Will the trade war between China and the United States affect ecig?

The Customs Tariff Commission of the State Council has decided to increase the tariff rate on the part of the US$60 billion list of US goods that have been subject to tariff increases since 0:00 on June 1, 2019, and implement 25%, 20% or 10% respectively. Add tariffs. For tariff items that have previously been subject to a 5% tariff, 5% tariffs will continue to be imposed.

On May 9, 2019, the US government announced that since May 10, 2019, the tariff rate imposed on the $200 billion list of goods imported from China has increased from 10% to 25%. The above measures by the United States have led to an escalation of Sino-US economic and trade frictions, contrary to the consensus between China and the United States on resolving trade differences through consultations, jeopardizing the interests of both sides and not meeting the general expectations of the international community.

Tariffs are import taxes imposed on products from another country to create a more favorable economic form for products made in the United States. However, because the United States does not have a large number of Ecig product manufacturers, this tax will only punish US importers, wholesalers, retailers, and ultimately only the American Ecig players.

The purpose of the tariff is to make the US-produced Ecig products competitive in the country. But if there is no American-made Ecog product, then everyone will suffer: consumers buy less products or wait for purchase, retailers are in trouble, distributors and importers reduce the number of products purchased from Chinese companies, Shenzhen factories will cut R&D budget and layoffs. This is a war without a winner.

It is difficult for American Ecig to “localize”. In addition to E-liquid, the United States does not manufacture large-scale production of Ecig equipment.

As for why the United States does not transfer Ecig technology from China? This issue has actually been discussed in the previous article. From a technical perspective, China currently has the largest number of Ecig manufacturers, and its R&D capability and product quality are already at a high level. Currently, some can be seen all over the world. Well-known manufacturers' equipment, such as SMOK, JOYETECH and Eleaf, are not only from China, but have been producing Ecig for ten years or more.

In addition to having ample resources and technology, China also includes professional product designers and engineers. However, this manufacturing experience and development foundation cannot be self-sufficient in the short term, let alone related parts supply chain and processing. Chained up.

From the point of view of production costs, if the manufacturing industry is established in the United States, it will focus on the local market at most. Because the labor costs in the United States are high, if the processing is sold to other markets, it is not economical, and the cost of raw materials is higher than that of China. It is also expensive, and no company will be willing to invest in Ecig manufacturing at this point in time.

If tariffs continue, the prices of lithium-ion batteries, E-liquids, and cartridges will increase. For American smokers, the use of Ecig was originally a matter of saving money and good things, but with tariffs to consumers. Driven by the increased cost of use and the FDA's tough policy, it is likely to force US Ecig users to start using traditional cigarettes again.

Geoff Habicht, president and founder of smoking Vapor, once said: "The tariff impact varies from product to product, especially for products with lower profits. In the face of this shocking and comprehensive upswing, we have to continue because of product cost and retail. The price is already very tight, so the retail price will rise another 15-20%. As for the higher-margin products, the 25% tariff may only increase the retail price by 8-10%."

Although the US tariffs have risen, it is good in the long run, forcing the upgrading of Chinese enterprises' industries and focusing on the process of brand and intellectual property. But it is worth noting that the Ecig industry is likely to become a victim of tariff competition. After all, tariffs will lead to higher retail prices, allowing users to reduce their willingness to buy, with consequent sales falling, dealers and wholesalers struggling to reduce the amount of trade orders for Chinese factories, and finally domestic Ecig manufacturers are also preparing Affected.

Therefore, if the company wants to retreat from the whole body, in addition to gradually shifting the market focus to other developing Ecig markets, it is afraid that it will continue to develop towards standardization, standardization and specialization. Only have the opportunity to minimize the risk of the entire cross-border business.