How will the future of vape enterprises be laid out?
2022 is destined to be a tragic year for China's vape industry. This year, many vape companies will disappear forever. May has not yet come, and many vape companies have already started to dump their products, and many sellers are actively stocking up, prepare for the upcoming regulation. Only vape and e-liquid businesses that have obtained licenses after October will survive, and the rest will have to be shut down or relocated out of China.
In 2021, after more than ten years of crazy and disorderly development, vape has become a big cake in the economic market. The vape market is not only favored by the capital market, but also the government departments are eyeing it, and they have sacrificed strict regulations. Regulate the system in order to reap more tax revenue in the vape market. Naturally, domestic vape cannot escape the fate of being strictly controlled. On March 22, the Ministry of Industry and Information Technology publicly solicited opinions on the revision of the "Regulations on the Implementation of the Tobacco Monopoly Law", and proposed that vape and other new tobacco products should be implemented with reference to the relevant provisions on cigarettes in these regulations. It is a fact that has been established, indicating that domestic vape is about to be controlled as tobacco, and whether it is production, sales or taxation, it will be close to tobacco products.
With the continuous strengthening of regulatory measures in various countries, the capital bubble of vape has been squeezed, and the share price of a leading vape brand in China has quickly halved. Today, its share price has fallen to only one-twentieth of the highest share price. , it can be seen that the capital that has poured into the vape market is retreating rapidly. With the continuous strengthening of various vape supervision and the implementation of policies, capital escapes, how will the future of vape enterprises be laid out?
In fact, up to now, there are only two ways for vape companies to go out. One is to meet the policy and obtain production licenses. , otherwise it will only be closed in October. Which of the two roads is better? Let's discuss it below.
The first way is to stay in the country to obtain a permit.
There are at least a few thousand vape companies in China, and there may not be more than 100 companies that can obtain a license. Therefore, if you choose to stay in China, your chances of survival will not be higher than one tenth, especially if a company with comparative strength For a small enterprise, or an enterprise that has not engaged in foreign trade export before, your chances of obtaining a license may be less than 1%, so enterprises that meet the above conditions, please change careers as soon as possible.
Even if you are lucky enough to obtain a production license, you still cannot be too optimistic, thinking that the sales of flavored e-liquid will be prohibited in the future, which will lose many customers, but it is not clear whether the production of flavored e-liquid will be banned for foreign trade export. If flavored e-liquids are banned even for foreign trade exports, the export business will face a sharp contraction unless other countries also ban the sales of flavored e-liquids. Therefore, companies that stay in China to obtain licenses are likely to develop rapidly. After all, there are more than half of the competitors, but at the same time, the prospects are unknown, because even the current policy is still not very clear.
The second way is to relocate the company abroad
Perhaps this is the most ideal route, but it is not suitable for small businesses because of the high cost. Relocating companies to countries with less stringent regulations will allow for greater flexibility and unrestricted production of vape and e-liquids, and without China, the largest vape-producing competitor, is likely to gain huge growth.
But this also has drawbacks, the high cost is inevitable, and the regulatory policy of vape is changing from time to time, it is difficult to guarantee that their vape management policy will change soon after you move in, which is not worth the loss. In conclusion, recent years have been a year of disaster for the vape business, but also a year full of opportunities.
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