especially the e-liquid leakage problem was very serious. Considering his own experience in the electronic consumer goods industry and the expertise of Kimree’s other two partners in the research and development of electronic products and factory management, after several discussions, Liu Qiuming found that the electronic cigarette products were not easy. Kimree’s first electronic cigarette manufacturing plant was established in Huizhou. Kimree began to focus on the research, development, production and sales of electronic cigarettes.

Speaking of setting up factories, Liu added, “We don’t want to be a simple factory. We want to learn from Foxconn. Foxconn seems to be a OEM factory, but it is not. Foxconn is a patent agent factory. The experience of stepping up the battle of soybean milk machine patents made me realize how important patents are, so our goal at that time was to be Foxconn in the electronic cigarette industry.

Liu Qiuming also cited for example that the prototype of Huangna tube wrapped cotton core used in electronic cigarettes was originally invented by him, because he found that Huangna tube’s insulation and it has a high temperature resistance when he worked step by step, which is also the reason why the industry later used Huangna tube.

“Few people can tell the story. At that time, we went to the supplier’s office to inspect, because I was in the electronics field, and I often used Huangna tube to wrapp conductor in Bubugao, so I know this thing is insulative and fire-resistant. And Huangna tube is soft, easy to assemble, so we invented today’s prototype of electronic cigarette, which is also our patent. So now we make disposable e-cigarette pods or disposable e-cigarettes, cotton core wrapped with tube patents are in my hands. ” Liu Qiuming talked about the origin and development of cotton core wrapped in electronic cigarette tubes.

Liu Qiuming Daily
Liu Qiuming Daily

Liu Qiuming is doing research and production of electronic cigarettes, and slowly found another important demand, that is, e-liquid. With the renewal iteration of electronic cigarette products, e-liquid has become a consumable product on electronic cigarette, and the quality of e-liquid directly affects the experience of vaping.

So Liu Qiuming began to look for good e-liquids. At that time, there were Good Links, but also Huabao, Boton and so on.

Markets are like battlefields.

“I contacted all the top ranked companies in the list of flavors and fragrances to discuss the market of electronic cigarettes. I told them it had a bright future and asked them if they would come, because I had a goal. The more people produce it, the greater the chance of high-quality e-liquid will show up. Any great action was rooted in a sense of crisis. At that time, the flavor and spice market had the biggest brands, Huabao and Boton. Since then, we have had cooperation with Boton. ”

At that time, the main electronic cigarette manufacturers were Firstunion, Smoore, Selebo, Jasper and so on. Now most of the electronic cigarette manufacturers are still in existence, Smoore is FEELM.

After a magnificent competition, Liu Qiuming took Kimree to 2013.

Liu Qiuming, Kimree
Handsome Liu Qiuming

With the development of the electronic cigarette market, Liu Qiuming had more ideas in 2013 and began to promote Kimree’s listing in the open market. At that time, there were three choices: Hong Kong stock, American stock and A stock. However, A stock was not optimistic about electronic cigarettes and the listing process was long. Hong Kong was also fighting against electronic cigarettes at that time. American stock was relatively open, so he chose the United States stock market.

But Liu Qiuming said that there were some mistakes in the decision-making. It would be right to go to Hong Kong, but they felt disrespectful to list electronic cigarette stock in Hong Kong, so they chose the United States.

“After nearly a year of preparation, Kimree IPO successfully passed the SEC audit of the Securities Regulatory Commission of the United States in 2014. But at that time, the United States was not optimistic about China’s stock market, the valuation was not within our expectations, and considering the risk of collective litigation after Nasdaq’s listing, we finally could decide not to list there. ”

These two points led Liu Qiuming to abandon Kimree’s listing in the United States.

According to the data disclosed at that time, in the first nine months of 2014, their total revenue was 87.57 million US dollars, US business was 8.02 million US dollars, accounting for 90%, EU business was 8.5%, Asian business was only 0.2%, and net profit was 18.41 million US dollars.

At that time, Kimree still did not introduce any external investment, and the shareholders were natural persons when they started their business. When the company grew to a certain scale, the problem of slow decision-making and even difficult to unify decision-making of shareholders caused by the average equity began to arise. Kimree was faced with such a problem at that time, so all shareholders decided to sell the company.

“Why sell them all? Because we have to advance and retreat together, and we can’t keep it. At that time, considering the upstream and downstream supply chain relationship with Boton, together with the relationship between Boton and the tobacco industry, we thought that the combination with Boton was the best choice. So Kimree became the first electronic cigarette company to turn itself into a listed company. ”

Liu Qiuming
Liu Qiuming being interviewed

In 2016, Boton’s China Flavors & Fragrances (03318.HK) announced that the total purchase of Kimree was 750 million yuan.

Since then, Liu Qiuming has joined Kimree in Boton and continues to be responsible for the electronic cigarette business. When talking about this period of history, Liu Qiuming did not feel particularly sorry. Despite the departure of partners, but he has continued to study in the electronic cigarette patent technology, the drawback is that sales performance in the market lagged behind.

In preparation for Kimree’s listing in the United States, Liu Qiuming spent more than a year preparing and performing. In his words, the process was “tormenting the boss”. After all, the boss is the soul of the company. On the one hand, he should prepare for listing, on the other hand, he should continue to focus on Market Research and development and production, which inevitably results in a loss of time allocation and judgment mistake.

“During this period, we did not seize an opportunity, that is, the mod vape market, some peers seized the opportunity to develop. “Liu Qiuming said frankly, “We have been engaged in R&D during this period, preparing for listing. We have not invested enough energy in the market, and when we look back, there was not enough talent reserve here. ”

After missing out on the box mod market, Liu Qiuming made two decisions in summing up 2016. One is to continue the research and production of pod vapes, the other is to make full efforts to bet on low-temperature vapes, that is, patent research and development related to the upgrading and transformation of traditional tobacco.

“These three years have made me realize that if I go ahead, I might change from a pioneer to a martyr.” Liu Qiuming said.

Kimree had done some work before making this judgement at that time, so Liu Qiumingcai devoted a lot of energy to the research and development of low-temperature pod vape products. However, the low-temperature vape market did not get popular within three years because of policies and habits, but Liu Qiuming still looked forward to this as the only possible solution to the health upgrading of the traditional tobacco industry and tobacco companies. The company’s profits and government tax revenue can not take into account this “contradiction triangle” product, but the time is not yet.

Lose at sunrise and gain at sunset.

It is also in these three years that Kimree has completed the patent protection and patented technological breakthrough of low-temperature products in hardware and software.

Liu Qiuming judged that low-temperature products and pod vapes will go hand in hand in the entire electronic cigarette market. After reserving the patent layout of low-temperature smoke, he will now concentrate all his energy on the popular cigarette market in 2019.

“What the low-temperature vape market needs to do now is to wait for the opportunity. ” Liu Qiuming said, “I will focus on the pod vape market next. I want to regain the glory of the pod vape market that once belonged to us. Now is just the right time. ”

 

Liu Qiuming, stand for Taki
Liu Qiuming, stand for Taki
Liu Qiuming, stand for George Patton
Liu Qiuming, stand for George Patton

Liu Qiuming’s pioneering history can be said to be the magnificent development history of China’s electronic cigarette.

Holding Kimree’s electronic cigarette patent also makes Liu Qiuming a real power figure in today’s electronic cigarette industry. This will be the trump card weapon in the future competition of electronic cigarette products.

It’s an industry that hasn’t developed for too long, and the market size is huge but accompanied by controversy. There are 350 million smokers in China, but the penetration rate of electronic cigarettes is less than 1%. We expect that once the relevant policies and national standards of electronic cigarettes are issued, the whole market will usher in a new round of big outbreaks and shuffles.

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