Indonesian e-cigarettes are chasing China, and their status as the supply chain king is facing erosion

Indonesian e-cigarettes are chasing China, and their status as the supply chain king is facing erosion

According to data from the U.S. Trade Commission in June 2023, the proportion of e-cigarettes imported into the United States from China dropped to 63.7% in the first half of 2023, while e-cigarette imports from Indonesia (hereinafter referred to as "Indonesia") accounted for more than 35%, making Indonesia has become the second largest e-cigarette exporter after China. This signals that China’s long-standing dominance in the global e-cigarette supply chain is being challenged.

Figures show that in March 2023, the proportion of e-cigarettes imported by the United States from Indonesia reached 48%, while that of China was only 52%. (already very close)

The industry generally believes that Shenzhen, China, is the global manufacturing center for e-cigarettes, accounting for more than 90% of the world's output. However, the e-cigarette industry in Indonesia has been booming in recent years, and many international e-cigarette companies have set up factories in Indonesia, such as Smore, Jinjia, Zhijing Precision, Philip Morris International, KT&G, etc. In the past two days, I also shared the current development situation of e-cigarettes in Indonesia.

Expert analysis believes that Indonesia has a large e-cigarette market, relatively low labor and land costs, and the policy advantage of only paying 2.6% import tariff in the United States, which has created good conditions for its e-cigarette exports. On the contrary, Chinese e-cigarette exports to the United States face tariff barriers of up to 31.5%.

With the rapid rise of Indonesia's e-cigarette industry and the decline of China's market share in the United States, China's global dominance of the e-cigarette supply chain is facing severe challenges. Industry insiders predict that competition between China and Indonesia in the global e-cigarette market will become increasingly fierce in the future.

In addition, China's e-cigarette exports are also facing new resistance from Europe. France and the UK are considering legislation to tackle the rise in youth use of e-cigarettes and the environmental pollution caused by discarded batteries. Industry experts worry that this move may hit China’s e-cigarette exports to Europe.

Overall, China's e-cigarette supply chain is under pressure from many parties, and maintaining its global leadership is facing challenges. The industry expects Chinese e-cigarette companies to seize opportunities and respond to various challenges through technological innovation and supply chain optimization.


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