Leading producers of electronic cigarettes in the U.S. are relocating their manufacturing from China to the U.S. due to increasing concern about the device's quality, as well as the possibility of stricter federal regulations.
Mistic and White Cloud, some of the top selling companies of e-cigarettes, said they would move production to U.S. factories to track quality and ingredients more closely, according to Reuters. The companies also believe costs would be lower than they would be in China.
"People are concerned about quality," said Bonnie Herzog, a senior analyst at Wells Fargo Securities.
"There is varying quality among these different brands. I think regulation will standardize these products because they will be forced to improve."
The U.S. Food and Drug Administration proposes regulations in April to have manufacturers looking to get into the U.S. market register with the agency and list their products' ingredients.
"As a general rule, the FDA regulation will require more control over the manufacturing process," said Bryan Haynes, an attorney at Troutman Sanders a law firm in Richmond, Virginia that represent e-cigarette companies. He added that more companies are looking to move production to the U.S. because it "could make compliance easier."
Most e-cigarettes are still made in China, Reuters reported. Some companies are happy with their products being made in China and look to keep their operations there.
White Cloud Electronic Cigarettes, based in Tarpon Springs, Florida, said it will start making the devices in the U.S. to produce them faster and more precisely.
"We can deliver y a much more uniform product because we're not reliant on someone's eye," said Rob Burton, director of corporate and regulatory affairs at White Cloud.
Burton said his company wants the product to receive approval from U.S. regulators as a medical device to help people stop smoking. He added that the new design for the device should provide users with "consistent vapor delivery."
Mistic expects their move of production to the U.S. will cut costs because the company wouldn't have to employ as many workers and won't have to ship the fluid for the device, Reuters reported.
"You're in the beginning stages of this industry," said John Wiesehan, chief executive of Mistic. "And we're developing standards as we speak."
