The global outbreak of the deadly coronavirus, also known as COVID-19, has sent shockwaves through various sectors of the economy. One industry that is particularly vulnerable to the economic ramifications of the virus is the vape industry. With the majority of vaping and e-cigarette hardware being produced in Shenzhen, China, the ongoing impact of the coronavirus could result in a significant delay in shipments and potentially even a shortage of vaping products in the United States. In this article, we explore the potential consequences of the coronavirus on the US vape industry and discuss the challenges faced by businesses in this sector.
The Vaping Capital of the World: Shenzhen
Shenzhen, often referred to as the “vaping capital of the world,” is home to approximately 1,000 factories producing about 90 percent of the world’s vaping and e-cigarette hardware. This bustling city connects Hong Kong to mainland China and serves as the manufacturing hub for numerous vaping companies, both large and small. However, with the coronavirus turning into an epidemic, the Chinese government has implemented strict measures, resulting in a significant decline in the number of people returning to work in Shenzhen.
The Threat of Delayed Shipments and Shortages
The Chinese government’s decision to keep citizens away from work for an extended period has raised concerns about the future availability of vaping products in the global market. While larger vaping companies like JUUL Labs, with facilities in Shenzhen, may have the resources to mitigate potential problems, small- and medium-sized businesses could face significant challenges if the virus continues to spread. Unlike Chinese manufacturing giants such as Foxconn, which produces parts for Apple, many vape distributors do not export enough to be considered a top priority, potentially delaying the resumption of inventory shipments for several months.
Warnings of a National Shortage
As early as mid-February, industry insiders started warning about the possibility of a major shortage in coils and hardware. Scott Alwine, a senior account manager for the wholesale vape supplier VaporBeast, sent an email to customers advising them to prepare for potential disruptions in the supply chain. He recommended stocking up on products to ensure a steady supply for customers, with the shortage potentially lasting through March and even a significant portion of April.
Manufacturing Challenges and the Disruption of the Supply Chain
Reports of Chinese factories remaining closed continue to emerge, adding to the concerns within the industry. Reopening these facilities requires government permits and adherence to stringent safety measures. Observing wholesale accounts online reveals a growing scarcity of vaping products, indicating the strain on the supply chain. Dimitris Agrafiotis, a consultant for vape manufacturers who frequently visits Shenzhen, affirms that the entire industry will be disrupted, hindering the progress and evolution of these products, which heavily rely on technological advancements.
Exploring Alternatives: Factories in Mexico
Given the uncertain timeline for the resumption of normal operations in China, some vape manufacturers have already begun considering alternative options. One potential solution discussed is opening factories in Mexico. While such a move would present its own set of challenges, it highlights the industry’s determination to find alternative sources of production and mitigate potential shortages caused by the ongoing coronavirus outbreak.
A Perfect Storm for the US Vape Industry
The coronavirus outbreak comes at a particularly challenging time for US vape companies. The Chinese New Year fell on January 25, just before news of the virus started making headlines. During this time, factories in China can close for up to two weeks, and many employees return to their villages for a break with their families. With the outbreak extending the closure period, the ripple effects on the vape industry are significant. Discussions surrounding the potential impact on businesses have been ongoing for weeks, fueled by the unpredictable nature of government policies at both the national and provincial levels.
Overcoming Multiple Crises: Vaping Controversies and Government Regulations
The vape industry has already weathered a series of crises in recent times. Last month, the Trump administration imposed a partial ban on flavored vaping products following concerns over teenage vaping rates and a wave of vaping-related illnesses associated with illicit THC cartridges. The hysteria in the US led China to remove the sale of e-cigarettes online as well. However, amidst the uncertainties posed by the coronavirus, some industry players argue that more pressing challenges lie closer to home, specifically addressing the role of the US government and advocating against full-scale prohibition efforts initiated by some states.
Ensuring Safety: Unlikely Contamination Risk
While concerns about the coronavirus extend to contamination, experts suggest that the likelihood of e-liquids or vaping devices being contaminated by workers in China and subsequently infecting users in the US is virtually nil. Stanley Perlman, a professor of microbiology and immunology at the University of Iowa and an expert in coronavirus infections, affirms that while the virus can survive on inanimate surfaces for a couple of days, the chances of transmission through shipment are extremely low.
Conclusion
The global outbreak of the coronavirus has disrupted various sectors of the economy, including the vape industry. With the majority of vaping hardware produced in Shenzhen, China, the extended closure of factories and the ongoing uncertainty surrounding the virus pose significant challenges to the supply chain and could result in a shortage of vaping products in the United States. Small- and medium-sized businesses may face the greatest difficulties, while larger companies are better equipped to navigate these challenges. Alternative solutions, such as exploring manufacturing options in other countries like Mexico, are being considered to mitigate potential shortages. As the industry grapples with the economic consequences of the coronavirus, it also continues to address existing controversies and regulatory issues.
FAQs
1. Will there be a shortage of vaping products in the United States due to the coronavirus?
- There is a potential for a shortage of vaping products in the US due to the impact of the coronavirus on the supply chain. The majority of vaping and e-cigarette hardware is produced in Shenzhen, China, and the extended closure of factories could lead to delays in shipments and potentially even shortages.
2. How long could the delay in vaping product shipments last?
- The exact duration of the delay in vaping product shipments is uncertain. Small- and medium-sized businesses in the vape industry, which do not export as much as larger companies, may face more prolonged delays. Some experts speculate that it could take a couple of months before inventory shipments can resume.
3. Are there any alternatives being considered to address potential shortages?
- Yes, some vape manufacturers have started exploring alternatives such as opening factories in Mexico. While this presents its own challenges, it demonstrates the industry’s willingness to find alternative sources of production to mitigate potential shortages caused by the coronavirus outbreak.
4. How is the US government impacting the vape industry?
- The US government has imposed various regulations and restrictions on the vape industry, including a partial ban on flavored vaping products. Some industry players argue that the focus should be on addressing these government regulations rather than being solely concerned about the impact of the coronavirus.
5. Can vaping products be contaminated by workers with the coronavirus in China?
- According to experts, the likelihood of vaping products being contaminated by workers with the coronavirus in China and subsequently infecting users in the US is extremely low. The virus can survive on surfaces for a limited time, but the chances of transmission through shipment are considered to be virtually nil.