Tsinghua University Team Releases E-Cigarette White Paper: Industry Entry Rules Are Imperative

The first blue book of China's e-cigarette industry—"Research Report on Public Health and Technology Regulation: Report on the Regulatory Status of the E-Cigarette Industry (2019)" was released on August 29, 2019, at Tsinghua University. The blue book strongly recommends the implementation of industry legislation and regulatory systems.

This blue book was compiled by the Public Health and Technology Regulation Research Group at Tsinghua University, citing materials from the World Health Organization, the U.S. Food and Drug Administration (FDA), the EU Tobacco Directive, the Journal of Tobacco Science of China, and other authoritative sources on new e-cigarette regulation from around the world, with over 5,000 publications searched, and the overall report exceeding 100,000 words.

According to the research group, this study used the Web of Science platform provided by Thomson Reuters, which allows browsing, analyzing, and tracking excellent academic research topics, focusing on e-cigarettes. From 2005 to 2019, a total of 5,277 publications were retrieved. The distribution of publication years shows a significant leap in research quantity starting in 2014, with the number of publications increasing from 166 the previous year to 406, reaching 1,139 in 2018. It is expected that the number of e-cigarette research publications in 2019 will not be lower than that of 2018.
 
"We attempt to objectively convey information about e-cigarettes from two dimensions," said Yan Fei, head of the research group and associate professor in the Department of Sociology at Tsinghua University. "One is the impact of this electronic product on the human body, and the other is how the government should effectively regulate this new fast-moving consumer product that has a huge market space and is still in its infancy."

Since the invention of e-cigarettes by Chinese pharmacist Han Li in 2003, the impact of this traditional cigarette alternative on the human body has remained controversial. Just a week ago, domestic media reported "the first death case related to e-cigarettes in the U.S." This topic even made it to the Weibo "hot search list," but tracing back to the source of the incident proved it was merely an ongoing investigation, possibly related to marijuana use; other media reported that "the harm of e-cigarettes is 5-7 times greater than that of traditional cigarettes," but the article did not provide relevant clinical studies. Whether in the newly emerging e-cigarette market in China or in the U.S., where the penetration rate has reached 13%, the public remains "in the fog."

The blue book cites authoritative content from the World Health Organization regarding e-cigarette research: In 2014, the WHO compiled existing research and expert opinions and submitted a report to the sixth session of the Conference of the Parties to the Tobacco Control Convention, summarizing the debates in the academic field regarding e-cigarettes and the limited nature of evidence. Five years later, in the WHO's 2019 Global Tobacco Epidemic Report, many conclusions from the 2014 report remain unchanged, and the limited nature of evidence has not improved. The study pointed out that compared to traditional cigarettes, e-cigarettes pose less harm, and if established smokers can completely replace cigarettes with well-regulated e-cigarettes, the toxic impact may be reduced, but they are not harmless.

"However, the 'good regulation' mentioned in the report has not been achieved in China," Yan Fei said. "According to our research, the Chinese e-cigarette market is still in a period of barbaric growth, which is very detrimental to the development of the industry and the sector."

In 2017, the number of e-cigarette consumers in China reached 7.4 million, and it is the world's largest producer (accounting for 95% of global share) and exporter (accounting for 90% of global share) of e-cigarette products, holding industry pricing power in the international market. The pursuit of capital has accelerated the formation of this trend, and currently, there are thousands of e-cigarette companies in China, with new brands emerging almost daily. Some leading e-cigarette companies have valuations exceeding $2 billion. At the same time, this industry has also solved employment for about 2 million people. In Shenzhen and Dongguan, many mobile phone and drone factories have fully transitioned to e-cigarette production.

On the other hand, due to the lack of clear industry standards and regulatory mechanisms, some companies pursue short-term profits, leading to situations where "pods" are substandard, leaking, and battery quality is inadequate, causing explosions that endanger consumers. "The industry has a low threshold; there is even a saying that with one or two million yuan, one can start an e-cigarette company. Some small manufacturers are just looking to make a quick buck, with no focus on product development or quality control," said an industry insider.

Therefore, the blue book strongly recommends the implementation of industry legislation and regulatory systems. Specific strategies include: product classification regulation—such as differentiating products containing nicotine from those like "vaporized coffee" that do not contain nicotine; the most common nicotine vaporization systems on the market can be divided into batteries, vaporization devices, and pods, where batteries and vaporization devices are considered electronic products, and the actual nicotine is in the pods, so regulation should be allocated based on the actual situation of the products; additionally, there should be full-process management in production and sales scenarios.

An industry insider stated: Once electronic technology and internet technology are involved in vaporization devices, companies can gradually master the production and sales of e-cigarettes, as well as analyze the behavior habits of the groups using these products. For example, through facial recognition technology in vending machines and statistical techniques on e-cigarette usage frequency, big data reports can be formed to achieve smoking control. This is what is referred to as "technology changing social governance."

In addition to establishing industry entry systems, the report particularly emphasizes that the purpose of regulation should be to enhance overall social welfare as the primary goal, ensuring the health of the majority of residents, and forming a gradual, multi-entity participation in governance. Furthermore, companies should fulfill their social responsibilities, prohibiting the sale of e-cigarettes to minors under 18, which is the bottom line and conscience of the industry.
 
Additionally, it is understood that legislation regarding e-cigarettes is currently in progress. Departments including the Ministry of Industry and Information Technology, the National Health Commission, the State Tobacco Monopoly Administration, and the State Administration for Market Regulation are all involved, with the issuance time likely by the end of this year. At that time, the industry will face a major reshuffle, which is also an inevitable path for the standardization and healthy development of China's e-cigarette industry.

Key Quotes from the Blue Book:

1. Currently, there is no definitive research conclusion on e-cigarettes.

2. E-cigarettes do not require combustion, reducing the harmful substances produced by combustion.

3. E-cigarettes do not pose secondhand smoke hazards to others, complying with public smoking ban policies.

4. According to the WHO's 2019 Global Tobacco Epidemic Report, e-cigarettes are less harmful than traditional cigarettes.

5. Establishing an industry entry system is imperative.

6. Regulation should prioritize enhancing overall social welfare.

7. E-cigarettes are not suitable to be treated as state monopoly tobacco products.

8. An overly radical alignment with WHO standards will inevitably cause China's e-cigarette industry to lose its advantageous position in the global market.

9. E-cigarettes form an industrial pattern of "Made in China, consumed in Europe and America."

10. Relevant policies do not necessarily have to wait for definitive research results to begin.

11. Currently, the e-cigarette industry is experiencing "bad money driving out good," where high-quality companies and products cannot realize their value.

12. There are no "real winners" among China's e-cigarette industry, consumers, and regulatory entities.

13. The legal regulation of domestic e-cigarettes will evolve from "a spark of fire" to "a raging fire."

14. National standards for e-cigarettes may represent an adjustment of interests in the existing tobacco landscape.

15. The state monopoly tobacco sales model will inevitably harm the innovation capability and initiative of the private e-cigarette industry.

16. E-cigarette regulation is a systematic project, and a single mandatory standard cannot accomplish it.

17. E-cigarettes should not be treated as tobacco monopoly products.

18. Regulation of e-cigarettes should be guided rationally and should not be overly radical.