If any individual can be held responsible for the “addictively sweet vape cloud” now enshrouding the globe, it is probably Zhang Shengwei, says Bloomberg Businessweek. Widely acknowledged as the “godfather” of the industry in Shenzhen, the world capital of vape production, this largely anonymous Chinese businessman has quietly grown his online shop, Heaven Gifts, into one of the industry’s biggest players, with 30 million users in 80 countries, and trouncing Big Tobacco in the process. Still, a backlash is coming.
Heaven Gifts’ three biggest brands – Geekvape, Lost Mary and Elf Bar – are youth favourites that have stormed Western markets, leaving regulators wringing their hands. “Zhang’s primary niche” is disposable vapes – “Barbiecore-coloured” baubles in which “flavours are a key attraction”, that have now taken roughly 60% of the US market. The most basic cost only a few dollars; all pack a powerful punch of nicotine. Their popularity worries parents, healthcare professionals and environmentalists, who “wince at the waste” of plastic and all those tiny batteries.
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In Zhang’s biggest market, the US (the company does not sell in China), vapes are fast becoming a geopolitical issue in the wider superpower stand-off. Indeed, the mysterious “e-cigarette titan” stands accused of “flooding” America with illegal products, says Reuters, aided by toothless regulators who are no match for his nimbleness and blatant disregard for rules. The US Food and Drug Administration (FDA) has been caught napping, says one public health professor. “It’s a kind of cat-and-mouse game, but the FDA is a slow-motion cat.” Meanwhile, says the Financial Times, Zhang continues milking a $28 billion market via his “sprawling web of investments” in China’s “Vape Valley” and beyond under the umbrella of his holding company, Shenzhen IMiracle Technology.
Reuters.
Zhang Shengwei's deft dance with the FDA
In the early years, Zhang focused on distribution, warehousing and selling vapes directly to customers abroad – excelling in cultivating ties with international distributors, especially in the UK. That stood them in good stead when, having moved from Shanghai to Shenzhen in 2014, they began planning to make their own products. The breakthrough was the launch of Elf Bar in 2021. Unlike his rivals, Zhang was determined to stick with international sales rather than targeting the potentially huge Chinese domestic market. It was prescient – in 2022, Beijing banned the sale of flavoured vapes.
Meanwhile, a “botched crackdown” on e-cigarettes in the US threw open the floodgates. In 2020, the FDA outlawed the use of sweet flavours in refillable “pod-based” vape products, badly hitting the US market leader, Juul Labs. But it exempted other device types, including disposables, ensuring a bonanza for Heaven Gifts. Zhang has since proved adept at manoeuvring his way round roadblocks – “spinning off his vapes into a dizzying number of brands”, says Businessweek. If one hits regulatory or legal problems, up pops another. No wonder Zhang is considered a “magician” in Shenzhen. He will need all his Houdini-like skills to escape a savvier US regulator and the backlash from Big Tobacco lobbyists.
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