China’s vape tycoon under scanner for flooding global market with candy-flavored vapes

A new breed of e-cigarette has addicted teenagers and confounded regulators worldwide by offering flavors like Blue Cotton Candy and Pink Lemonade in a cheap, disposable package.

The tycoon dominating this latest wave is Zhang Shengwei, 50, a veteran of China’s vape industry in the southern manufacturing hub of Shenzhen.

According to a Reuter report, Shengwei quietly rose over 15 years from a boutique exporter to become one of the world’s largest vape manufacturers. His main company, Heaven Gifts, now competes with industry giants Juul Labs Inc and British American Tobacco Plc in the US, the UK and across Europe.

Shengwei has navigated shifting regulations in countries cracking down on candy-flavored vapes, which many health advocates say are designed to hook teenagers. In the US, the firm simply ignored regulations on new products and capitalized on poor enforcement, thereby flooding the US market with flavored vapes that have been among the best-selling US brands, including Elf Bar, EBDesign and Lost Mary.

In the UK, by contrast, Zhang has complied with regulations requiring lower nicotine levels and government registration while building an unmatched distribution network.

In China — where more than 90 per cent of the world’s vaping devices are manufactured — Zhang steered clear of domestic sales, resisting the temptation of a gargantuan market with 300 million smokers who might be converted to vaping. His focus on exports looked prescient when Beijing last year banned all domestic sales of flavored vapes, crushing some of Zhang’s competitors that had bet heavily on the China market.

Before launching the Elf Bar, Heaven Gifts established a distribution beachhead in the UK. While operating as a middleman, moving products from China’s Vape Valley through local distributors, Zhang also set up his own branded website called Deepvaping to sell directly to consumers and retailers.

The UK offered a more permissive regulatory environment. As the US debated banning flavors, the UK allowed them, while setting limits on nicotine levels and requiring vape companies to register with regulators. Heaven Gifts says it abided by the UK rules.

Heaven Gifts spokesperson Li said the company is “paying great attention” to the issue and blamed illegal smuggling of products meant for other markets into Hungary.

A Heaven Gifts spokesperson, Jacques Li, said the company does not market to children and takes youth-vaping concerns seriously. He acknowledged the company’s flavors could attract teens but said the company is modifying its packaging to be less appealing to youth and discontinuing some flavors, such as “rainbow candy.”

Flavored vapes are more effective in helping smokers quit than those that mimic cigarettes, he said.

“Adults like flavors, too,” Li said. “Flavored e-cigarettes shouldn’t be demonized. They’re not evil.”

Zhang’s deft maneuvering illustrates the difficulty of curtailing youth vaping despite a global effort to halt a new wave of teenage nicotine addiction. It also highlights how China’s domestic candy-vape crackdown is proving to be a rare success — even as its homegrown e-cigarette industry continues to dominate manufacturing and exports.