Company dynamics

E-cigarettes compete with each other

  China's tobacco industry is a billion-dollar market.According to public information, the tobacco industry's tax revenue and profits totaled 11556.2 million yuan in 2018, the national finance totaled 10.008 trillion yuan, and the industrial glass pipes added value was 787.7 billion yuan.

lookah shop image.jpg

  Maybe a lot of people don't have the concept of 100 billion. You can see the analogy: the tobacco industry accounts for about 1% of China's tax revenue, and its share of national income has been stable between 6% and 10% throughout the year.In addition, the tobacco industry's industrial and commercial tax profits are growing every year.In 2009, the tobacco industry's tax profits exceeded 500 billion yuan for the first time, and in 2014, it succeeded in exceeding 1 trillion yuan.

  Tax profits in the tobacco industry hit a record high of $1.15562 trillion in 2018.This figure is equivalent to the profits of petrochina, sinopec, China's four largest Banks, alibaba, tencent and baidu.

  According to the China institute of industry, 30 per cent of traditional oil rigs smokers in the UK have switched to e-cigarettes, while the penetration rate in the us is 13 per cent, compared with just 1 per cent in China.Data from the e-cigarette industry of the China electronic chamber of commerce showed that the global output value of e-cigarettes in 2018 was 110 billion yuan, while the domestic scale was only 4 billion yuan.

  "Assuming only 5% of traditional cigarette consumers in China switch to e-cigarettes, the size of the market is enough to drive practitioners crazy," Goldman Sachs said in a 2013 report.In addition, e-cigarettes could account for 10 per cent of total tobacco sales and 15 per cent of profits by 2020.Even if that expectation is too high, it's still "longer slopes, thicker snow."

  For smokers, tobacco is a necessity, and in a huge market, e-cigarettes want a piece of the action.

  China is the world's largest maker of e-cigarettes, and more than 90 percent of the world's e-cigarette equipment is made in shenzhen.According to e-cigarette practitioners, e-cigarettes only need to import chips, the rest can be completed through domestic procurement, each production cost less than 50 yuan, gross profit can be up to 80%.

  The e-cigarette industry chain includes upstream raw materials suppliers, e-cigarette design manufacturers and downstream sales enterprises. Upstream raw materials are divided into battery raw materials suppliers (battery, core, control circuit), atomizer raw materials suppliers (plastic, glass, hardware, heat resistant) and tobacco raw materials suppliers.Midstream design and manufacturing include two categories of cool water pipes professional e-cigarette manufacturers and international tobacco giant manufacturing departments: domestic private brand market occupies a small proportion, and enterprises consider foreign well-known brand OEM/ODM.World-renowned tobacco groups such as FEMO international, imperial tobacco, British American tobacco and Japan tobacco have become major e-cigarette brands with their strong research, development, production and distribution capabilities.With the increasing demand in Europe and the United States and the development of domestic manufacturing industry, e-cigarette products present a global industrial chain pattern with China as the center and Europe and the United States as the center.

  In fact, the threshold to enter the e-cigarette industry is not high, is a very light business model.Because the industrial chain has been very complete, it can all contract production, only need to carry out different arrangements and combinations in the projects provided by various parts suppliers, millions of investment, half a year is enough to build a new brand.

  Have a mature and perfect industry chain, this is, entrepreneurs can take advantage of water dog pipe ready-made, and electronic cigarettes sprayer, batteries, and it is not difficult to produce, while the key of smoke bomb production threshold is very high, but does not prevent entrepreneurs profit, its main profit point is atomizer, usually costs in 30-50 yuan, but the price is ten times the left and right sides, this is the real profits.

  A lot of money poured into the e-cigarette industry, why not like the mobile phone industry, group purchase, sharing industry directly through price cut to occupy the market?

  One reason is that the e-cigarette industry is a healthy cash-flow business, enabling funders to provide enough start-up capital compared with Shared bikes, artificial intelligence, autopilot and other vents -- often hundreds of millions of dollars in financing.The hardware structure is simple, the composition of the tobacco oil is not complex, but also provides a supply chain and matching.

  Second, the payback period for the e-cigarette industry is short.The most important thing for investors to invest in e-cigarettes is the quick cash return. Its high gross profit can guarantee the short-term return of funds. Only one advantage can guarantee the investment floor.

  Many e-cigarette brands, which had not bid before, are now entering the e-cigarette business, and more are hoping to catch up with the regulatory gap and fish in troubled waters, a tough catch.They were all thinking without thinking -- making quick money.