Research on the Ecological Deconstruction of E-Cigarette Industrial Clusters in Shenzhen, China, and a Niche Analysis of Related Enterprises

Abstract

As an emerging industry, e-cigarettes have been greatly prosperous globally in recent years. In China, Shenzhen is the center of e-cigarette production, and a complete business ecosystem has been built at this point. To explore the phenomenon of the agglomeration of e-cigarette enterprises in Shenzhen, the business ecosystem structure and evolution path of e-cigarette industrial clusters in Shenzhen (the Shenzhen e-cigarette industry) are illustrated in this study from an ecological perspective, and the development characteristics of the Shenzhen e-cigarette industry as well as the interspecies relationships among enterprises were studied based on the population life history theory. Eight representative firms were also selected here. Their patent information was collected and classified to investigate niche characteristics using Levins’ niche breadth and niche overlap index. The results indicate that, after a long-term evolution, the Shenzhen e-cigarette industry has preliminarily built a business ecosystem with a unique structure. The developmental process is accompanied by the transformation of the development pattern from imitation to innovation and the enterprise populations have achieved coevolution through mutualistic symbiosis. In the area of technological innovation, niche-widening and -separation strategies are employed by the e-cigarette enterprises. The above reasons explain the boom of the Shenzhen e-cigarette industry and why Shenzhen is becoming the center of e-cigarette production.

1. Introduction

E-cigarettes, a new type of tobacco product, are enjoying great prosperity around the world. In the 1960s, the American engineer Gilbert proposed the idea of e-cigarettes. In 2003, Han Li of China invented the first e-cigarette product and founded the “Ruyan” brand [1]. With the increase in public health awareness and other factors, the traditional tobacco market remains sluggish and sales have decreased in recent years, while the e-cigarette industry is undergoing accelerated development and its market size is expanding constantly. According to data from the Electronic Cigarette Industry Committee of the China Electronics Chamber of Commerce, global sales of e-cigarettes reached USD 33 billion in 2019, a 106.25% increase compared with 2018 and a 14-fold increase compared to 2012. Global e-cigarette retail scale increased from USD 16.1 billion in 2016 to USD 56.9 billion in 2021. China’s e-cigarette market scale is also expanding, reaching CNY 116 billion in 2021, with most products exported overseas.

In the early stage of the e-cigarette industry, Chinese non-tobacco companies first entered the e-cigarette field. In recent years, with the popularity and rapid development of new tobacco products worldwide, traditional tobacco companies such as the Yunnan China Tobacco Group and the Shanghai Tobacco Group have started e-cigarette businesses and launched a series of products [2]. At present, the global e-cigarette industry presents a pattern of the manufacturing center being located in China and the sales center being located in Europe and the United States [3]. China is a major producer of e-cigarettes, with more than 90% of products in the global e-cigarette market being produced by private Chinese enterprises. Despite the continuous growth of e-cigarette production in China, e-cigarette consumption in China is relatively in a downturn. Of the total production, 90% is for export, and there are only a few influential Chinese e-cigarette brands [4].

Shenzhen, the center of Chinese e-cigarette production, has agglomerated thousands of e-cigarette enterprises and has developed a complete business ecosystem consisting of producers, suppliers, sellers, and competitors. E-cigarette manufacturers in adjacent cities are also in rapid development, driven by the prosperity of the Shenzhen e-cigarette industry [3,4].

To explain the reasons for the prosperity of the Shenzhen e-cigarette industry, we attempt to address the following topics in this research: (i) The structure and evolutionary process of Shenzhen’s e-cigarette business ecosystem which includes e-cigarette enterprises and related organizations. (ii) The developmental strategies adopted by the Shenzhen e-cigarette industry. (iii) The relationships between enterprise populations on different parts of the industrial chain. (iv) The development strategies for the survival and growth of e-cigarette enterprises in Shenzhen.

The above four topics are analyzed by applying ecological concepts and approaches at both the industrial and enterprise level: At the industrial level, we built a detailed business ecosystem model to illustrate the structure and evolution of Shenzhen’s e-cigarette business ecosystem. Based on life history theory, we also discuss the developmental strategies of the Shenzhen e-cigarette industry during different development stages and the relationships between different e-cigarette enterprise populations. At the enterprise level, we took technological innovation as an important indicator of enterprise development and employed Levins’ niche breadth and niche overlap index to evaluate the technological innovation conditions of representative enterprises in the Shenzhen e-cigarette industry.

As the first empirical study to systematically investigate the e-cigarette industry from ecological perspectives, this study makes contributions to three aspects: Firstly, we provide detailed interpretations for the structure and development of the e-cigarette industry from macro (industrial) to micro (enterprise) levels, which have rarely received attention from scholars. Secondly, we highlight the application of ecological concepts and approaches in the study of emerging industries. Thirdly, this paper discovers a development pattern transformation from imitation to innovation of the Shenzhen e-cigarette industry as well as niche-widening and -separation strategies of Shenzhen’s e-cigarette enterprises, which may provide experience for other emerging industries’ development.

2. Theoretical Background

2.1. Business Ecosystem Theory and Life History Theory

In this study, an industrial-level analysis of the structure and development of the Shenzhen e-cigarette industry is based on business ecosystem theory and life history theory. The concept “business ecosystem” was first proposed by Moore [5]. A business ecosystem refers to a structured community that crosses a variety of industries, in which the business activities of different companies share the same fate and the companies coevolve capabilities around a new innovation [6]. A business ecosystem evolves in four stages: birth, expansion, leadership, and self-renewal; if there is no self-renewal, the ecosystem will head towards death [5]. After decades of development, a complex business ecosystem has been constructed for the Shenzhen e-cigarette industry. The core ecosystem is effectively integrated with surrounding components, including extended ecosystems, symbiotic species, and competitive species, which stabilizes the development of the industry. The complex structure of the business ecosystem has experienced long-term evolution. Therefore, this study illustrates the business ecosystem structure and evolution process of the Shenzhen e-cigarette industry.

“Life history” refers to the entire process experienced by plant populations from seed germination to seed formation, including the life history characteristics of plant populations at various stages of the life cycle and their interactions with other organisms in their habitats [7]. The life history of plant populations includes two aspects:

(1)

The life history strategy, which represents the adaptation patterns of plants in specific habitats. The life history strategies employed by plant populations are the result of plants allocating limited resources to various functions, such as growth, reproduction, and defense [8,9]. Primary research on the life history strategy in ecology was qualitative until MacArthur and Wilson proposed the r–K selection theory [10]. In the r–K selection theory, the life history strategies of organisms are divided into the r strategy, for developing in changing environments, and the K strategy, for keeping stability in stable environments. Grime [11] further classified the life history strategies of plants by their resource and habitat conditions and established the CSR triangle model, where “CSR” represents three basic strategies: C—competitive strategy, S—stress-tolerant strategy, and R—ruderal strategy (Figure 1). According to the CSR triangle model, external factors that limit plant biomass in habitats consist of two types: stress—conditions that restrict production, and disturbance—biological activities and physical phenomena that cause plant biomass destruction. In their adaptation to different forms of stress and disturbance in habitats, the evolution of plant populations is associated with three different strategies: The competitive strategy (C) prevails in productive and relatively undisturbed habitats (low stress with low disturbance), in which plants are characterized by high vegetative growth and competitiveness. The stress-tolerant strategy (S) is associated with continuously unproductive conditions (high stress with low disturbance), in which plants are weak in both growth and reproduction for endurance. The ruderal strategy (R) is characteristic of severely disturbed but potentially productive habitats (low stress with high disturbance), where plants have a short life span and high seed production. The life history strategy has been applied in the strategic choices of organizations in previous studies. Enterprises may differentiate into the r strategy type and the K strategy type during their adaptation to the market environment [12,13]. Compared with the r–K selection theory’s single evaluation criterion of environmental stability, Grime’s CSR theory takes both the resource and environmental conditions into account in life history strategy classification. Hence, the analysis of the development strategies of the Shenzhen e-cigarette industry adopts the CSR triangle model, owing to the technical and environmental complexity of the e-cigarette industry in this study.

(2)

Interspecific relationships, which represent the interactions and coevolutionary behaviors between plants and other organisms in a habitat [8]. Similar relationships exist in enterprise populations, including competition, cooperation, mutualism, parasitism, commensalism, etc. [14]. These relationships have significant impacts on the enterprise populations and the entire business ecosystem. Numerous scholars focus on interspecific relationships between enterprise populations. Mathematical methods such as the logistic model and the Lotka–Volterra model are involved in studies on enterprise interspecific relationships to conduct quantitative research on enterprise populations [15,16,17]. For e-cigarettes, a new industry that lacks data and research, it is necessary to characterize the relationship between the enterprise populations for future works. After years of development, a complete industrial chain, including upstream, midstream, and downstream, has been established in the Shenzhen e-cigarette industry. Relationships between enterprise populations along the industrial chain are complex. Mutualistic symbiosis exists behind their competition behaviors. Coevolution achieved by mutualism is an important relationship between enterprises in the business ecosystem, which is conducive to the stability and development of the whole ecosystem [18]. Hence, this study focuses on interspecific relationships between different e-cigarette enterprise populations, especially their coevolution behavior achieved by mutualism.

2.2. Niche Theory

A niche, which describes the roles, functions, and impacts of species in the environment, is a fundamental concept in ecological study. In the 1970s, niche theory was introduced in management science, and an “enterprise niche” was proposed by scholars [19]. Quantities of literature explain the concepts of an enterprise niche. From the static level, an enterprise niche represents the space and environment occupied by enterprises [12,20,21]. From the dynamic level, an enterprise niche is the capabilities of enterprises to engage in survival, development, and competition, in which core technological capability and manufacturing capability play vital roles [22]. Recent literature combines both the static and dynamic attributes of enterprise niches. The former are the resources controlled by enterprises. The latter are the impacts enterprises have on the environment and the capabilities of enterprises for competition and development [23].

The niches of organisms are often characterized by the niche breadth and overlap. For the niche breadth, different biological interpretations have been proposed by different ecologists [24,25,26,27,28,29]. In this paper, we describe the niche breadth as the combination of the environment in which species inhabit and the resources they utilize. The niche breadth of a species can be estimated by measuring the uniformity of the distribution of individuals of that species in the resource matrix [30]. According to this principle, Levins established Levins’ standardized niche breadth index for niche breadth metrics [31]. Levins’ index was developed by other scholars from the perspectives of resource availability and resource matrixes [30,32]. Additionally, varieties of niche measurement approaches were also proposed by follow-up researchers, such as Pielou’s index, Petraitis’ index, and Hurlbert’s index [25,33,34,35,36]. Niche overlap is defined by previous literature from many perspectives, such as resource utilization, interspecific similarities, and interspecific encounter frequency [25,30,37,38]. This study adopts niche overlap as the joint use of resources by two or more species [30]. Approaches of niche overlap measurement include Pianka’s symmetrical niche overlap index, Levins’ asymmetrical niche overlap index, Hurlbert’s encounter-frequency-based niche overlap index, etc. [25,31,39]. In addition to their widespread application in ecology, the niche breadth and overlap are also introduced by scholars in the evaluation of enterprise niches in recent years [40,41,42,43,44,45].

As an emerging industry, the Shenzhen e-cigarette industry is at the peak of product R&D (research and development). Therefore, technological innovation plays a crucial role in enterprises’ development. Simultaneously, there is also a change in the market structure of the industry and competition between the enterprises is becoming increasingly fierce. With the intensification of competition, the environmental suitability and scalability of e-cigarette enterprises in the business ecosystem are also changing, that is, the enterprise niche is in variation. Technological innovation is important for e-cigarette enterprises to improve product quality, enhance the efficiency of resources’ utilization, and thus occupy favorable niches. Thus, in this study, we evaluated the niche breadth and overlap of e-cigarette enterprises from the perspective of technological innovation in products, aiming to illustrate innovation paths of selected enterprises and innovation conditions of the industry. For e-cigarette enterprises, the innovation-related niche breadth represents resources that they have occupied in different innovation orientations, and innovation-related niche overlap refers to resources jointly utilized by two enterprises.

3. Materials and Methods

3.1. Data Selection

In the enterprise niche evaluation part of this study, it is hardly feasible to conduct an evaluation for all of the enterprises in the Shenzhen e-cigarette industry when considering their vast number. Therefore, eight scalable enterprises with salable e-cigarette products are selected from the thousands of Shenzhen’s e-cigarette enterprises (

Table 1. Basic information of the selected e-cigarette enterprises.

Company	Location	Registered Capital * (CNY)	Profiles
Dekang Bio	Shenzhen, China	4 million	Founded in Changning City, Yunnan Province of China, Dekang Bio has engaged in the technological development, production, and sale of medical raw materials, nicotine, plant extracts, and e-cigarette e-liquid. Dekang Bio invested in the R&D of the e-liquid of e-cigarettes in 2006. In 2011, the company set up a branch in Shenzhen and established a global distributor system in September. Dekang Bio’s network for production, sale, and R&D covers the United States, the United Kingdom, Romania, and other countries, and their products are exported to many countries and regions around the world.
Shenzhen Zinwi Bio-Tech	Shenzhen, China	200 million	Shenzhen Zinwi Bio-Tech is a high-tech e-cigarette enterprise with its main business in the technological development, production, and sale of nicotine salt and e-liquid. At the beginning of its establishment, Zinwi Bio-Tech provided customized production services of e-cigarette products for brands and traders. In 2018, it turned from production services to the research of nicotine salt. At present, Zinwi Bio-Tech has independent technologies in R&D and the production of nicotine salt, and has developed several types of products. The products are sold in dozens of countries and regions around the world, such as Europe, the United States, the Middle East, and Southeast Asia, and strategic cooperative relationships with several domestic and international brands have been established by the company.
First Union Group	Shenzhen, China	100 million	First Union Group is a manufacturer of electronic atomization equipment. It integrates the product design, integrated manufacturing, quality assurance, and supply chain management of e-cigarette products. The company has obtained more than 900 e-cigarette patents worldwide. First Union Group has a complete sales and service system and has built a large sales network throughout China. Moreover, it has established cooperative relations with many customers in the international market. At present, it has provided OEM/ODM services for more than 300 e-cigarette enterprises worldwide.
Innokin Technology	Shenzhen, China	22 million	Innokin Technology has creatively developed a number of e-cigarette technologies, such as e-cigarette pen caps, connecting devices, and magnet connections. Its products are sold in more than 50 countries, including the United Kingdom and the United States.
Buddy	Shenzhen, China	8.34 million	Buddy is an e-cigarette enterprise that integrates the R&D, production, sale, and service of products together. The company has created four e-cigarette brands till now.
ALD Group Limited	Shenzhen, China	350 million	ALD Group Limited focuses on the research and application of electronic atomization technology. Its business involves electronic nicotine delivery systems (ENDSs), inhalation medical vapor equipment (IMV), low-temperature nonburning devices (HNB), and other fields. The company firstly carried out the automated production of e-cigarettes, with a manufacturing center covering over 40,000 square meters.
VOOPOO	Shenzhen, China	40 million	VOOPOO entered the e-cigarette industry after acquiring the American brand WOODYVAPES in 2017. The company’s business includes the R&D, design, production, and sale of e-cigarettes. The products are mainly exported. Meanwhile, VOOPOO has its own brand.
Aspire	Shenzhen, China	3.22 million	Aspire mainly focuses on the R&D and production of electronic atomization equipment. In 2013, the company independently developed its e-cigarette brand and obtained a number of patents. At present, Aspire has more than 500 franchise stores throughout more than 30 provinces in China.

* Registered capital of the enterprises is from the National Enterprise Credit Information Publicity System, China [47].

). To ensure the reliability and representativeness of the niche evaluation, the selected enterprises have been founded for more than five years and have registered capital of over CNY 3 million. Due to the lack of statistical data on the enterprises of the Shenzhen e-cigarette industry, it is difficult for us to acquire their detailed innovation-related information, such as on technical talent, cooperative research institutions, etc. Since patents are the output of technological innovation activities, it is reasonable to take the patents as indicators of the innovation resources and capabilities that the e-cigarette enterprises acquire. In this study, we collected the patent information of eight selected enterprises from their establishment to 2021. The information was downloaded from the China National Intellectual Property Administration, where detailed information of each patent can be searched for by the patent number in the Supplementary Materials (Tables S1–S8) [46].

According to the product replacement and technological development of e-cigarettes, the innovation of e-cigarette products is classified into 12 orientations (R), including e-liquids, e-cigarette cases, batteries and charging devices, switches, atomizers and atomization methods, heater parts, materials of e-cigarettes, appearances of e-cigarettes, smoke flow, oil transportation, storage and supply devices, control systems, and others, which are marked as R1–R12, respectively (

Table 2. Classification of e-cigarettes’ technological innovation orientations.

Code	Technological Innovation Orientations
R1	E-liquids
R2	E-cigarette Cases
R3	Batteries and Charging Devices
R4	Switches
R5	Atomizers and Atomization Methods
R6	Heater Parts
R7	Materials of E-cigarettes
R8	Appearances of E-cigarettes
R9	Smoke Flow
R10	Oil Transportation, Storage, and Supply Devices
R11	Control Systems
R12	Others

).

Based on the classification, we systematically categorized the innovation orientations of all patents for the eight selected enterprises.

Table 3. Distribution of patents on the innovation orientations for the selected enterprises.

Company	R1	R2	R3	R4	R5	R6	R7	R8	R9	R10	R11	R12	${{\displaystyle \sum }}_{\mathit{j}=1}^{\mathit{n}}{\mathit{R}}_{\mathit{i}\mathit{j}}*$
Dekang Bio	6	0	0	1	0	0	0	0	0	0	0	0	7
Shenzhen Zinwi Bio-Tech	10	0	0	0	0	0	0	0	0	0	0	0	10
First Union Group	0	3	15	17	55	39	5	1	0	7	46	9	197
Innokin Technology	3	0	7	31	54	32	2	2	0	9	20	12	172
Buddy	0	0	0	5	11	21	4	0	1	2	2	0	46
ALD Group Limited	2	2	1	12	12	22	5	4	0	6	7	2	75
VOOPOO	0	1	9	88	36	15	3	9	3	10	26	16	216
Aspire	0	0	3	6	16	37	0	0	2	12	1	2	79

* ${{\displaystyle \sum }}_{j=1}^n{R}_{ij}$ is the sum of the patents on orientation $j$ of enterprise $i$.

provides the distribution of patents on every innovation orientation for the eight selected enterprises. See the detailed categorization of patents for the selected enterprises in the Supplementary Materials (Tables S1–S8).

3.2. Niche Evaluation Methods

In this paper, approaches to calculate the niche breadth and niche overlap are derived from Levins [31]. Levins’ niche breadth index can be calculated as follows (Equation (1)):

$$B_i=\frac{1}{{{\displaystyle \sum }}_{j=1}^n{P}_{ij}^2}$$

(1)

where $B_i$ is the niche breadth of enterprise $i$ and $P_{ij}$ is the proportion of enterprise $i$’s patents on innovation orientation $j$ ($R_{ij}$) to the total patents of enterprise $i$ ($P_{ij}=\frac{R_{ij}}{{{\displaystyle \sum }}_{j=1}^n{R}_{ij}}$, $i=1,2,3,\cdots ,i,i\le n$).

Since ${{\displaystyle \sum }}_{j=1}^n{P}_{ij}=1$, ${\displaystyle \sum }_{j=1}^n{P}_{ij}^2$ will be smaller when there are more innovation orientations and the investment in each direction is more even for enterprise $i$, which leads to a higher value of the niche breadth ($B_i$). Conversely, $B_i$ will be lower when enterprise $i$ participates in fewer innovation orientations or its technological innovation activities are more specialized. Normally $B_i$ > 1, whereas $B_i$ = 1 indicates that enterprise $i$ has only one innovation orientation and the enterprise niche is fairly narrow.

The detailed formula of Levins’ niche overlap index is as follows (Equation (2)):

$$O_{ik}=\frac{{{\displaystyle \sum }}_{j=1}^n\left(P_{ij}{P}_{kj}\right)}{{{\displaystyle \sum }}_{j=1}^n{\left(P_{ij}\right)}^2}$$

(2)

where $O_{ik}$ is the niche overlap to enterprise $k$ generated by enterprise $i$. Similarly, $O_{ki}$ represents the niche overlap to enterprise $i$ generated by enterprise $k$. Usually, $O_{ik}\ne O_{ki}$.

In this paper, Levins’ niche overlap index measures the overlapping in technological innovation between two enterprises, which is in proportion to the potential competition degree between them. When $O_{ik}=0$, there is no overlap in technological innovation between enterprise $i$ and enterprise $k$, indicating no competition between the two enterprises.

Levins’ niche overlap index is applied in a niche overlap analysis between two enterprises. However, competition in the Shenzhen e-cigarette industry usually exists among multiple enterprises. In this paper, we also estimate the overall niche overlap ($O_i$) of an enterprise in the industry (Equation (3)):

$$O_i=\frac{{{\displaystyle \sum }}_{k=1}^n{O}_{ki}}{n-1}\left(k\ne i\right)$$

(3)

where $n$ is the total number of enterprises in the industry.

$O_i$ represents the average level of the niche overlap between enterprise $i$ and other enterprises in the industry. $O_i$ = 0 suggests that there are no other enterprises in the innovation areas of enterprise $i$. A higher $O_i$ value indicates more participation of other enterprises in the technological innovation orientations of enterprise $i$, resulting in fiercer potential competition.

4. Results and Analysis

4.1. Business Ecosystem Model and Population Life History of the Shenzhen E-Cigarette Industry

4.1.1. Business Ecosystem Model of the Shenzhen E-Cigarette Industry

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Business Ecosystem Structure of the Shenzhen E-Cigarette Industry

Figure 2 shows the detailed structure of the business ecosystem of the Shenzhen e-cigarette industry. The ecosystem is mainly constituted of four components: core ecosystem, extended ecosystem, competitive species, and symbiotic species:

Core ecosystem: This part represents traditional e-cigarette enterprises which produce e-cigarette products and integrate with other parts of the business ecosystem. The boundaries here are equivalent to the boundaries of traditional e-cigarette enterprises. In the core ecosystem, innovation of internal activities is performed along the value chain to gain core competitiveness which is the foremost resource of the enterprises. For example, e-cigarette enterprises can obtain core technologies through technological innovation, or establish competitive advantages by strengthening marketing innovation.

Extended ecosystem: This part is constituted by the supply side and the demand side of e-cigarettes, which are critical for the business ecosystem. The supply side mainly includes (1) manufacturers that provide upstream raw materials (battery cells, circuit boards, nicotine, etc.) to produce e-liquid, batteries, atomizers, and other accessories for e-cigarettes; (2) laboratories built by enterprises and collaborative research institutes for technological support and reserves; (3) suppliers of e-cigarette parts; and (4) organizations that provide financial services. The demand side is the marketing channels of e-cigarette products, such as offline sales of dealers and agents, online sales on e-commerce platforms, and overseas exports to Europe, America, Southeast Asia, and Russia.

Competitive species: Competitive species represented by traditional tobacco enterprises and international e-cigarette manufacturers are potential threats to the core ecosystem of the Shenzhen e-cigarette industry. Traditional tobacco enterprises have cultivated a large and fixed consumer population after years of tobacco sales. The price advantage, high consumer acceptance, and high market saturation of traditional tobacco products make it difficult for the market entrance and expansion of e-cigarette enterprises. In addition, Philip Morris International, British American Tobacco, Japan Tobacco, Imperial Tobacco, and other multinational tobacco companies have significantly developed in the e-cigarette area, making the international e-cigarette market increasingly competitive.

Symbiotic species: In the business ecosystem of the Shenzhen e-cigarette industry, symbiotic species are crucial to the abiotic environment, so that they have a profound impact on the whole system. The symbiotic species include public organizations related to e-cigarettes (China Electronic Chamber of Commerce, Shenzhen E-cigarette Industry Association, etc.), scientific institutions (public health agencies, third party appraisal agencies, etc.), and government regulatory authorities (customs departments, tobacco departments, commodity inspection bureaus, etc.).

External ecological environment: The prosperity of the Shenzhen e-cigarette industry is closely related to the unique external environment of Shenzhen: First, the complete industrial chain and well-developed hardware manufacturing industry have laid the foundation for the manufacturing of e-cigarette products. Second, numerous science and technology industrial parks in Shenzhen guarantee the technology reserve of the industry. Third, the improvement of intellectual property protection in China provides benefits for innovation, resulting in a significant increase in e-cigarette-related patents. Fourth, thousands of skilled grassroots staff in Shenzhen are high-quality labor resources that improve the frontline efficiency of e-cigarette production. Finally, endowed with a unique location and developed transportation, Shenzhen is convenient for the exporting of e-cigarette products.

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Evolution Path of the Business Ecosystem

As an emerging industry, the Shenzhen e-cigarette industry is currently in rapid development, with a scale exceeding CNY hundreds of billion. According to the evolutionary stages of the business ecosystem, the Shenzhen e-cigarette industry is still in its expansion stage. Figure 3 shows its evolution path till now:

Birth stage: In the early stage of the development of the Shenzhen e-cigarette industry, the scale of e-cigarette enterprises is small and the structure of the business ecosystem is simple. Enterprises in the core ecosystem have cultivated the first generation of consumer groups for e-cigarette products through production and sales. With the development of the industry, suppliers responsible for raw material manufacturing and demanders responsible for sales appear in the ecosystem, forming an initial industrial chain.

Expansion stage: In this stage, there is an expansion in the scale of enterprises and a gradual increase in the number of enterprises in the industry. Since enterprise saturation has not been reached within the industry, the dominant enterprise relationship is cooperation rather than competition, and there is a mutualistic symbiosis between e-cigarette enterprises. Meanwhile, the industrial chain within the ecosystem is further improved: On the supply side, enterprises cooperate with research institutions or build their laboratories to carry out technological innovation to improve product quality and production efficiency. Simultaneously, a capital inflow of the ecosystem provides financial services for e-cigarette enterprises. In the core ecosystem, e-cigarette enterprises obtain core competency through technological innovation. On the demand side, the diversification of sales channels further expands the consumer group of e-cigarette products. In addition, the accession of new members further complicates the structure of the business ecosystem: Public organizations such as the Electronic Cigarette Association are established through business alliances. Scientific research institutions are involved in the ecosystem through cooperation with e-cigarette enterprises. In this stage, the government actively intervenes in the e-cigarette industry and increases the supervision of products. Public organizations, scientific research institutions, and the government together constitute symbiotic species of the business ecosystem. The development of the e-cigarette industry also attracts the participation of Chinese traditional tobacco companies, international tobacco companies, and others, which become competitive species of the business ecosystem.

Thus, a business ecosystem has been established gradually with the development of the Shenzhen e-cigarette industry, and the ecosystem’s structure has transformed from being simple to being complex. During this process, the division of labor and the specialization of enterprises have emerged to achieve niche separation. A complete industrial chain, from raw material supply, to product processing, to sales, has been constructed. The participation of symbiotic species, competitive species, and other members completes the structure of the business ecosystem. The above changes improve the stability of the business ecosystem and promote innovation activities, supporting the further development of the Shenzhen e-cigarette industry.

4.1.2. The Population Life History of the Shenzhen E-Cigarette Industry

The development history of the Shenzhen e-cigarette industry is similar to the life history of plant populations. In the research on plant populations’ life history strategies, the stability of the environment is an important determinant for the choices made by plants. Similarly, when the surrounding environment changes, e-cigarette enterprises show adaptation to specific habitats under selection, in a similar manner to plant populations. Interactions and even coevolution also exist among the enterprises. Therefore, it is feasible to apply theories and methods of life history strategies and interspecies relationships to our research on the Shenzhen e-cigarette industry.

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Development Strategies of the Industry—From the Perspective of Life History Strategies

The Shenzhen e-cigarette industry can be seen as a large population involving thousands of e-cigarette enterprises. As with plant populations, the industry employs different population life history strategies in different stages. Since the emergence of the Shenzhen e-cigarette industry, the stress of its habitat is maintained at a low level, while the disturbance level in the habitat has decreased. Thus, the life history strategy of the industry has transformed from the ruderal strategy (R) to the competitive strategy (C) (Figure 4):

Stage I: This stage corresponds to the birth stage of the business ecosystem. As an emerging industry, there is a low level of environmental stress and substantial market resources for the Shenzhen e-cigarette industry. The popularity and scarcity of e-cigarettes cause products to sell out when exported overseas. However, high uncertainties exist for the capital, technology, labor, equipment, and raw materials required by the enterprise for production, as well as for the policies of the government, making the habitat unstable. There are increasing numbers of new enterprises in this stage through “reproduction”, which means they are “genetically” similar: new e-cigarette enterprises are established by core employees who left original enterprises or new entrepreneurs through imitating the technologies, production, and sales of existing enterprises. These new enterprises resemble original enterprises in production, organization structure, and even management, showing the distinct phenomenon of “heredity”, in a similar manner to organisms. In this stage, e-cigarette enterprises are characterized by a small scale, simple product types, high natality, and high mortality, corresponding to the ruderal strategy (R).

Stage II: This stage corresponds to the expansion stage of the business ecosystem. The environmental stress is still moderate for the unsaturated market and abundant resources. Policies and standards of e-cigarette products are introduced by the government to strengthen the supervision of the industry and improve the market order. The volatility of the habitat is dramatically reduced because of the stabilization of the ecosystem structure. Therefore, enterprise mortality decreases gradually, and there is a large number of enterprises in the industry. To maintain their competitiveness in the market, e-cigarette enterprises increase their investment in R&D, which promotes technological innovation in the industry and raises the barriers for new entrants. The “reproduction” of enterprises slows down due to industrial barriers, and several sizable enterprises emerge as a result of their technological advantages. Meanwhile, there is diversification in both products and consumer populations, such that consumers can buy e-cigarettes by preference. In this stage, the life history strategy of the Shenzhen e-cigarette industry transforms from the ruderal strategy (R) to the competitive strategy (C), and the resource allocation priority shifts from “reproduction” to “growth”: The enterprises abandon stage I’s development pattern of imitation. Some of them focus on design and manufacturing for product differentiation, while others improve their brand influence through marketing strategies. More importantly, technological innovation is indispensable for e-cigarette enterprises to acquire core competitiveness.

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Interspecific Relationships of Shenzhen E-Cigarette Enterprise Populations

Figure 5 illustrates the interspecific relationships between enterprise populations along the industrial chain:

The upstream of the industrial chain includes manufacturers of e-cigarette modules, such as e-liquid, atomizers, batteries, and chips. The innovation of one module usually drives the innovation of others, which promotes the product renovation of e-cigarettes. Ultimately, coevolution is achieved between different enterprise populations through collaborative innovation. For example, the upgrading of heater strips in atomizers improves the taste of e-liquid, but it requires batteries with higher power. Ultimately, it leads to the upgrading of products in batteries.

The midstream of the industrial chain consists of e-cigarette manufacturers and brand enterprises. E-cigarette manufacturers, on the one hand, provide products for international tobacco companies through OEM. On the other hand, they establish their own brands and supply to retailers through dealers for the distribution of e-cigarette products. There is “exploitation competition” between different e-cigarette manufacturers, which means that inhibition within the manufacturer population occurs through competition in capturing resources. Actually, since abundant resources for production, sales, and innovation are still available for the current e-cigarette industry, there is little inhibition between manufacturers. Furthermore, to acquire commercial legitimacy and development opportunities, these enterprises often join forces to establish public organizations, such as the Shenzhen Electronic Cigarette Committee, founded in 2017. For brand enterprises, there is much more intense competition than for manufacturers. Different brands compete with each other to occupy more market share, causing “interference competition” between them.

The downstream of the industrial chain is constituted by three retailer populations: cross-border e-commerce, offline flagship stores, and agency retail stores. Intense “interference competition” exists within each of the three populations. However, there are “exploitation competition” and mutualistic symbiosis for interpopulation relationships; due to market unsaturation for e-cigarettes, the success of one type of retailer can promote public awareness of the products and thus improve the sales of the other two retailer populations.

Thus, our research has shown that a synergistic and symbiotic interspecies relationship has been established between different e-cigarette enterprise populations. The relationship is established in three patterns: (1) Manufacturers in the upstream achieve coevolution through the mutual promotion of product innovation. (2) Midstream enterprises jointly found public organizations for legitimacy and development opportunities. (3) Retailers in the downstream promote public awareness and acceptance of e-cigarette products by mutualistic symbiosis in sales. The above phenomena have contributed to benign competition and the coevolution of the enterprises’ populations within the Shenzhen e-cigarette industry, which are conducive to the technological innovation of the products and the operation of the e-cigarette market. Finally, they promote the stability and the development of the business ecosystem.

4.2. Niche Breadth and Overlap of Representative E-Cigarette Enterprises

4.2.1. Descriptive Analysis

In order to show the technological innovation conditions of the selected e-cigarette enterprises, we counted the innovation orientations of selected enterprises in each year. Our results illustrate the characteristics of the technological innovation path varied with time for each enterprise (Figure 6).

Two enterprises—Dekang Bio and Shenzhen Zinwei Bio-Tech—have a few patents which are only concentrated on ingredients and the taste of e-liquid (R1). First Union Group reached the peak of innovation in 2013, 2016, and 2019. The enterprise focused on batteries and charging devices (R3), switches (R4), and atomizers and atomization methods (R5) in the early stage, and then transformed its focus to research heater parts (R6) and control systems (R11). The patents for Innokin Technology are relatively evenly distributed in every direction, and the total number of patents per year has not changed significantly over time. For Buddy, there is a dramatic increase in patent numbers from 2018 to 2020, and the enterprise began to focus on the design of e-cigarette materials and appearances (R7, R8) since 2018. For ALD Group Limited, most patents were about heater parts (R6) before 2018, after which the technological innovation orientations tended to be diversified. VOOPOO and Aspire have just applied for patents in the past four years, and their innovation activities are mainly related to switches and heater parts, respectively.

4.2.2. Niche Breadth of E-Cigarette Enterprises

Based on ${{\displaystyle \sum }}_{j=1}^n{R}_{ij}$, shown in Table 3, we calculated the niche breadth value ($B_i$) for each enterprise (

Table 4. Niche breadth of the selected enterprises.

Company	P1 *	P2	P3	P4	P5	P6	P7	P8	P9	P10	P11	P12	Bi
Dekang Bio	0.857	0.000	0.000	0.143	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	1.324
Shenzhen Zinwi Bio-Tech	1.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	1.000
First Union Group	0.000	0.015	0.076	0.086	0.279	0.198	0.025	0.005	0.000	0.036	0.234	0.046	5.287
Innokin Technology	0.017	0.000	0.041	0.180	0.314	0.186	0.012	0.012	0.000	0.052	0.116	0.070	5.290
Buddy	0.000	0.000	0.000	0.109	0.239	0.457	0.087	0.000	0.022	0.043	0.043	0.000	3.458
ALD Group Limited	0.027	0.027	0.013	0.160	0.160	0.293	0.067	0.053	0.000	0.080	0.093	0.027	6.175
VOOPOO	0.000	0.005	0.042	0.407	0.167	0.069	0.014	0.042	0.014	0.046	0.120	0.074	4.453
Aspire	0.000	0.000	0.038	0.038	0.203	0.468	0.000	0.000	0.025	0.152	0.013	0.025	3.475

* P₁ represents the proportion of one enterprise’s patents on innovation orientation 1 (R1) to the total patents of the enterprise, and it is the same for P₂–P₁₂.

). The results show a large variation in the niche breadth for the selected enterprises. According to the niche breadth values, the enterprises can be divided into three groups:

Narrow niche enterprises ($B_i$ ≤ 2): Dekang Bio and Shenzhen Zinwi Bio-Tech have relatively narrow enterprise niches, which are related to their limited innovation orientations concentrated in e-liquid. Medium niche enterprises (2 < $B_i$ < 4): Buddy and Aspire have participated in over 50% of the innovation orientations, and they have many more patents than narrow niche enterprises. Wide niche enterprises ($B_i$ $\ge$ 4): for ALD Group Limited, Innokin Technology, First Union Group, and VOOPOO, the patents of the four enterprises have been involved in over 80% of the innovation orientations, suggesting that they have adopted a comprehensive technological innovation strategy to occupy wide niches.

4.2.3. Niche Overlap of E-Cigarette Enterprises

Table 5. Niche overlap between the selected enterprises *.

Company	Dekang Bio	Shenzhen Zinwi Bio-Tech	First Union Group	Innokin Technology	Buddy	ALD Group Limited	VOOPOO	Aspire
Dekang Bio	1.000	1.135	0.016	0.054	0.021	0.061	0.077	0.007
Shenzhen Zinwi Bio-Tech	0.857	1.000	0.000	0.017	0.000	0.027	0.000	0.000
First Union Group	0.065	0.000	1.000	0.929	0.954	0.771	0.700	0.872
Innokin Technology	0.215	0.092	0.929	1.000	0.994	0.809	0.860	0.900
Buddy	0.054	0.000	0.624	0.650	1.000	0.702	0.431	0.947
ALD Group Limited	0.282	0.165	0.900	0.944	1.253	1.000	0.821	1.175
VOOPOO	0.259	0.000	0.589	0.724	0.555	0.592	1.000	0.418
Aspire	0.019	0.000	0.573	0.592	0.952	0.661	0.326	1.000

* Numbers in this table are niche overlaps of enterprise $i$ relative to enterprise $k\left(O_{ik}\right)$, where enterprises in the first column represent enterprise $i$ and enterprises in the first row represent enterprise $k$.

presents the niche overlap values $\left(O_{ik}\right)$ of each selected enterprise relative to the other seven enterprises. The results indicate that Dekang Bio and Shenzhen Zinwi Bio-Tech have little overlap with the other six enterprises $(O_{ik}$ < 0.3), which is closely related to their specialization in e-liquid innovation. For the rest of the six enterprises, they have large niche overlaps with other enterprises, except Dekang Bio and Shenzhen Zinwi Bio-Tech, with most having $O_{ik}$ > 0.5. This result suggests that their innovation activities highly resemble those of other enterprises. Meanwhile, we found that $O_{ik}$ > $O_{ki}$ in most cases for three of these enterprises—First Union Group, Innokin Technology, and ALD Group Limited, with these three enterprises as enterprise $i$ and other enterprises as enterprise $k$. The result suggests that the niche overlap that they have generated is larger than that of others. Furthermore, it should be noted that all of the three enterprises have a wide enterprise niche breadth ($B_i$ > 5).

The overall niche overlap ($O_i$) for each selected enterprise is shown in

Table 6. Overall niche overlap of the selected enterprises in the industry *.

Company	Dekang Bio	Shenzhen Zinwi Bio-Tech	First Union Group	Innokin Technology	Buddy	ALD Group Limited	VOOPOO	Aspire
Oi	0.250	0.199	0.519	0.559	0.676	0.517	0.459	0.617

* Since it is hard to collect patent information of all of the e-cigarette enterprises in Shenzhen, eight selected enterprises are used here to represent the Shenzhen e-cigarette industry and $n$ = 8 for Equation (3).

. For Dekang Bio and Shenzhen Zinwi Bio-Tech, there are relatively small values of $O_i$ (<0.3), which means that there are few participants in their areas of technological innovation. The rest of the selected enterprises have high overall niche overlap values ($O_i$ > 0.4). Meanwhile, wide niche enterprises (First Union Group, Innokin Technology, ALD Group Limited, and VOOPOO) have a lower level of $O_i$ than medium niche enterprises (Buddy and Aspire).

5. Discussion

5.1. Ecological Interpretation of the Rapid Development of the Shenzhen E-Cigarette Industry—Industrial Level

As shown in the model constructed in Section 4.1., the Shenzhen e-cigarette industry has developed into a complicated and diverse business ecosystem constituted of a core ecosystem, an extended ecosystem, symbiotic species, and competitive species. Traditional e-cigarette enterprises of the core ecosystem are in the center of the whole business ecosystem and other elements participate in e-cigarette-related activities around the core ecosystem: Organizations in the extended ecosystem provide support in terms of raw materials, financial investment, and product sales. Symbiotic species, such as public organizations and research institutions, promote communication and technology reserves among e-cigarette enterprises, respectively. Competitive species also improve the business ecosystem’s vitality via their competition with e-cigarette enterprises. Coevolution has been reached by their interactions with each other, and finally, it improves the ecosystem’s stability in addition to its capabilities in production, sales, and innovation. Meanwhile, the external environment provides multiple benefits in infrastructure, labor, transportation, etc., which is also significant for the ecosystem’s development. It is also important to note that the business ecosystem has undergone an evolution process from being simple to being complex, and a complete industrial chain has gradually been constructed, with the enhancement of ecosystem stability.

Life history analysis further explains the strategic development of the Shenzhen e-cigarette industry, which varies with changes in the environment and resource conditions. In the early stage, with the absence of legal supervision and substantial market gaps, the construction and expansion of the Shenzhen e-cigarette industry are in disorder. Numerous entrepreneurs from various industries have entered this area by imitating the technology and business models of original e-cigarette companies. Although this leads to the homogenization and high mortality of enterprises, the industry becomes sizable and accumulates large numbers of consumers. With the increase in environment stability and market competition, there is a strategic transformation from imitation to innovation for e-cigarette enterprises in the subsequent stage. The innovation strategy makes the enterprises establish their advantages, and simultaneously it further improves the product quality and promotes industrial labor division, which is conducive to the long-term growth of the Shenzhen e-cigarette industry.

Interspecies relationship analysis reveals special competition between enterprise populations of the Shenzhen e-cigarette industry, which is different from that of traditional industries. Due to the limited resources in product processing and marketing, potential competition is inevitable for the enterprise populations. Nevertheless, for these e-cigarette enterprise populations, competition is often accompanied by their cooperation behaviors, such as collaborative innovation and establishing public organizations. Finally, they achieve coevolution. The following reasons may contribute to this phenomenon: (1) Since the Shenzhen e-cigarette industry has not been well established, there are no obvious barriers to technical exchange between enterprises. (2) An alliance between enterprises helps them gain acceptance of e-cigarette products from consumers. (3) Cooperation can improve the efficiency of resource utilization when the resources are still remaining.

5.2. Ecological Interpretation of the Rapid Development of the Shenzhen E-Cigarette Industry—Enterprise Level

According to Equation (1), the niche overlap measured by Levins’ niche breadth index represents the diversity of innovation activities that the enterprises participate in. Since Levins’ niche overlap index is derived from the “competition coefficients” of the Lotka–Volterra equations, niche overlap values calculated in this study reflect competition between the enterprises [31]. Hence, the niche breadth and niche overlap values of the eight selected enterprises indicate their development strategies in the e-cigarette area.

The niche evaluation results reveal that niche-widening and -separation strategies have been employed by e-cigarette enterprises in technological innovation. For the enterprises with a wide niche breadth, they have broadened the innovation path through diversified development in technological innovation, which has provided solid technical reserves in the industry. Those with a wide niche breadth have also enhanced their competitiveness by exerting immense pressure on their rivals. For the enterprises which have little overlap with others, they have established core advantages through specialization in few innovation orientations, and potential competition with other enterprises from niche overlapping has also been avoided through this strategy.

6. Conclusions

In this paper, a synthesized study has been conducted on the Shenzhen e-cigarette industry. The analysis of the industry’s structure and development, and the case study of representative e-cigarette enterprises, allow us to propose explanations for the prosperity of the Shenzhen e-cigarette industry as follows:

• The complex structure, the strong association between components, and suitable external environment of Shenzhen’s e-cigarette business ecosystem ensure the stabilization and development of the industry.
• The development strategy transformation from imitation to innovation of the Shenzhen e-cigarette industry has strengthened the competitiveness of enterprises and improved the internal development potential of the industry, which promotes the maturation of the industry.
• There is benign competition between e-cigarette enterprise populations, and they have achieved coevolution through mutualistic symbiosis.
• Niche-expansion and -separation strategies of different e-cigarette enterprises have improved resource utilization efficiency and avoided excessive competition in the industry.

There are still some limitations to this study. In the niche evaluation of e-cigarette enterprises, patents are selected as an indicator of technological innovation conditions. However, not all innovations of e-cigarette products were patented by e-cigarette enterprises, due to their weak patent consciousness in the early development stage of the Shenzhen e-cigarette industry. In addition, the patents in preparation are not included in the research due to the hysteresis of the patent application. Detailed investigations of the e-cigarette enterprises may provide us with a comprehensive understanding of their innovation conditions. Meanwhile, the e-cigarette enterprises selected in the niche evaluation are limited. More characteristics of the Shenzhen e-cigarette industry might be found in future studies by collecting patent information from more enterprises.

Our research has proven the possibility of utilizing ecological approaches in empirical studies on the e-cigarette industry. Future research could focus on other emerging industries similar to e-cigarettes. With the innovation in technologies and business models, quantities of emerging industries, such as e-cigarettes, have come up in recent years. Compared with traditional industries, they are more complicated in terms of their technical compositions and surrounding environments. Theories and approaches in ecology can provide distinct insights to understand their operating mechanisms and development.