Why There Are Less Vape Factories In China Day By Day

Have you noticed that there are fewer and fewer vape factory this year?

According to the number of vape business categories registered by Chinese companies, it has decreased significantly by 2025.

In 2012, I joined an vape foreign trade company and worked in foreign trade sales

At that time, Chinese vape enterprises were in the form of contract processing. According to the data of Alibaba’s gold medal supplier members at that time, there were only over 200 vape companies serving as suppliers to foreign customers. A small portion of them are traders, and I played the role of a trader, providing OEM order services for over 20 foreign brands. There are approximately less than 200 vape factories engaged in contract manufacturing for foreign customers. That is also the initial stage of vapes.

In August 2014, Alibaba lifted the restrictions on Gold Supplier membership.

So the number of gold medal members registered on Alibaba increased to 800 in just two months, and the number of factories also doubled. At that time, fruit flavored vape also began to emerge, and due to their highly attractive taste, vapes had already experienced explosive growth since 2017.
By 2022, it will be the year with the highest number of vape enterprises in China, with as many as 60000 vape related businesses. However, with a global population of only 8 billion, China is a country that prohibits fruit flavored vapes and cannabis vapes, also India is also a country that completely prohibits vape. Simply put, with such a size market, how can we consume such a huge quantity of vapes? According to official data, by the end of 2024, the number of enterprises operating vape in China has decreased to less than 20000. And a survey has also confirmed that in the past 2023-2024, the production of vape in China has decreased significantly, as many of my friends’ factories are massively reducing production capacity, closing production lines, or directly declaring bankruptcy.

In such a context, the competition within Chinese vape factory has led to the following situations:

1. Inefficient enterprises: consuming themselves to death

What is a low efficiency enterprise like? The boss makes decisions by banging his head, departments play the ball, suppliers can’t keep up with the pace, and the production cycle is half a month slower than peers. Others have already launched three new models, but it is still polishing the packaging of the first one; Others have reduced the inventory turnover days to 20 days, and their goods are stored in the warehouse to eat dust.

2. Enterprises with inadequate globalization layout and sparse localization: ‘horizontal in the nest’ cannot survive for long

Now that domestic policies are tightening and competition is intensifying, overseas has become a battleground. But some companies haven’t even done a good job in the most basic “localization” – such as selling in Europe, not knowing whether local consumers are more concerned about “nicotine salt concentration” or “battery life”; Selling in Southeast Asia, unable to understand the taboos of religious culture on product design; Even being pressured by local distributors, they only say ‘our costs are high and we can’t lower them’.
Even worse, some companies have no concept of “global layout” and think that “sending goods to overseas distributors” means going global. As a result, local brands have emerged, and consumers demand “local services+customized products”. Their goods accumulate dust in the warehouse, and they can only watch others make money overseas.

3. Enterprises without profits and cash flow: ‘robbing the east wall to make up for the west wall’ will not last long

Some companies, in order to seize market share, blindly engage in price wars, selling their products very cheaply with meager profits. Running a business requires spending money in all aspects, including research and development, updating production equipment, and marketing. If profits are not enough and cash flow is not smooth, once there is a slight fluctuation, such as an increase in raw material prices or a sudden decline in market demand, the enterprise will be in a crisis of capital chain rupture. Without funds, enterprises cannot even sustain normal production, let alone develop.

4. A company with a fragmented management and internal strife: ‘One’s own people’ kill oneself

For example, the boss is suspicious of being seriously ill, and always thinks that senior executives need to “switch jobs and go it alone”, so he sends relatives to manage finance and set eyeliner on business, which makes the team eccentric; For example, several partners initially formed a “brotherly partnership”, but now they have conflicts over “who is in charge of production” and “who holds more equity”, resulting in decision-making bottlenecks and project stagnation; For example, the management only knows how to “manage relationships” but not how to “do business”. Meetings only discuss “human relationships and worldly wisdom”, without discussing “how to improve product yield” or “how to reduce costs”.

I believe that after 2025, China’s vape factory will enter a gradually stable state, and in the future, Chinese vape supplier will be more rational and the market will become better and better.