---
title: "2020, the Unexpected Death of an E-Cigarette Company"
description: "After four months of preparation, team building, marketing, and channel expansion, Su Rong never expected his last meeting with his boss Yan Jia to be at a police station. The reason was that Yan Jia went to a CVS store to retrieve their disposable e-cigarettes, but the store owner didn't recognize him and refused to return them, insisting that the channel guy who had stocked the products come. In a panic, Yan Jia called the police, and the store owner, Yan Jia, and Su Rong all ended up at the police station. Yan Jia's reason was poor sales, so he wanted to take the products back. But Su Rong didn't understand..."
author: "格物消费"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-01-05"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/ILuKCWI2rA-Isq64EarTtg"
translation: "https://xinjignxiao.com/zh/articles/2020-%E4%B8%80%E5%AE%B6%E7%94%B5%E5%AD%90%E7%83%9F%E5%85%AC%E5%8F%B8%E7%9A%84%E6%84%8F%E5%A4%96%E6%AD%BB%E4%BA%A1-544a9d8d.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/2020-the-unexpected-death-of-an-e-cigarette-company-544a9d8d/"
citation: "格物消费. “2020, the Unexpected Death of an E-Cigarette Company.” New Distribution, 2020-01-05. https://xinjignxiao.com/en/articles/2020-the-unexpected-death-of-an-e-cigarette-company-544a9d8d/"
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---

# 2020, the Unexpected Death of an E-Cigarette Company

> After four months of preparation, team building, marketing, and channel expansion, Su Rong never expected his last meeting with his boss Yan Jia to be at a police station. The reason was that Yan Jia went to a CVS store to retrieve their disposable e-cigarettes, but the store owner didn't recognize him and refused to return them, insisting that the channel guy who had stocked the products come. In a panic, Yan Jia called the police, and the store owner, Yan Jia, and Su Rong all ended up at the police station. Yan Jia's reason was poor sales, so he wanted to take the products back. But Su Rong didn't understand...

After four months of preparation, team building, marketing, and channel expansion, Su Rong never expected his last meeting with his boss Yan Jia to be at a police station.
The reason was that Yan Jia went to a CVS store to retrieve their disposable e-cigarettes, but the store owner didn't recognize him and refused to return them, insisting that the channel guy who had stocked the products come. In a panic, Yan Jia called the police, and the store owner, Yan Jia, and Su Rong all ended up at the police station.
Yan Jia's reason was poor sales, so he wanted to take the products back. But Su Rong didn't understand why the boss didn't just give a heads-up, instead sneaking around to collect them himself, and even getting him involved in the police station incident.
**This is just the tip of the iceberg.**
In fact, during those four months, Yan Jia's startup e-cigarette company, Love's Prey, experienced layoffs, a falling out between executives and the founder, and even scenes of the boss destroying evidence and late-night office confrontations. The underlying issues were unpaid wages, no compensation, and employees without labor contracts.
Now, most employees at Love's Prey's Beijing office have been dismissed, except for a few. A former employee has started a business selling export surplus goods on social media, and even the owed wages were paid in kind.
Besides the millions of yuan lost, all the effort and sweat invested by everyone has also gone down the drain.
Love's Prey, this e-cigarette company, seemed to fail because of the "power cut" (online sales ban), but in reality, those looking to make quick money often find themselves stuck in the mud. It's just that in the chaotic e-cigarette industry, the greed of human nature is more visible.
**We used 7,000 words to objectively record the story of this company.**
##### **-01-**
##### **Late-Night Showdown**
**A phone call shattered Zhang Peng's peace of mind.**
Receiving a call in the dead of night is already annoying, but what was said on the phone was even more so.
**"You need to come quickly, something big has happened! It's a disaster!"**
On the other end was his friend and colleague Lin Jianyu. Zhang Peng had a hunch why Lin Jianyu was calling, so he asked, "What's wrong? Did it escalate?"
According to Lin Jianyu, it had indeed escalated, and with whom? Of course, with the company's boss.
So Zhang Peng called the boss, Yan Jia, who said, "It's nothing, nothing. You don't need to come."
The stark contrast between his colleague's and boss's reactions made Zhang Peng uneasy. Reflecting on the past two months, the company had been full of absurdities, and he thought it must have escalated, but going to the office for a "late-night showdown" at this hour would just add to the amusement.
Zhang Peng, holding the title of China Sales Director, felt he should go to the "scene" to see what was happening.
He rushed to the office at Sihui Guocuiyuan, arriving at 2 a.m. Lin Jianyu and a group of brothers were confronting Yan Jia. Zhang Peng listened for a while to understand the situation:
It turned out that Yan Jia had decided to shut down the company but hadn't informed the other employees. These employees had no contracts and no severance. Lin Jianyu, as a leader, feared that if the boss closed the company, he and his team would have no evidence of their work, so he came to the office in the early morning to take personal items and proof of employment.
Unexpectedly, the boss also showed up.
It turned out that Yan Jia was worried they might come back to steal things after being fired, so he came to check on the office in the middle of the night. Coincidentally, the two groups ran into each other.
**The atmosphere became extremely awkward.**
Lin Jianyu, disregarding any pretense, directly questioned Yan Jia about compensation. The argument became heated. Yan Jia initially refused to compensate, but under pressure from the group, he finally agreed to delay salary payments.
Love's Prey, which had been the highlight of the Shanghai e-cigarette expo just months ago, had now fallen to the point of refusing to pay dismissed employees' wages.
It's worth noting that these employees never had formal contracts, let alone social insurance.
##### **-02-**
##### **The Beginning**
**The story starts from the company's founding.**
August 24, 2019, was the day Zhang Peng joined Love's Prey. The day before, through his friend Lin Jianyu's introduction, Zhang Peng met Yan Jia, the boss and founder of Love's Prey, at a café.
Lin Jianyu and Zhang Peng had been colleagues before and remained friends after leaving. This time, it was also because of Lin Jianyu's invitation that Zhang Peng agreed to join this entrepreneurial dream.
Love's Prey was the name Yan Jia gave to his e-cigarette brand. When asked about the origin of the name, Yan Jia rambled on about concepts, and Zhang Peng never really understood, but it was a minor issue since Yan Jia was the founder.
Before this, Zhang Peng knew nothing about Yan Jia, only that he came from an ODM/OEM background in e-cigarettes. Although he hadn't worked in FMCG, he should know more about e-cigarettes than Zhang Peng.
**"At our first meeting, I felt a bit uneasy; he didn't have a complete plan."**
But being a Beijing native who values face, Zhang Peng had already agreed to help Lin Jianyu, so he didn't hesitate. He thought he should use his expertise to help Love's Prey in its early stages.
Zhang Peng had many years of experience in the alcohol industry and was very familiar with it. He also wanted to expand into a new circle and make a big impact.
"Plus, being a smoker, I thought e-cigarettes were a great invention with lots of potential, so I thought it was worth a try."
**To some extent, e-cigarettes can't be called an 'industry,' let alone a 'sector.'**
Compared to traditional mature FMCG industries or the hot "AI" and "health" sectors, the e-cigarette market is too small and fragmented.
But in the pod era, there were indeed no technical barriers.
Except for professional players or supply chain veterans who could distinguish quality by battery, atomization structure, and materials, for consumers, what you see is what you get—the designs are largely homogeneous.
Just like placing a glass of Yanjing, Harbin, or Laoshan beer, if they're all pure draft, it's hard to tell them apart.
In the first week of September 2019, the team chose an office in the East Fourth Ring area of Beijing, with a monthly rent of 20,000 yuan, which was quite a bargain.
Although the company wasn't registered yet, recruitment couldn't stop. From finance to sales, every position needed to be filled. Lin Jianyu and Zhang Peng naturally became middle managers, and Zhang Peng got the title of China Sales Director.
Like many startups, Love's Prey set lofty goals from the start, aiming for the "great dream" of China's 350 million smokers, seemingly without considering how difficult it would be to convert them all to e-cigarette users.
##### **-03-**
##### **Caught Off Guard**
**Indeed, the e-cigarette industry was really hot at that time. How hot?**
E-cigarette expos in first-tier cities were packed, with people wanting a piece of the pie and others just watching the excitement.
**"99% of e-cigarettes come from Shenzhen"** was the industry consensus. Of 58 manufacturers, 36 were from the Pearl River Delta, reflecting this phenomenon.
Yan Jia was from Shenzhen, a place deeply intertwined with e-cigarettes. He knew well how wide and broad the profits were.
**But the unspoken rule of business is that when most people know something makes money, it's not far from decline.**
Yet this didn't stop those eager to make money, coming from all walks of life and all corners of the country.
Lin Jianyu came from a media background. Unlike Yan Jia, who came from ODM, or Zhang Peng, from FMCG, Lin Jianyu valued connections highly. This might be a common trait among media professionals, knowing the importance of public opinion and networks.
Especially for a new brand like Love's Prey, building a reputation was crucial, and Lin Jianyu invested the most effort here.
At various e-cigarette expos, Lin Jianyu showcased Love's Prey products, introduced them everywhere, and took photos with industry leaders to gain favor and presence.
Zhang Peng, on the other hand, leveraged his years of FMCG channel experience to get Love's Prey products into various stores, big and small.
**"Our initial idea was to make the entire street know Love's Prey, so we needed intensive distribution, getting the product into every store on the street, no matter how small."**
Rich channel resources were Zhang Peng's advantage. Even mom-and-pop shops in residential areas could get the product. For an obscure brand, no channel could be overlooked, no matter how small.
But soon, Zhang Peng discovered that there was no systematic approach from CEO to CV. From pre-sales, during-sales, after-sales, to warehousing, the entire supply chain lacked standardized SOPs.
**"The work became: whatever Boss Yan gives you, you turn it into cash. To me, this was very amateur and immature."**
Having worked in large, mature companies, Zhang Peng was troubled by this. The company was in its startup phase, and imperfections were understandable, but he didn't even see hope for improvement.
Despite such immature operations, Love's Prey, as a young brand, was still progressing at a gratifying pace.
From September 16, when they started distributing, to September 31, they had stocked 556 points and sold 5,500 yuan. In October, despite frequent stockouts, they sold 30,000 yuan.
**"If November hadn't gone south, we could have hit 100,000 yuan."**
Why would a company that seemed to be doing well suddenly decide to shut down? The seeds of trouble were sown early: an unsystematic supply chain and chaotic management were dragging down the fragile team every day.
But revenue was weak compared to the total operating costs, and Yan Jia knew he should cut his losses.
Rough estimates: Love's Prey's monthly personnel costs were around 200,000 yuan, rent 20,000 yuan, and they attended two expos, each costing 100,000 yuan, totaling about 200,000 yuan. All in all, excluding goods, they had spent over a million yuan.
**"But his way of cutting losses was completely wrong!"**
##### **-04-**
##### **Hard to Say Goodbye**
**The sudden online sales ban in November had a huge impact on Love's Prey. For the entire e-cigarette industry, it was a turning point from boom to bust.**
The State Administration for Market Regulation issued a notice on the 1st, requiring that e-cigarettes not be sold to minors, not be sold online, and not be advertised online.
After the "power cut" order, Yan Jia began to worry constantly about whether the business could continue. Meanwhile, e-cigarette companies like RELX and Snow+ started aggressively expanding offline.
**"How crazy was it? RELX's offline policy was already 'buy 10 get 10 free,' meaning the first 20 sticks were free," revealed an insider.**
Besides discounts, RELX even allowed some channels to sell on credit.
If the leading companies were struggling, smaller companies had it even harder.
**Typically, for a company facing losses, cost-cutting is the first priority, such as reducing labor costs—layoffs or halting hiring.**
**Yan Jia certainly wouldn't spend money on more people, so he had Zhang Peng use his connections to attract intermediaries with higher commissions to sell products. That wasn't a problem, but frequent stockouts and shipping errors were enough to damage a brand's reputation.**
At first, Zhang Peng would frequently chase orders, but seeing no results, he stopped. He adopted a "come if you want" attitude toward goods. Moreover, Yan Jia had many ideas, changing daily, like a revolving door.
**By October 1, Zhang Peng had considered resigning, but Yan Jia repeatedly persuaded him to stay, saying he didn't need to come to the office every day.**
**"He said I could come two or three days a week, mainly to guide the work."**
So Zhang Peng stayed temporarily, but his work shifted from doing nothing to constantly educating everyone. From top to bottom, they were all FMCG novices, and Zhang Peng felt increasingly overwhelmed.
**Running out of stock was a serious problem, but an even more serious one was pricing. They debated from a minimum order of 100 sticks to 10,000 sticks, and from a purchase price of 15 yuan to 17 yuan, which made Lin Jianyu furious.**
**"Can you believe it? After all that debate, he set the purchase price 4 yuan higher than RELX, at 17 yuan for orders over 1,000 sticks."**
**Lin Jianyu thought that even with his best connections, he couldn't sell such expensive products.**
Fortunately, Zhang Peng's channel resources were solid, so Love's Prey entered many stores without paying entry fees. This was very "cost-effective" for Yan Jia, so he was always polite to Zhang Peng, thanking him profusely.
**But was saving entry fees enough?**
Anyone in retail knows you either compete on price or run frequent promotions. Supermarkets and stores are full of "buy X get Y" deals, with flexible giveaways.
**E-cigarettes naturally needed promotions too, like buy 10 get 2, buy 10 get 5, or even buy 10 get 10. Different merchants had varying quantities due to promotional changes.**
What happened next fully exposed Yan Jia's lack of understanding of the FMCG industry. He sent people to check stores and, upon their return, concluded that Lin Jianyu or Zhang Peng had embezzled goods, which is why the giveaway quantities varied.
Lin Jianyu was furious.
**"We're not short of money; who would covet a few disposable e-cigarettes?"**
What was even more absurd was that Yan Jia, during occasional store visits, found another brand's disposable e-cigarettes mixed in with his own. He quickly concluded that Zhang Peng was helping other brands with their channels.
**Thus, an unfounded suspicion was planted.**
##### **-05-**
##### **Brothers at Odds**
**Soon, the suspicion reached Zhang Peng's ears. He felt hurt. Why would someone who was so polite and respectful to his face harbor such suspicions behind his back?**
Beijing is a small world, especially within an industry. Bad words spread quickly.
Gradually, Zhang Peng heard more and more disparaging remarks about himself or employees, and his heart grew colder.
Meanwhile, Lin Jianyu's dissatisfaction with Yan Jia was reaching a boiling point.
It turned out that Yan Jia always thought Lin Jianyu was all talk and no action. Compared to Zhang Peng, who was actually out there building channels and selling, Yan Jia considered Lin Jianyu redundant, even though Yan Jia had initially approached Lin Jianyu to partner.
On one hand, Yan Jia was anxious about the company's losses; on the other, he faced the pressure of layoffs to cut costs. For someone with limited entrepreneurial experience, this was overwhelming.
**The company had to dissolve, or at least some people Yan Jia deemed unnecessary had to leave, like Lin Jianyu.**
Before Yan Jia could officially announce layoffs or dissolution, Lin Jianyu sensed the tension. He felt aggrieved, having put so much effort into helping Yan Jia, only to be repaid with ingratitude.
Unable to sleep, Lin Jianyu decided to go to the office to take certain documents as leverage. After all, for a company without even a registered license, finding leverage was easy.
**At around 2 a.m. in Beijing, downstairs at Love's Prey, Lin Jianyu and several employees ran into Yan Jia.**
This led to the late-night showdown mentioned earlier.
**"What are you doing at the office in the middle of the night?" That might have been Lin Jianyu's question too.**
Normally, when a company lays off employees or dissolves, it should settle accounts and give proper notice.
**"He didn't plan to give formal notice or severance. He just called people in the middle of the night to say don't come to work tomorrow. Have you ever seen such a casual boss?"**
Not only did he refuse to compensate, but he also wanted to pay formal employees at 80% of their salary as if they were still on probation. Lin Jianyu later had daily phone arguments with Yan Jia over wages, but that's another story.
Deciding to dissolve in the middle of the night, they had to inventory the goods. They called the warehouse guy to count stock. To avoid being "framed" again for embezzlement, Lin Jianyu verified the inventory with the warehouse manager countless times.
**"Yan Jia also said the quantity was fine at the time."**
##### **-06-**
##### **A Mess**
Sometimes dissolving a job (or business) is harder than divorce. Few couples part amicably, let alone business partners with conflicting interests.
**"By the end, I didn't care about compensation; just pay the owed wages. I didn't want to hear about this company anymore."**
Amidst exhaustion and noise, Zhang Peng went home, waiting for his salary in a few days. He was truly drained.
**"I felt it was an insult to my career." That was his only feeling when he received a pay slip for only half his salary.**
Zhang Peng smiled gently and said to Yan Jia, "Brother, like this, I'll go to the bathroom, and you think it over? When I come back, we'll talk."
He meant he hoped Yan Jia would seriously recall his promises and Zhang Peng's work over the past two months.
When Zhang Peng returned, he asked Yan Jia if he had thought it through. Yan Jia, perhaps realizing his mistake, felt embarrassed and tore up the pay slip in front of Zhang Peng.
Finally, Yan Jia asked if he could pay in installments, and Zhang Peng agreed. He was always easygoing.
**"I don't need that money, but I felt that kind of salary was a satire, even an insult to my career." In short, Zhang Peng never wanted to mention this miserable work experience again.**
From meeting Yan Jia on August 23 to officially leaving, Zhang Peng had fewer than five phone calls with Yan Jia. His deepest impression of Yan Jia was his verbosity, repeating the same nonsense over and over.
Yan Jia might not understand the FMCG industry, but he should understand how a company operates.
Beijing's government is efficient; a company can be registered in almost a day. Yet from August to December, the company was never registered, and many employees didn't even sign labor contracts.
The only one who signed a contract was Lin Jianyu, who ended up fighting the hardest. As they say, the deeper the relationship, the harder the parting.
Looking back at Love's Prey's brief history, it coincided with the November "power cut" event. Love's Prey wasn't heavily involved in online sales, yet it still collapsed.
They say entrepreneurship is hard, but when things reach this point, everyone knows who's responsible.
**Love's Prey, now empty, burned millions of yuan. For the vast e-cigarette market, that's not a huge sum, especially for the leading companies, but for ordinary investors, it's significant.**
Shortly after the company dissolved, Lin Jianyu received another call from Yan Jia, who said the warehouse was missing over 2,000 e-cigarettes...
**Lin Jianyu was amused: "At that hour, could I have moved 2,000 e-cigarettes? Isn't that ridiculous?"**
Onlookers could curse and leave the group chat, but Lin Jianyu's anger had been pent up too long; he couldn't just leave.
Zhang Peng felt he had gotten into a mess and decided to step away, while Lin Jianyu hoped Yan Jia would learn a lesson. Yan Jia felt even more wronged, having spent a fortune on useless people.
After the split, Love's Prey needed to wrap up completely. Yan Jia had to retrieve the products already distributed, so he picked a day and went out with a few people to collect them.
That's how the police station scene at the beginning happened.
# **-07-**
# **Epilogue**
If there was a biggest trend of 2019, it was e-cigarettes. In the first half of 2019 alone, over 30 e-cigarette brands raised a total of 1 billion yuan, roughly the size of a mid-sized venture capital fund.
The high cash flow and high margins of e-cigarettes attracted not only capital but also many grassroots entrepreneurs, including those from the smartphone and smart hardware era in Huaqiangbei, as well as OG figures from the big cloud era representing American street culture, and of course, speculative entrepreneurs chasing trends.
However, the good times didn't last. Across the ocean, the e-cigarette brand Juul was pulled from shelves in some U.S. states, and the online sales ban in November caught all e-cigarette practitioners off guard.
E-cigarettes entered the market 10 years ago.
Countless companies, big and small, have come and gone. In the FMCG industry, even wealthy cross-industry players can't crack it. Take Hengda Ice Spring, for example; despite Xu Jiayin's management prowess, he never succeeded with it.
Looking at the beer industry, China Resources Snow spent 200 million to build a 100 million market, achieving today's position. But in the e-cigarette market, everyone wants to grab money, and most bosses lack deep business experience.
**The logic of speculators: If I don't see profits in a month, it's okay; if I don't see profits in two months, I start to panic.**
Yan Jia, Lin Jianyu, and Zhang Peng, three men in their thirties, came together because of e-cigarettes and turned against each other because of them. They might have dreamed of success but feared failure, like a couple craving love yet fearing intimacy. This ambivalence affected them throughout.
Sometimes I think the so-called trends and lucrative e-cigarettes are actually tools sent by heaven to test people's integrity. They can quickly change lives and bring wealth, but they can also make people lose themselves and fall into a swamp of fate. Only those who can control wealth while maintaining inner peace are truly lucky. Most people only see the wealth, not the cliff.
Consumption is the most secular religion humanity has built in the 21st century. It soothed the monotony and fate of people alienated as cogs in the industrial age, and it also comforted the loneliness and helplessness of the information age. Now, can atomized tobacco save people from the deep sense of powerlessness in modern life?
**No one knows.**
**Source: Gewu Consumption (ID: gewuxiaofei01)**
**Tips of 400-2000 yuan will be paid for any leads used.**


---

## Citation metadata

- Publisher: New Distribution
- Author: 格物消费
- Published: 2020-01-05
- Canonical: https://xinjignxiao.com/en/articles/2020-the-unexpected-death-of-an-e-cigarette-company-544a9d8d/
- Original source: https://mp.weixin.qq.com/s/ILuKCWI2rA-Isq64EarTtg

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