After over a week of ownership mine does not smell at all.
It has other fit issues with the smart cover functionality but the smell is not a problem, and I've just disabled that feature. It's not like the iPad doesn't go to sleep on its own after a couple of minutes.
Once the smell had gone away for the most part, I put a heavy layer of leather conditioner on it, heated it up with a blow dryer, and left it overnight. Wiped off the excess the next morning and now it just smells like leather conditioner unless I stick my nose right on it and breath deeply.
It's a flawed product but unless you are super sensitive the smell dissipates after a few days. I will continue to use it until I find a better alternative that adds a minimum of bulk like this Yoobao.