Chinese e-cigarette companies dig gold in Indonesia, expand markets and build factories

Recently, RELX Infinity Plus, a new refillable cartridge launched by RELX in Indonesia, has been developing in Indonesia for several years, and the Indonesian market has also attracted companies such as grapefruit. 

In addition to brand owners, foundries have also expressed interest in building factories in Indonesia. Some leading companies, such as Smol, have already built factories, and more companies are still under investigation to use Indonesia as an export processing base.

Different from the complete monopoly of the Chinese market, the Southeast Asian market represented by Indonesia is more like the Chinese market four years ago, and its policies are relatively open. This large market with hundreds of millions of smokers is very attractive to Chinese companies.
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Two top e-cigarette professional media recently conducted a survey in Indonesia and found that there are well-known domestic brands such as RELX, Laimi, YOOZ, SNOWPLUS, etc. that are developing the market in Indonesia. Expand channels. RELX’s main style is the same as that in China, except that the pods are all flavored and fruity, and consumers in the Southeast Asian market like the cool taste.

In Indonesia, open-type products occupy most of the market. Both large and small cigarettes are mainly open-type. The local government only levies a tax of 445 rupiah/ml for local e-liquids, and 6030 rupiah for closed-type pre-filled products. Shield/ml tax, the policy is obviously inclined to local e-liquid suppliers. Therefore, there are no disposable products of more than 6ml in the Indonesian market, and the tax cost alone is 18 yuan, which is almost equivalent to the cost of the product. The most popular one on the market is the disposable product of less than 3ml, with a retail price of about 150k rupiah.

Among the closed cartridge replacement products, RELX sells better. RELX replicates the domestic model, vigorously develops agents and distributors, and builds specialty stores. The retail price is about 45 yuan per pod, which is more expensive than domestic ones, but for offices, etc. Places, or for girls, closed reloading products are more suitable. Closed single-use products are only sold in small quantities.

YOOZ Indonesian staff said that Indonesia has a certain threshold for e-cigarettes. Indonesia needs NPBBK with import and export qualifications. Indonesia’s electronic cigarette products need to be affixed with tax labels. Indonesia’s electronic cigarette tax is relatively heavy, and closed products are basically equivalent to about three yuan per milliliter. 

In addition to introducing the classic ZERO sold in China, YOOZ also introduces high-end products UNI (345k IDR single host, 179k IDR two bullets), mid-end product Z3 and entry-level product mini (179k IDR one shot, two bombs or two bombs) ).

Miao Wei, head of the Southeast Asian market of LAMI, said that Laimi chose the brand to go overseas. Brands going overseas are more than manufacturing, can have added value to local partners, and can create greater value for customers. The core purpose of the brand is to reduce transaction costs and allow users to make choices faster and with confidence. This is also a long-term and intensive process. 

Leimi plans to introduce a full range of products, including large-capacity disposables, small-capacity disposables, large-capacity reloading, small-capacity reloading, and open oil-refillable reloading products, in order to test out the best-selling products in the market and further expand. 

In Indonesia, the old-fashioned open equipment VOOPOO sells the best, and the other ones are GEEKVAPE, VAPORESSO, SMOK, Uwell and so on. Only RELX is more mature for closed-type reloading, and the others are in the initial stage. 

From last year to the year before last, closed-type bomb replacement products gradually began to gain momentum, mainly RELX. Now more and more Chinese brands are entering Indonesia, and the market share of closed products has been gradually increasing.

The hardware of Indonesia’s electronic cigarettes is basically from China, from Shajing, Shenzhen. However, local Indonesian e-liquid merchants have certain advantages. Local Indonesian e-liquid merchants generally make open products. They have their own brand of e-liquid and buy Chinese hardware to match them and sell them to consumers. Locals love products that are cool, colorful, lighted, or quirky. 

Disposable electronic cigarettes, which are popular all over the world, account for more than 60% of the world’s share, but there is basically no market in Indonesia, mainly due to tax reasons. Products below 3ml are more welcome locally. 

At the recent e-cigarette exhibition held in Indonesia, Mr Nirwala, director of the Communication and Stakeholder Compliance Department of the Indonesian General Administration of Customs, delivered a keynote speech on “Indonesia’s Customs Clearance and Taxation Policy for Imported Electronic Cigarette Products”.

Mr Nirwala said that from 2017 to 2021, Indonesia has been imposing a 57% tariff on e-cigarette products, and this year, it is taxed on a unit basis, with a tariff of 2.71 rupiah per gram of solid tobacco products and 445 per milliliter of open system e-liquid. IDR tariff, IDR 6.03 per ml of closed system e-juice.

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Two Supreme recently interviewed Garindra Kartasasmita, secretary general of the Indonesian Electronic Cigarette Association. Garindra said that if the target market is still the United States, the United Kingdom, the Middle East, etc., they can build a factory in Batam, Indonesia, which is designated as the A free trade zone, where Chinese companies can ship all their raw materials without paying any tariffs, and then the products can be exported easily.

A Chinese lawyer who has been deeply involved in the local area for many years told reporters that he has recently received inquiries from a number of e-cigarette companies from Shenzhen about the construction of local factories, and some companies have entered a substantive stage.

It is understood that Chinese e-cigarette companies are very enthusiastic about investing and setting up factories in Indonesia and Southeast Asia, and there is no publicity. The local factory has the advantages of low labor cost and export bonded, but the disadvantage is that the industrial chain is not perfect.

The disposable products that Chinese electronic cigarette foundries are good at are not popular in Indonesia, and they are not popular in large quantities, so the advantageous products of the foundries are useless. At present, some foundries plan to develop new products for the Indonesian and Southeast Asian markets, such as refillable oil. Disposable cigarettes, refill cigarettes, open pod cigarettes, etc. 

Pindu Bio has not set foot in the Southeast Asian market before, but through participating in the exhibition and study and inspection, it suddenly found that this market has great potential and plans to participate in it. Tan Zijun, vice president of Pindu Bio, believes that the Southeast Asian market has great potential, and the future growth space is very large. It must be a must for the future of the electronic cigarette industry. I believe that disposable electronic cigarettes will gradually become popular in the Indonesian market.
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Post time: Nov-04-2022