The involvement of capital has worried vape companies

With the popularity of vape pen, the vape industry has stood on the cusp, and “profiteering” has become synonymous with the industry. The accelerated involvement of capital in this industry has also changed the business and competition in this industrial chain. The so-called extremes must be reversed. Just when capital has entered the industry one after another, and the industry is full of excitement, some companies in the industry have also developed fear.

Recently, the "Securities Daily" reporter interviewed Zhang Yang, head of a small and medium-sized enterprise upstream of the vape industry chain. Different from the outside world, he reluctantly said that the vent is the vent of capital.

The entities in the vape industry chain have already differentiated. “Enterprises that can pull capital investment stand in the air, and companies that have not pulled capital are getting harder and harder. The surrounding small and medium-sized enterprises are mostly in transition.”

Zhang Yang told the "Securities Daily" reporter that (the public) very few people know that vape originated in China. China's first vape is called "Ruyan" and the founder is Han Li. After the introduction of the cigarette in 2003, the sales amounted to over 100 million yuan. Since then, it has been affected by other factors. For example, the cigarette has to be transferred overseas, its performance has shrunk, and it was finally acquired by Imperial Tobacco.

Zhang Yang introduced that for more than a decade, influenced by multiple factors, this industry has been developing at a low level. The domestic market is not large, and the main thing is export trade. Until the intervention of capital, the exposure of this industry will continue to increase.

“The days of making money are over,” says Zhang Yang. More and more capital is involved in this industry, and they prefer the head-to-head business. With the help of capital, these companies began to expand the industrial chain and seize the channels. “Everyone has earned money before, and now my friends are transforming.”

Capital will choose the leading enterprises in the industry, and then carry out the development of the whole industry chain. "Three years ago, the vape enterprise was earned by everyone, and now resources and business are concentrated to the head enterprises." Zhang Yang explained to the "Securities Daily" reporter. "Shenzhen has thousands of large and small manufacturers and brands. My company is mainly development and production, mainly engaged in hardware molds. In the past, 90% of the company's business was done as vape, and now only 30%."

In Zhang Yang's view, under the intervention of capital, their living space has become narrow. However, Shen Meng, executive director of Shannon Capital, told reporters that the vape technology threshold is not high, so a large number of production companies will soon appear.

From the outside world, vape is a profiteering industry. Shen Meng told reporters that with reference to cigarettes, vape's profit margin may be large.

Zhang Yang said that vape's "profiteering" is relative. "The producer develops a product with a cost of 50 yuan and an ex-factory price of 60 yuan to the sales company. It can sell at a minimum of 299 yuan in the market," in this industry chain. The profit of the producer is certain, and the profit of the sales company is related to the marketing cost of the enterprise.

"If the sales company takes 200 yuan to go to marketing, its profit is not high. But if you only take 10 yuan to go to marketing, its profit margin is very impressive." Zhang Yang introduced.

With the help of capital, the marketing methods of some enterprises have also been upgraded, and the channel has become a must for manufacturers. "Capital is the use of money to occupy the channel. Nowadays, there are too many marketing methods for Internet companies, and the pressure on traditional production enterprises is too great." Zhang Yang said, "What I am most worried about now is that the industry has been working hard for decades and the scale is 500. From 2000 to 10,000 people, capital will be overtaken in a corner in one year."

Zhang Yang said that he does not want the vape industry to become the next shared bicycle.