People's Daily: E-Cigarette Firms Must Face Their Social Responsibility

  According to data, as of August 2018, China holds 87% of the total global patents for e-cigarettes. Industry insiders indicate that China is globally leading in the technology of atomized e-cigarettes; however, in the field of heated tobacco products, China still needs to work hard to break through the patent technology barriers set by European and American countries.

Globally, the e-cigarette consumption market is experiencing an "explosive growth" trend, leading to fierce competition for capital. However, the changing regulatory policies and international trade situation are adding many uncertainties to the development of the e-cigarette industry.

Although the potential for the Chinese e-cigarette industry is enormous, experts point out that achieving a balance between the e-cigarette industry and public health requires joint efforts from the government, enterprises, academia, and other stakeholders.

In recent years, more and more well-known companies have emerged in the "track" of the e-cigarette industry. Earlier this year, domestic technology company Smartisan Technology announced its "entry" into the market; some investment institutions, such as IDG Capital, Source Code Capital, and ZhenFund, have also invested heavily.

With the gathering of "big names," the e-cigarette startup scene is booming. In the increasingly dense commercial layout, how can public interest and public health be ensured?

In Shenzhen, there are numerous companies specializing in the production and sales of e-cigarettes. According to data provided by the Electronic Cigarette Industry Committee of the China Electronic Commerce Association, over 90% of the world's e-cigarettes are produced in Shenzhen and its surrounding areas. From "workshop-style" production to group operations, and then to internet entrepreneurship and capital market pursuits, the e-cigarette industry is developing rapidly as the industrial chain matures.
 
What is China's current position in e-cigarette technology research and development?

"As of August 2018, there are a total of 25,979 e-cigarette patents globally, with China holding 22,825, accounting for nearly 87.9%." Ao Weinuo, Secretary-General of the Electronic Cigarette Industry Committee of the China Electronic Commerce Association, explained that among new tobacco products, several core invention patents for heated tobacco products are currently held by American tobacco giant Philip Morris International and British tobacco giant British American Tobacco; while the mainstream, high-quality patents for atomized e-cigarettes are primarily held by Chinese companies.

A reporter's inquiry into financial data service provider Wind's database and a research report from Beijing Hankuang Law Firm found that there are currently at least 12 listed and registered companies involved in the e-cigarette industry in China, including 7 A-share listed companies, 2 Hong Kong listed companies, and 3 New Third Board listed companies.

The strong market demand has also attracted traditional tobacco companies to "enter the market." Some local tobacco companies in China have established new tobacco divisions to attempt to enter the e-cigarette market.

The growing e-cigarette supply chain serves the explosively growing global consumption market.

According to the "2018 World Tobacco Development Report" published by the Tobacco Economic Research Institute of the State Tobacco Monopoly Administration, the global e-cigarette sales in 2018 were approximately $14.52 billion, a year-on-year increase of 27%, more than ten times the growth since 2010; it is estimated that by 2022, the number of consumers of new tobacco products (including heated tobacco products and atomized e-cigarettes) will exceed 64 million.

Compared to the global sales of over $540 billion for cigarettes, e-cigarette sales are not large. However, compared to the annual decline rate of cigarettes, the growth rate of e-cigarettes is quite remarkable.

The United States is the largest consumer market for e-cigarettes globally. In 2018, e-cigarette sales in the U.S. reached $5.6 billion, a year-on-year increase of 20.5%; followed by the UK market, with sales of $2.43 billion, a year-on-year increase of 36.6%. Italy, Germany, and France are also major consumers of e-cigarettes.

The vast e-cigarette market has triggered fierce competition for capital. Major tobacco giants, such as Altria, British American Tobacco, and Imperial Brands, are entering the e-cigarette market through acquisitions of e-cigarette companies or the development of new products. Additionally, there are also cases of brands from industries such as automotive and pharmaceuticals "crossing over" into the e-cigarette sector.

While capital battles intensify, the changing regulatory policies around the world have increased the uncertainties in the e-cigarette industry.

On June 25 of this year, officials in San Francisco approved a decree banning the sale of nicotine-containing e-cigarettes or other devices not approved by the U.S. Food and Drug Administration, making it the first city in the U.S. to ban e-cigarettes.

Countries and regions such as Canada, Japan, Brazil, and India are also facing the "cloud of policy" regarding the ban on e-cigarettes. According to a survey conducted by the Electronic Cigarette Industry Committee of the China Electronic Commerce Association in 2018, over 50% of Chinese companies have slowed down their R&D investment and development pace due to concerns about policy risks.

Currently, the domestic e-cigarette industry is awaiting the introduction of national regulatory policies. Industry insiders believe that e-cigarette companies must first recognize their social responsibilities.

"There are many practitioners in the e-cigarette industry, and product quality varies greatly." A person in charge of a Shenzhen e-cigarette company stated, "Before national standards and regulatory policies are released, we urge our peers to practice self-discipline, ensure product quality, avoid false advertising, and not promote or sell e-cigarettes to minors."

Xu Xiaoxin, an associate professor at the School of Social Development and Public Policy at Beijing Normal University, pointed out that achieving a balance between industrial development and public health requires joint efforts from multiple parties.

"The government should play a role in establishing a regulatory framework regarding age restrictions, advertising promotions, product standards, and risk warnings, enhancing enforcement capabilities; the e-cigarette industry should fulfill its corporate social responsibility; academia should strengthen scientific research on the health impacts of e-cigarettes; and the public health and education sectors should work together to enhance health education for young people." Xu Xiaoxin stated, "Only in this way can we jointly contribute to the realization of a 'Healthy China.'"