On June 4, Justfog Electronic Technology (Dongguan) Co., Ltd. announced its self liquidation due to severe financial difficulties following a contract termination by its major client, JFT Corporation. This move has led to losses exceeding 60 million yuan. As the situation unfolds, it’s essential to understand who JFT Co., Ltd. is and its relationship with JUSTFOG.
JFT Co., Ltd.: The Major Client Behind the Liquidation
Company Overview
JFT Co., Ltd. is a Korean company that develops, manufactures, and distributes e-cigarette products. Headquartered in Seongdong-gu, Seoul, JFT has expanded its market presence to over 46 countries across various continents. The company operates two manufacturing plants in China, including Justfog Electronic Technology (Dongguan) Co., Ltd., which is currently undergoing liquidation.
Timeline of JFT’s Development
- 2009: Development of products and establishment of the JUSTFOG brand.
- 2014: Official establishment of JFT, expanding its business scope.
- 2017: Expansion of production capacity at the first plant.
- 2019: Establishment of a second production plant and laboratory company to enhance R&D and production capacity.
Products and Market Presence
JFT’s product lineup includes the popular Just Fog brand, which offers various e-cigarette devices such as Q16, Q14, Mini Fit, and the recently launched Glent, a refillable e-liquid device. The brand has gained significant attention and market share in Korea and internationally.
The Controversial Termination and Its Aftermath
Reasons for Termination
JFT Corporation cited severe violations by Justfog Electronic Technology (Dongguan) Co., Ltd., including the establishment of affiliated companies by the actual controllers to inflate raw material procurement prices and the sale of counterfeit JUSTFOG trademark products. These actions led to a breach of honest cooperation principles, prompting JFT to terminate the contract.
Financial Impact on Justfog
The termination has resulted in operational difficulties for Justfog, with losses exceeding 60 million yuan. The company announced its decision to liquidate, ceasing all operations.
Public Statements and Reactions
JFT Corporation responded to the liquidation announcement, emphasizing the reasons behind the contract termination. Meanwhile, Justfog accused JFT of unilateral and malicious contract termination, leading to significant financial losses.
New Product Launch Amid Controversy
On June 3, JFT Corporation’s CEO, Lee Hee-seung, announced the launch of Glent, a new refillable e-liquid device under the Just Fog brand. This launch coincides with the liquidation announcement, indicating ongoing operations and product development at JFT despite the controversy.
JFT’s Background
Company Structure
JFT is led by CEO Lee Hee-seung, who oversees interactions between the local Chinese companies and the Korean headquarters. The company’s leadership team includes key figures responsible for business management, domestic sales, marketing, and R&D.
Market Position and Growth
JFT has established itself as a significant player in the e-cigarette market, with a strong presence in Europe, the Middle East, and the United States.
Impact of Government Regulations
In October 2019, the Korean Ministry of Health and Welfare issued a strong advisory against the use of vaporized e-cigarettes due to health concerns. This advisory, along with similar measures in other countries, has influenced the market dynamics and regulatory landscape for e-cigarette products.
JFT has responded to regulatory challenges by advocating for reasonable and feasible e-cigarette regulations. The company continues to adapt its business strategy to comply with evolving regulations while maintaining its market presence.
Sale of Old Shares
In April 2019, during the e-cigarette boom in the U.S., JFT sold old shares worth 22 billion won ($16 million) to domestic venture capital and new technology business finance companies.
Equity Structure
Founder and CEO Lee Hee-seung held 80% of the shares, including those held by persons with special relationships. Lee Hee-seung was the largest shareholder with 55%, his brother, Research Director Lee Hee-min, held 15%, and his spouse, Marketing Director Kim Eun-kyung, held 10%. Additionally, founding members Director Lee Chang-hee (China business) and Director Kim Hyo-jin (overseas sales management) each held 10%. Executives sold approximately 1% to 5% of their shares, each gaining billions of won, with most of the issued stock held by the five main executives.
