Leaders visit e-cigarette companies in Shenzhen

What is the deeper meaning behind this?

Recently, leaders from Guangming and Bao'an districts have been conducting research on electronic cigarette businesses within their jurisdiction. On August 4th, Guangming district committee secretary Cai Ying led a team to investigate Shenzhen Zhenwei Biotechnology Co. Ltd. and Shenzhen Hanqingda Technology Co. Ltd. On July 21st, Bao'an district mayor Wang Lide and deputy mayor Zhu Yun led a team to visit Shenzhen Jiner Technology Co. Ltd. for research purposes.

Shenzhen Zhemi Biotechnology Co., Ltd. as seen in the photo source from Guangming, Shenzhen.

What is the significance behind the visits of leaders from two major administrative districts in the western part of Shenzhen to the headquarters of the leading electronic cigarette company within a period of two weeks?

In the past half month, leaders from two districts have conducted research on three industry leaders.

According to public reports, on the afternoon of August 4th, Cai Ying, the secretary of the Guangming district party committee, led a team to visit Shenzhen Zhenwei Biotech Co., Ltd. and Shenzhen Hanqingda Technology Co., Ltd. They visited the company's production workshop and testing laboratory, and were briefed on the relevant situation.

Ouyi News noted that this is not the first time Cai Ying has conducted research on e-cigarette companies. On October 26 last year, Cai Ying, who had just taken office as the Secretary of the Guangming District Committee, visited the first company as part of her new role, which happened to be a e-cigarette company - Shenzhen Smok Technology Co., Ltd.

It is worth mentioning that the companies involved in this survey, including Zhenwei Biotech, Hanqingda Technology, and Avipsa Technology which were surveyed earlier, are all prominent export-oriented enterprises in the electronic cigarette industry, with products covering electronic atomizers, e-liquids, and more.

Using Zhenwei Biotech as an example, the company was established in 2016 and is headquartered in the Gaoxin Technology Industrial Park in Guangming District. It is a high-tech enterprise specializing in the research and development, production, sales, and service of electronic atomized liquid. Its products have been exported to over dozens of countries and regions including Europe, America, the Middle East and Southeast Asia.

True Taste Bio, a leading company in the export of e-cigarette oil, has invested heavily in research and innovation. Recently, they even established the True Taste Bio Yunnan Research Institute in Kunming, which is the world's first research institution specifically dedicated to researching tobacco flavor aerosols. It is worth noting that True Taste Bio currently holds over 200 patents and pending patent applications.

Aside from Guangming District, leaders from Bao'an District also recently visited electronic cigarette businesses.

Bao'an Scenery. Image source: Binhai Bao'an.

On the afternoon of July 21st, the District Mayor of Bao'an, Wang Lide, and Deputy District Mayor Zhu Yun visited Shenzhen JINE Technology Co., Ltd., where they toured the company's product exhibition hall and gained a deeper understanding of its recent development and future strategic plans.

Like several other companies in the industry, Jiere Tech is also a company with a strong focus on exports. Additionally, it is one of the companies in the industry with the highest investment in scientific research. Jiere Tech has accumulated over 1800 patent applications, and its patent growth rate in 2021 has exceeded 300% compared to the previous year.

In addition to leadership visits and research, on March 20th of this year, the Baoshan district issued a government document entitled "Several Measures to Promote the High-Quality Development of Advanced Manufacturing and Modern Service Industries in Baoshan District (Shenbao Government Office [2022] No. 15)". Article 8 specifically mentions the encouragement and support of the "new electronic atomization equipment" industry, marking the first time that "electronic atomization" has been explicitly written into a local government's industry support document.

Soon after, the Baoshan District Committee and Government held a symposium on specialty enterprises, inviting eight local atomization technology companies, including Mcwell, Wuxin Technology, and Jieer Technology. During the meeting, the Baoshan District expressed its intention to establish a service team dedicated to atomization technology companies, providing stronger policy guidance and support.

Various signals indicate that the "Da Bao'an" area, the birthplace of the electronic atomization industry, has elevated the strategic position of this industry to new heights.

Emerging Growth Centers within Regional Economies

In fact, there is a saying within the industry that accurately summarizes the position of the electronic atomization industry in the "Great Bao'an" area: over 95% of electronic cigarette production and products worldwide come from China, with 70% of that originating from Shenzhen, and over 95% of that from Bao'an.

According to statistics, the electronic cigarette industry in Bao'an District had a total output value of 31.1 billion yuan in 2021, with 41 companies in the formal sector. In terms of production and processing, there are global leaders like Mcwell and leading companies such as Gigre and Heyuan Technology. As for brands, there are global leaders like Vaporesso and top-ranking local brands like Mody Tech.

From the perspective of the overall industry layout, the electronic atomization industry has formed a very complete industrial chain in the "Da Bao'an" area, spanning from the upstream supply of raw materials to the midstream design and manufacturing of products and the global sales network.

However, before this, the electronic vaporization industry also went through a period of what appeared to be a "wild growth" in the eyes of outsiders. During that period, the electronic vaporization industry experienced a "battle of a thousand factions" and also had some quite negative opinions arise.

Since last year, a series of regulatory documents pertaining to the electronic cigarette industry have been introduced, making it an established part of the tobacco industry and a growing segment of regional economies.

Against this backdrop, key officials in the "Da Baoan" region have been intensively visiting and conducting research on electronic cigarette companies, while the district has gradually introduced supportive policies, which have brought this emerging industry to the forefront.

It should be noted that the electronic atomization industry, dominated by private enterprises, has developed almost entirely through self-initiative, from technological innovation to the perfecting of the industrial supply chain to sales distribution.

According to the "2022 Blue Book of Electronic Cigarette Industry Export", the Chinese electronic cigarette industry is one of the representative industries that grew against the trend during the pandemic, especially in 2021 when the export scale of electronic cigarettes reached 138.3 billion yuan, a year-on-year increase of 180%, far exceeding the total national commodity export during the same period. Furthermore, it is estimated that the total export of electronic cigarettes in 2022 will reach 186.7 billion yuan, with a growth rate of 35% based on the 138.3 billion yuan base of 2021.

As a strong export-oriented industry, the electronic atomization industry is a relatively rare industry in China that has global core technology, product pricing power, and strong product innovation capabilities.

It should be noted that the electronic cigarette industry is also facing the risk of industry spillover. Local governments should be vigilant, given the rapid development of the global electronic cigarette industry. While domestic companies may have some technological barriers and protective measures in the short-term, they still need to increase their research and development investment and upgrade their brands. Local governments should also prioritize service and actively cooperate with businesses to facilitate upgrades. At the same time, competition in intellectual property rights in the global electronic cigarette industry will become normalized. Local governments should also timely provide protection for businesses regarding their intellectual property rights.

In addition, as policies become clearer, local governments should have more detailed support policies to keep this advantageous industry in Shenzhen and in the "Dabao'an" area.

This article contains excerpts or reprints of third-party information whose copyrights belong to the original media and authors. If there is any infringement, please contact us to delete it. Any individuals or organizations wishing to reprint must contact the author and should not reprint directly.