“Are you over 18 years old? If not, please leave.
This is a reminder of the landing page of the American pornographic websites, while the reminder of the landing page of American electronic cigarette retail websites is: “Are you over 21 years old?”
What pornographic websites and e-cigarettes have in common is that they target young people. But in the United States, the threshold for buying e-cigarettes is higher than for viewing pornographic websites. In the criminal law and related laws of California and other places, the sale of tobacco products or appliances, including electronic cigarettes, to anyone under 21 years of age is clearly illegal.
The bottom line for sex is 18, and the bottom line for the international tobacco industry is 21.
Internationally, such a reminder is no longer news. Within China, e-cigarette brand websites, such as Smoore‘s own brand Vaporesso, which mainly do overseas vape export business, also set the threshold.
But from last year to now, RELX, Yooz, Moti and other new e-cigarettes who have been capitalized on, output radical agency model and Internet marketing, the vape industry in China is in chaos.
Just six months ago, RELX tried to enter the campus. Though companies with the problems of low-price warfare & OEM, pod electronic cigarettes are 10 times the profits of mobile phone hardware, which has become the industry’s public secret.
During this process, the moral bottom line of vape companies is blurring.
A dead lie
At the Shenzhen Conference on March 31, RELX released the new device, RELX Alpha. In its press release, the “Guardian Plan” was brought out at the end: the sale and marketing of electronic cigarette products to minors was firmly prohibited, and adults should avoid using electronic cigarettes in front of minors.
Previously, in January 2019, RELX announced the plan to protect minors, although the packaging of RELX electronic cigarettes was printed with small letters warning, “Alcohol allergy, heart disease… Minors and other groups, do not use it”, but the text of the instructions is extremely provocative.
RELX CEO Wang Ying explained the protection plan in an interview. The first step is to start with the people around him, “For example, not using electronic cigarettes in front of minors, not setting an adult model”, and the second step is to radiate cooperation channels by means of propaganda.
Wang Ying’s concluding remark is meaningful, “This is not the business of a single enterprise, but the whole industry, we need to do it together.”
But just six months ago, RELX tried to squeeze into the campus.
On August 29, 2018, a marketing consultant for RELX e-cigarettes posted on a website saying, “Seeking campus agents, up to 35% commission.” Its certification information is Shenzhen Fog Core Technology Co., Ltd. – RELX, and the cooperation place is Beijing. The validity period is up to December 31, 2018.
RELX will provide 30 yuan discount coupons for campus agents (for campus promotions); resources and fees for campus promotion (campus agents are responsible for overall planning); a complete set of campus marketing materials; and necessary campus sponsorship.
The requirements of campus agents are: there are certain campus network resources in Beijing; good cooperative relations with various colleges and universities’associations; and a certain understanding of students’ consumption ability on campus.
Finally, note, “If you meet all the needs of the above requirement, don’t worry about the remuneration, absolutely enough”.
This information has 24359 views and 8 replies. Although the poster did not carry out professional certification on the website, Vape HK contacted the poster and the agent said he did work for RELX Company, but the campus agency activities have been suspended. As to the result of previous activities, the agent did not respond.
It’s like the social marketing of JUUL, an American electronic cigarette company, targeting young people, not just smokers.
According to the Food and Drug Administration (FDA), the proportion of high school students using electronic cigarettes in the United States has surged from 1.5% in 2011 to 15% in 2015. This number expanded rapidly in the next few years, and the FDA attributed the responsibility to electronic cigarette start-ups such as JUUL.
In fact, the posting time of the above campus agent is a delicate point. The day before the post was sent out (August 28, 2018), the State Administration of Market Supervision and Administration and the State Tobacco Monopoly Bureau issued an official announcement banning the sale of electronic cigarettes to minors. A few days later, the announcement spread rapidly through the media.
With the lesson of “campus loan“, it is obvious that electronic cigarettes enter the campus in a form of self-destroy. In the regulatory vacuum zone, how to protect minors, at present, only rely on the self-discipline of electronic cigarette enterprises.
Cross-regional low-price battle
In 2018, Smoore’s business income was 3.433 billion yuan, up 119.33% year on year.
On March 29, the domestic electronic cigarette industry giant Smoore produced a beautiful annual report for 2018. The total profits in the four quarters of 2018 were 110 million, 123 million, 268 million and 283 million respectively, with net profits of 785 million yuan, an increase of 257% over the same period last year. Among them, ODM (original design and manufacturer) business realized business income of 249,198.97 million yuan, an increase of 148.28% over the previous year.
RELX, YOOZ and other hot brands of pod vapes, have the same main authorized supplier, Smoore.
Smoore, who started with Feelm ceramic atomizing core technology, has long been aware of the limitations of ODM and has begun to build his own brand Vaporesso. Vaporesso launched its own Zero vape last year, but its market popularity is still slightly lower than that of Internet e-cigarette brands such as RELX.
Why Smoore’s grand-child RELX does better than its son Vaporesso?
On this point, Smoore is not the exception. Traditional brands of electronic cigarettes are often known for their high-power voltage-regulated electronic cigarettes, but these devices are not easy to use, only in small crowds. Pod vapes of traditional electronic cigarette brands only have reviews from professional electronic cigarette website & influencers, which depends on the stable overseas market.
However, with the support of capital, relying on large-scale social marketing and radical agency model, RELX, YOOZ, Moti and other influencer products have rushed to promote the category of pod vapes to the deep Chinese market.
“The whole province has been planted with our flags.” RELX’s general agent of a province told Vape HK.
RELX has higher requirements for the general agent of the city, including promotion ability and practical experience, while the applicant to be RELX distributor needs to pay a deposit of 5,000 yuan. After signing the authorization contract, he can join.
According to a RELX agent contract awarded by Vape HK, after applying to be a distributor, RELX’s vape pods can be obtained at a discount of less than 50%, and the source of electronic cigarette cartridge can be obtained at a discount of nearly 50%. If the order quantity is large, you can even get a better price.
Portable electronic cigarettes are ten times as profitable as mobile phone hardware, which is an industry secret.
Some people in the industry said that the average gross profit of the vape industry can reach 60%-70%, which can be described as windfall profits. Now the secret of the electronic cigarette industry is that it can’t stop the cross-regional low-price battle.
A person claiming to be the general agent of RELX Beijing told Vape HK that he could supply the vape at the price of $20 (Official price $39.9) for vape and $9 (Official price $14.99) for the cartridge from Shanghai and Lianyungang, but he needed to deduct the bar code of the vape packaging to prevent the manufacturer from finding out the serial goods and getting fined.
The market for vapes has been disrupted by channel distributors cross-regional low-price battle.
On the latest products of RELX, the two-dimensional code is printed directly on the vape elastic-plastic seal to prevent the phenomenon of low price battle. But an agent of Moti, RELX and other brands told Vape hk, “If you want, I’ll sell, I have ways to get out of it.” Said the agent, “Don’t worry about the low price battle in the early stage, the market is developing fast, and most dealers basically play like this.”
Channel vendors sell vape at very low prices, which exposes the nature of the industry’s windfall profits and further stimulates the market. Taking the vape “Ammo” of Shenzhen Bolton Group as an example, since the first 15 regional agents on March 1, after one month‘s development, it has expanded to 39 national regional cities.
The fire of vape is planted all over the country.
“The municipality directly under the Central Government sells 20,000 cigarettes a month,” an Ammo e-cigarette salesman of Shenzhen Bolton Group told Vape hk that the joining of Ammo e-cigarettes is more direct. Its main one-time e-cigarette sticks sells only 39 yuan on its official site. If you choose to be a distributor, you can purchase 1,000 items, each only needs 19 yuan.
Who is in charge of tomorrow?
“You’ve earned the money you shouldn’t have earned. You may laugh happily, but there’s no tomorrow.” Chen Zhenjiang, CEO of Dongguan Yihi Electronic Co.,ltd, told Vape hk.
At the 2018 ECC exhibition in the United States, SXmini, a high-end vape product, was exposed. As a traditional high-end brand of electronic cigarettes, SXmini was considered a compromise of traditional electronic cigarettes in the eyes of many old vapers because of pod vape’s little technological innovation.
SXmini from Yihi mainframe product is less influential than those current influencer products, because the first batch of vape cartridges taste did not meet its expectations, and its production was once stopped and improved. Chen Zhenjiang said excitedly in an interview, “The electronic injection technology developed by Yihai for two years will be presented at Shenzhen Electronic Cigarette Expo in April, which will ensure that every bite of electronic cigarette is fresh for vapers.”
Chen Zhenjiang compares the current popular vape pods to an old dish. Today’s craze is to stir-fry in one pot. Their innovation level is not high, but “at the right time, anything you do is right”. Almost at the same time, the traditional electronic cigarette manufacturer Aspire has also introduced ZQ Assure Pods.
They are accustomed to making a fortune in silence, because they often play a conservative and low-key role when in the tobacco industry of China. They rely on their accumulated technology to build portable electronic cigarettes. There is no radical marketing strategy of traditional vape enterprised compared to the hot Internet brands like RELX. This is also the incompatibility between the two kinds of companies.
“If the core competitiveness of an enterprise like RELX depends on marketing, it is typical to make quick money.” Chen Zhenjiang said.
Unlike the traditional electronic cigarette manufacturers Smoore for RELX, YiHi is an vape company that never works as an OEM. Chen Zhenjiang believes that only when people do not blindly pursue short-term benefits, can they truly achieve an electronic cigarette brand.
“Capital injection has brought new players into the market, and its role in boosting the wave has expanded the boundaries of the e-cigarette market.” Chen Zhenjiang agrees with this. He agrees with the innovation of technology more, just like the temperature control technology of electronic cigarette chip, which has been built by Yihi, based on the high-end brand value orientation, is what the enthusiasts of electronic cigarettes are enthusiastic about.
Throughout the past decade, observing from the growth of domestic electronic cigarettes, the one is still standing in the market is the one relying on technological innovation, such as the ceramic atomization core technology behind Smoore and ALD.
At the end of 2018, Juul, an vape company in the United States, was acquired by Altria Group, a tobacco giant with well-known brands such as Marlboro, for 35% of its shares at a price of $12.8 billion, with a valuation of $38 billion.
The three-year-old company’s success is also based on technological innovation, which extracts nicotine from the chemical level rather than free nicotine from traditional electronic cigarettes. However, Juul’s Chinese imitators, who just learned how to socialize marketing to young people, then began to race around and forgot about technological innovation.
Chinese domestic e-cigarette market is still in chaos.
“It’s a good thing that 315 Party exposed unqualified electronic cigarettes.” Chen Zhenjiang said. Yihi participated in the China Electronics Commerce and drafted the General Specification for Appliances of Vape Products with the vape industry companies in an attempt to fill the gap in the industry in 2017.
Today, he looks forward to the regulation of policies and rules at the national level, and mandatory national standards for vape and e-liquid been submitted by the National Tobacco Monopoly Bureau, which is expected to be introduced within the year.
Just as the FDA of the United States has raised the entry threshold of vape enterprises and made the vape industry in the United States tend to be standardized, the vape industry in China may also be included in the regulatory field of food and drug authorities in the future.
“Whether high-power electronic cigarettes or today’s pod vapes, the future will eventually be the world of portable vapes.” Chen Zhenjiang said that after more than 10 years of ups and downs in the industry, he believes that whoever enters the market, it will not shuffle quickly, and this market is not a winner-take-all market.
For e-cigarette manufacturers, the uncertainty lies in this, they may face tax increases, licensing access and other supervision. The spring to ride on a horse to enclose is doomed to be short, and no one can predict what kind of failure awaits them.
Or maybe soon, you will find a new vape brand ad among the Vivo, OPPO & Huawei billboards all over China’s counties.