Could E-Cigarettes Be Banned Nationwide in China? Forecasting Domestic Policy Risks

Policy issues have always been the primary concern and worry for those in the e-cigarette industry. It has long been viewed as the biggest risk to the development of e-cigarettes!

Could e-cigarettes be banned nationwide in China?

China has now become the global production base for e-cigarettes, producing over 90% of the world's e-cigarettes, with around 1 million practitioners. In 2018, the export value was estimated at 26 billion RMB, with over 20,000 patents applied for, accounting for 87% of global e-cigarette patents. China has worked hard to develop an industry that has a voice on the global stage; what benefits would banning e-cigarettes bring to China? Looking across the country, how many industries have such a commanding position globally?
 
Moreover, e-cigarettes were invented in China. If there was a real intention to eliminate e-cigarettes, there would be no need to formulate the national standard for e-cigarettes, nor would it be in the "approval stage"!
 
Banning e-cigarettes is impossible; the logical step would be to bring them under regulation, standardize their development, and subsequently impose taxes!

Medium and large e-cigarette companies support e-cigarette regulation

Currently, the Chinese e-cigarette market is rife with chaos, with varying quality and safety concerns, which are detrimental to the healthy development of the e-cigarette industry and the interests of consumers, creating a significant negative impact on the development and image of e-cigarettes.

Major e-cigarette companies in the industry have also realized that it is urgent to regulate the development of the e-cigarette industry through legal means; strengthening regulation is beneficial for the long-term and orderly development of the e-cigarette industry and for protecting consumer interests. It is hoped that the government will adopt a supportive attitude in formulating e-cigarette policies to protect this industry that has gained a voice in the international market.

What methods will be used to regulate e-cigarettes?

Due to the complex nature of e-cigarette products, regulatory policies vary significantly across countries, with no unified regulatory approach. Currently, there are several viewpoints regarding the legal status of "e-cigarettes," primarily categorizing them as tobacco products, pharmaceuticals, or consumer goods. Adopting any of these viewpoints will lead to different legal effects and cause the government to adopt a "loose-tight" regulatory mindset.

It is precisely because there is no explicit regulation regarding the legal status of "e-cigarettes" that no government department has absolute justification to claim complete legality over its regulatory authority.

Among the three main regulatory approaches, categorizing e-cigarettes as tobacco products or pharmaceuticals has precedents internationally.

Regulatory paths in the United States and Japan

In the United States, e-cigarettes are regulated as tobacco products. The U.S. is the largest e-cigarette market globally and attempted to define e-cigarettes as pharmaceuticals in 2010, subjecting them to pharmaceutical standards. The U.S. Food and Drug Administration (FDA) considers nicotine to be a drug under the U.S. Food, Drug, and Cosmetic Act, thus e-cigarettes containing nicotine should be evaluated and approved by the FDA for safety and efficacy.

However, this relatively stringent regulatory measure faced strong opposition, and the FDA lost in court, having to consider regulatory measures under the category of tobacco products. Subsequently, the FDA began to regulate e-cigarettes as tobacco products.
 
On May 5, 2016, new regulations were issued, clearly bringing e-cigarettes and other new tobacco products under government regulation, requiring e-cigarette manufacturers to submit product ingredient information to the FDA. If new e-cigarette products are launched, they must submit new product applications for FDA approval. At the same time, the FDA designed tobacco control measures for e-cigarette products, including age restrictions for purchase, health warnings on packaging, and restrictions on vending machines.

In Japan, e-cigarettes are regulated as pharmaceuticals. Initially, Japan faced the same regulatory choice as the U.S., whether to classify e-cigarettes as tobacco products under the Ministry of Finance or as pharmaceuticals under the Ministry of Health. The Ministry of Finance has long held statutory authority to regulate domestic tobacco products and is the actual controller of Japan's only domestic tobacco company—the Japan Tobacco Industry Company.

In early December 2010, the Ministry of Health obtained regulatory authority over e-cigarettes similar to pharmaceuticals through legal interpretation. Currently, e-cigarettes sold in the market do not contain any nicotine (IQOS is sold as cigarettes in Japan, not as e-cigarettes). E-cigarettes containing nicotine are currently prohibited without permission from the Ministry of Health, and only nicotine-free e-cigarettes can be sold in the market.

The future development of e-cigarettes in China

After the national standard for e-cigarettes is released, a taxation policy will follow, initially not restricting the sale of e-cigarettes domestically, but limiting them after reaching a certain sales scale; however, strong support for exports will be encouraged to generate foreign exchange for the country, promoting cooperation with tobacco companies to implement a "go global" strategy, and partnering with tobacco companies to grow stronger abroad!

Domestically, policy is not the biggest risk for the e-cigarette industry; the biggest risk is the rapid changes in the industry. If one fails to keep up with the development trends, they will be eliminated!