Challenges Faced by E-cigarette Retailers in China

Recently, it has been observed by reporters that despite the numerous tobacco retailers obtaining licenses and various brands being granted production permits, the enthusiasm of electronic cigarette retailers to pursue licensing and maintain their businesses remains consistently low.

It has been discovered that over 50,000 electronic cigarette retail licenses have been approved nationwide, but only just over 20,000 have actually been issued. This accounts for less than 40% of the total approved. Surprisingly, 20% of the stores that have been approved have chosen to forfeit their license.

Closed Shop in Pain over Unclear Policy Direction

A journalist discovered in a bustling commercial street in Beijing that once had four or five different branded electronic cigarette stores established one after the other, only one store still remains operational as a conglomerate. However, neighboring shops have either shut down or posted rental notices on their storefronts.

Zhao Cheng is the owner of this convenience store. During an interview, the reporter learned that he has already obtained a retail license. However, due to a lack of confidence in the future, he is considering selling the store before the lease expires.

The confusion over policy direction is the main reason why Zhao Cheng is considering closing his store. "There is a lot of policy uncertainty during the transition period, and the brand has no countermeasures. The staff responsible for the tobacco bureau also cannot provide clear answers," said Zhao Cheng.

Zhao Cheng, one of the earliest electronic cigarette shop owners, stated that he quit his stable job and invested all his savings into this business when he saw the potential of the industry. At its peak, he managed three shops. However, he now only has one left and due to the impact of the pandemic, even if he were to switch professions, the stability of his business would still be uncertain. He is unsure of what the future holds.

Supply Shortage: National Standard New Products Delayed Indefinitely.

Even after obtaining a permit, Zhao Cheng, who is considering closing his store, is not an exception. Cui Zhiqiang, an e-cigarette shop owner from Chongqing, is also facing a similar dilemma.

I have received a warning from relevant personnel that fruit-flavored electronic cigarettes will be banned from October onwards. In order to successfully apply for a tobacco retail license, I have purchased a large number of electronic cigarette products of various brands, in accordance with the requirement that electronic cigarette stores cannot operate exclusively. However, according to Mr. Cui Zhiqiang, these brands are not popular and have resulted in a large amount of unsold inventory, causing significant financial pressure on the business.

Well-selling brands such as YUEKE and YUZI have been sold out for some time now, while other products that were procured as per requirements lack recognition and fail to attract consumers. The situation I am currently facing is that the products with market demand are out of stock, and the products available in stock do not have market demand," sighed Cui Zhiqiang.

According to sources, tobacco officials in many provinces and cities have been warning retail store owners to quickly use up their stock of fruit-flavored e-cigarettes before the new regulations take effect on October 1. If they continue to sell these products after the deadline, they will face varying degrees of administrative penalties. However, new national standard products from various brands have yet to hit the market, leaving store owners struggling to make ends meet after they exhaust their stock of fruit-flavored products. The cost of rent and other operating expenses will make it difficult for them to stay afloat.

The implementation of new regulations for electronic cigarettes has caused confusion, with a lack of clear guidelines during policy execution in various regions, insufficient existing inventory, and a delay in new product releases. This has become a major concern for electronic cigarette shop owners across the country.

According to industry media investigations, in July, 35% of store owners experienced a decline in sales, and 29% of them reported that continuing to operate their stores was only due to the sunk costs, reflecting a low level of confidence in the industry.

The application process is difficult and there is a high rental pressure.

Furthermore, many shop owners have encountered numerous difficulties when applying for licenses in various locations. The reporter also interviewed a former electronic cigarette shop owner in Zhangjiakou, Hebei Province. The shop owner stated that he applied for an electronic cigarette retail point two months ago. However, the location of his store was not among the existing points of the local Tobacco Bureau, which prevented him from obtaining a license smoothly.

I have called many times to ask, but the other party does not know how to solve this situation, they just keep repeating information from the state bureau's documents." The former store owner stated that they switched careers to cut their losses in a timely manner. "Even if I can get the license, I don't want to do it anymore in this situation.

In recent years, the explosive growth of the e-cigarette industry has led to dedicated e-cigarette retail stores becoming a new retail format. According to the "2021 E-cigarette Industry Blue Book," there are nearly 190,000 e-cigarette retail outlets in the domestic market, including 138,000 authorized stores and 47,000 dedicated stores. E-cigarette sales networks have penetrated into cities at all levels, with an average of 1,301 e-cigarette retail stores in each first-tier city and 33 in each fifth-tier city.

Under current regulations, the data mentioned above will undoubtedly experience a significant shrinkage. "In the long run, the legalization and regulation of e-cigarettes will promote the standardized development of the industry, but the issue of employment for retailers should not be underestimated," experts have stated. "During the implementation of regulations, the absence of service awareness and meticulous enforcement will cause pain for e-cigarette shop owners.

This article contains excerpts or reprints from third-party sources. Copyright belongs to the original media and author. If there is any infringement, please contact us for deletion. Any organization or individual wishing to reprint should contact the author and refrain from directly reprinting.