315 Gala Exposes E-Cigarettes, Companies Issue Statements to Clarify

315 Gala Exposes E-Cigarettes, Companies Issue Statements to Clarify. The year 2019 can be considered a pivotal year for the e-cigarette industry, as various brands have entered the market, leading to increased media and public attention on e-cigarettes. As a manufacturing base for e-cigarettes, China's exposure of e-cigarettes during the 315 Gala may play a role in promoting regulatory standards for domestic e-cigarettes. Due to the low entry barriers for e-cigarettes, this emerging industry is a new exploratory field, and in the absence of a unified standardized model, every step is a new attempt. Public attention is beneficial for accelerating the introduction of regulatory policies and promoting the healthy development of the industry.

Currently, the domestic standard for "Determination of Nicotine, Propylene Glycol, and Glycerin in E-Liquids by Gas Chromatography" is reported and executed by TC144 (National Tobacco Standardization Technical Committee), with the regulatory authority being the State Tobacco Monopoly Administration. The standards for e-cigarettes are expected to be released in October this year, as learned from the Global Standards Public Information Service Platform. Most domestic e-cigarette devices are primarily for export, with e-cigarettes being a major export trade product. While developing, domestic companies are also understanding and improving their compliance with foreign standards such as FDA and EU TPD2.0, which is beneficial for the long-term development of the companies. The exposure of e-cigarettes during the 3.15 event may lead to regulations on raw material selection, additive usage, process design, and quality control, promoting orderly development in the industry.

The following are responses from publicly listed companies related to the 3.15 e-cigarette topic;

1. Yiwei Lithium Energy

Researching food-grade safety lithium battery technology

Yiwei Lithium Energy has been involved in lithium batteries for electronic vaporizers since 2012, primarily researching food-grade safety lithium battery technology, and is a supplier of lithium-ion batteries for electronic vaporizers for companies such as British American Tobacco (BAT), Japan Tobacco (JTI), Imperial Brands (IT), Altria (PMI), Reynolds American (RJR), and JUUL.

Yiwei Lithium Energy stated in a response to the Shenzhen Stock Exchange that Micwell does not produce e-liquid for e-cigarettes. During the production process, Micwell adheres to strict inspection standards and does not violate national laws and regulations, ensuring that product standards meet customer requirements and the legal requirements of the local government.

2. Shunhao Co., Ltd.

Mainly engaged in the R&D and sales of low-temperature heated non-combustible devices

Shunhao Co., Ltd. stated on the Shenzhen Stock Exchange Interactive Easy platform that it has invested in a factory in Cambodia (acquired 100% of INO-JK in 2018) primarily to produce low-temperature heated non-combustible pods suitable for low-temperature heated non-combustible devices, not e-liquid vaporizing e-cigarettes, and this product will be legally sold overseas in the future, with trial production planned for the second half of this year.

Listed in 2011. In 2013, it established a joint venture with Dongfeng Co., Ltd. to form Shanghai Green Xin Electronic Technology Co., Ltd., engaged in the R&D and manufacturing of e-cigarettes. In 2014, Shunhao Co., Ltd. obtained core patents for low-temperature non-combustible technology and launched the IQOS-compatible device MOX Edge, entering the Japanese market.

3. Jinjia Co., Ltd.

Collaborating with China Tobacco to complete the R&D of low-temperature non-combustible devices and e-cigarette devices

Jinjia Co., Ltd. entered the e-cigarette field in 2014, mainly collaborating with China Tobacco to complete the R&D of low-temperature non-combustible devices and e-cigarette devices. It has cooperated with China Tobacco companies in Yunnan, Shanghai, Henan, Shandong, Guangxi, and Chongqing, and has formed a certain accumulation of patents and technologies. Due to the current lack of clear domestic policies and regulations, the collaborative R&D projects have not been promoted or launched domestically; the core technology of the e-cigarettes sold in the domestic market is the heating and atomization technology independently developed by Jinjia Technology, with the e-liquid provided by well-known third parties in the industry.

Jinjia Co., Ltd. pointed out that in the absence of clear domestic policies, the current important direction for developing new tobacco business is to actively cooperate with the needs of China Tobacco, researching products such as heated non-combustible devices. Currently, the revenue from the new tobacco sector is mainly from R&D project income, which is relatively small, with new tobacco-related revenue accounting for about 0.15% of the company's total revenue in 2018. Jinjia's Deputy General Manager Li Xiaohua stated: "E-cigarettes are growing amidst controversy." He also hopes that regulatory policies for the industry can be introduced as soon as possible.

4. Yingqu Technology

Providing precision plastic components for IQOS brand e-cigarettes for foreign PMI clients
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Yingqu Technology stated that since 2014, it has been a secondary supplier for PMI's e-cigarette products, providing R&D and production of precision plastic components for IQOS brand e-cigarettes, and has not engaged in the production of complete e-cigarette devices or related equipment or parts for e-liquid e-cigarettes, nor has it produced e-liquid or tobacco products such as pods; PMI's IQOS brand e-cigarette products have not been sold in the Chinese market and are not included in the e-cigarette products exposed during the "315 Gala."

5. Heertai

Currently has no plans to expand into e-cigarettes and related fields

Heertai is mainly involved in the R&D, production, and sales of smart controllers for household products, microwave and millimeter-wave RF simulation phased array T/R chip development, design, production, and sales, smart hardware, as well as IoT (Internet of Things) and AI big data operation service platform business. On December 10, 2014, it signed a cooperation framework agreement with Jinjia Co., Ltd. regarding the R&D, production, and cloud platform management of smart e-cigarettes and smart health products, but ultimately did not reach a cooperation agreement.

The exposure of e-cigarettes during the 315 Gala and the subsequent statements from e-cigarette companies also demonstrate that many companies have entered the e-cigarette industry. It is believed that more e-cigarette companies will emerge, as the profitability of the tobacco industry is evident. We can only hope for further regulatory policies to standardize the industry, as the prospects for the e-cigarette industry are immense.