Tobacco Control Order Not Yet Issued, but E-Cigarettes Are Already Booming

Introduction: The recent revision of the "Advertising Law of the People's Republic of China" explicitly prohibits outdoor tobacco advertising. Some media analyze that this move is paving the way for comprehensive tobacco control. If tobacco control is implemented, how will the 350 million smokers in China change, caught between the irresistible craving for a cigarette after a meal and the difficulty of quitting? "Many customers come to buy electronic cigarettes to replace traditional cigarettes for quitting smoking."

Chinese electronic cigarette news: "The filter of thinkers, the elegance of smokers." This advertising slogan suggests it is a cigarette advertisement. In reality, a large number of disguised tobacco advertisements still exist, advertising the company name rather than the tobacco itself.

This situation may change in the future. The recent revision of the "Advertising Law of the People's Republic of China" explicitly prohibits outdoor tobacco advertising.

Some media analyze that this move is paving the way for comprehensive tobacco control. If tobacco control is implemented, how will the 350 million smokers in China change, caught between the irresistible craving for a cigarette after a meal and the difficulty of quitting? "Many customers come to buy electronic cigarettes to replace traditional cigarettes for quitting smoking," said Guo Limei, the general distributor of a hardware brand in Henan, stating that electronic cigarettes can serve as a transitional tool for quitting smoking.

In 2013, American researchers surveyed 307 electronic cigarette purchasers, finding that 16.2% of them chose electronic cigarettes due to government smoking bans, while about 32.5% were purchasing them to quit smoking.

"Without open flames, in crowded places where smoking is prohibited, there are no safety hazards," said a merchant selling electronic cigarettes in Wanbo Mall. "Besides personal use, they can also be given as gifts."

"Electronic cigarettes are a good choice for customers and a great opportunity for businesses. They can be improved in many aspects to become a widely accepted product," said Farrell Delman, president of the American Smokeless Tobacco Association, at the recently concluded China Electronic Cigarette Summit.

His ambitious outlook is based on the continuously expanding electronic cigarette market. According to Business Weekly, the global electronic cigarette market is currently about $2 billion, expected to reach $10 billion by 2017; while in China, the electronic cigarette market was valued at 266 million yuan in 2012, projected to reach 434 million yuan by 2017.

Market Survey

One brand sells 2.52 million yuan monthly

In Wanbo Mall, merchants offer prices ranging from 26 yuan to 320 yuan depending on the brand and style. "There are two types: cigarette-style and e-liquid style. The latter is about 200 yuan more expensive than the former for the same brand," said a merchant surnamed Guo.

She showed a cigarette-style electronic cigarette priced at 120 yuan, which looks like a traditional cigarette in appearance and length, with a metallic yellow pod (mouthpiece) and a white cigarette stick (body) packaged in a rectangular box. The store owner claimed that a full charge can last 3 to 5 days, and the cigarette stick is disposable after use.

"Recently, the e-liquid style has been very popular; it is a second-generation product," said another store owner. This product consists of a pod, atomizer, and lithium battery (cigarette stick), and just like adding ink to a pen, you only need to pour the e-liquid into the atomizer without frequently replacing the cigarette stick.

When I tried taking a puff, I found that the device did not produce smoke, but I could exhale vapor.

How is the sales situation? A store owner selling lighters claimed that they could sell a box of 1000 pods in a month.

On Taobao, searching for "electronic cigarettes" shows 9 brands with a total of 63,700 items. A certain brand, claiming to be the top seller online, sells for 168 yuan, with a monthly sales volume of 15,000 sets, totaling 2.52 million yuan in sales. According to incomplete statistics, the total sales of electronic cigarettes on Tmall in 2013 approached 60 million yuan.

One Perspective

Electronic cigarettes belong to tobacco and are classified as medical products

The popularity of electronic cigarettes is not only welcomed by smokers; some say it also brings good news to over 700 million secondhand smoke victims in China. But is this really the case?

"The most common result of smoking is chronic bronchitis. Smoking electronic cigarettes is not much different from smoking traditional cigarettes. There are no clinical recommendations for patients who cannot quit smoking to use electronic cigarettes, and they are not considered harmless," said Xu, a bronchitis specialist at the Second Hospital of Zhengzhou. "Moreover, we must also consider whether there is electronic radiation when using electronic cigarettes."

The World Health Organization's stance is much more resolute. In a report released on August 26, it stated that electronic cigarettes also produce toxic substances and classified electronic cigarettes as tobacco products and medical supplies.

"Some distributors have talked to us about selling in pharmacies, but we haven't seen any pharmacies in China selling them yet. Most are sold online, and currently, no brand is available in supermarkets in China," said Mr. Zhu, who sells a high-end electronic cigarette brand.

Among the 307 surveyed, 26.3% purchased electronic cigarettes out of curiosity. This has led to concerns that the novel and fashionable appearance of electronic cigarettes may attract young people to become dependent on nicotine.

Countries abroad have taken the lead. As early as April this year, the U.S. Food and Drug Administration proposed a ban on selling electronic cigarette products to minors. Mr. Guo, a sales manager at a Shenzhen high-end electronic cigarette company, stated that the domestic electronic cigarette sales are currently in a regulatory vacuum.

Industry Status

Small factories rely on producing old products and competing on price

The debate over the efficacy of electronic cigarettes is ongoing, but brands are growing wildly. According to data from the June issue of "Tobacco Control," there were 466 electronic cigarette brands in the U.S. market (as of January 2014), with 10 new brands appearing each month.

In Shenzhen, the main production area for electronic cigarettes in China, there were fewer than 500 electronic cigarette companies in 2011, but this number surged to about 1500 in 2013, an increase of approximately 200%.

Compared to the mature market in the U.S., the domestic market is still in its infancy. Industry insiders claim that 2014 is the year of the electronic cigarette market.

However, for distributors like Mr. Zhu, 2014 is more of a disaster year. "Due to low technical barriers, a large number of manufacturers have entered the market. You can rent a one-square-meter space, get parts from a supplier, and assemble them yourself."

"More than 95% of domestic production companies are concentrated in Shenzhen, mainly relying on small factories to produce old products at low prices; only a small number of large tobacco companies are developing new varieties to capture market share," Mr. Guo agreed with this viewpoint.