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Market analysis of electronic cigarettes in China

Release date 25.08.2022

Number of pages 49

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The relevance of research

Purpose of the study

Analyzing the state of the Chinese electronic cigarette market, assessing the market size, analyzing competitors, and identifying factors affecting the electronic cigarette market

Content

Part 1. China Electronic Cigarette Market Overview

1.1. Main characteristics of the market

1.2. Dynamics of the Chinese e-cigarette market volume in 2017-2021 Potential market capacity

1.3. China Electronic Cigarette Market Trends and Prospects

1.4. Assessment of factors affecting the market

1.4.1. Social factors

1.4.2. Technological factors

1.4.3. Economic forces

1.4.4. Political factors

1.4.5. Conclusions about the influence of factors on the market

1.5. China e-cigarette market life cycle stage

1.6. Competition from substitute products

Part 2. China's main companies in the electronic cigarette market

2.1. The main companies (TOP-5) of electronic cigarettes in China

2.2. Market shares of electronic cigarettes of the main companies

2.3. Profiles of major companies

2.4. Analysis of the product range

Part 3. The volume and dynamics of domestic production of electronic cigarettes in China

Part 4. Analysis of China's foreign trade supply of electronic cigarettes

4.1. Volume and dynamics of foreign trade deliveries of electronic cigarettes

4.2. Structure of foreign trade deliveries

4.3. Forecast of foreign trade deliveries until 2026

Part 5. Consumption of electronic cigarettes

5.1. Estimation of the number of buyers and their financial capabilities

5.2. Estimate of e-cigarette consumption per capita

5.3. Key consumer trends

Part 6. Assessment of factors of investment attractiveness of the market

Part 7. Forecasts and conclusions

7.1. Forecasts of the Chinese economy until 2026

7.2. Barriers in the market

7.3. Market Growth Drivers

7.4. Market development forecast until 2026 of China's electronic cigarettes

7.5. Key findings. Go-to-Market Recommendations

Research excerpt

Part 1. China Electronic Cigarette Market Overview

1.1. Main characteristics of the market

An electronic cigarette (English e-cigarette) is a device that simulates smoking, powered by a battery or accumulator, which generates highly dispersed vapor that is inhaled during smoking. Can be used as a nicotine delivery device (electronic nicotine delivery devices - ENDS) or for inhaling flavored vapor (aerosol) without nicotine. The established term for the process of using electronic cigarettes is vaping (from the English vaping), and some devices are called vapes.

Currently, there are many types of electronic cigarettes on the market, which differ in design (shape, size, etc.) or performance characteristics (service life, battery capacity, etc.). In general, all devices on the market can be divided into disposable ones, the resource of which is designed for approximately 200-250 puffs without the possibility of refueling, and reusable ones, designed for 500-1000 puffs, with the possibility of refueling and charging.

At the Conference of the Parties of the Fifth Session of the World Health Organization (WHO) Framework Convention on Tobacco Control, the following division of electronic nicotine delivery systems was proposed:

In composition - with tobacco / without tobacco;
By use - reusable / disposable;
According to the power source - on batteries / rechargeable.

In addition, electronic cigarettes are divided into types, type of control, atomizer (evaporator), etc. According to the size and shape, electronic cigarettes are divided into 6 types, marked with the letter symbols AF.

...

Within species, e-cigarettes can vary considerably in design and specifications.

...

Currently, there are 2 main consumer groups in the e-cigarette market:

1. Electronic smoking devices.

2. Liquids for electronic smoking devices.

The subject of this study is the market of electronic cigarettes (electronic smoking devices) without consumables for them in the People's Republic of China.

...

1.2. Dynamics of the Chinese e-cigarette market volume in 2017-2021 Potential market capacity

Consider the dynamics of the market volume.

According to GidMarket estimates, in 2017-2019. China's electronic cigarette market size has been actively growing due to the development of domestic production and demand growth in line with global industry trends. At the same time, growth rates gradually slowed down.

Chart 1. Dynamics of the market size of China's electronic cigarettes in 2017-2021, billion yuan

Experts highly appreciate the potential of the Chinese ES market. According to WHO, the number of smokers in China exceeds 300 million people, and electronic cigarettes are being promoted as an alternative to traditional smoking.

...

1.3. China Electronic Cigarette Market Trends and Prospects

The main trends in the e-cigarette market are:

Growth in production and competition in the market.
The rapid development of technology and the increase in device modifications.
Tighter control and regulation of the market.
Increase in domestic consumption.

Electronic cigarettes have long been positioned as a harmless or less harmful alternative to traditional tobacco products, both for smokers themselves and for others. These products have even been offered as a treatment that is as effective as certified nicotine replacement therapy (NRT). ECs were not subject to laws and restrictions governing tobacco products and the industry. There was no age limit and no fines for ""soaring"" in public places. Manufacturers did not require licenses, and products were not standardized. The concentration of nicotine in ENDS liquid was not regulated by law, and the manufacturer was not required to disclose the composition of mixtures. Such conditions contributed to the increase in ES consumption worldwide and stimulated the development of Chinese production. The low barrier to entry in the industry attracted a large number of enterprises to the market. According to iiMedia Research, from 2013 to 2021. the number of enterprises engaged in the production of ES in China increased by 3,7 times. Moreover, market experts note that a significant part of the companies were engaged in copying well-known brands and supplied low-quality goods.

The first electronic cigarettes resembled ordinary ones and had a very simple design, which is why they were called Sigalike. As users noted, they were not very convenient and left much to be desired in terms of taste. The growing popularity of vapes and increased competition provoked a rapid development of technologies and product modifications on the market. The design of the ES was changed by increasing the liquid reservoir, improving the evaporator, control capabilities, etc. To attract consumers, manufacturers have worked on product design, offering mini models, models similar to pipes and cigars, etc., as well as a variety of flavors, incl. nicotine and non-nicotine mixtures. Experts call the trend of recent years smokeless cigarettes, which are much more convenient in design and use compared to classic vaporizers, since they do not require additional accessories and liquids.

The growing popularity of ES, especially among young people, as well as illnesses and deaths caused by vaping, provoked close attention of regulatory authorities to the market. The first restrictions in the industry were introduced by the US Food and Drug Administration (FDA) in 2016. In China, the tightening of industry regulation began in 2019, when an age limit was introduced on the sale of EC, and then a ban on online sales of products. According to Chinese media, the share of electronic sales in China accounted for over 45%. Accordingly, such a measure had a significant impact on the market: many players were forced to reduce production and personnel. On the other hand, large companies have benefited.

In 2021, the Chinese authorities proposed a draft regulation in the field of ES, which they called the most stringent regulation in this area. According to media reports, in the face of tightening legislation, some Chinese companies are thinking about moving their production to Southeast Asia. In particular, according to Yicai Global, CECC reported 20 companies, including industry leaders, that partially relocated their factories. One of the destinations for moving is called Laos because of the low cost of labor and the minimum amount of export tax. The only inconvenience in the country is the difficulty of protecting intellectual property.

In May 2022, new industry regulations came into effect, which were significantly relaxed compared to the original version. According to market experts, the new regulation marked ""an era of strict regulation"" in the development of the industry, which will lead to the legalization of the market. At the same time, despite the tightening of the rules for the sale and production of products, in 2022, industry participants noted an increase in demand for ES in the domestic market of China.

1.4. Assessment of factors affecting the market

1.4.1. Social factors

Population. China is one of the most populous countries in the world, with a population of more than 1 billion people, even excluding the special economic territories of Hong Kong and Macau.

Diagram 2. Dynamics of the population of China, 2014-2021, million people

Despite the birth restrictions that have been in place in China for a long period, the country has experienced a steady population growth for several decades. Although in recent years there has been a downward trend in population growth.

...

General trends in the change of macroeconomic indicators can be traced in such a value as the income of the population, which determine the level of effective demand.

Disposable income per capita in China showed a positive trend throughout the study period.

...

The growth of disposable income contributes to the qualitative development of the market and indicates a stable solvent demand.

cultural traditions. Tobacco was introduced to China in 1575, and paper cigarettes appeared at the end of the 30th century. After that, the development of the Chinese tobacco industry began. The peak of fashion for smoking in the country fell on 40- years. XX century, but still smoking in China is very common and has even become part of the national culture. For example, smoking expensive cigarettes in China is still a sign of high status. In addition, there is the so-called ""cigarette etiquette"", according to which treating a cigarette is a sign of good taste, a show of respect or a sign of gratitude.

The tradition of gifting cigarettes is also widespread and is practiced in all classes of society, various daily interactions and special occasions. According to a survey conducted by the Chinese Center for Disease Control and Prevention, more than 50% of respondents planned to buy cigarettes as gifts for Chinese New Year.

1.4.2. Technological factors

Modern ES, as a rule, consist of two independent modules: a battery pack and an atomizer (evaporator). The battery pack performs the function of power supply and control. The atomizer is equipped with a built-in e-liquid reservoir, a connector for connecting to the battery pack, and a heating element, which consists of a metal coil and cotton filler. Accordingly, the production chain of electronic cigarettes includes the initial supply of raw materials, intermediate production of the product and subsequent sales.

High level of industrial development. Today, China is the center of world industry, occupying a leading position in terms of the total number of industrial enterprises and the number of workers employed in them. The Chinese machine tool industry is one of the most developed in the world: about 1 million machine tools are exported annually, including high-tech equipment with automatic control systems. The electronic industry is well developed - a significant part of all electronic devices in the world, light industry is produced in the country, chemical production is actively developing, etc. Accordingly, the domestic production of ES in the country is able to develop at the expense of its own resources and does not depend on imports.

In addition, China has a good resource base for the development of production. The country ranks first in the world in the production of ferrous metals. There are reserves of iron ore, coking coal and alloying metals. Due to the rich reserves of copper, antimony, tin ores, as well as manganese and molybdenum, non-ferrous metallurgy is quite well developed. Also in China, there are all conditions for the development of energy: hydro resources, hydrocarbon fuels, significant wind and solar energy potential, deposits of shale and uranium ores, oil fields. China has the largest proven reserves of rare earth elements (REEs) needed for high-tech products, controlling about 80-85% of the world's REZ market. An important factor is also the presence of gigantic labor resources.

Developed logistics system. China occupies a fairly favorable geographical position, having a significant territory of the Pacific coast and a land border with 14 countries, which contributes to the development of foreign economic relations. Throughout its history, China has developed trade routes: the Great Silk Road, tea supplies to India, sea routes to European states.

At the present stage, China is implementing the Belt and Road Initiative (BRI) - the integration of the Silk Road Economic Belt and the st Century Maritime Silk Road projects. BRI is a multidimensional model of regional cooperation that will expand China's geo-economic space through the formation of the following areas (corridors):

transport corridor,
energy corridor,
shopping corridor,
cyber information corridor,
Scientific and technical cooperation,
Agricultural development,
Cultural exchange,
Expanding educational and career opportunities,
tourism development,
Security and political interaction.

Under this initiative, which is scheduled to be implemented by 2049, China has invested several trillion dollars in the development of transport, electricity and telecommunications infrastructure, which should provide a competitive advantage in the processing of ships and cargo in the world's largest channels and ports; the priority of land freight transport in the economic zones of key countries, and, consequently, a commercial advantage in the world market.

At the present stage, China is already the world's largest exporter with a well-developed transport and logistics infrastructure. In addition, one of the two largest transport hubs in Asia is located on the territory of the Hong Kong Special Economic Zone, which contributes to the growth of cargo turnover.

1.4.3. Economic forces

Data on the dynamics of GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation.

The dynamics of GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.

...

Retail trade turnover is a reflection of the effective demand of the population and the level of real incomes of the population.

...

Currency regulation in China. Until 1994, in China, there were 2 national currency rates in parallel:

Market, used for foreign trade settlements and established on the basis of the average cost associated with the acquisition of foreign exchange earnings from exports.
Official, determined on the basis of binding to the currency basket.
...

At present, the policy of the People's Bank of China is aimed at controlling the exchange rate of the yuan to ensure the competitiveness of Chinese goods in the world market.

1.4.4. Political factors

The tense political situation in interstate relations has a negative impact on the whole world and the global economy. Restrictions imposed on India by a number of countries create logistical difficulties and increase the likelihood of a global crisis, and also affect the level of world energy and food prices.

State regulation is a factor that generally has a significant impact on the current market situation. It is a set of centralized administrative influence on the activities of a sector of the economy through the formation of a regulatory and legislative framework.

The fight against smoking in China, where more than half of adult men and over 3% of women smoke, is a matter of national security. According to some estimates, smoking-related diseases could lead to the death of more than 150 million smokers in China. At the same time, no significant steps were taken in this area for a long time.

Initially, the Chinese government supported the idea of distributing electronic cigarettes in the country as a device to help people get rid of nicotine addiction by controlling the amount of nicotine consumed. However, the rise in popularity of vaping and the results of studies on its health effects have led to a gradual change in attitudes and, as a result, to increased regulation of the domestic e-commerce market.

...

Starting May 1, 2022, EC enterprises must obtain approval and license from the Tobacco Monopoly Administrative Department of the State Council, which must then be ratified and registered by the Market Supervision and Management Department. In order to obtain a license, a company must have the appropriate amount of funding, as well as the technology and equipment for production, and comply with the requirements of the national policy on electronic cigarettes. In the event of a change in the scope of activity, the license must be re-licensed, and if the production capacity is expanded, approval from the STMA is required.

Tobacco- and nicotine-containing raw materials for ES should be purchased only from companies that have the right to carry out such activities. The ECs themselves must be branded and their packaging must comply with regulations regarding labels and warnings.

Similar rules apply to companies engaged in the wholesale and retail sale of electronic cigarettes and related products, which must also obtain licenses for their activities and approval from the STMA in case of a change in scope. The criteria for obtaining a license are the same as for manufacturers, but adjusted to apply to wholesale and retail trade. In addition, wholesale and retail deliveries are strictly stipulated only between licensed companies.

1.4.5. Conclusions about the influence of factors on the market

Table 3. STEP analysis of factors affecting China's e-cigarette market

In aggregate, the impact of macro factors on the Chinese electronic cigarette market is estimated by GidMarket as positive of medium strength, due to the influence of a group of economic, technological and social factors.

A significant negative impact on the market is caused by a decrease in retail trade turnover in 2022 and a tense political environment.

The market is stimulated by a high level of development of production and a good resource base, as well as growth in the number and income of the population.

Tighter regulation of the industry has a multidirectional impact, which ultimately leads to the legalization of the market, a reduction in the number of players and an increase in the cost of entry. The impact may be negative in the short term, but will be more positive in the future.

1.5. China e-cigarette market life cycle stage

At present, China's electronic cigarette market is in the stage of early life cycle maturity. The product is represented by a significant number of modifications. At the same time, the quality of the goods is at a stable level, so there is no need to make any changes to the basic characteristics of the product.

...

On the one hand, ES as a commodity has already moved into the category of standard and represented by a sufficient number of types. On the other hand, it should be noted the growing demand and interest in these products. The volume of the market and the volume of consumption as a whole continues to grow.

At this stage, the role of price competition may increase, as the product is offered for sale by many brands. Moreover, from 2022 their number may increase due to imports. The market is highly segmented, enterprises are trying to satisfy all possible needs.

The main task of the enterprise at this stage is to maintain and, if possible, expand its market share and achieve a sustainable advantage over direct competitors.

...

1.6. Competition from substitute products

Initially, the e-cigarette was introduced to the market as a product to combat nicotine addiction, along with patches, chewing gum and other products in this niche. However, manufacturers have been most successful in positioning EC as an alternative to smoking. Accordingly, the main substitutes for ES at the moment are traditional cigarettes, smokeless tobacco, and hookahs.

Cigarettes became the most popular form of tobacco smoking in the 1950th century. The development of the tobacco industry, active advertising and the formation of a fashion for smoking contributed to the rapid growth in the number of smokers in the world. Moreover, consumers began to be warned about the dangers of smoking only in the 1970s, and the first restrictions appeared in the s.

According to the WHO, the number of smokers in the world currently exceeds 1 billion people. At the same time, the peak of world consumption of cigarettes passed in 2009 and since then there has been a downward trend due to the growing popularity of a healthy lifestyle (HLS), awareness of the risks associated with smoking and an active fight against smoking in many countries. However, analysts note an increase in tobacco industry revenues and estimate the global market at ... $ billion in 2021.

...

At the moment, China has restrictions on smoking in most public places, and the fight against the habit is carried out mainly with the help of fines and encouragement for those who refuse it.

...

At the same time, in China there is a whole industry for those who want to quit smoking. For these purposes, you can use the services of healers and traditional Chinese medicine salons that offer acupuncture, herbal infusions, breathing exercises, etc., or switch to alternative products, in particular smokeless tobacco.

Smokeless tobacco is a group of tobacco products designed to deliver nicotine to the body through the mucous membranes of the mouth or nasal cavity.

Smokeless tobacco includes:

chewing tobacco,
snuff - snuff,
snus is mouth or sucking tobacco.

Smokeless tobacco products, like conventional cigarettes, contain the neurotoxin nicotine, which causes both physical and behavioral as well as social dependence. The advantage of these products is that they do not cause lung cancer. However, smokeless tobacco products are classified as carcinogens, containing 28 cancer-causing substances.

In China, there is no ban on these products: they can be easily purchased at any store. Snus is actively produced in the country mainly in the southern regions. Also in China, you can buy a type of non-smoking tobacco banned in Europe, nasvay, which is produced exclusively in an artisanal way and is sold only in farmers' markets. Nevertheless, the consumption of these products in the country is much lower than traditional tobacco. At the same time, its decrease is noted, which corresponds to global trends and modern fashion.

Hookah has been known in China since the Ming Dynasty, not only as a way to smoke tobacco, but also as a piece of art and an occasion for communication.

...

Arabic hookah in China is legally in a border position. The production of Arabic hookah tobacco in China, its transportation and sale must comply with the rules of the entire tobacco industry. At the same time, tobacco for Arab China is practically not produced in China itself, its import volumes are small, and there is also no clear control scheme, which limits its distribution in the country.

Thus, at the moment, the main competition for ES is traditional cigarettes, the main advantages of which at the moment are:

Widespread - the number of consumers exceeds the users of ES by 15-20 times.
Cultural practices associated with smoking that cannot be applied in ES, such as a treat at a meeting or a display of status.
Low cost of traditional cigarettes.
Softer restrictions for traditional cigarettes - there are no restrictions on advertising and sale on the Internet, unlike EC.

Part 2. China's main companies in the electronic cigarette market

2.1. The main companies (TOP-5) of electronic cigarettes in China

A large number of companies are involved in the production and sale of electronic cigarettes in China, from small handicraft industries to international corporations. At the same time, a significant part of Chinese ES manufacturing enterprises, including major players, is oriented towards the export of their products and is poorly represented in China. However, the industry is highly competitive.

Recognized leaders in the Chinese market - brands ...

Evaluation of players is difficult due to the fact that financial statements are available only for the global offices of large companies. In addition, cooperation and colaboration is common among Chinese EC manufacturers.

...

2.2. Market shares of electronic cigarettes of the main companies

The Chinese market leader in 2021 was ..., driven by the largest number of retail stores in the domestic market. According to GidMarket, the brand's share is ...%.

...

The Herfindahl-Hirschman Index for the Chinese e-cigarette market is 2205<10000 in 2021, which means that the market is highly concentrated with a small number of operators occupying a significant part of the market.

2.3. Profiles of major companies

XXX

...

XXX

...

XXX

...

2.4. Analysis of the product range

Leading players in the ES market offer a wide range of products, which can vary significantly depending on the region of delivery, due to existing requirements of Chinese law, as well as rules and restrictions in force in different countries.

The POD System, a compact device with a tiny battery, is currently on the market. Autonomy is achieved through a high resistance evaporator that does not require high power for heating. POD systems are used with specially formulated nicotine salt e-liquids. Such devices are of open and closed type. Closed devices consist of a battery pack and a hearth - a disposable capsule or with pre-filled liquid. In open devices, cartridges are radically different, some of them have filling holes with a non-removable coil or use replaceable evaporators, the functionality for working in different modes may increase.

...

An analysis of the range of electronic cigarettes of the largest manufacturers in China showed the following:

...

Part 3. The volume and dynamics of domestic production of electronic cigarettes in China

According to analysts, in 2021, the number of enterprises engaged in the production of electronic cigarettes in China exceeded ... thousand. Experts note that the market has a large share of small players who do not have their own devices, but are engaged in copying well-known brands. In addition, the production of some major international brands is carried out in China, as well as contract manufacturing of companies from other countries.

According to the ES Industry Blue Book, the number of Chinese ES brands in 2021 exceeded ...

Part 4. Analysis of China's foreign trade supply of electronic cigarettes

4.1. Volume and dynamics of foreign trade deliveries of electronic cigarettes

Since 2017, the State Tobacco Monopoly Administration (CTMA) has introduced a ban on the import of foreign electronic cigarettes. Wang Xia, director of China's border and customs protection, said the measure was caused by a threat to the economic security of China's tobacco industry. Accordingly, foreign trade activity in the ES market during the study period was limited only by the export direction, which stimulated the growth in demand for products in the US, the EU and other countries.

Chart 9. The volume and dynamics of exports of electronic cigarettes 2017-2021, billion yuan

In 2020, the volume of ES exports grew by only ...%, according to GidMarket calculations.

...

It is rather difficult to determine the volume of exports in physical terms due to the variety of products in terms of weight and value.

4.2. Structure of foreign trade deliveries

According to the Blue Book of the e-cigarette industry, in 2021 the largest recipient of Chinese ECs was the United States, which accounted for ...% of supplies.

Diagram 10. The structure of exports of electronic cigarettes in 2021,%

4.3. Forecast of foreign trade deliveries until 2026

Since May 2022, new rules have come into force that affect both production and sales within the country, and foreign economic activity on the market. The Chinese authorities have allowed the import of EC into the country, but only with the approval of the CTMA, subject to national standards, while the sale of imported products is possible only through the e-cigarette transaction platform, which has not yet been launched. Given the PRC's policy of supporting domestic producers and protecting the world's largest tobacco industry, foreign brands should not expect to receive quick approvals, so EC imports will be very small in the near future and will not have an impact on the market.

...

Part 5. Consumption of electronic cigarettes

5.1. Estimation of the number of buyers and their financial capabilities

For a long time, e-cigarettes were not subject to age restrictions, and teenagers were the most active consumers. According to Chinese media reports, in 2019, about 10 million people aged 15 and over were regular users of electronic cigarettes. Since 2019, Chinese authorities have begun to impose restrictions on the sale of electronic cigarettes to minors.

...

Thus, China has a fairly high level of income for developing countries, which, however, lags far behind wages in the US and the EU.

5.2. Estimate of e-cigarette consumption per capita

The dynamics of the volume of consumption of electronic cigarettes per capita in China as a whole correlates with the dynamics of the market, since the population in the study period did not change significantly.

Chart 12. E-cigarette consumption per capita in China, 2017-2021, yuan/person

Thus, throughout the period, the level of consumption remained at a very low level and was much less than 1 device per person.

5.3. Key consumer trends

The Chinese market and Chinese consumers are in many ways different from Western ones due to national characteristics and culture, which must be taken into account when promoting goods and services.

Chinese market buffs talk about the ""hourglass model,"" which describes the tendency of Chinese consumers to shop at the top or bottom of the price bracket, the two extremes of the hourglass.

In addition, the experience of Western brands suggests that foreign companies need to be more careful when using elements of Chinese culture to promote products. The difference in the perception of Chinese consumers from Western consumers leads to a complete denial and ignorance of brands. While the supply of a product or service, taking into account such features, can significantly increase sales.

...

Part 6. Assessment of factors of investment attractiveness of the market

The positive factors of the investment climate in China's ES market dominate over the negative ones.

The most significant negative factors.

...

The most significant positive factors.

...

Part 7. Forecasts and conclusions

7.1. Forecasts of the Chinese economy until 2026

...

The conference also reaffirmed the need to continue the “six guarantees” policy proposed by the Politburo in April 2020, representing six fundamental aspects of the economy and society that should be given priority and protection in economic policy to ensure economic recovery, namely:

Job security;
Guaranteeing basic livelihoods;
Guaranteeing states of the market;
Ensuring energy and food security;
Ensuring the stability of supply chains;
Ensuring the activities of grassroots organizations and structures.

The stable economic situation in China, which contributed to the growth of consumption and productivity among domestic companies, gave grounds for a positive assessment of the prospects for the domestic market by foreign companies.

...

7.2. Barriers in the market

The main barrier to the ES market in China at the moment is the tightening of legislation affecting the production, sale, foreign economic activity and promotion of these products.

...

7.3. Market Growth Drivers

The growth driver of the industry in China is primarily the growth in demand for power plants in the US and Europe. Due to a stable sales market, enterprises have the opportunity to develop the domestic market, offering the Chinese consumer a high-tech product at an acceptable cost.

...

7.4. Market development forecast until 2026 of China's electronic cigarettes

We will analyze the market based on methods based on identifying trends over time, adjusted for expert opinion in the industry.

...

7.5. Key findings. Go-to-Market Recommendations

The history of the Chinese cigarette market began in 2004, when the first modern electronic cigarette was released. However, for a long time the market was developing due to the export direction, while domestic consumption remained at an extremely low level. The turning point was the period of 2017-2018, when a ban was introduced on the import of foreign ES, and the domestic market began to develop due to new players.

...

Under the current conditions, operators planning to enter the Chinese market are advised to focus on the premium ES segment, using the attractiveness of the Western model in their promotion strategy. At the same time, it is worth considering the national characteristics of Chinese consumers and carefully studying the experience of successful and unsuccessful strategies of foreign brands in the Chinese market. To reduce the cost of production, it is recommended to use contract manufacturing, which is offered by many Chinese manufacturers.

In general, existing and new market operators are recommended to systematically study the competitive environment and consumer preferences, study and develop production technologies, study investment opportunities in the industry, establish stable partnerships with all participants in the product distribution chain, as well as conduct advertising campaigns and sales promotion activities subject to the restrictions of the current legislation.

Diagrams

Chart 1. Dynamics of the volume of the Chinese electronic cigarette market in 2017-2021, billion yuan

Chart 2. Dynamics of the population of China, 2014-2021 , million people

Chart 3. Dynamics of disposable income per capita in China in 2017-2021, yuan

Chart 4. Dynamics of China's GDP, 2017-2021, trillion yuan

Chart 5. Dynamics of retail trade turnover in China 2017-2021, trillion yuan

Chart 6. Monthly dynamics of the US dollar against the yuan, January 2017 - June 2022, yuan per 1 US dollar

Chart 7. Shares of the largest competitors in the Chinese e-cigarette market in 2021

Chart 8. Dynamics of domestic production of electronic cigarettes in China 2017-2021, billion units

Chart 9. The volume and dynamics of exports of electronic cigarettes 2017-2021, billion yuan

Diagram 10. The structure of exports of electronic cigarettes in 2021,%

Chart 11. Forecast of the volume and dynamics of exports of electronic cigarettes 2021-2026, billion yuan

Chart 12. E-cigarette consumption per capita in China, 2017-2021, yuan/person

Chart 13. Forecast of the Chinese economy for 2022-2026, billion yuan

Chart 14. China e-cigarette market size forecast 2022-2026, million yuan

Tables

Table 1. Classification of ES by types

Table 2. Classification of EC type of atomizer

Table 3. STEP analysis of factors affecting China's e-cigarette market

Table 4. Main companies participating in the Chinese ES market in 2021

Table 5. Profiles of companies participating in the Chinese e-cigarette market in 2021

Table 6. ES assortment of leading Chinese market players, 2022

Table 7. Average wages by industry in China in 2021

Table 8. Evaluation of factors of investment attractiveness of the electronic cigarette market in China

All reports