I. China Won Through Manufacturing Over the Past Decade
Looking back at the evolution of the e-cigarette industry, China's supply chain has created an industrial miracle. From the initial R&D of atomizers to the era of disposable e-cigarettes, Chinese companies have achieved global supply capabilities. Why do so many global e-cigarette brands choose Chinese manufacturing? Because China possesses a combination of advantages that are difficult for other countries to replicate:
01 A Complete Industry Chain
An e-cigarette is not a simple product; it involves chips, batteries, structural components, plastics, hardware, ceramics, e-liquid, packaging, and automation equipment. China possesses a complete upstream and downstream industry chain.
A product can go from design to mass production in a very short timeframe.
02 Exceptional Manufacturing Efficiency
The e-cigarette industry moves at a rapid pace. Once a hit product emerges, the market window may last only a few months. The greatest strength of the Chinese supply chain lies in its ability to rapidly prototype, adjust, and scale up to mass production.
This capability is unmatched by many overseas manufacturing systems.
03 Cost Advantages
The cost advantages derived from economies of scale have enabled Chinese companies to quickly penetrate global markets-particularly during the period of rapid growth for disposable e-cigarettes.
The Chinese supply chain has become the core of the global industry value chain.
II. However, Manufacturing Is Shifting from a Competitive Edge to a "Standard Requirement"
When a capability becomes a baseline skill for everyone, it ceases to be the deciding factor for success. This is the greatest challenge facing the Chinese supply chain today.
In the past, simply having a factory meant competitiveness. In the future, having a factory merely grants entry to the game. This shift is driven by three major changes occurring in the global e-cigarette industry.
01
Overseas Brands Are Increasingly Controlling the Upstream Value Chain
The industry's past model saw overseas brands handling sales while Chinese companies handled manufacturing. This was a classic OEM model: Chinese firms earned manufacturing profits, while overseas brands captured the brand premium.
In recent years, however, a distinct shift has emerged: more overseas companies are strengthening their capabilities in branding, distribution channels, user engagement, and product definition. They are no longer merely purchasing products; they are actively participating in defining them.
This signifies a change in how value is distributed across the industry chain. While manufacturing remains important, profit centers are shifting toward branding, technology, and distribution channels.
02
Global competition is shifting from manufacturing to technology
In the past, competition in the e-cigarette industry centered on production speed, cost efficiency, and the breadth of product portfolios (SKUs). In the future, competition will increasingly focus on technological capabilities.
Examples include atomization technology, materials science, smart technology, and automated manufacturing.
03
The third shift: Regulations are raising the bar for global operations
In the past, Chinese companies expanding overseas simply needed to find clients, manufacture products, ship them, and close the deal. The future will be increasingly difficult, as the global market enters an era of strict regulatory compliance.
Different countries entail different regulations, certifications, packaging requirements, and sales restrictions.
Companies need more than just factories; they require an understanding of global markets, regulatory expertise, local operational capabilities, and after-sales service infrastructure.
This explains why more and more companies are finding that while they can manufacture products, succeeding in the market is becoming increasingly difficult.
III. What is the next step for China's e-cigarette supply chain?
China's supply chain is likely to evolve in three key directions:
01
From OEM to ODM
In the past, clients dictated what to produce. In the future, companies must participate in product definition.
Those capable of helping brands create products will capture greater value.
02
From manufacturers to technology companies
Leading companies of the future must possess core technologies, patent portfolios, and R&D capabilities, rather than merely owning production lines.
03
From supply chain to industry chain
Truly competitive companies of the future will need to integrate technology, products, brands, and distribution channels to form a complete, closed-loop ecosystem.
IV. The greatest crisis is not a decline in manufacturing capability
Many worry: Will Vietnam or India replace China? Will other countries snatch away orders?
In my view, these are not the greatest challenges facing China's e-cigarette supply chain. China's manufacturing prowess remains formidable; the real challenge lies elsewhere:
Can Chinese companies transition from merely "manufacturing value" to "creating value"?
If companies limit themselves to producing goods defined by others, their manufacturing cost advantages will inevitably be eroded by global competition. However, if they can engage in product innovation, technological R&D, brand building, and global operations, immense opportunities still await them.
