A Showdown Is Inevitable Between HNB Heated Tobacco and Vaping

It has been ten days since the 315 Gala, and the duration of the exposure events seems to be getting shorter, as it appears that no one is discussing issues like kickbacks, medical waste, or spicy strips anymore. In this broader context, the topic of electronic cigarettes has become relatively less attention-grabbing.<\/span><\/p>

On the contrary, from the reactions within the electronic cigarette industry and community, aside from industry associations issuing statements to strengthen self-discipline and actively calling for national standards, the actual operations of market players have not been fundamentally affected. E-commerce continues to operate normally, new projects are being launched, and new capital continues to enter the market…<\/span><\/p>

If we rewind six months, you might recall that the focus of discussion both inside and outside the industry was still on HNB products represented by IQOS. Now, in terms of media attention, HNB has been overshadowed by vaping devices. Where there is attention, there is bound to be a flow of money. Compared to the clear certainty of HNB, vaping devices have attracted more entrants due to the potential opportunities they present. However, a lack of attention does not mean that the value and trend of HNB have been diminished; the excitement in the vaping sector does not imply silence on the HNB front domestically.<\/span><\/p>

Joint actions by the monopoly, customs, market supervision, postal services, and public security are still intensifying enforcement efforts, with major cases involving HNB being cracked down on in multiple regions. The prices of tobacco sticks in the circulation market, composed of various trading groups, have also risen in response. From both regulatory and defensive perspectives, as well as in preparation for the national team's entry into the market, the authorities have not relaxed their vigilance on HNB, and the research and overseas sales of HNB by China Tobacco have not slowed down.<\/span><\/p>

From another perspective, many private enterprises are also actively investing in the research and development of HNB devices. After all, the design and continuous upgrade of smoking devices as electronic products is a certain consumer demand, but the market opportunities still depend on the authorities' starting gun for such products. After all, a smoking device without tobacco sticks is meaningless; no one wants to buy a heater to use as a warm baby, just like tobacco sticks are rising in price while devices are falling in price.<\/span><\/p>

Compared to the more speculative nature of investments in vaping devices, companies investing in HNB devices appear to be more like stable investors, willing to accept a longer investment return period. I believe this investment is meaningful because our consumer research on HNB products represented by IQOS has revealed that there are still many pain points in the device experience that have not been addressed. There is a need for innovative entities focused on smoking devices within this industry chain.<\/span><\/p>

Several vertical media outlets I follow in the electronic cigarette industry have published commentary articles after the 315 event, many of which are positioned to whitewash themselves while ignoring the interests involved in the overall environment. For example, some articles start by clarifying the concept of electronic cigarettes: electronic cigarettes refer to products like HNB that are essentially tobacco, while the vaping devices mentioned in the 315 event are not tobacco. First, who you are is not important; what matters is how consumers perceive you, and perceptions are not easily changed. Furthermore, this kind of boundary-drawing and positioning is meaningless; standing on the opposite side of HNB does not mean that vaping devices are safer in terms of identity and situation.<\/span><\/p>

Under the same alternative demand for the same group, HNB and vaping devices will inevitably have a showdown in the future, and the details of the above position may have already been revealed. If the access to tobacco sticks becomes increasingly restricted and transaction costs rise, then the existing group will certainly shift towards vaping devices. If the vaping market operates under limited regulation, then when the national team enters the HNB market, both sides will inevitably compete for users.<\/span><\/p>

For vaping devices, it is a competition for customer acquisition, but for the national team, customer acquisition is essentially about retention, aiming to mitigate user loss and market damage caused by alternative consumption through HNB. To understand this "loss aversion" psychology and the resulting stress response, you can compare it to how Alibaba and Tencent treat Pinduoduo and Toutiao.<\/span><\/p>

There will inevitably be a showdown between HNB and vaping devices in the future. Because of the same logic, we can also understand why Marlboro's parent company, Altria, would spend a lot of money to acquire JUUL. In the "low-risk, smoke-free world" they want to build, the first principle to maintain their leading position is: everything for user volume.<\/span><\/p>

There will inevitably be a showdown between HNB and vaping devices in the future. But regardless of how this battle unfolds, the outcome will be a replacement for traditional cigarette users. Therefore, for the parent company and the national team, the rapid changes in the market today will create an increasing sense of urgency regarding policy openings and decision-making timelines. Currently, the reality of multiple parties competing means that the national team hopes to maintain tax benefits, while private enterprises may also want reassurance and hope to see negative news dissipate quickly. Therefore, accelerating the process of regulation and legislative release may become a common stance for all parties…<\/span><\/p>