For more than two decades, China has been the unshakable core of the global vape manufacturing industry, accounting for 95% of the world’s production capacity and powering the development of the global market with its complete industrial chain and efficient production capabilities. However, since 2025, the global vape industry has ushered in a critical period of structural adjustment: the United States’ drastic tariff increases, tightening regulatory policies in Europe and the United States, and the rise of emerging markets have jointly promoted the geographical reconstruction of the supply chain. Southeast Asia, with Indonesia at the forefront, has rapidly emerged as a new force in vape manufacturing, forming a competitive and complementary balance with China’s manufacturing system. This balance not only reshapes the global industrial layout but also defines the new direction of cost control, compliance operations, and market expansion in the industry.

China’s Vape Manufacturing: From Scale Dominance to High-Quality Upgrade Under Pressure

China’s vape manufacturing industry, rooted in industrial clusters such as Shenzhen and Dongguan, has formed an irreplaceable comprehensive advantage over long-term development. In terms of the industrial chain, it covers the entire process from raw material supply, core component R&D (such as nicotine salt technology and atomizing core technology), to finished product assembly and testing, with a high degree of industrial agglomeration and supporting efficiency. In terms of production capacity, intelligent manufacturing has become the core driving force: the automation rate of production lines in Shenzhen’s Bao’an industrial cluster has reached 85%, with a single-line daily output of 150,000 units, and AI visual inspection systems have improved defect recognition accuracy to 99.7%, significantly reducing quality inspection costs. Technologically, Chinese manufacturers have achieved breakthroughs in nicotine salt technology, increasing bioavailability to 92%, and the application rate of Yunnan tobacco leaf extracts has risen from 18% to 43%, leading the global technological innovation trend.

However, since 2025, China’s vape manufacturing industry has faced unprecedented pressure, which has directly triggered adjustments in its industrial positioning. On the one hand, the U.S. market, which accounts for 39.6% of China’s vape exports, has been hit hard by high tariffs: since April 2025, the total tax rate on Chinese vape products imported into the U.S. has soared to about 79%, resulting in a nearly 94% year-on-year drop in China’s shipments to the U.S. in May, with only 71 batches recorded by the FDA, compared with nearly 1,200 batches in the same period last year. On the other hand, the tightening of global regulatory policies has raised the threshold for compliance: Europe has promoted unified flavor restrictions and packaging label specifications, while the UK has imposed a ban on disposable e-cigarettes, forcing Chinese manufacturers to adjust their product structures. Domestically, the improved export filing mechanism has also strengthened the control of the legal and compliant production chain, accelerating the elimination of backward产能.

Faced with these challenges, China’s vape manufacturing industry is accelerating its shift from scale-driven to high-quality development. On the one hand, it focuses on the research and development of high-end, intelligent, and environmentally friendly products, such as the exploration of “smart e-cigarettes” combined with health monitoring functions, to seize the high-end market share. On the other hand, Chinese enterprises are actively carrying out global layout, adopting strategies such as “local distribution + authorized branding + joint ventures” to enhance localized operation capabilities, and even setting up production bases in Southeast Asia and the Middle East to avoid tariff barriers and gain regional market advantages. At the same time, the trend of brand concentration is obvious. The top 5 domestic brands account for an increasing market share, and more enterprises are transforming from OEM to OBM (own brand manufacturing) to seek long-term value growth.

Southeast Asia’s Rise: Indonesia Leads the Way in Cost and Regional Advantages

Against the backdrop of China’s manufacturing pressure, Southeast Asia’s vape manufacturing industry has risen rapidly, with Indonesia becoming the most prominent emerging manufacturing center. Data show that Indonesia’s e-cigarette shipments in the first five months of 2025 reached 3,139 batches, exceeding the 3,102 batches for the entire year of 2024, with a compound annual growth rate of over 300%, directly filling the market gap left by China’s declining exports to the U.S. The rise of Indonesia’s vape manufacturing is not accidental but relies on unique cost advantages, regional location advantages, and policy support.

Cost advantage is the core driving force for Indonesia’s rise. Compared with China, Indonesia has lower labor costs and factory operation costs. By controlling the entire industrial chain, using local labor, and obtaining raw materials at cost prices, Indonesian manufacturers have eliminated intermediate links that push up prices in China. A typical example is the “2.99 US dollar revolution” launched by Indonesian manufacturers such as PT Smart Vape Factory: they can provide high-quality e-cigarette devices comparable to Geek Bar at a unit price of only 2.99 US dollars, which has strong appeal to price-sensitive emerging markets. In terms of location, Indonesia’s Batam Island, adjacent to Singapore, has become a key export hub, enjoying convenient global shipping routes and tax preferences, which can significantly reduce logistics costs and shorten delivery times for customers in Southeast Asia and even global markets. In addition, the Indonesian government’s supportive policies for export-oriented manufacturing, such as favorable trade policies and industrial incentives, have also provided a good policy environment for the development of the local vape industry.

While developing rapidly, Indonesia’s vape manufacturing industry also has obvious competitive characteristics in terms of product positioning and services. Unlike China’s comprehensive product line, Indonesian manufacturers focus more on innovative and specialized product designs, such as leading the market with open pod systems such as SO1 and Infantry 40. In terms of customization services, they provide more direct communication channels and flexible cooperation methods for ODM/OEM projects, working closely with customers to meet personalized needs from branding to product design. In terms of compliance, Indonesian factories are also actively obtaining international certifications such as ISO and GMP to enhance the reliability of their products in the global market.

However, Indonesia’s vape manufacturing industry still faces inherent shortcomings. The imperfect local industrial chain supporting facilities and backward infrastructure have led to high factory construction costs. At the same time, the local labor market has problems such as employees’ lack of long-term employment awareness and frequent lateness, which increases the difficulty of enterprise training. In addition, the need to apply for NPPBKC licenses for operating in Indonesia, which involves complex procedures such as local company registration and factory inspection, also brings certain entry barriers to enterprises.

The Coexistence of Competition and Complementarity: The Formation of Manufacturing Balance

The rise of Southeast Asia’s vape manufacturing industry has not completely replaced China’s position but has formed a new balance of competition and complementarity between the two. This balance is based on differences in market positioning, industrial advantages, and cost structures, and jointly meets the diverse needs of the global vape market.

In terms of industrial chain collaboration, there is a potential complementary relationship between China and Southeast Asia. China’s strong R&D capabilities and core component production capacity can provide technical support for Southeast Asian manufacturers; while Southeast Asia’s cost advantages and regional location advantages can help Chinese enterprises expand into emerging markets and reduce production costs. Some Chinese head enterprises have begun to adopt the global layout model of “Shenzhen R&D – Dongguan Intelligent Manufacturing – Southeast Asia Distribution”, which combines China’s technological advantages with Southeast Asia’s market and cost advantages to achieve a win-win situation.

In terms of competitive dynamics, the two sides are also promoting each other’s progress. The cost advantage of Southeast Asia has forced China’s manufacturing industry to accelerate the pace of intelligent transformation and high-quality upgrading, improving production efficiency and product added value. China’s technological and compliance advantages have also prompted Southeast Asian manufacturers to invest more in improving product quality, obtaining international certifications, and enhancing R&D capabilities to avoid being trapped in low-end price competition.

Future Trends: The Balance Will Be Deepened Under Regulatory and Market Changes

In terms of market positioning, the two sides show a clear division of labor. China’s manufacturing industry, relying on technological advantages and compliance capabilities, is more focused on high-end markets in Europe and the United States, as well as the research and development and production of high-value-added products such as intelligent and environmentally friendly e-cigarettes. Southeast Asia, represented by Indonesia, relies on cost advantages to focus on price-sensitive emerging markets such as Southeast Asia, the Middle East, and Africa, and mainly produces cost-effective products such as disposable e-cigarettes (though facing regulatory risks). This division of labor not only avoids direct homogeneous competition but also optimizes the allocation of global industrial resources.

First, regulatory compliance will become the core criterion for adjusting the balance. As more countries and regions issue restrictive policies on disposable e-cigarettes and flavor e-cigarettes, both Chinese and Southeast Asian manufacturers will face the pressure of product structure adjustment. China, with mature compliance experience and strong R&D capabilities, is expected to take the lead in the research and development and production of compliant products such as closed pod systems and recyclable e-cigarettes. Southeast Asian manufacturers need to speed up compliance upgrades to avoid being eliminated by the market due to policy restrictions while relying on cost advantages.

Second, the regionalization of the supply chain will be further strengthened. With the continuous rise of emerging markets in Southeast Asia, the Middle East, and Africa, the demand for localized production and distribution will increase. Chinese enterprises will continue to increase their investment in Southeast Asia, establishing more localized production and R&D centers to adapt to local market demand and policy requirements. Southeast Asian manufacturers will also expand their market coverage with the support of local policies and demographic dividends, further strengthening their position in the global supply chain.

Third, technological innovation will become the key to breaking the balance. The global vape market is gradually shifting from price competition to value competition, and technological advantages such as atomizing core stability, battery safety, and personalized flavor technology will become the core competitiveness of enterprises. China, which has obvious advantages in technological research and development, is expected to maintain its leading position in high-end technology. Southeast Asian manufacturers need to strengthen technological cooperation with China and other regions to improve their independent innovation capabilities, otherwise, they may face the risk of being marginalized in the long-term competition.

Conclusion

Looking ahead, the manufacturing balance between China and Southeast Asia in the global vape industry will be further consolidated and deepened, and the industry pattern will show three main trends against the backdrop of tightening global regulations and the rise of emerging markets.

The manufacturing balance between China and Southeast Asia in the global vape industry is a product of the joint action of global economic environment, policy changes, and market demand. China’s manufacturing industry, with its technological advantages, complete industrial chain, and compliance capabilities, will continue to occupy an important position in the global high-end market; Southeast Asia, represented by Indonesia, relies on cost and regional advantages to become an important force in emerging markets. The future of the global vape industry will not be a one-sided victory for either side, but a pattern of coexistence, competition, and win-win cooperation. Under this balance, enterprises that can flexibly integrate the advantages of both sides, adapt to regulatory changes, and grasp market trends will gain sustainable development momentum in the increasingly complex global competition.