Opportunities and challenges coexist in the development of new tobacco products in China
Opportunities and challenges coexist in the development of new tobacco products in China. E-cigarettes were effectively pioneered in China, and the country is also the world's largest producer of vaping products. There are more than 2,000 major domestic m
The development of new tobacco products in China presents both opportunities and challenges. E-cigarettes were actually discovered in China, which is also the world's largest producer of e-cigarettes. There are over 2,000 major manufacturers of e-cigarettes in the country, and this number continues to grow explosively. Geographically, domestic e-cigarette manufacturers are concentrated in Shenzhen and Huizhou, with some presence in Shanghai, Henan, Zhejiang, and Tianjin, but their share is relatively small. Most e-cigarette products produced in China are primarily supplied to foreign markets; according to Reuters, Shenzhen provides over 95% of the world's e-cigarette products. This means that the e-cigarette market is mainly in Europe and America, while production is in China, led by domestic companies in Shenzhen.
According to statistics from the National Bureau, there are currently over 1,100 offline e-cigarette sales stores in China, mainly concentrated in the more developed eastern coastal regions. Online, preliminary statistics show that there are over 30,000 stores selling e-cigarettes on Taobao, with 1,000 stores on Tmall, primarily focusing on low-end products, with lower professionalism, operating under a traditional B2B model.
According to data from Euromonitor International, there were approximately 2 million e-cigarette users in China in 2016, with total e-cigarette sales reaching 3.2 billion RMB, a 28% increase from 2015. It is expected that in the next five years, domestic e-cigarette products will maintain a compound annual growth rate of 19%. Although the growth rate of e-cigarettes is rapid, compared to the traditional cigarette market (approximately 15 trillion in 2017), it is negligible, but as a new product, its existence cannot be ignored.
In fact, our country initiated a major project for new tobacco products in the tobacco industry in 2014, achieving full coverage of e-cigarettes, heated non-combustible tobacco products, and oral tobacco products. There are many products, but most are still in the design or sample stage. At the national level, the Shanghai New Tobacco Products Research Institute was established in 2015, and 15 out of 19 provincial industrial companies (Hebei, Jiangxi, Chongqing, and Shaanxi have not established) have set up research institutions for new tobacco products.
As of 2018, major tobacco industries in China had 30 products sold abroad, mainly the “Firavo” from the Shanghai New Tobacco Products Research Institute, “Yuner” from Yunnan Zhong, “Puffly” from Hunan Zhong, and “Eter” from Shandong Zhong.
Since our country implements a tobacco monopoly, new tobacco products face the issue of whether they fall under the monopoly category. Among the three mainstream new tobacco products—heated non-combustible tobacco products, e-cigarettes, and oral tobacco—the main components of heated non-combustible tobacco products and oral tobacco are cigarettes and tobacco leaves, which undoubtedly fall under the scope of tobacco monopoly management. The National Bureau has issued specific documents, and various levels of tobacco monopoly bureaus have included heated non-combustible tobacco products under monopoly management. However, there is still considerable controversy regarding the regulation of e-cigarettes.
Currently, the e-cigarettes circulating in the market mainly fall into two categories: the first category includes e-cigarettes containing nicotine and other tobacco extracts, while the second category includes e-cigarettes without nicotine and other tobacco extracts. The first category constitutes the vast majority. In a narrow sense, the first category is the true e-cigarette. The second category of e-cigarette products, due to their lack of any tobacco extracts, do not fall under the strict definition of e-cigarettes and are not addictive; at most, they can only be regarded as a type of quasi-e-cigarette product. Given the different core components of these two categories, they should be distinguished during regulation: e-cigarettes containing nicotine and other tobacco extracts should be regulated as tobacco products, while those without nicotine and other tobacco extracts should be managed under general consumer goods standards.
E-cigarettes were initially marketed as smoking cessation products, nominally aligning with and supporting the global anti-smoking trend, and received support from some anti-smoking organizations. Due to being a newly emerging product, many countries did not regulate them, allowing companies producing and selling e-cigarettes to advertise freely across various media and adopt many flexible marketing strategies, leading to a positive market response. However, later, as some scientific research found that e-cigarettes are not as "harmless" as advertised, some countries began to regulate e-cigarettes. In 2009, Brazil and Canada banned the use and sale of e-cigarettes; in 2010, Singapore banned the import and sale of e-cigarettes; in 2011, Argentina banned the import, sale, and advertising of e-cigarettes; in 2013, Spain banned the use and sale of e-cigarettes in public places. Additionally, countries like Russia, Seychelles, Uruguay, Cambodia, Turkmenistan, Hong Kong, Costa Rica, Israel, and Thailand have also implemented bans. Recently, Carrie Lam announced a comprehensive ban on e-cigarettes in Hong Kong.
Currently, our country lacks clear regulatory policies for new tobacco products, especially e-cigarettes, with no specific regulatory authority defined. However, there is good news that the state has authorized the National Tobacco Monopoly Bureau to formulate standards for e-cigarettes. If the national authorized standards for e-cigarettes can be utilized to unify and effectively strengthen market access and regulation, it would be a significant positive development for the industry, enhancing the regulatory authority over products like e-cigarettes.
According to statistics from the National Bureau, there are currently over 1,100 offline e-cigarette sales stores in China, mainly concentrated in the more developed eastern coastal regions. Online, preliminary statistics show that there are over 30,000 stores selling e-cigarettes on Taobao, with 1,000 stores on Tmall, primarily focusing on low-end products, with lower professionalism, operating under a traditional B2B model.
According to data from Euromonitor International, there were approximately 2 million e-cigarette users in China in 2016, with total e-cigarette sales reaching 3.2 billion RMB, a 28% increase from 2015. It is expected that in the next five years, domestic e-cigarette products will maintain a compound annual growth rate of 19%. Although the growth rate of e-cigarettes is rapid, compared to the traditional cigarette market (approximately 15 trillion in 2017), it is negligible, but as a new product, its existence cannot be ignored.
In fact, our country initiated a major project for new tobacco products in the tobacco industry in 2014, achieving full coverage of e-cigarettes, heated non-combustible tobacco products, and oral tobacco products. There are many products, but most are still in the design or sample stage. At the national level, the Shanghai New Tobacco Products Research Institute was established in 2015, and 15 out of 19 provincial industrial companies (Hebei, Jiangxi, Chongqing, and Shaanxi have not established) have set up research institutions for new tobacco products.As of 2018, major tobacco industries in China had 30 products sold abroad, mainly the “Firavo” from the Shanghai New Tobacco Products Research Institute, “Yuner” from Yunnan Zhong, “Puffly” from Hunan Zhong, and “Eter” from Shandong Zhong.
Since our country implements a tobacco monopoly, new tobacco products face the issue of whether they fall under the monopoly category. Among the three mainstream new tobacco products—heated non-combustible tobacco products, e-cigarettes, and oral tobacco—the main components of heated non-combustible tobacco products and oral tobacco are cigarettes and tobacco leaves, which undoubtedly fall under the scope of tobacco monopoly management. The National Bureau has issued specific documents, and various levels of tobacco monopoly bureaus have included heated non-combustible tobacco products under monopoly management. However, there is still considerable controversy regarding the regulation of e-cigarettes.
Currently, the e-cigarettes circulating in the market mainly fall into two categories: the first category includes e-cigarettes containing nicotine and other tobacco extracts, while the second category includes e-cigarettes without nicotine and other tobacco extracts. The first category constitutes the vast majority. In a narrow sense, the first category is the true e-cigarette. The second category of e-cigarette products, due to their lack of any tobacco extracts, do not fall under the strict definition of e-cigarettes and are not addictive; at most, they can only be regarded as a type of quasi-e-cigarette product. Given the different core components of these two categories, they should be distinguished during regulation: e-cigarettes containing nicotine and other tobacco extracts should be regulated as tobacco products, while those without nicotine and other tobacco extracts should be managed under general consumer goods standards.
E-cigarettes were initially marketed as smoking cessation products, nominally aligning with and supporting the global anti-smoking trend, and received support from some anti-smoking organizations. Due to being a newly emerging product, many countries did not regulate them, allowing companies producing and selling e-cigarettes to advertise freely across various media and adopt many flexible marketing strategies, leading to a positive market response. However, later, as some scientific research found that e-cigarettes are not as "harmless" as advertised, some countries began to regulate e-cigarettes. In 2009, Brazil and Canada banned the use and sale of e-cigarettes; in 2010, Singapore banned the import and sale of e-cigarettes; in 2011, Argentina banned the import, sale, and advertising of e-cigarettes; in 2013, Spain banned the use and sale of e-cigarettes in public places. Additionally, countries like Russia, Seychelles, Uruguay, Cambodia, Turkmenistan, Hong Kong, Costa Rica, Israel, and Thailand have also implemented bans. Recently, Carrie Lam announced a comprehensive ban on e-cigarettes in Hong Kong.
Currently, our country lacks clear regulatory policies for new tobacco products, especially e-cigarettes, with no specific regulatory authority defined. However, there is good news that the state has authorized the National Tobacco Monopoly Bureau to formulate standards for e-cigarettes. If the national authorized standards for e-cigarettes can be utilized to unify and effectively strengthen market access and regulation, it would be a significant positive development for the industry, enhancing the regulatory authority over products like e-cigarettes.
