Tue, Dec 03, 2019 - Page 4 News List

Vaping concerns hit Chinese manufacturing

BANNED:A ‘de facto’ ban on e-cigarettes in China and 39 vaping deaths in the US have affected companies in Shenzhen, where 90 percent of vaping devices are made

The Guardian, SHENZHEN, China

Online e-cigarette sales looked like a promising industry for Edwin Wong when he started his venture a year ago.

The 34-year-old had studied Shenzhen’s businesses and products since 2012, and saw a sure bet. Soon, he had developed a loyal base of more than 600 repeat customers, and business was steady.

Then suddenly, everything changed. Overnight his 2.2 million yuan (US$312,398) investment in a startup, called KiwiPod, disappeared.

“A lot of people have gone into this business who never knew anything about the business before, they just threw money into it. Most just thought it was hot, very profitable, and now they are gone,” he said.

Searching Chinese e-commerce platforms such as Taobao or JD.com for “e-cigarettes” — something that would normally yield thousands of options — revealed nothing.

It was as if the online shops never existed.

Rumors were rampant of at least two suicides among the throngs of small-time sellers whose business model had disappeared.

The day everything changed was Nov. 7, when Chinese authorities suddenly imposed a de facto ban on e-cigarettes, issuing an order discouraging online sales to protect children from the hazards of smoking.

The order came out just before China’s biggest annual online shopping holiday, Nov. 11.

China is the world’s biggest manufacturer and exporter of e-cigarettes, according to the China Electronic Cigarette Chamber of Commerce. Last year, more than 2 million people worked in the industry, with annual sales worth 33.7 billion yuan and exports worth 28.7 billion yuan.

In Shenzhen, about 90 percent of the world’s vaping and e-cigarette devices are designed and manufactured in about 1,000 factories. Thousands more companies form the supply chain throughout Guangdong Province and China.

The industry is in damage control after an outbreak of vaping-related respiratory ailments led to at least 39 deaths across the US.

The US Centers for Disease Control is blaming the additive vitamin E acetate used in some e-liquids and said most of the cases were associated with smoking of THC oils, the main psychoactive compound in marijuana.

US President Donald Trump is meeting industry and health representatives, amid indications that the final policy in the US would balance health concerns with economic ones. The US market has already shrunk by about a quarter.

New York City lawmakers last week voted to ban flavored e-cigarettes. The measure, which New York City Mayor Bill de Blasio says he supports, bans all e-cigarette and e-liquid flavors except tobacco.

It is expected to take effect in July next year.

In Shenzhen, the bigger players have fared better than the smaller sellers, and life for them goes on as normal, for now.

The six-story Teslacigs factory is easily missed from the road in Shajing, sitting behind a tangle of tropical brush and amidst a cluster of similar dust-stained buildings.

Inside, about 400 workers quietly assemble new pods and other vaping devices in a pristine, dust-free, temperature-controlled environment, a far cry from the dusty world outside. The factory shows no signs of slowing down. The Chinese market still has potential, managers say, but all eyes are on what the US is going to do.

“We’re investing in our company, and we’re waiting to see what happens with US regulation,” said Xiang Jie, vice general manager of Teslacigs.

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