American e-cigarette brand JUUL will officially enter the Chinese market and is reported to be negotiating terms for distribution channel cooperation with Tmall and JD.com. The company is planning to start its Chinese operations in October. In addition, JUUL plans to allocate roughly $100 million on brand building and marketing in China within the next 15 months.
According to sources familiar with the matter, JUUL, founded in 2015, began research on the Chinese market as early as in 2016, but the local e-cigarette industry was severely underdeveloped, forcing the company to put the plan on hold. Around June 2019, JUUL established cooperation with Bain & Co, a Big Three consulting firm. The latter was responsible for the initial team building, corporate planning, talent recruitment and supply chain management in JUUL. In addition to the Chinese market, Bain was also responsible for JUUL’s shipment operations in other regions.
JUUL is reaching out to local e-cigarette industry talent through multiple channels, and hopes to build a localized supply chain in China. According to sources, JUUL has already settled on a foundry in the Wujiang area of Suzhou, but considering the future demand, might seek a new location in the Suzhou area to expand its production scale.
While looking for a person who could lead its Chinese business, JUUL has approached many well-known local executives, including Wang Huainan, the founder of the parenting platform Babytree. According to 36Kr, Wang has not yet confirmed his joining of JUUL, but will fly to JUUL’s headquarters in the United States for negotiations within a month.
With a valuation of over $38 billion, JUUL is the highest valued e-cigarette Unicorn in the world. In 2018, Altria, the mother company of Marlboro, acquired a 35 percent stake in the company for $12.8 billion.