Unclear Classification of New Smoking Products Leaves a Billion-Yuan Market Unregulated

2014 is becoming the year of e-cigarettes, as tobacco companies across the country are trying to enter this market. Currently, there are no special restrictions, industry standards, or regulatory mechanisms in the e-cigarette industry. Compared to the optimistic predictions of the tobacco industry regarding the prospects of e-cigarettes, there is significant controversy in the public health community regarding the understanding of e-cigarettes.

"All Made in China"

In July 2014, Liu Tao almost lost his life due to a box of "cigarettes" he bought for 300 yuan on Taobao.

At 3 a.m. on July 7, 2014, when Liu Tao's craving for cigarettes hit, he pressed the switch on the "cigarette," and the device began to heat up. Before he could bring it to his mouth, the "cigarette" suddenly exploded. When a reporter from Huashang Daily interviewed him in the hospital, his left hand was wrapped in about 5 centimeters of white gauze, with damage to his finger nerves, arteries, and tendons.

The "cigarette" Liu Tao purchased was not an ordinary cigarette, but an e-cigarette. Unlike traditional cigarettes, e-cigarettes do not burn tobacco leaves but vaporize a liquid containing nicotine that consumers inhale. E-cigarettes do not contain tar and do not produce lingering secondhand smoke, leading many e-cigarette brands to promote them as smoking cessation products, claiming they reduce harm and pollution to both smokers and their surrounding environment.

Despite frequent safety incidents, a new industry is rapidly creating wealth myths.

The United States is a major consumer of e-cigarettes. Five years ago, its sales were almost zero, but by 2013, they had climbed to $1 billion. The tobacco research organization Big Tobacco estimates that e-cigarette sales in the U.S. will surpass traditional cigarettes by 2047.

A report from Rui Zhi Research obtained by Southern Weekend shows that e-cigarettes have become the biggest highlight in the global tobacco industry in recent years, especially making breakthrough progress in the U.S. market. Rui Zhi Research focuses on consulting services in the tobacco industry.

"As the world's largest e-cigarette production base, China's e-cigarette consumption landscape is gradually opening up, with private capital and online sales significantly impacting the traditional tobacco product management structure," Rui Zhi Research wrote in its analysis report.

Wu Yiqun, director of the New Exploration Health Development Research Center and a leading figure in China's tobacco control community, has a keen sense of the development of tobacco products. During a business trip to the U.S., she bought no less than 10 types of e-cigarettes, stating, "When I opened them in China, they were all Made in China."

Currently, Shenzhen, Beijing, and Zhejiang have become global e-cigarette production bases. Zhang Zao, an official from the National Tobacco Monopoly Administration, revealed to Southern Weekend that "the domestic tobacco monopoly system is relatively strict. Before 2000, private entrepreneurs began developing e-cigarettes, and some mainstream brands in the U.S. also purchased their technology from China."

For decades, e-cigarettes have been "blooming inside the wall while fragrant outside." After the central government issued the "Eight Regulations," e-cigarette consumption in China began to surge. A search for "e-cigarettes" on Taobao revealed that one online store had monthly sales exceeding 10,000 units. According to Guojin Securities analysis, if e-cigarettes capture 10% of the domestic first-class cigarette market share, the e-cigarette market capacity would be nearly 30 billion yuan.

After years of waiting, 2014 is becoming the year of e-cigarettes, as tobacco companies across the country are beginning to explore this market. In June 2014, Yunnan Tobacco signed a cooperation agreement with Huabao International to jointly develop e-cigarettes and other products. Recently, Hubei Tobacco will launch its first batch of e-cigarette products in Wuhan.

Is it a cigarette or an electronic product?

Currently, the national team is wading through murky waters. Southern Weekend reporters found over 7,000 types of e-cigarettes on Taobao. "The current market development is very chaotic," Wu Yiqun said.

Rui Zhi Research analysis believes that "the lack of industry standards for 'mouthpieces' and circuit battery products, along with the absence of product quality monitoring and certification procedures, especially the mainstreaming of internet sales, has led to a greater disparity in e-cigarette products."

In September 2003, an e-cigarette explosion occurred in Atlanta, USA, and it was later confirmed that the involved brand Seego EHit was produced in China.

It is worth noting that the turf wars between ministries are making this hundreds of billions market a no-man's land. "Is it a food, an electronic product, or a drug? It seems to be none of these because no one wants to manage it," a tobacco control expert revealed.

The National Tobacco Monopoly Administration believes that the main component of e-cigarettes is high-purity nicotine extracted from tobacco. According to the "Regulations on the Management of Hazardous Chemicals," "nicotine" and "nicotine compounds and preparations" are listed as hazardous chemicals, thus e-cigarettes should comply with the regulations and be supervised by the State Administration of Work Safety. #p#分页标题#e#

However, the State Administration of Work Safety believes that the safety of the production and transportation of hazardous chemicals is under its supervision, while the potential hazards of using hazardous chemicals in products should be regulated by other relevant departments. Currently, enterprises only need to obtain relevant production and operation licenses when producing and operating nicotine. However, there are no legal restrictions on the use of nicotine.

The result of the dispute is that e-cigarettes are classified as electronic products, enjoying a 17% value-added tax treatment, meaning e-cigarettes can be produced and sold in China as ordinary products. Currently, there are no special restrictions, industry standards, or regulatory mechanisms for e-cigarettes.

"E-cigarettes have only become popular in recent years, while the Tobacco Monopoly Law has been in effect since 1991, with the last amendment in 2009, which does not apply to e-cigarettes at all," a person close to the National Tobacco Administration revealed.

The second article of the Tobacco Monopoly Law states: cigarettes, cigars, tobacco strips, and re-dried tobacco leaves are collectively referred to as tobacco products, which do not include e-cigarettes. Zhang Zao revealed a detail that around 2006, e-cigarette advertisements were everywhere, and the National Tobacco Administration was worried about the impact on normal cigarette sales, so they sent police to check e-cigarette factories in Northeast China, but in the end, they could only let it go. "There is no legal basis for it."

This is not an embarrassment unique to China. In Canada, the government has banned the import and sale of nicotine-containing e-cigarettes through strict anti-smoking laws. However, nicotine-free e-cigarettes can be used as smoking cessation medical devices.

The Dutch government not only allows the import and sale of e-cigarettes but has also recognized e-cigarettes as a consumer product.

The conflicting e-cigarette management policies behind this are a result of the World Health Organization's silence. According to relevant individuals, the National Tobacco Administration is inclined to include e-cigarettes in the monopoly through judicial interpretation.

"The World Health Organization has not provided a clear statement on whether e-cigarettes are tobacco products or smoking cessation products," said a person from the National Tobacco Administration. "In October 2014, the World Health Organization will hold a special meeting. As a party to the Framework Convention on Tobacco Control, we will wait for their conclusion before deciding whether to adjust our policies."

"Tearing apart the public health community"

The public health community has generated significant controversy regarding the understanding of e-cigarettes. "This topic has torn apart the public health community," Wu Yiqun said.

In June 2014, 129 doctors and oncologists from 31 countries jointly wrote to the World Health Organization, urging it not to waver in its determination to strictly regulate e-cigarettes.

The joint letter stated that establishing strict regulations on e-cigarettes could prevent youth smoking, protect the general public from secondhand smoke, and further regulate the market. The letter also demanded that all e-cigarette manufacturers provide data proving that e-cigarettes are safe and can help people quit smoking, and that they must disclose the liquid components contained in e-cigarettes.

Prior to this, 53 internationally renowned scientists had also written to the World Health Organization, stating that tar-free e-cigarettes could protect smokers from most cancers, heart disease, and lung disease, and that e-cigarettes might be one of the most innovative health products of the 21st century, potentially saving millions of lives.

Wu Yiqun explained that the controversy surrounding e-cigarettes focuses on several aspects: "Whether e-cigarettes help with smoking cessation, the inhaled nicotine can satisfy smokers' cravings, but it can also lead to addiction; secondly, e-cigarettes contain a large number of flavors and additives, what are their side effects?"

The U.S. Food and Drug Administration (FDA) claims that propylene glycol and glycerin in e-cigarettes are "generally recognized as safe" as food additives, but their long-term effects after inhalation remain uncertain. Currently, the FDA's Tobacco Products Center has begun collecting reports of side effects from e-cigarettes, such as eye irritation, headaches, and coughing.

The FDA has also stated that in the future, e-cigarettes and other nicotine products will have mandatory product standards set to protect public health. Some local governments in the U.S. have already passed laws regulating the sale and use of e-cigarettes.

As an opponent, Wu Yiqun is more concerned about the impact of e-cigarettes on teenagers. Data from Rui Zhi Research shows that the number of middle and high school students in the U.S. using e-cigarettes doubled between 2011 and 2012, with 1.78 million middle and high school students using e-cigarettes in 2012, and the proportion of high school students using e-cigarettes rising from 4.7% in 2011 to 10% in 2012.

"Old smokers won't use them; compared to traditional cigarettes, the taste is too far off. E-cigarettes are targeting new smokers," said an e-cigarette industry worker in Yunnan. #p#分页标题#e#

To bridge the gap in understanding e-cigarettes within the public health community, we may have to wait for the World Health Organization's Conference of the Parties to the Framework Convention on Tobacco Control in October this year.