China’s e-cigarette industry cuts 10 pct of staff, slows production as regulation tightens
China’s e-cigarette industry has laid off around 50,000 people since October, roughly 10 percent of its workforce, trade association estimates showed, as tightened regulation in the United States and China smother the once-booming sector.
Ao Weinuo, secretary of the Electronic Cigarette Industry Committee, late on Thursday said media scrutiny of vaping in the United States, the largest e-cigarette market, has also caused demand to wane just as China banned online e-cigarette sales.
Factories in the southern Chinese city of Shenzhen, where approximately 90 percent of the world’s e-cigarettes are made by a 500,000-strong workforce, have consequently slowed production and cut staff.
The downturn comes after the success of e-cigarette firm Juul in the United States prompted investors in China to pour money into startups with products mimicking Juul’s compact size and potent nicotine formulation - startups that industry watchers say are now saddled with excess inventory.
Association Chair Ou Junbiao, founder of e-cigarette maker Sigilei, earlier this month told media outlet China Venture that his company has cut headcount by about half from around 1,000.
One Shenzhen worker told Reuters that employer Teslacigs suspended hiring just as it moved into a facility intended for double its 400-strong headcount.
Another person at a factory of 300 workers said orders have fallen 30 percent since their peak, and that management will consider layoffs if the regulatory environment does not improve next year.
“We're under a lot of stress,” the person said.
Leo Chan, an investor at venture capital firm Autobot who researches China’s e-cigarette industry, said some makers tried to shift excess inventory by opening offline stores, but the increased competition angered original offline franchise partners.
Smaller brands with less investor backing have fewer options. One manager at a brand that launched this year said sales dropped 60 percent after online sales were banned in November.
“We invested a lot of capital into online sales as the core of our launch strategy,” said the manager, who declined to be identified due to the sensitivity of the matter. “The new rules immediately messed up our path.”
US raises tobacco and e-cigarette purchase age from 18 to 21The US Congress voted Thursday to raise the minimum age of tobacco and e-cigarettes from 18 to 21 across the country, amid a surge in youth vaping.The ... Variety
Philippine leader says to ban ‘toxic’ e-cigarettes and arrest usersThe Philippines will outlaw the use and importation of e-cigarettes and arrest anyone using them, its president said on Tuesday, joining a growing ... Healthy Living
Instagram bans influencers from promoting vaping productsSocial media influencers will be banned from promoting vaping, tobacco products and weapons on Instagram as the Facebook-owned platform doubles down ... Digital