In the trade war between the United States and China, an unexpected industry will be caught in the fire. It is electronic cigarette. It is understood that in this trade war, enterprises including Juul and other e-cigarette manufacturers will be hit, and the sales profits will drop sharply, and the American sellers will continue to complain.
E-cigarette popularity in the United States
We know that the global e-cigarette consumer market is mainly in Europe and America, and the United States is a big consumer. In the past year, the U.S. e-cigarette brand Juul has occupied the leading position in the U.S. e-cigarette market. As a habit forming method for addicted smokers to help quit smoking, Juul has achieved a sales volume of 940 million US dollars in 52 weeks, a rise of 783%, while the overall growth of e-cigarettes in the same period is 97% to 1.96 billion US dollars. It can be seen that in the United States, electronic cigarettes, including Juul, are more and more popular with local people Welcome.
Electronic equipment is "other machinery" and is also subject to tariffs
But like many of the products that American consumers love, Juul and other popular e-cigarettes are not made in the United States. They are made in China, because China is the world's earliest birthplace of e-cigarettes, the largest trading country and producer. Shenzhen produces more than 90% of the world's e-cigarettes, including Juul and other e-cigarettes. In other words, if the United States imposes a 25% tariff on Chinese imports, buyers will be the first to be hit. According to trade experts, e-cigarette equipment belongs to the category of "other machinery", which happens to be on Trump's tariff list, and it is ultimately the US distributors who pay for it.
American companies suffer
Arnaud Dumas de rauly, co-founder and co CEO of bln group, a developer and distributor of steam technology for the hemp and traditional steam industries, has seen the economic impact of the trade war on his daily business. According to reports, the price of the products imported two weeks ago has been higher than that of a month ago. The profit margin of these electronic cigarette products in the United States is between 10% and 15%. However, if an additional tariff of 25% has to be paid, there will be little profit left. For the sake of cost, these additional fees will be collected from consumers, which limits the use of these auxiliary treatment products by patients and consumers.
Last month, companies in the steam technology and e-cigarette industry attended a hearing held by the U.S. trade representative, Tony Abboud, executive director of vapor Technology Association, a trade group representing more than 600 companies, told the news agency. "It's a huge impact, especially for anyone with a low or middle income." This will hurt the industry by increasing tariffs.
A representative of a local e-cigarette store called vapor solutions also said that if the price of e-cigarettes goes up, the store's profit margin will drop because they have to bear the cost. Morgan fox, a spokesman for the American Marijuana Industry Association, added that there is another potential disadvantage in the price rise, that is, when consumers are faced with a very high legal price, they are likely to look for alternatives and lower price products, which will breed an underground black market and create opportunities for illegal actors. Fox added that if the U.S. - China trade war is prolonged, many industries will face the effect of spin off, and the e-cigarette related industries will also cause confusion.
Patent advantages of e-cigarette in China
According to bis research, sales of e-cigarette equipment, cooking oil and batteries in the United States reached $5.4 billion in 2017, up 15% from 2016. Convenience stores, grocery stores and e-cigarette stores are all major distributors. Despite Trump's warning that foreign manufacturing is moving away from US producers, China is "stealing American jobs.". However, the representatives of American enterprises believe that this is not the case. For the whole e-cigarette industry, the technology, human resources and raw materials are all in China. The so-called manufacturing work is not in the United States first, and the patents are not owned by the United States, which is not in line with the reason for launching a trade war against China.
According to the patent application situation of China's e-cigarette, the author found that as of August 3, 2018, the number of Chinese patent applications for e-cigarette related technologies was 12249, of which the main patent types were 2800 invention patents, 4529 utility model patents and 3958 design patents in China. However, Chinese enterprises were in a blowout situation in patent applications every year As soon as they want to settle the "patent account" with American enterprises, almost 80% of American e-cigarette enterprises have to bow their heads. Chinese e-cigarette enterprises have an absolute say in manufacturing, production and circulation price control. Such international trade advantages make China's e-cigarette win more in this trade war.