National Vaping Standards to Be Issued This Year, Ending the Era of No Standards

Recently, the official website of the National Standardization Administration revealed that the project progress for the mandatory national standard for electronic cigarettes has entered the "under approval" stage. According to the approval process, the national standard for electronic cigarettes in China will be officially released within this year.

This means that the domestic electronic cigarette industry, which has long been in a state of "no product standards, no quality supervision, no safety assessment," will welcome formal industry regulatory standards.

Industry insiders say that the national standard for electronic cigarettes includes mandatory clauses and involves international trade, requiring notification to the WTO (World Trade Organization). Reuters previously reported that China has submitted a 68-page document divided into seven chapters regarding the electronic cigarette "national standard" to the WTO.
 
According to the document obtained by Ran Finance, the "National Standard of the People's Republic of China—Electronic Cigarettes" details the specifications for electronic cigarette products in terms of design, production, packaging, and other aspects.

"The introduction of national standards indicates that electronic cigarettes have obtained a 'birth certificate,' transitioning from 'three no products' to standardized products," commented an electronic cigarette entrepreneur on the significance of this standard.

As a result of this news, some domestic electronic cigarette concept stocks rose against the trend, with Kosen Technology reaching a maximum increase of 8.07%, Yingqu Technology rising by 8.04%, and Jinjia Co., Ltd. increasing by 5.57%. On June 3, Kosen Technology and Jinjia Co., Ltd. closed up by 3.91% and 3.95%, respectively.

However, there is still no clear legal definition regarding whether electronic cigarettes are classified as tobacco products and managed by the State Tobacco Monopoly Administration. Entrepreneurs speculate that electronic cigarettes will likely fall under tobacco regulation, but there has been no official announcement yet.

The electronic cigarette industry is welcoming the "national standard"

The national standard for electronic cigarettes is a mandatory industry specification, with the State Tobacco Monopoly Administration as the supervising department, and TC144 (National Tobacco Standardization Technical Committee) as the reporting and executing department.

According to information from the National Standardization Administration's official website, this industry standard was issued in October 2017, with the project progress divided into six stages: online public notice, drafting, soliciting opinions, review, approval, and release, with a project cycle of 24 months.

Currently, this plan has entered the "under approval" stage, with four months remaining until project completion.

The aforementioned WTO document indicates that the national standard for electronic cigarettes consists of seven chapters: "Scope, normative reference documents, terms and definitions, technical requirements, testing methods, packaging, labeling, instructions, storage, and transportation," with the chapters on "technical requirements" and "packaging, labeling, instructions" being mandatory, while the other chapters are recommended.

Before the release of the national standard, there were no clear regulatory policies in the domestic electronic cigarette industry. The lack of industry standards and regulatory policies meant that product quality varied widely, leading to a mixed industry.

Electronic cigarette products had significant variability in raw material selection, additive use, and after-sales service, making quality control and safety supervision challenging.

The ambiguity in product classification is the primary reason for the lack of specific industry regulations in the electronic cigarette sector.

According to Yu Lei, general manager of the electronic cigarette brand HIMOP and Beijing Haimanpu Company, the current regulatory environment for the electronic cigarette industry in China is in a blank period. Batteries fall under consumer electronics, e-liquids involve food, and pods have tobacco functions but are not classified as tobacco. Electronic cigarettes are neither electronic consumer products nor included in medical or tobacco regulation. "It's a bit like a no-man's land," Yu Lei said.

Globally, electronic cigarettes are typically classified by governments into two categories. Sun Haiming, founder and CEO of Poolan, stated that the mainstream classification of electronic cigarettes internationally is as medical devices and tobacco products, with a small number of countries categorizing them as fast-moving consumer goods.

Due to the absence of industry standards, the electronic cigarette industry has been in a state of wild growth. Although some capital has entered the market, most investors remain cautious. Multiple investors have told Ran Finance that they will not invest in electronic cigarette projects at this time.

Electronic cigarette practitioners are gaining "recognition"

Without industry standards, electronic cigarette practitioners cannot take significant steps forward. Once standards are established, they will undoubtedly impact the industry.

Many electronic cigarette entrepreneurs have expressed to Ran Finance that, based on the current policy information available, the introduction of national standards is a positive development for the electronic cigarette industry.

"This is a regulation that is beneficial to the industry, indicating that it cannot be banned," said Qiu Yiwu, CEO of Whale Light Smoke, to Ran Finance.

"The introduction of national standards indicates that electronic cigarettes have obtained a 'birth certificate,' transitioning from 'three no products' to standardized products," Yu Lei said.

Tobacco is a typical monopoly industry in China, with China National Tobacco Corporation holding an absolute advantage, tightly controlling all aspects from raw material production to finished product sales.

While the international electronic cigarette industry is thriving, China National Tobacco Corporation is also laying out its electronic cigarette business. Private capital began to enter the market in large quantities starting in the second half of 2018.

Wu Pengfei, head of Shenzhen Ruili Chuang, believes that "the introduction of national standards will mark the legalization of electronic cigarette products, officially entering the historical stage of China. This is a recognition of the entire electronic cigarette industry and has significant meaning."

In terms of specific effectiveness, the national standard for electronic cigarettes is an industry specification, not a law. For players in the electronic cigarette industry, determining which government department will regulate them is another consideration.

Sun Haiming revealed to Ran Finance that a director from the State Tobacco Monopoly Administration visited Poolan for research and investigation in April this year.

He believes that it is only a matter of time before the tobacco industry broadly enters the electronic cigarette market, stating, "It has basically been determined domestically that electronic cigarettes will be managed by the tobacco department, so the State Tobacco Monopoly Administration has been actively conducting research."

Currently, in the United States, the regulatory body for electronic cigarettes is the FDA (Food and Drug Administration), while in the UK, it is PHE (Public Health England). Yu Lei believes that it is reasonable for the health department to manage health issues while the market supervision bureau oversees production and circulation, but it is rare for related interest units to set relevant standards.

Wu Pengfei believes that based on the drafting process of the national standard for electronic cigarettes, it is highly likely that electronic cigarettes will fall under the jurisdiction of the State Tobacco Monopoly Administration, as the unit responsible for the standards is the State Tobacco Monopoly Administration, and most of the experts involved in the drafting process are tobacco experts. The entire system still refers to the cigarette system. However, there has been no official statement yet.

Additionally, many industry insiders have indicated that the production of nicotine, an important substance used in e-liquid, is already largely monopolized, making it difficult for new players to enter the market. "No matter how much smoking devices are sold, they cannot compete with the profits from selling e-liquid, just like selling printers cannot compete with selling ink cartridges."

The electronic cigarette industry may enter a reshuffling period

With the introduction of national standards for electronic cigarettes, it means that electronic cigarette players can no longer act arbitrarily in product design, production, and sales, and must comply with specific parameters according to the standards.

For example, regarding the flavors of electronic cigarettes, some manufacturers have claimed to add ginseng to their e-liquids for its invigorating effects. If the industry standards are officially released, the flavors of electronic cigarettes can only be produced according to the specified catalog.

"This will simplify everyone's gameplay; no more gimmicks, only selections from the catalog, and the industry will gradually standardize," Wu Pengfei said.

In addition, the content of important substances like nicotine and the emissions of harmful substances will also be regulated by national standards.

Qiu Yiwu stated that the unpublished national standards have imposed restrictions on nicotine content in e-liquids. According to the aforementioned WTO document, the nicotine content limit for electronic cigarettes is set at 20mg, which means that the addiction and withdrawal potential of electronic cigarettes will decrease, making it so that "old smokers feel nothing when they smoke."

Wu Pengfei believes that this will have a positive effect on increasing industry standards. "Previously, some manufacturers produced e-liquids with nicotine content as high as 30mg or even 50mg, endangering lives without anyone being able to regulate it, but with content limits, it will be relatively safer."

In addition to stricter product requirements and more standardized management, this also raises the bar for industry entry.

In Sun Haiming's view, the formal release of national standards for electronic cigarettes will establish regulations in production, research and development, and sales, significantly raising the industry threshold, and products that do not meet the standards will risk being removed from the market.

For example, he mentioned that the purity of nicotine must be above 99%, a concept he had never encountered in the industry before. "Industry standards place high demands on the responsiveness of production and brand companies; once the policies are implemented, if companies cannot keep up with the response speed, they will likely suffer time losses."

This has precedents in the European and American markets. Since 2016, the European and American markets have intensified control over the electronic cigarette industry, with the FDA requiring all electronic cigarette products to undergo traceable pre-market approval processes.

This has resulted in significantly increased time and financial costs for launching electronic cigarette products, with at least $2 million required per product to meet FDA requirements.

However, on the other hand, strict controls and rigorous approvals have also brought efficiency, improving the overall quality of the industry. Wu Pengfei believes that with government regulation, the industry will undergo a reshuffle, gradually entering a phase of orderly competition, where truly capable companies will quickly capture the market.