E-liquids: “Made in China” and Made Better

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By Nattira Medvedeva

As the popularity of e-cigarettes continues to grow among consumers, especially in Western markets, the demand for e-cigarettes and e-liquids has increased exponentially, providing a very lucrative opportunity for producers both large and small to enter this burgeoning industry. 

Currently, the majority of e-cigarette hardware and liquids that are available in the global market are manufactured by companies from China. More specifically, they are manufactured by companies based in Shenzhen, one of China’s fastest growing cities and well known as a manufacturing base for a wide variety of products, including high-technology electronic goods. There are currently thousands of companies in Shenzhen, small and big, that are supplying e-cigarette hardware and liquids to the global market, which is no surprise considering the city’s strong manufacturing economy and the simple fact that the e-cigarette has its origins right here in China.

However, a challenge that these Chinese suppliers face is some Western consumer perception that goods “made in China” may fall short of quality standards or are less preferable to goods that are made in the Western world. This perception affects the producers of e-cigarettes and e-liquids as, understandably, consumers are more keen to understand the contents and quality of products that they will be inhaling directly into their lungs.

“It is the wrong perception that products manufactured in China have ‘lower quality’ than those made elsewhere,” said Zhixuan Zheng, general manager of Changning Dekang Biotechnology, a leading manufacturer of e-liquids and also the producer of DeCloud shisha fruits, which are made of 100% real fruit, contain no harmful combustion products, and last three times longer than conventional shisha tobacco. “We are convinced that lower quality products have been produced in other parts of the world as well, not only in China. However, Dekang and its subsidiary strictly produce products following European and American standards and our production process meets the GMP standard.” 

Dekang e-liquids are produced in the company’s state-of-the-art facilities, which cover over 10,000 sq.m of space in Shenzhen and in Changning, a city in Yunnan province. Dekang’s quality control standards are among the highest in the industry, with its “ultra clean” 100,000- class dust-free workshop and having received the GMP, HALAL, RoHS, and CE certificates.

“What Dekang needs to do [to address the misperception about “made in China” products] is to put quality and safety control first; maintain our philosophy of using pharmaceutical-grade raw materials and herbal extracts, which we have done since Dekang was founded in 2003; focus on customer experience and continue to lead the industry,” said Zheng. Dekang has also established long-term partnerships with the University of South Florida, University of Geneva, and other scientific research institutions and conducted a series of research to prove the safety of their products.

Hank Yao, vice-president of Hangsen, another top manufacturer of e-liquids, pointed out an interesting fact about “made in China” goods and the misperception such goods receive. “I think it’s an issue or a point of view that has been formed for so many years. We do understand that China has exported problematic products to Europe and the US. Nobody will deny that.  But, we also understand there are some companies that are here for the long run, for example, Huawei, and Lenovo. There are more and more Chinese brands that are appearing in the world market. I’m sure going forward there will be more and more popular Chinese manufacturers or companies that will become well-known in the US, Europe, and the rest of Asia and will demonstrate our capabilities to manufacture quality products. In fact, the majority of the products that Europe and the US are consuming actually already come from China, for example Apple products or other electronic products.”

As for what Hangsen does to counter the misperception, Yao said, “What we need to do for every customer that we come across is to welcome them to visit us because we believe seeing is believing. It’s only when you see this [production facility] that you will believe this is the proper thing. We know that there are a lot of manufacturers in the US and in Europe who produce their liquids in their bathtub or a small lab that’s no bigger than [a small meeting room] with a few small tanks.  Do you believe that because it’s made in the UK such a small lab will have better quality control than [Hangsen’s] facility? I don’t think so. But it’s a conceptual thing that people think that anything ‘made in the UK’ is better than anything made in China.”

Hangsen follows ISO9001 and GMP production practices to manage the process with the highest quality standards. Their 40,000 sq.m factory is equipped with the most advanced manufacturing machines and testing devices to guarantee product consistency and production capacity. Every Hangsen product, including parts, packaging, and ingredients, goes through at least 10 quality control steps and 5 testing procedures before it is shipped out from the factory. 

Samuel Lau, vice-president and co-founder of Oplus, one of the newest companies to enter the e-liquid market, said, “The truth is, or how I see it, I think we have very good manufacturers. The safety standards and the quality control standards are good. I visited a few e-liquid manufacturers in the UK, they are nowhere close to the standards that we have in China.”

“They don’t even have the dust-free room, but because it’s made in the UK that makes them special,” he continued. “It’s quite ironic. Most people think that in China [the production process] is like that in a kitchen factory. This is a fact, people don’t really know what’s happening in China, they just think that [this is how it is].

“We try to tell people that we want to maintain very high quality standards. We try to prove that it doesn’t matter where it’s made, it only matters how you make it.” Oplus even has a live camera feed on its website that allows viewers to see real-time action in its facility, including its +10,000 dust-free workshop.

Support for Chinese manufactured e-cigarette hardware and liquids is not limited to only the Chinese manufacturers themselves, but also from other stakeholders in the industry. For example, speaking at the CECMOL 2nd E-Cig Forum (see story on the Forum, page 20) in Shenzhen on April 9, 2015, Ron Tully, founder of TNV Ventures LLC and former vice president of new projects and vice president of public affairs at National Tobacco, said: “Most of these devices are actually made in China. They’re very good quality devices. There are very good liquids coming out of China. In all likelihood there’s nothing wrong with Chinese e-liquids but there is a sort of economic bigotry that takes place here in relation to consumer selection.”

While explaining to the Forum the results of a recent research conducted by his team where 159 sweet flavor liquids from the US and European market were analyzed, Dr. Konstantinos Farsalinos of the Onassis Cardiac Surgery Center in Athens, Greece, and the University of Patra, Greece, said that 74 of the liquids contained substances that while safe for food use, are toxic when inhaled and can cause respiratory damage. While allowing that Chinese e-liquids also need to be studied, he did mention that, “unfortunately the regulators don’t like Chinese products although they have no evidence that they are bad. Or they have evidence from first-generation cigarette-like devices. But, we need this testing and we need tests to evaluate and compare these liquids with US and European liquids.”

Both Dekang and Hangsen are of the same opinion that established industry standards are key to helping solve this misperception of “made in China” goods. “Products of different quality appear [in the market] because the industrial standards still haven’t been published and the standards of each [manufacturer] are different,” said Dekang’s Zheng. “We hope to have proper, suitable standards which can help the enterprises sustainably produce high-quality, safe products and ensure that consumers can use the products harmlessly.

“Dekang, as an important member of China’s e-cigarette industry, can contribute to this by setting and adhering to high requirements and standards for ourselves, which will also serve as a benchmark to the industry,” Zheng said.

Hangsen’s Yao believes that regulations will also help rule out smaller players who do not meet the standards from the industry. “There are a few big players in this industry and thousands of small players and what they do is exactly as what the small players in other countries do. They don’t have much knowledge about this product, they’re just mixing liquids in their bathtub, and this is risky.”

“This product, the liquid, it looks the same, it doesn’t look much different from product to product, but you never know what is inside. It took us almost a decade of knowledge to come to this stage where we are fully confident that our products are safe, because we know what we are facing, what we are producing, what the process is, how to avoid contamination, how to make sure there are no toxic ingredients in the flavor that we purchase. But, those small players don’t have this kind of knowledge. They might buy flavors from some unknown source and think they’re safe, but that’s not necessarily true.”

The good news is that relevant industry members and the Chinese government have started to work together, along with e-cigarette associations from other countries where regulations have been or are soon to be established, to develop regulations for China’s e-cigarette industry.

In the meantime, both Dekang and Hangsen have established production facilities overseas to better respond to the demand for their products in Western markets. Dekang set up a 3,800 sq.m facility with modern automatic production equipment and a GMP-certified workshop in Bucharest, Romania in September 2014.  Dekang’s European facility also produces DeTab, a nicotine alternative product which is completely nicotine-free but provides the same satisfaction and sensation as a nicotine liquid when vaping.  DeTab is created by using the latest e-liquid production technology and only environmentally- friendly ingredients. The facility also produces the Dekang Europe Series and Q10 Series to meet the requirements of different countries. “There is no doubt that setting up our European subsidiary was done to speed up the logistics and provide better service to our European consumers,” said DeKang’s president. “Our e-liquid products made in China and in Europe have the same strict production standards, yet totally different production lines and various feature products that really satisfy the needs of our customers in different countries.”

Hangsen’s reason for setting up its facilities in Poland and the US is similar – to provide closer service to its customers. “At the end of the day, it doesn’t matter where we manufacture as long as you comply with the regulations. That is what the customer is looking for,” said Hangsen’s vice president. “There are customers who want products made in Europe because of closer proximity or because of the time difference they want to deal with a local office that will provide them with liquids made in Europe. That’s fine because we have the technology and we have the expertise.  From day one that the factory opened we were already receiving orders for US-made liquid or European-made liquid.”

Oplus, however, has chosen not to set-up an overseas facility.  “We really don’t want to go to that step,” said Lau. “The benefit of manufacturing e-liquid in China is, first, we have a very good supply chain for packaging that lets you offer any kind of nice packaging to your customer, which is very difficult [in other countries].  And second, we are near to the whole industry center. Shenzhen obviously is the center of the e-cigarette industry. We want to stay near the e-cigarette manufacturers and supply liquid to them as well. But yes, if “made in China” becomes a big problem for us we’ll consider going out to the US, the UK, or Europe.”

All three companies share the same opinion about the future of e-cigarettes in the Chinese market. Dekang’s Zheng said, “Actually, China’s e-cigarette market is growing and it also has great potential for more development. Due to the anti-smoking efforts from the government, China’s smokers are gradually seeking the ideal tobacco replacement products. E-cigarettes have become the best choice for smokers. With a large number of China’s population being smokers, there is no doubt about the great potential of the Chinese e-cigarette market.”

Hangsen’s Yao agrees. “It is actually growing, and growing fast. Once more and more people get to know [e-cigarettes], I’m sure it will be huge because the market is so big.”

Oplus’ Lau believes that the right marketing strategies will also help the industry grow in the Chinese market. “[Starting in 2013], major companies, mostly from tobacco-related industries like cigarette packaging and tobacco flavoring, started entering the Chinese market. Those companies have financial and channel advantages, but their experience of e-cigarettes and knowledge of this unique market [is yet not enough]. The time of explosive growth will come soon when [e-cigarettes] finally have the attention of the right people with the right marketing strategies.”