Outlook for heated tobacco products in 2018 and the direction of national policy
On July 17, 2018, the ‘Key Tasks for Deepening Reform in 2018’ issued by the State Tobacco Monopoly Administration was officially released, clearly stating that innovation and reform in new tobacco products should continue to be deepened. Once the news wa
On July 17, 2018, the "Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018" was publicly released, clearly stating the intention to "continue to deepen the innovation and reform of new tobacco products." This news has attracted widespread attention from both industry insiders and outsiders.
Considering the current market situation, relevant documents from the national bureau, opinions from industry insiders, and insights from experts in the e-cigarette industry, China E-Cigarette News attempts to interpret heated non-combustion new tobacco products. Any shortcomings are welcome for feedback.
"Strengthen research on classification management measures for new tobacco products. For new tobacco products that fall under the monopoly supervision category, further research should be conducted to formulate relevant policies regarding market supervision, identification and inspection, and case transfer."
---"Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018"
First, Regulation of Devices and Tobacco Sticks
According to the Tobacco Monopoly Law, cigarettes, cigars, cut tobacco, and re-dried tobacco leaves are collectively referred to as tobacco products. Therefore, although heated non-combustion new tobacco products are nominally "new," their essence still involves heating cigarettes to produce aerosol, which is the main basis for their inclusion under monopoly supervision.
It is easy to imagine that even if the sale of heated non-combustion tobacco products is opened up in the future, "dedicated tobacco sticks" will still be considered monopoly products, with unshakeable barriers.
However, heated non-combustion new tobacco product devices are not restricted by the Tobacco Monopoly Law. Currently, devices that can heat regular cigarettes have appeared on the market. Although the satisfaction with these products is still lacking, they provide a reference point.
China E-Cigarette News believes that in the future, the national bureau will also strengthen market regulation of "devices," establishing relevant access standards and management mechanisms. However, the focus will be on "regulation" rather than "prohibition," creating a relatively open market space with broad prospects for relevant enterprises.
Second, Protection of Related Technological Rights
Currently, relevant industrial enterprises in the industry have accumulated a number of patented technologies for new tobacco products. However, due to the uniqueness of the tobacco industry, China E-Cigarette News believes that in the future, related process technologies are likely to be shared within the industry, leading to large-scale production and establishing relevant technological barriers.
For private enterprises, although competitors may be strong, they are not insurmountable. The protection of patented technologies for new tobacco products is equitable, and private enterprises can theoretically enjoy the same technological protections as industrial enterprises. For companies interested in researching new tobacco products, the protection of related technological rights is more beneficial than harmful, and future development is also promising.
Third, Identification and Inspection of New Tobacco Products
China E-Cigarette News believes that although there are various types of new tobacco products, there is one core standard that remains unchanged: whether they contain "tobacco substances," including tobacco leaves, cut tobacco, cigarettes, cigars, and other forms, and whether their working principle involves "processing and treating tobacco leaves to produce satisfaction."
As long as new tobacco products contain tobacco leaf components, regardless of their product form or technical form, they will eventually be included under the management of the "Tobacco Monopoly Law"; it is only a matter of time.
Fourth, Case Transfer
Regarding the transfer of cases involving new tobacco products, China E-Cigarette News believes there are two directions: first, smuggling and counterfeiting of new tobacco products will face legal supervision similar to that of producing and selling counterfeit cigarettes; second, the protection of related technologies must also form relevant legal provisions to provide a basis for resolving legal disputes.
Fifth, Development of Domestic New Tobacco Products
"Promote the innovative development of the entire industrial chain of new tobacco products. Accelerate the research and innovation of technology, products, and equipment for new tobacco products, and ensure the standardization of six integrated products, promoting the standardization, industrialization, and branding of new tobacco products. Strengthen the research and layout of standards for new tobacco products."
---"Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018"#p#分页标题#e#
As early as 2008, when new tobacco products first emerged, relevant domestic enterprises began related research. Especially research institutions represented by the Shanghai New Tobacco Products Research Institute have accumulated a large number of patented technologies in a short period.
In the patents publicly announced by the State Intellectual Property Office from April to June 2018, there were 894 applications from domestic tobacco industry units, including 61 invention patents, 71 utility model patents, and 17 design patents in the field of new tobacco products, totaling 150, accounting for more than one-sixth of the total patents in the tobacco industry.
It is not difficult to see that the national bureau has given considerable emphasis and support to the technological development of new tobacco products. Furthermore, in the "Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018," it was explicitly stated that six integrated products should be standardized this year.
Currently, industrial enterprises such as Sichuan Tobacco, Hubei Tobacco, and Henan Tobacco have already prepared relevant products and are beginning the pre-launch preparations. By early 2019, related non-combustion tobacco products from domestic industrial enterprises could officially meet the public.
China E-Cigarette News attempted to search for "heated non-combustion" on an e-commerce platform, and the page immediately displayed multiple purchase links for heated non-combustion new tobacco products. However, due to relevant legal regulations, consumers can only purchase devices and not tobacco sticks, leading to a situation of "having the gun but no bullets."
Due to relevant laws and regulations, the domestic market currently does not allow the sale of heated non-combustion new tobacco products. Related industrial enterprises can only promote their products through "testing" and "research."
Currently, related industrial enterprises are using the method of selling devices with complimentary dedicated tobacco sticks for trial sales, but once the tobacco sticks are consumed, they will inevitably face the dilemma of not being able to sustain consumption.
Sixth, Sales of Heated Non-Combustion New Tobacco Products
Even if the national bureau opens up the sale of heated non-combustion tobacco products in the future, the choice of sales channels will still be an important issue. China E-Cigarette News believes that there are several potential sales avenues for heated non-combustion new tobacco products in the future.
First, devices will primarily be sold online, with terminal sales as a supplement.
Currently, heated non-combustion new tobacco product devices are not included under monopoly categories. Although the national bureau will strengthen control over devices (technical standards, production processes, sales channels), the likelihood of including them under monopoly management is low.
Relying on online platforms for sales can provide a relatively fair and open platform for industrial enterprises' related products in a controllable domestic market environment, which is a significant test of product competitiveness and is essential for the market-oriented reform of the tobacco industry.
Second, dedicated tobacco sticks will be sold through retail terminals.
China E-Cigarette News believes that the tobacco sticks required for heated non-combustion new tobacco products will inevitably and exclusively be sold through terminals. Related foreign products will be included under foreign tobacco management and will enjoy the same treatment as conventional foreign cigarettes.
By purposefully introducing foreign heated non-combustion tobacco products, the domestic market competition atmosphere can be invigorated, keeping it within a controllable range while meeting domestic consumer demand.
Third, new tobacco products will be completely sold through terminal monopoly sales.
On one hand, to protect the development of related industrial enterprises' new tobacco products, monopoly management will be implemented; on the other hand, to mitigate the impact on traditional cigarettes and maintain industry stability.
Although this method is relatively conservative, it is not without the possibility of implementation.
Seventh, International Development of Domestic New Tobacco Products
Additionally, the national bureau has clearly stated in its "Notice" to "promote the international expansion of new tobacco products," which is an inherent part of the "going out" development strategy.
From July 9 to 12, Heilongjiang Tobacco Industrial Co., Ltd. showcased its heated non-combustion new tobacco products, water pipes, and oral tobacco during the World Cup in Russia.
It can be anticipated that in the future, domestic new tobacco products will gradually step onto the international stage and compete with strong foreign products.
Considering the current market situation, relevant documents from the national bureau, opinions from industry insiders, and insights from experts in the e-cigarette industry, China E-Cigarette News attempts to interpret heated non-combustion new tobacco products. Any shortcomings are welcome for feedback.
"Strengthen research on classification management measures for new tobacco products. For new tobacco products that fall under the monopoly supervision category, further research should be conducted to formulate relevant policies regarding market supervision, identification and inspection, and case transfer."
---"Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018"
First, Regulation of Devices and Tobacco Sticks
According to the Tobacco Monopoly Law, cigarettes, cigars, cut tobacco, and re-dried tobacco leaves are collectively referred to as tobacco products. Therefore, although heated non-combustion new tobacco products are nominally "new," their essence still involves heating cigarettes to produce aerosol, which is the main basis for their inclusion under monopoly supervision.
It is easy to imagine that even if the sale of heated non-combustion tobacco products is opened up in the future, "dedicated tobacco sticks" will still be considered monopoly products, with unshakeable barriers.
However, heated non-combustion new tobacco product devices are not restricted by the Tobacco Monopoly Law. Currently, devices that can heat regular cigarettes have appeared on the market. Although the satisfaction with these products is still lacking, they provide a reference point.
China E-Cigarette News believes that in the future, the national bureau will also strengthen market regulation of "devices," establishing relevant access standards and management mechanisms. However, the focus will be on "regulation" rather than "prohibition," creating a relatively open market space with broad prospects for relevant enterprises.
Second, Protection of Related Technological Rights
Currently, relevant industrial enterprises in the industry have accumulated a number of patented technologies for new tobacco products. However, due to the uniqueness of the tobacco industry, China E-Cigarette News believes that in the future, related process technologies are likely to be shared within the industry, leading to large-scale production and establishing relevant technological barriers.
For private enterprises, although competitors may be strong, they are not insurmountable. The protection of patented technologies for new tobacco products is equitable, and private enterprises can theoretically enjoy the same technological protections as industrial enterprises. For companies interested in researching new tobacco products, the protection of related technological rights is more beneficial than harmful, and future development is also promising.
Third, Identification and Inspection of New Tobacco Products
China E-Cigarette News believes that although there are various types of new tobacco products, there is one core standard that remains unchanged: whether they contain "tobacco substances," including tobacco leaves, cut tobacco, cigarettes, cigars, and other forms, and whether their working principle involves "processing and treating tobacco leaves to produce satisfaction."
As long as new tobacco products contain tobacco leaf components, regardless of their product form or technical form, they will eventually be included under the management of the "Tobacco Monopoly Law"; it is only a matter of time.
Fourth, Case Transfer
Regarding the transfer of cases involving new tobacco products, China E-Cigarette News believes there are two directions: first, smuggling and counterfeiting of new tobacco products will face legal supervision similar to that of producing and selling counterfeit cigarettes; second, the protection of related technologies must also form relevant legal provisions to provide a basis for resolving legal disputes.
Fifth, Development of Domestic New Tobacco Products
"Promote the innovative development of the entire industrial chain of new tobacco products. Accelerate the research and innovation of technology, products, and equipment for new tobacco products, and ensure the standardization of six integrated products, promoting the standardization, industrialization, and branding of new tobacco products. Strengthen the research and layout of standards for new tobacco products."
---"Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018"#p#分页标题#e#
As early as 2008, when new tobacco products first emerged, relevant domestic enterprises began related research. Especially research institutions represented by the Shanghai New Tobacco Products Research Institute have accumulated a large number of patented technologies in a short period.
In the patents publicly announced by the State Intellectual Property Office from April to June 2018, there were 894 applications from domestic tobacco industry units, including 61 invention patents, 71 utility model patents, and 17 design patents in the field of new tobacco products, totaling 150, accounting for more than one-sixth of the total patents in the tobacco industry.
It is not difficult to see that the national bureau has given considerable emphasis and support to the technological development of new tobacco products. Furthermore, in the "Key Points for Comprehensive Deepening Reform Work of the State Tobacco Monopoly Administration in 2018," it was explicitly stated that six integrated products should be standardized this year.
Currently, industrial enterprises such as Sichuan Tobacco, Hubei Tobacco, and Henan Tobacco have already prepared relevant products and are beginning the pre-launch preparations. By early 2019, related non-combustion tobacco products from domestic industrial enterprises could officially meet the public.
China E-Cigarette News attempted to search for "heated non-combustion" on an e-commerce platform, and the page immediately displayed multiple purchase links for heated non-combustion new tobacco products. However, due to relevant legal regulations, consumers can only purchase devices and not tobacco sticks, leading to a situation of "having the gun but no bullets."
Due to relevant laws and regulations, the domestic market currently does not allow the sale of heated non-combustion new tobacco products. Related industrial enterprises can only promote their products through "testing" and "research."
Currently, related industrial enterprises are using the method of selling devices with complimentary dedicated tobacco sticks for trial sales, but once the tobacco sticks are consumed, they will inevitably face the dilemma of not being able to sustain consumption.
Sixth, Sales of Heated Non-Combustion New Tobacco Products
Even if the national bureau opens up the sale of heated non-combustion tobacco products in the future, the choice of sales channels will still be an important issue. China E-Cigarette News believes that there are several potential sales avenues for heated non-combustion new tobacco products in the future.
First, devices will primarily be sold online, with terminal sales as a supplement.
Currently, heated non-combustion new tobacco product devices are not included under monopoly categories. Although the national bureau will strengthen control over devices (technical standards, production processes, sales channels), the likelihood of including them under monopoly management is low.
Relying on online platforms for sales can provide a relatively fair and open platform for industrial enterprises' related products in a controllable domestic market environment, which is a significant test of product competitiveness and is essential for the market-oriented reform of the tobacco industry.
Second, dedicated tobacco sticks will be sold through retail terminals.
China E-Cigarette News believes that the tobacco sticks required for heated non-combustion new tobacco products will inevitably and exclusively be sold through terminals. Related foreign products will be included under foreign tobacco management and will enjoy the same treatment as conventional foreign cigarettes.
By purposefully introducing foreign heated non-combustion tobacco products, the domestic market competition atmosphere can be invigorated, keeping it within a controllable range while meeting domestic consumer demand.
Third, new tobacco products will be completely sold through terminal monopoly sales.
On one hand, to protect the development of related industrial enterprises' new tobacco products, monopoly management will be implemented; on the other hand, to mitigate the impact on traditional cigarettes and maintain industry stability.
Although this method is relatively conservative, it is not without the possibility of implementation.
Seventh, International Development of Domestic New Tobacco Products
Additionally, the national bureau has clearly stated in its "Notice" to "promote the international expansion of new tobacco products," which is an inherent part of the "going out" development strategy.
From July 9 to 12, Heilongjiang Tobacco Industrial Co., Ltd. showcased its heated non-combustion new tobacco products, water pipes, and oral tobacco during the World Cup in Russia.
It can be anticipated that in the future, domestic new tobacco products will gradually step onto the international stage and compete with strong foreign products.
