Science and technology is an important driving force for human development, and every technological breakthrough in a subdivision affects the future development direction of an industry.
Taking the mobile Internet as an example, in 2007, Apple released the first generation of iPhone, subverting the physical keyboard; the following year, the 3G version was released, opening the prelude to the mobile Internet. In 2013, the shipment of iPhone 4 exceeded that of the feature machine for the first time, officially opening the era of mobile Internet. Today, smartphones have met hundreds of functions or user needs such as instant messaging, search engines, online music, online literature, and social networking sites.
In the more than a decade of this technology explosion and the changing social habits of users, the technology and supply chain in China, the demand is global, but the electronic atomization industry, which is still controversial, is also undergoing tremendous changes.
Electronic Atomization: A New Market with Unpredictable Changes
20 years ago, pharmacist Han Li added nicotine to the atomization liquid, and invented the world's first electronic cigarette product "RuYan" based on electronic atomization technology, which opened the prelude to the development of the electronic atomization industry.
After experiencing such smoke, large smoke and APV, global electronic atomization has entered the "small smoke era", and bullet replacement and disposable atomization products have gradually become the primary choice for the vast majority of smokers. While electronic atomization has gradually become a new 100-billion-level market, China's technology and supply chain have also been playing the role of promoters.
While the advantages of technology and supply chain have promoted the maturity of the electronic atomization industry, due to the rapid outbreak of new categories, the homogenization of products has become increasingly serious, and the market has increasingly lacked revolutionary products that can lead the future development. Users are also beginning to find that there are fewer and fewer products that are refreshing and can greatly enhance the sense of atomization experience and harm reduction, which seriously hinders the healthy and sustainable development of the industry.
At the same time, with the successive introduction of policies and regulations in various countries around the world, as an addictive product that strictly limits the user to adults, the production and sales of electronic atomization products have become more stringent.
In 2016, the European Union included electronic atomization in the Amendment to the Tobacco Products Draft, and electronic atomization and related products began to be regulated by Chapter 20 of the TPD. The content is generally to strengthen management rather than restrictions, which affirms the legitimate market position of e-cigarettes, such as the atomization liquid in a single atomization bomb cannot exceed 2 ml, and the nicotine content cannot exceed 2%.
In September 2021, according to the "opinion" report on the progress of tobacco product review and related enforcement measures released by the US FDA, the preliminary acceptance review of all applications (Acceptance) has been completed before September 9, 2020, and a total of 6.5 million PMTA applications for ENDS products have been accepted, and more than 200,000 RTA (refusals) have been issued at the same time – which means that more than 90% of all applications have been completed. Electronic atomization products submitted for approval are prohibited from being sold in the US market because they have not passed the relevant safety audits.
If we look back at China, the birthplace of electronic atomization, we will find that policy regulation is also steadily implemented in a scientific way.
A list of trends in China's electronic atomization management system (Source: Ai Media Consulting)
On December 2, 2021, the State Tobacco Monopoly Administration promulgated the Administrative Measures for Electronic Cigarettes (Draft for Solicitation of Comments) and solicited opinions from the public. According to the national standard public information platform, the national standard (draft for comments) of "electronic cigarettes" has entered the stage of public comment and is planned to be formally implemented 3-5 months after release. Prior to this, the State Council issued a decision on amending the Regulations on the Implementation of the Tobacco Monopoly Law of the People's Republic of China, which specifically made provisions on the management of e-cigarettes.
For the electronic atomization industry, on the one hand, it wants to bring revolutionary changes in both safety and experience, and requires the overall innovation of technological solutions; on the other hand, in the context of stricter global supervision, the pursuit of more compliance, more harm reduction and higher quality has become the general trend of the global market, and it is also the basic direction of technology research and development.
On the whole, under the influence of multiple factors of product form, user market and policies and regulations, the electronic atomization industry must continue to innovate technology and innovate. Enterprises that are now at the forefront of the industrial chain also have the opportunity to gain a firm foothold in the international development and adapt to the new changes that are constantly occurring in the market through long-term technology accumulation.
Technological innovation is a boulder thrown into the lake
Mastering the core supply chain and occupying a dominant position in the world, China's e-cigarette industry has completed the road of "from zero to one", of which the decisive role is the atomization core technology.
Whether it is disposable atomized smoke, bullet-changing atomized smoke or traditional large smoke equipment, it is necessary to heat and atomize the smoke oil through the atomization core and then inhaled, and the overall structural design of the atomization core also needs to ensure safety, stability and efficiency. From the perspective of the past technical path, the atomization core has mainly experienced the stage from the atomization core of the glass fiber rope to the cotton atomization core, the columnar ceramic core, and then the bowl ceramic core.
In fact, since 2016, dozens of markets around the world have begun to rapidly accept electronic atomization products, which is inseparable from the wide application of ceramic atomization core technology. This innovation not only leads the development trend of the global electronic atomization industry, accelerates the industry from the era of big smoke to the era of small smoke, but also makes the electronic atomization that originated in China go to the world.
Compared with the cotton core technology that was popular at the beginning of the invention of electronic atomization, the ceramic core solves the problem of large porosity and high penetration rate of smoke oil in the cotton core, and the actual performance in terms of anti-leakage liquid, anti-drying, atomization stability, and small size is better.
Once the small smoke products equipped with ceramic atomization cores were launched, they opened up a large number of new markets for electronic atomization with their distinctive characteristics and advantages.
The data shows that the global retail scale of e-cigarettes has continued to grow since 2016, and the global retail scale of e-cigarettes reached US$45.3 billion (about 287.5 billion yuan) in 2020, an increase of 28.7% year-on-year. By 2023, the global retail scale of e-cigarettes is expected to reach $86.7 billion.
At the same time as the rapid growth of market scale, "Foggy Bottom" Shenzhen is gradually being known by more people.
The "2021 Blue Book of E-cigarette Industry" shows that China's e-atomization patents account for 90% of the world's related patents; China's production capacity accounts for 95% of the global production capacity, and China's electronic atomization products are exported to more than 200 countries and regions around the world. From the upstream supply of raw materials, to the midstream product design and manufacturing, and then to the layout of sales in the global market, a very complete industrial chain has been formed.
In other words, the electronic atomization industry centered on Shenzhen, China, has gradually emerged the "catfish effect" under the leadership of the head enterprises - not only conquering the world with the core technologies and solutions of core enterprises, but also spawning a number of excellent enterprises responsible for different roles such as design, accessories production, and product sales.
The complete industrial chain and core technology layout means that after zero to one, China's electronic atomization is moving towards a new milestone in development, followed by more pragmatic innovation - innovation that can be complied with and legal, safer, more environmentally friendly and more efficient.
If the birth of the ceramic atomization core has changed the development trend of the industry, then it must be mentioned that SmolFELM.
In 2014, Smore began to start research on ceramic heating element technology. A year later, Smore International began to develop the first generation of ceramic atomization cores; in 2016, the first ceramic heating technology was officially introduced to the market. During the year, Smore launched the second generation of ceramic atomization solutions with original porous black ceramic + metal coatings.
The subversiveness of this set of technologies is that ceramics have more high temperature resistance than cotton cores, which solves the problem of paste cores very well; another advantage of porousness is that the oil conduction speed is faster, it will not be dry burned because of the long time, and it also ensures the delicacy and stability of the taste.
According to the data, from 2016 onwards, the sales volume of Simmer's ceramic core solution products has grown rapidly in the following years, and the global shipment volume has exceeded 3 billion by the end of 2021. At the same time, this solution also had the name FEELM in 2018, and in 2019, the "FEELM inside" technology brand was officially launched.
While the market scale is growing by leaps and bounds, Simmer International has also completed the corresponding layout in terms of patents. It is understood that as of 2021, Smol has more than 3300 global patent applications, half of which are invention patents.
Under the influence of FEELM, the global electronic atomization market began to shift from cotton core to ceramic core, which in turn brought a new outlet for investment. The "2021 Blue Book of the E-cigarette Industry" shows that the e-atomization industry entered the peak period of financing in 2019, and the number of domestic financing increased by nearly 5 times compared with the previous year.
Of course, opportunities and risks are relative, with the tightening of supervision, so that the harm reduction, product quality and other aspects of the technical requirements of the rising ship, while the industry "inner volume" to bring a high degree of homogenization of products. The market is in dire need of breakthrough technology to become a boulder thrown into the waters of silent lakes.
On January 18, Smore held a new technology conference in London, England, and officially launched a new generation of ultra-thin ceramic atomization solution "FEELM Air", which aroused widespread concern in the industry. As a senior enthusiast commented, this time Simar once again pointed directly to the pain points of the industry, once again expanding the boundaries of ceramic atomization.
As a new generation of electronic atomization solutions, FEELM Air is equipped with a new generation of bionic film ceramic cores with thinner thickness (only 7.8mm thickness, 25% thinner than the previous generation), and has iterated on taste reduction, harm reduction, leak prevention, and differentiated experience. In terms of process, FEELM Air introduces a nanoscale vacuum lamination process to achieve more accurate taste reduction.
In terms of core materials and structure, FEELM Air designed a 7-layer composite alloy material, which increased the harm reduction of FEELM Air by 80% and the average reduction rate of spices by 33% (all compared with the previous generation). In addition, the ultra-low power interactive linear motor, fast charging system, MEMS sensing technology, etc. in the scheme also improve the sense of harm reduction and experience from multiple dimensions.
It can be seen that in addition to the core technology iteration of ceramic atomization itself, battery systems, sensing systems, etc., "FEELM Air" is also aligned with smart phones, smart cars and other technical manufacturing fields. The addition of new technologies can effectively solve the safety risks caused by problems such as atomization power instability, which is also the focus of the industry for a long time.
The FEELM Air technology solution, which has a comprehensive and numerous core technologies, has satisfied the appetite of the industry, and many people have been speculating about which brand will be the first to use FEELM Air.
As the industry media has commented, the FEELM Air heralds the arrival of a new era.
In the era of product strength, "Created in China" starts again
In recent years, the "product force" of electronic atomization has gradually become an important topic of discussion in the market and users, and the basis for supporting "product power" is to emphasize the overall "technical solution".
The future performance of FEELM Air still needs time to test, but from the development process of ceramic atomization solutions in the past few years, we can already see that the electronic atomization industry needs core technology, and the market also needs core technology.
Source: Company Prospectus, China Merchants Securities
According to public information, in the revenue structure of Smore International in 2020, British American Tobacco-Renault alone contributed more than 3.4 billion yuan in revenue, accounting for nearly 35% of revenue.
In fact, the ceramic core technology solution that FEELM became famous in the first world war was not smooth. For example, the distribution of the ceramic wrapped heating wire used in the first generation of ceramic cores did not solve the problem of occasional scorching odor, and the second generation of laminating technology greatly improved the transmission efficiency of the ceramic atomization core, which in turn got rid of the heating unevenness of the heating wire.
"How important is the technological lead? Compared with the same track enterprises, Heyuan Group, Zhuo Lineng and other manufacturers only launched ceramic cores in 2019, and need to constantly bypass Thermol patent, which not only increases the research and development time and difficulty, but also increases the cost - this is the first-mover advantage of Thermor. An industry investor told 36Kr.
It is also not difficult to review the entire path of Smore and find that re-research and development has always been the most important barrier. According to 36Kr, the cumulative investment in research and development of Simar International has reached 2 billion yuan; it is planned to increase the annual investment in scientific research funds in the future and maintain more than 10% of the turnover; and the investment in basic research funds is not less than 30% of the total investment in scientific research funds.
Such data maps the development trend of the industry: the advantages of core technology solutions help Smore International occupy an important position in the global market, which not only proves the correct judgment of FEELM in the development route, but also means that if China's electronic atomization industry wants to continue to lead the world, it needs to continuously achieve breakthroughs in technology.
The comprehensive support of leading technology + advanced manufacturing is the core element that determines the competitiveness of the industry. Based on the actual situation, the "Matthew effect" of the industry is becoming more and more significant, and the leaders of specialized enterprises who have been deeply cultivating the industry for a long time will be more competitive.
With the gradual improvement of the policies and regulations of the world's major electronic atomization markets, the industrial chain and technical capabilities of "Foggy Valley" Shenzhen are gradually maturing, and the corresponding technical indicators are also moving closer to the policy.
Wu Li, deputy director of the Tianfeng Securities Research Institute, once said, "Atomized e-cigarettes have become one of the important industries for the mainland's export and foreign exchange earnings, making a stable contribution to employment and real economic growth. However, the application of atomized nicotine is only the beginning of this trillion-level industrial opportunity, and in the future, we are expected to see atomization technology being applied and promoted in more fields, such as traditional Chinese medicine atomization applications, inhalation atomization vaccines, medical beauty atomization applications, CBD atomization applications and other fields. ”
In the future, China's "Foggy Bottom" will "start again", with the vision of technology and social responsibility, while continuously improving its strength, exploring the application of electronic atomization in multiple fields, and constantly breaking through the boundaries of technology.