Views: 0 Author: Site Editor Publish Time: 2026-06-06 Origin: Site
In recent years, the global e-cigarette and novel tobacco market has been undergoing a profound structural reshuffle. As regulatory policies tighten worldwide and compliance thresholds continue to rise, the low-end OEM model characterized by "wild growth" is rapidly fading. In its place, compliant brands that prioritize quality, safety, and traceability are emerging. During this industrial transition from quantity to quality, plant extraction processes—the core link in source manufacturing—are facing unprecedented tests. High-standard stainless steel extraction equipment, with its superior material performance and precise process control, is becoming a critical cornerstone for empowering the novel tobacco supply chain to break through bottlenecks.
The year 2026 marks a watershed moment for the global e-cigarette and new tobacco industry. After undergoing turbulent changes during the 14th Five-Year Plan period, the whole industry is poised to enter a relatively stable compliance environment. A small number of companies will reap the rewards of "long-termism," while the majority will need to consider how to make a "graceful" exit.
With the cancellation of export tax rebates for Chinese e-cigarettes, any company lacking the ability to command a price premium—regardless of its size—can begin contemplating its timeline for exit.
As dictated by the "impossible trinity" of e-cigarettes—compliance, health, and low price—ultimately, only companies that can achieve a price premium will be able to survive and thrive.
Traditional tobacco consumption is declining overall, and the consumption of high-priced cigarettes will continue to decrease. However, there is no equivalent iterative relationship with new tobacco products. The growth momentum of e-cigarettes and heated tobacco products is slowing, and a large amount of "bubble" will be squeezed out. This includes regional small and medium-sized brands, which appear particularly fragile due to the withdrawal and price increases of OEM manufacturers in China's supply chain.
Justfog, a Korean brand that once had a certain level of recognition in Europe—it has now faded into obscurity. With the successive implementation of supporting policies, China's e-cigarette industry will officially enter an "optimization" era in 2026. Reducing overcapacity, adjusting structures, and combating involution will become the main themes of the year.
Many companies will still cling to the mindset that "as long as it sells, it makes money," believing that the logic that the world must import e-cigarettes from China remains unchanged, and they will persist. However, this way of thinking may ultimately lead to even greater losses.
Those companies that chose to close factories early and liquidate starting in 2024 are now glad they hit the brakes early—at the very least, their shareholders no longer have to keep pouring money in and incurring losses.
This month, Reynolds American once again filed a petition with the U.S. International Trade Commission (ITC), alleging that multiple Chinese e-cigarette brands, their subsidiaries, and nine U.S. distributors have engaged in unfair competition by circumventing various restrictions, illegally expanding their market share, and causing "material injury" to the domestic performance of its Vuse products in the United States. Unlike previous cases, since last year, the U.S. government and officials have also intensified their crackdown on e-cigarette imports from China, even allocating dedicated budgets for this purpose. Compared with the Section 337 investigation filed in October 2023, this round of investigation by Reynolds American involves fewer Chinese companies but presents stronger evidentiary support, focusing more on "illegal trade"—primarily through allegations of circumventing FDA authorization and tax evasion.
Additionally, barring any unexpected developments, JUUL is expected to continue leveraging patent litigation strategies to seize market share. It will likely soon file new Section 337 investigations and patent lawsuits, further targeting second-tier brands.
Similar to the development logic of traditional tobacco, the global new tobacco market is likely to eventually form a TOP 10 landscape consisting of "five major traditional tobacco companies + five new tobacco companies," demonstrating the controlling power and strategic competitiveness of the conglomerates and capital behind the nicotine industry.
Leveraging their strong capital strength and control capabilities, the TOP 10 companies have made long-term and intensive investments in compliance, R&D, and marketing, sending a clear signal of "safety, reliability, and compliance" to the market. When choosing e-cigarette products, consumers are increasingly gravitating toward these well-known brands. If Shenzhen's leading e-cigarette companies are not part of the TOP 10's "circle of influence," they will constantly face competitive friction, intellectual property disputes, and other forms of exclusion.
This trend is forcing small and medium-sized OEM/ODM manufacturers to exit the "low-price" market. As foreign small and medium-sized brands gradually withdraw due to market changes, the order sources for these OEMs are disrupted. Growing brands no longer prioritize low prices as their primary consideration; instead, they are shifting orders to high-quality OEM companies with strong quality control and R&D capabilities. As this shift occurs, companies lacking core technology and brand empowerment capabilities will inevitably be naturally eliminated by the market.
Capacity Reduction and Tax Rebate Cancellation Accelerate Short-Term Risks
China once had nearly 400 e-cigarette processing enterprises, leading to severe overcapacity in domestic production, along with imbalances in both capacity and quality. Between 2023 and 2025, it is estimated that over a hundred companies will have experienced business suspension, bankruptcy liquidation, or equity transfer. Domestic e-cigarette brands (for domestic sales) and export (trade) brand companies have virtually fallen silent. Some nicotine-related (or tobacco-like product) companies that harbored hopes of exploiting loopholes have almost all ceased operations amid this round of the government's comprehensive crackdown on "illegal operations."
In the next three years, against the backdrop of capacity reduction, tax rebate cancellation, and credit assessment policies, the need for capacity consolidation will first absorb some companies. In the short term, there will be a wave of corporate mergers and acquisitions, closely resembling the reform path taken by traditional tobacco. The remaining companies without stable orders will gradually exit or scale down; in an optimistic scenario, they may only survive until the license renewal period in September 2027.
Faced with the difficulties mentioned above, many business owners choose to "tough it out," often with the reasoning, "I've been doing this for most of my life, and I don't know what else to do." However, in the business world, sentiment cannot replace rational decision-making. Proactively and compliantly pursuing liquidation and exit is not a failure; it is a form of wisdom—stopping losses and protecting oneself.
Enterprises without Resources Are Advised to Accelerate Their Exit
For pure manufacturing enterprises lacking sufficient cash flow, technical talent, and stable orders, it is recommended that they put the timing of their exit on the agenda as soon as possible. This will help avoid workforce-related incidents and the risk of creditor runs. Gradually phasing out operations and properly relocating employees will become critical short-term tasks. It is also essential to conduct financial and tax risk assessments promptly—essentially performing a health check on the business in advance.
Enterprises with Weak Brands but Multi-Industry Chains Should Be Cautious About Restructuring
Some e-cigarette company investors have other affiliated businesses, along with certain financing capabilities or cash flow support. However, amid this new wave of industry development, whether to divest or integrate their e-cigarette segment depends on whether there is still an opportunity to break into the domestic TOP 20. They should also be cautious about making further investments and avoid blindly expanding scale.
Individual Investors Facing Significant Risks Should Pursue Compliant Exits
When a company faces a substantial funding gap and there is no certainty about the sustainability of future orders, ceasing operations and initiating liquidation procedures is the best option to protect the personal financial safety of shareholders. Continuing operations would mean using shareholders' personal savings to fill the company's shortfalls—a path that could easily exhaust years of accumulated capital and ultimately leave both the company and the individuals in dire straits. In contrast, a compliant liquidation can clearly delineate the boundaries between corporate debts and shareholders' personal assets within the legal framework, achieving effective risk isolation.
The rise of compliant e-cigarette brands is, in essence, a contest of comprehensive supply chain strength. As low-end OEMs are eliminated for failing to cross the red lines of quality and safety, modern manufacturing equipment represented by 304/316L stainless steel extraction systems is injecting strong momentum into the novel tobacco supply chain through irreplaceable material advantages, ultimate process precision, and comprehensive compliance designs. Choosing high-quality extraction equipment is not only an inevitable step to align with regulatory trends but also a core strategy for enterprises to build long-term competitiveness in fierce market competition.
