Go! Sell electronic cigarettes overseas!

          Previously, on June 15, the official website of the National Tobacco Monopoly Administration announced that the national unified electronic cigarette trading management platform was officially launched. Electronic cigarettes implement "one thing one code", and electronic cigarette enterprises without licenses will not be allowed to trade through electronic cigarette trading platform. At the same time, the new version of the Measures for the Administration of Electronic Cigarette has deleted the requirement that enterprises exporting electronic cigarettes need to obtain a license for tobacco monopoly production enterprises.



According to the "Blue Book of Export of Electronic Cigarette Industry in 2022" (hereinafter referred to as the "Blue Book"), there are more than 1500 electronic cigarette manufacturing and brand enterprises in China, of which more than 70% are mainly exported overseas. It is estimated that the total export of electronic cigarettes will reach 186.7 billion yuan in 2022, with an estimated growth rate of 35%.



          After the "Thousand Cigarette Wars", there is a saying in the electronic cigarette industry: "More than 95% of the global electronic cigarette production and products come from China, 70% of China comes from Shenzhen, and more than 95% of Shenzhen comes from Bao'an". China is gradually changing from the world's largest e-cigarette manufacturer to the world's largest e-cigarette brand exporter.



        "The reason why Shenzhen has become the core lies in its strong IT manufacturing industry, which provides strong technical support for the innovation and upgrading of e-cigarette products." Guo Xiaoyu, the co-founder of Shenzhen Two Supreme Technologies Co., Ltd., analyzed that "e-cigarettes have a strong 'innovation' attribute, and the product replacement rate remains within 3-6 months. Looking at the global market, only Shenzhen can achieve such rapid innovation."



       Let's sell electronic cigarettes overseas!



       On July 2, Lin Yu was busy preparing materials in his office. As a "recruit" who has just entered the electronic cigarette industry for less than a year, he is now planning to lead his team to Southeast Asia for development.



Lin Yu knew that this decision meant that he would start from scratch in a strange market. However, he said, "Compared with the domestic market with increasingly strict regulatory policies, there is undoubtedly more room for overseas markets."



          In 2019, the domestic electronic cigarette industry broke out rapidly, and once set off a "thousand cigarettes war". However, with the new regulatory requirements of "manufacturers shall not produce 'fruit flavor' cigarette bombs" and "one cigarette and one identity", the industry began to develop in compliance.



       The reporter of Shell Finance and Economics of Beijing News learned that compared with the domestic market, the overseas market has a broader prospect both in terms of user scale and in the future. According to the report of "Blue Book of Export of Electronic Tobacco Industry in 2022", the global electronic cigarette market size will exceed 108 billion dollars in 2022. It is expected that the overseas electronic cigarette market size will maintain a growth rate of 35% in 2022, with the total size exceeding 100 billion dollars.



        Unlike the Chinese market, some countries in Southeast Asia are open to e-cigarettes and even allow e-cigarettes to be sold online. According to data from Euromonitor, a consumer market research institute, it is estimated that the total electronic atomization market in Southeast Asia will reach 766 million US dollars, or about 5.1 billion yuan, in 2023.



        After a year of preparation and trial, Zhang Lei has now established a firm foothold in the Southeast Asian market, and his electronic cigarette brand has gradually opened up.



       According to the data of the Blue Book, the export scale of China's electronic cigarettes will reach 138.3 billion yuan in 2021, an increase of 180% year on year. It is estimated that the total export of electronic cigarettes will reach 186.7 billion yuan in 2022, with a growth rate of 35%.



       "Before, some e-cigarette companies went into a misunderstanding and felt that going to sea was the way they were forced to choose under the 'no way to go'." An e-cigarette practitioner told the reporter, "In fact, the overseas market and the domestic market are equally important, and should be the core direction of the development of each e-cigarette company."



       "Now Yueke, MOTI Magic flute and other leading enterprises are also beginning to bet on overseas markets," Zhang Lei said. The reporter looked up public information and found that Yueke had tried overseas exploration as early as 2019. After the establishment of "Yueke International", which is responsible for overseas business, in 2021, it has accumulated millions of consumers in more than 40 countries around the world.



       Another brand, MOTI Magic Flute, now covers 35 countries and regions around the world, has more than 100000 outlets of all kinds in the world, and has even established an independent e-commerce platform for industry leaders in North America.



       "Many manufacturers have gone to sea, which is bound to intensify the competition in the overseas market." Lin Yu said, "Although the future is uncertain, this is the most important choice for electronic cigarette manufacturers at present."



       Why Shenzhen? Customers have new ideas and can get proofing products within two hours



      In the small notebook that Lin Yu carried with him, there was a map of the world filled with symbols, on which a long line was drawn in black: Shenzhen - Southeast Asia - Europe and America. This is the "sailing map" he set for himself. Although he has just entered the first stop, he is full of confidence: "strive to complete this line within five years."



Lin Yu's reliance stems from his partner's factory in Bao'an District, Shenzhen.



The reporter from Beijing News Shell Finance learned that there are more than 1500 e-cigarette manufacturing and brand enterprises in China, and nearly 100000 e-cigarette supply chain and surrounding service enterprises, forming a complete e-cigarette industry cluster. Most of them are gathered in Bao'an, Shenzhen.



The origin of Shenzhen and electronic cigarettes can be traced back to 2004. At that time, the first domestic electronic cigarette "Ruyan" came out, which not only quickly became popular in the domestic market, but also attracted many consumers worldwide. Influenced by the success of "Ruyan", a large number of e-cigarette factories have sprung up in Zhejiang, Shenzhen and other places. In the following ten years, Shenzhen has gradually become the most core e-cigarette production cluster in China and even in the world.



Guo Xiaoyu, the co-founder of Shenzhen Two Supreme Technologies Co., Ltd., told reporters that years of development have brought together not only many electronic cigarette enterprises, but also supporting enterprises, including industrial design, mold, battery, etc., in Bao'an, Shenzhen. "There is an electronic cigarette 'two-hour traffic circle', and the whole industry chain cooperates closely. Even when manufacturers and customers burst out with new ideas in communication, it may be less than two hours to get sample products."



According to the official data, there are 55 electronic cigarette enterprises above the designated size in Bao'an District in 2021, including many well-known enterprises such as Maxwell and Foxcore Technology, with an output value of 35.6 billion yuan. In 2022, the number of enterprises has increased to 77, and the output value is expected to further increase.



Lu Jixian, deputy director of Shenzhen Bao'an District Investment Promotion Department, said publicly that Bao'an will be committed to building a 100-billion-level electronic cigarette industry cluster, and will also build a global atomization technology center in the future, constantly expand the application boundary of electronic cigarette technology, for atomization treatment, beauty and other fields, and continue to expand overseas markets.



In July 2020, Lin Yu came to Bao'an District of Shenzhen for the first time. Previously, he had acted for a domestic brand of e-cigarettes. Affected by the market explosion, Lin Yu, who was unwilling to be a dealer, decided to set up a team to build his own e-cigarettes brand.



"After inquiring around, we found that the most concentrated area of electronic cigarette industry is here." Lin Yu told reporters that although there are electronic cigarette manufacturing factories in Foshan, Dongguan and other places, it is far less concentrated than Bao'an in Shenzhen. He was amazed by the high-end production equipment and complete accessories of the local e-cigarette manufacturing factory. "There are everything from cigarette sticks, cigarette oil, batteries to cigarette bombs. Just provide the brand and LOGO to the other party, and you can produce exquisite e-cigarettes."



Soon, Lin Yu reached a cooperation with a surrogate factory. He was responsible for designing the brand and sales channels, and the other party was responsible for producing electronic cigarettes.



When he saw the samples designed by the other side according to his requirements, Lin Yu's confidence in the export route increased greatly. "It is much better than expected, and it can be upgraded and iterated with the needs of players and the market in the later stage. I believe that it will be welcomed in the overseas market."



An accident: the export road is open, and the logistics bottleneck is difficult to stop the enthusiasm of going to sea



The entry of domestic electronic cigarettes into the overseas market stems from an accident.



A knowledgeable person in Shenzhen told the reporter that many years ago, a Chinese student studying in Türkiye brought the electronic cigarette back to Türkiye. The new product quickly aroused local curiosity and asked about the purchase channel.



As a country with the highest smoking rate in the world, electronic cigarettes quickly triggered a buying boom in Türkiye, and even entered the European market through Türkiye. In a short time, not only did a large number of overseas students come to Shenzhen Electronic Cigarette Factory with backpacks to carry goods, but also attracted many overseas dealers to Shenzhen for purchase.



"There are two reasons behind the popularity of electronic cigarettes in Europe and the United States. One is that the price is lower than that of traditional cigarettes, and the other is that the foreign market is more tolerant of electronic cigarettes." Guo Xiaoyu told reporters.



But the way to export is not simple.



The first problem to be solved is logistics. In the past, 40% of the electronic cigarettes exported by Shenzhen were shipped from Shenzhen to Hong Kong and then to the world. However, after Hong Kong announced that "since April 30, the sale, manufacture, import or promotion of electronic cigarettes and heated tobacco products in Hong Kong are illegal", manufacturers had to find new export routes.



The reporter learned that recently, Shenzhen Airport said that it had worked with the Electronic Cigarette Professional Committee of the China Electronic Chamber of Commerce and other relevant parties to jointly study and issue the identification standards for white-listed enterprises of electronic atomization products and the operational guidelines for differential security inspection of air transport exports, aiming at the bottlenecks in the domestic electronic cigarette air transport chain. In the future, it plans to build Shenzhen Airport into a global electronic cigarette transit center.



When the products reach the overseas market, manufacturers also need to face the challenges of different policies and consumer trends of players in the overseas market.



Taking electronic cigarette bombs as an example, many domestic popular flavors are not popular overseas. The requirements for nicotine content vary from country to country. The United States allows the content to be no more than 3%, while the United Kingdom requires the content to be no more than 2%, which requires manufacturers to take corresponding measures and research and development according to local specific conditions.



"Before going to sea, we must also understand the local control system for e-cigarettes to avoid unnecessary losses." Zhang Lei told reporters that the global regulatory policies for e-cigarettes are different today. Both the United States and the European Union have adopted a federal approach to the regulation policy of electronic cigarettes. In Southeast Asia and the Middle East, although the market is relatively loose, some countries tend to adopt the ban on electronic cigarettes.



The above problems cannot hinder the export enthusiasm of Chinese manufacturers. According to the Blue Book, the export volume of electronic cigarettes in 2021 will increase by 180% compared with 2020. It is estimated that the export volume will reach 186.7 billion yuan in 2022, with a year-on-year increase of 35%.



Competition for patents and standards has surfaced, not all of which are profitable



On June 23, a news from overseas quickly ignited the domestic electronic cigarette circle: the global electronic cigarette giant JUUL was officially issued a listing refusal order by the US Food and Drug Administration.



"This is undoubtedly good news for domestic e-cigarette exporters." On July 8, an e-cigarette practitioner told the Beijing News Shell Finance reporter, "If JUUL really delisted, it means that other brands will gain greater market share, and many of them from China will also benefit from it."



According to the analysis report of Zheshang Securities, JUUL has withdrawn or provided 52% flexibility of orders for its main competitor manufacturer, Semore International, and many international electronic cigarette brands it cooperates with are now accelerating to seize the American market.



The reporter learned that, as the largest single market in the world, the U.S. electronic cigarette market will account for more than 55% of the total overseas global market in 2021. In the first quarter of 2021 alone, the U.S. market accounted for 58% of China's electronic cigarette exports, with an export value of about 73.3 billion yuan. For the practitioners of electronic cigarettes, such a huge market must not be missed.



"Nowadays, almost most brands and manufacturers are starting to make efforts in overseas markets." Wang Min, who runs an electronic cigarette factory in Shenzhen, told reporters that his factory has been busy in manufacturing for many brands in recent years. She found that the sales direction of the other party was almost concentrated in overseas areas.



Previously, there were media reports that many electronic cigarette factories in Shenzhen, which mainly engaged in foreign trade, were recruiting. In order to catch up with the order, many factories urgently recruited short-term workers for 10 days, with additional manpower to catch up with the production of electronic cigarettes, and worked overtime on the New Year's Day holiday.



"E-cigarettes have a strong 'innovation' attribute, and the product replacement rate remains within 3-6 months. Looking at the global market, only Shenzhen can achieve this rapid innovation state," Guo Xiaoyu said.



In addition to the rapid iterative innovation of technology, more and more e-cigarette manufacturers are gradually moving towards high-tech, and begin to care about patents.



According to the Research Report on the Market Operation Situation and Development Strategy of China's Electronic Cigarette Industry in 2022-2028 released by Intelligent Research Consulting, the number of patent applications for electronic cigarettes in China in 2021 was 5937, with a year-on-year increase of 41.9%. The number of major patent applications in Guangdong Province reached 21646, accounting for 69.2% of the total number of patent applications.



According to the Blue Book, patent applications for electronic cigarettes have emerged in the past three years. In the past three years, the number of patent applications has exceeded 5000 each year. Since the fourth quarter of 2021, the number of patent applications has increased every month. It is estimated that the total number of patent applications will exceed 7000 in 2022.



The blue ocean market is not risk-free. "A few years ago, many e-cigarette brands have moved to the overseas market, but not all of them can succeed." Wang Min told reporters that there are many losers among the overseas manufacturers. "It is often heard that who went to the sea again and who failed again. Such stories are everywhere in the circle."



The reporter learned that the e-cigarette enterprises that go to sea now have a trend of two levels of differentiation. Due to the characteristics of stricter production standards and better quality, head enterprises are not only easy to enter the new white list of Shenzhen Airport when exporting, but also highly respected by players in overseas markets. However, it is relatively difficult for small and medium-sized enterprises to go to the sea, and they can not even rule out the gloomy outcome of leaving the field.



"Going to sea is more like a 'gambling'. It needs to adapt to different regulatory policies, cultural differences, consumer habits and other issues. Once the decision is wrong, the final result can only end in failure." Wang Min said.



Ling Xiaolu, executive commissioner of Shenzhen Bao'an District Government, said that he hoped that the electronic cigarette industry would continue to expand overseas markets, occupy more overseas market shares, occupy the upstream position of the global industrial chain, and take the lead in setting standards for the global electronic atomization industry.