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The number of companies involved in the Chinese vaping market may be far lower than previously thought.
Though it is often suggested that 100,000 businesses in China are involved with e-cigarettes, new regulations that came into force last year may have led to some leaving the market, and others may never have been active at all.
Hanyu Liu, a market analyst at Daxue Consulting, a Beijing-based market research and management consulting agency focusing on China, told ECigIntelligence that the 100,000 figure refers to any business authorised to sell related products.
“This would include the numerous small e-cigarette retailers and distributors found throughout streets and malls in China,” he said. “And just because a company is authorised to do business involving e-cigarettes, it doesn’t mean they have done so at any time.”
A Chinese business licence defines the scope of business in which the named company is legally allowed to operate. Though this doesn’t stop some companies from working illegally in an area, firms typically list many diverse business areas on their licence – often around 100 – so that they can legally operate in all of them if they wish. This does not, however, mean that they actually do so.
Daxue estimates that in terms of larger companies there were 1,000 to 1,500 manufacturers, approximately 200 e-cigarette brands, and 100 to 150 e-liquid companies operating in China in 2021.
And these numbers likely dropped after China introduced new regulations in 2022.
Flavour ban makes its impact
Synthetic nicotine and nicotine-free e-liquid have been banned in China since 1st October 2022, when the country’s standard for e-cigarettes took effect. The national standard, published in April last year, also defined important vaping industry terminology and specified requirements for product design and use of materials and chemicals. And it confirmed the ban on all non-tobacco flavours, which came into force on 1st May.
Shenzhen Siyikang Technology is one such company that is no longer involved in the e-cigarette business. “The reason is China’s regulations, and our customers changed their business,” said a company representative when asked about the business change.
Such an exit is likely typical. Liu mentioned that part of the problem is that businesses have lost a large amount of their market with the ban on flavours. “Within the last year, I would assume over a third, if not more, of small players have exited this space due to this ban,” he said.
In Shanghai, for example, it’s obvious that most of the small booths around underground stations, typically Relx or Snowplus franchises, have now closed.
Despite the regulations, however, there are still flavoured vape products on sale in Shanghai as of January 2023. This may be a case of shops clearing old stock, but enforcement of the ban at points-of-sale also seems limited.
– Mark Andrews ECigIntelligence contributing writer
Photo: Elvir K
