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China’s e-Cigarette Sector Lays off 10% of Employees

China's e-Cigarette Sector Lays off 10% of Employees

China’s e-cigarette business has laid off nearly 50,000 folks since October, roughly 10% of its workforce, trade affiliation estimates confirmed, as toughened regulation in the U.S. and China suppresses the once-booming industry.

Secretary of the Electronic Cigarette Industry Committee on Thursday said media investigation of vaping in America, the biggest e-cigarette market, has further triggered demand to wane just as China banned online e-cigarette sales.

Factories within the southern Chinese language metropolis of Shenzhen, the place a 500,000-sturdy workforce makes roughly 90% of the world’s e-cigarettes, have consequently slowed manufacturing and lower workers.

The decline comes after the success of e-cigarette agency Juul in the U.S. prompted buyers in China to pour cash into startups with products mimicking Juul’s compact dimension and potent nicotine formulation – startups that business watchers say at the moment are saddled with excess inventory.

Affiliation Chair Ou Junbiao, founder of e-cigarette manufacturer Sigilei, earlier this month told media outlet China Venture that his firm has cut headcount by about half from around 1,000.

One Shenzhen worker said employer Teslacigs rejected hiring just as it moved into a center intended for double its 400-strong headcount.

Another individual at a manufacturing plant of 300 staff said orders have dropped 30% since their peak, and that management will contemplate layoffs if the regulatory environment doesn’t improve in 2020.

Leo Chan, an investor at venture capital agency Autobot who researches China’s e-cigarette sector, stated some manufacturers tried to shift excess stock by opening offline stores, however, the increased competition provoked original offline franchise partners.