After the American e-cigarette giant Juul reach the Chinese market for less than a year, it’s rapidly withdrawing from China now. Shenzhen’s layoffs, Beijing executives’ resign, and Shanghai and Suzhou’s intensive downsizing all show Juul is retreating and failing in China.
According to statistics, Juul was founded in 2015 and is a US e-cigarette startup. In December 2018, the company was acquired by U.S. tobacco giant Altria Group for $ 12.8 billion, and its valuation rose to $ 38 billion. To this end, the company also gave out $ 2 billion as a year-end award to employees, with an average of $ 1.3 million per person.
Juul was once a myth of the electronic cigarette industry. Juul has long been a fan of China, which is expected to become the next trillion-level electronic cigarette market. In fact, as early as 2016, Juul began planning to enter the Chinese market, but because the China domestic situation was unclear at the time, the plan to enter China was put on hold. As the national standard for electronic cigarettes has entered the “in approval” phase, many entrepreneurs have begun to make electronic cigarettes.
At the end of 2018, Juul set up a local team in China and became a grounded multinational company. It rented WeWork’s almost one-story office space in Beijing’s Upper East Gemini, filled it with brand new workstations. But few rooms are full, and most of the time, there are only a few Chinese executives who have conference calls with the US headquarters every week.
A year later, Juul’s business in China was almost halted and it was losing ground. From 0 to 38 billion US dollars (about 266 billion yuan) valuation, the company took three years; from 38 billion US dollars to 16.4 billion US dollars (about 114.787 billion yuan), it only took one year.
In September 2019, Juul tested online e-commerce sales in China, but it did not last long. On November 1, China issued the strictest e-cigarette warning to date, calling on the e-cigarette industry to stop selling and promoting e-cigarette products online. Juul was unable to go online with JD Tmall, and died before starting his career.
According to Ran Financial Journal, Juul China has laid off staff in November. Sources in the Shenzhen branch revealed that “people from the U.S. headquarters first arrived in Shanghai, brought lawyers to Shenzhen, and then asked everyone to go home.” Currently the Juul Shenzhen branch basically already in a disbanded state. According to sources, Juul’s branch in Suzhou has also carried out personnel layoffs. In addition, Beijing executives resigned and Shanghai and Suzhou staffed downsizing is going on.
In addition, a person close to Juul said that after the online sales ban was introduced in early November, Juul’s business in China was basically suspended, and all recruitment plans were suspended. “Stand by and watch the domestic market first, and wait for instructions from the US headquarters.”
Juul has a hard time in the U.S. in 2019
Former e-cigarette myth Juul, life in the United States in 2019 is very difficult.
On November 15, Juul’s headquarters said it would lay off 650 employees, accounting for 16% of all 4051 employees. This move will help Juul reduce costs by nearly $ 1 billion next year.
Juul is struggling in the United States. Currently, the US e-cigarette ban has not been officially launched, but Juul has voluntarily stopped the sale of flavoring products other than tobacco flavors, stopped all advertising, and does not support any private e-cigarette associations that intended to challenge the government and flavor ban.
The pressure that Juul faces in the United States mainly comes from the popular e-cigarette culture among young people in the United States. This has led states to take measures to sanction Juul. Not only have prosecutions from schools and individuals, but also the attorneys from California and New York have sued Juul for advertising fraud and addiction to minors.
Under the pressure of many parties, Juul replaced almost all of its executives. The executive from Altria KC took over Juul as CEO, and the strategy adopted was to actively revise the previous extensive operations and actively surrender.
With the cliff-like slump in business and the downturn in the US e-cigarette market, Juul’s valuation may continue to fall.