Mist Dispersal 'Mist City' Disposable Vape

The situation is changing.
In recent years, China's e-cigarette industry has flourished, with an increasing export scale. The total export volume is expected to reach 186.7 billion yuan in 2022, a year-on-year increase of 35%. In 2020, the export scale reached 49.4 billion RMB, an increase of 180% compared to the previous year; In 2021, the export scale reached 138.3 billion RMB, an increase of 180% compared to the previous year. (Data source: "2022 Blue Book for the Export of Electronic Cigarette Industry" jointly produced by the Electronic Cigarette Professional Committee of the China Electronic Chamber of Commerce and Shenzhen Two Supreme Technologies Co., Ltd.)
For a long time, Shenzhen, China has been regarded as the center of the global e-cigarette supply chain and manufacturing industry. This viewpoint has been widely recognized in the global e-cigarette industry, and Shenzhen is also known as the "fog capital" of the world. Some people jokingly say that the air in Bao'an Shajing is filled with sweet flavors.
However, according to data released by the US Trade Commission in June 2023, in the first half of 2023, the United States imported only 63.7% of e-cigarettes from China, with e-cigarettes from Indonesia (hereinafter referred to as "Indonesia") accounting for over 35% of its share. This means that Indonesia has surpassed other countries and become the second largest exporter of e-cigarettes after China.

1、 Sailing to Indonesia
In the past two years, the Chinese e-cigarette industry chain has been moving in a clustered manner to Indonesia.
Batam Island, the largest island in the Strait of Malacca, faces Singapore across the sea. It is one of the main ports in Indonesia and an important port for Southeast Asian shipping. Here, the average daily container throughput is approaching 2700, and it is expected to increase to 1 million per year in the future.
In the industrial park 15 kilometers away from the port, there are rows of rolling assembly line workers sitting in rows. They sequentially inject cigarette oil into the assembled oil storage cotton and seal it. When the cigarette holder is inserted upside down on the suction port similar to a compressor, and the cigarette holder emits white mist, the assembly of an electronic cigarette is completed.
This e-cigarette trade route that originated in China includes ports and factories in Batam, making it exceptionally busy.
A container ship loaded with lithium batteries, oil storage cotton, and heating wire sets sail southward from Shenzhen, stops at the port of Batam via the Strait of Malacca, and is then transported by truck into the industrial park. Soon, these accessories were assembled into finished products, which were then transported back to the port and then transported through the Strait of Malacca to the location of 82 million e-cigarette users worldwide.
The traders behind this trade route are Chinese businessmen, and when their presence appeared in Indonesia, the country was also given a different commercial color. In the past, they were mainly active in Shenzhen, Dongguan and their surrounding areas, controlling nearly 90% of the global e-cigarette production capacity.
Smart Chinese businessmen are flooding into Southeast Asia, attempting to replicate their past success in new markets.
The gold rush wave is constantly rising, and the changes in the e-cigarette industry are also part of this wave. The story of e-cigarettes going to Indonesia may be a small microcosm of Chinese companies going to Southeast Asia.
Indonesia is the largest economy in Southeast Asia, with a GDP of nearly $1.32 trillion in 2022. Not long ago, the Indonesian President made a bold statement: by 2045, Indonesia's GDP will be among the top 5 in the world and among developed countries!
Indonesia has a population of over 270 million, making it the fourth most populous country in the world and the country with the largest number of overseas Chinese. At the same time, there are over 70 million smokers, making it the only country in Southeast Asia that allows tobacco advertisements to be published through media such as television. Indonesians who are accustomed to open e-cigarettes (where tobacco oil can be self injected multiple times) have achieved self-sufficiency in tobacco oil.
Batam Island is one of the most important e-cigarette production bases in Indonesia and a gathering place for Chinese businessmen. Old Chinese electronic cigarette manufacturers such as Meishenwei, Honeycomb Factory, and VTV have all built new factories on Batam Island.
In addition, Malang City, located in East Java Province, Indonesia, is another e-cigarette production base in Indonesia, about two thousand kilometers away from Batam Island. The world's largest e-cigarette equipment manufacturer, Simore, is located here, controlling nearly 23% of the global e-cigarette equipment production capacity, and Simore's headquarters is located in Bao'an, Shenzhen.
In July 2022, Simore established its 14th global factory in Malang, Indonesia, covering an area of approximately 6 hectares and having 16 production lines, each capable of producing 7200 electronic cigarette bombs per hour. According to statistics, the annual output value of the Simore Malang factory is approximately 860 million US dollars.
Not only Batam, Surabaya in Indonesia, Jakarta, but also Tanglang have established e-cigarette factories.
The rising costs, unstable supply chain in China, and strong overseas brands forcing top contract manufacturers to establish factories in third-party countries with lower taxes and labor costs have led Chinese e-cigarette contract factories to target Indonesia.
In addition to cheap labor, another advantage of Indonesia is tariffs. The United States exempts some goods originating from Indonesia from tariffs or levies taxes at lower rates, including e-cigarettes.
In the 1970s and 1980s, the Indonesian government realized the strategic position of Batam Island and began to transform it into an industrial, commercial, and tourism center. In 1978, Batam Island was established as a bonded zone and enjoyed preferential policies such as exemption from import and export tariffs and consumption taxes.
In 1978, a processing enterprise called "Taiping Handbag Factory" appeared in Dongguan County, marking the official entry of Shenzhen and Dongguan into the era of "three supplies and one supplement" processing trade. Soon, Nike, Adidas, and Apple will also relocate their factories to Shenzhen, earning the name of Shenzhen's World Factory.
Now, Indonesia is replicating the Shenzhen experience and attempting to become a new world factory. With the emergence of Chinese e-cigarette upstream and downstream enterprises such as e-cigarette brands, foundries, essence and fragrances manufacturers and even packaging manufacturers in Indonesia, oil storage cotton and lithium batteries from China will also continue to arrive for final assembly.
The investment of Chinese e-cigarette companies in Indonesia is a microcosm of going overseas to Southeast Asia, and more and more e-cigarette industries are gradually shifting to other countries and regions in Southeast Asia, such as Malaysia, Vietnam, Laos, and so on.
Although variables such as "decoupling and chain breaking", "risk reduction", and "friend circle" pose serious challenges to globalization, "the development dividend of emerging markets+the industrial capacity advantage of Chinese enterprises" are also forming new opportunities, new hotspots, and new highlights.
2、 Backup Southeast Asia
Some e-cigarette merchants choose to build factories in Southeast Asia, not all of which are intentional.
On the one hand, most of the e-cigarette factories in Shenzhen and Dongguan are contracted by international brands. Over the years, facing fierce competition, the contracted factories have often been at a disadvantage in negotiations with the brand side. Some overseas customers have requested: 'We may have to do some cutting with China's supply chain, and you must have production capacity outside of China.' Even, the demand for safety exceeds cost-effectiveness. Southeast Asia, as proposed by overseas customers, has become the location of the "backup" factory.
There is also a certain general industry situation background. For example, some e-cigarette manufacturers have decided to invest in product manufacturing in Southeast Asia, directly because the United States has increased the tariffs on e-cigarettes exported from China by an additional 25%.
This situation mainly highlights the rise of local protectionism in global trade, causing many export-oriented industries to only seek overseas solutions.
It is none other than Southeast Asian countries that can afford to be the location of the 'backup economy'. According to a 2022 study, the average economic growth rate of Southeast Asian countries in the next 10 years will still reach 4% -5%, making it the fastest growing region in the world.
Among them, Vietnam is the leader, with a GDP growth rate at the forefront. In 2022, it achieved the highest level of 8.02% in the Asia Pacific region, and is more similar to China in terms of historical tradition, political system, economic and social culture, labor characteristics, and other aspects. And the new labor force that can meet the shortage of China's labor market: In 2021, Vietnam's total birth rate was 2.11, while China only had 1.3.
As evidence, according to statistics from the Vietnamese Ministry of Planning and Investment, from early January 2018 to April 20, 2023, foreign investors registered investment capital in Vietnam reached approximately 180 billion US dollars, equivalent to 40.3% of Vietnam's total foreign investment in the past 35 years. Among them, Singapore, China, Japan, and South Korea play crucial roles.
It should be said that the "backup economy" has certain factors that are forced by the situation, which does not necessarily mean that Chinese entrepreneurs are rooted overseas. But the latter seems to be more important. For example, there is no greater investment opportunity than investing in China 30 or 40 years ago. Will Southeast Asia be the next China?
For example, China's "the Belt and Road" development initiative, since it was proposed in 2013, has invested a total of $161.3 billion in 145 countries and 32 international organizations along the Belt and Road, ushering in the first decade. Wang Huiyao, Director of China and Globalization Think Tank and Counsellor of the State Council, once said that Southeast Asia is the most important focus of the "the Belt and Road Initiative". Data shows that in 2022, China's investment in Southeast Asian countries along the "the Belt and Road" initiative increased by 151% year on year, and construction projects increased by 76%.
Since the beginning of this year, the "sweet potato theory" proposed by national leaders has gradually formed a consensus in manufacturing centers such as Zhejiang as a theoretical support for domestic enterprises to develop overseas. It means that in the current complex international trade environment, in order to further survive and develop, enterprises should have the courage to break free from the environmental limitations of their location, seek solutions and methods from the outside, and focus on long-term development. For example, 'Jump out of China and develop China'.
Vietnam has a more complete industrial foundation compared to other Southeast Asian countries, equivalent to China 15 years ago, "he said, adding that" this country is quite dynamic and energetic.
In the first half of this year, Vietnam attracted a total registered capital of 13.43 billion US dollars, a decrease of only 4.3% compared to the same period last year. In addition, the actual funds in place reached 10.2 billion US dollars, a year-on-year increase of 0.5%.
In addition, in the first half of 2023, the registered capital of newly approved projects in Vietnam increased significantly by 31.3%, exceeding 6.49 billion US dollars. Investment funds through joint ventures, equity participation, and other means exceeded 4 billion US dollars, a year-on-year increase of 76.8%.
The labor cost in Vietnam is lower than that in China, at around three to four hundred US dollars. However, due to the lack of supply chain support in the local area, raw materials are still purchased from abroad (the cost is 1.3 times higher than in China), coupled with high land costs and insufficient proficiency of workers, the overall cost has not significantly decreased. So, he believes that "industries with tariffs less than 25% still have advantages in domestic production".
The national system of Cambodia, another country, is different from that of China and Vietnam. It is a constitutional monarchy, but now it is a country with relatively rapid economic development in Southeast Asia and even the world. The expected GDP growth rate last year and this year is between 5% and 6%, known as the "new tiger" of the Asian economy and regarded by many Chinese enterprises as a "value depression" in Southeast Asia.
In response to this, in recent years, a large number of Chinese people have gone to the emerging special zone of West Port in Cambodia to seek gold, giving West Port a somewhat lively atmosphere of early Shenzhen development. At present, the per capita annual income of Sihanouk Province has reached 4180 US dollars, ranking first among all provinces in Cambodia and more than twice the national average level. In addition, in terms of political and economic relations, China Cambodia relations are quite strong. For example, China is the largest source of foreign investment in Cambodia, and the local manufacturing industry is also dominated by Chinese enterprises.
Cambodia, which is currently in a critical period of transition from an agricultural country to an industrial country, has undertaken a large number of domestic transfer industries.
People often say that Cambodia's development level is 20 years behind China's, and Vietnam is about 10 years behind China's. Whether accurate or not, they are definitely our past. So, this is also a journey back to history. Seeing them may also allow us to see our history, and looking back on history will definitely be more conducive to thinking about our future.
3、 Going to sea is a foregone conclusion
Compared to Shenzhen, the electronic cigarette supply chain in Southeast Asia still needs to be improved, but the transfer of the industrial chain is a dynamic process.
The first one to follow the assembly process and overflow is the tobacco oil. When the Smolder factory first appeared in Indonesia, at least five companies that provided it with raw materials such as tobacco oil and plastic also followed suit.
The certificate of origin issued by Southeast Asia has great attraction for Chinese merchants, especially for top tier factories that focus on tariff compliance.
The United States is the world's largest consumer of e-cigarettes, consuming 58% of China's annual export of e-cigarettes. The electronic cigarettes exported from China to the United States do not have an advantage in tariffs, and are even more than 20% higher than those in Southeast Asia and other regions.
In April 2018, the United States released a list of goods that were subject to tariffs on China. For the first batch of goods containing $34 billion, a 25% tariff was imposed in July of that year, including e-cigarettes. This has led to a sudden increase in tariffs from the original 6.5% to 31.5%.
In fact, after the imposition of tariffs, Chinese merchants, in order to avoid heavy taxes, would initially transport their products to third-party countries, change containers in the bonded area, obtain a certificate of origin, and then transport them to the United States, in order to avoid the additional 25% tariff.
However, nowadays, US customs often strictly inspect the procurement, payment, and customs clearance records of raw materials. If overseas factory construction is involved, they will also require companies to provide a list of local workers and payroll, and if necessary, customs may even conduct local research.
So the acquisition of certificates of origin will also become more standardized among Southeast Asian manufacturers in the future.
In addition, according to the new regulations in China, enterprises that obtain production licenses must conduct transactions involving nicotine, tobacco oil, and electronic cigarette products on designated trading platforms. Enterprises without a production license either engage in front-end accessory processing and assembly of semi-finished products, or have only one way to go to sea; Enterprises that have obtained licenses must also consider going overseas as an alternative to maintain the stability of their supply chain.
Far away in Batam, Indonesia, at the entrance of a certain e-cigarette park, a truck that had just unloaded its cargo was preparing to drive back to the dock. The wheels turned vigorously, causing friction with the ground and raising a cloud of flying dust. The flying dust is affecting the fate of e-cigarette brands going to sea.
As far as retail terminals in the United States, there are more and more "Made in Indonesia" printed on the packaging boxes of e-cigarette products.