What Does China’s First Independent Vape Expo Reveal?

China's First Independent Vape Expo

From April 15 to 17, 2015, the first independent vape expo in China, the Shenzhen International E-Cigarette Industry Expo, was held, featuring nearly a hundred e-cigarette companies. This expo provided a platform for exhibitors to showcase themselves and for attendees to experience the products.

During the expo, in addition to the regular e-cigarette product displays, there were themed activities such as an e-cigarette summit, new product showcases from exhibitors, and a fancy e-cigarette show. The e-cigarette summit received considerable attention.

At the summit, Charly PAIRAUD, Secretary-General of the French E-Cigarette Industry Alliance (FIVAPE) and a participant in the development of e-cigarette industry standards by the French Standards Association (AFNOR), interpreted the upcoming e-cigarette industry regulations in France and their potential impact on the market.

Vincent CUISSET, President of VDLV from France and one of the drafters of the e-cigarette industry standards by AFNOR, focused on the safety of e-cigarette liquids and related policies.

Policy and regulation experts Azim Chowdhury and David Ettinger from the U.S. Food and Drug Administration (FDA) analyzed how Chinese e-cigarette manufacturers should respond to U.S. FDA policies and regulations when exporting.

The speakers invited to this summit mainly came from Europe and North America, which are also the most mature e-cigarette markets globally.

What is the Current State of the Overseas E-Cigarette Market?

E-Cigarette Exhibits

Taking the U.S. e-cigarette market as an example, between 2008 and 2010, the FDA temporarily banned manufacturers like Sottera, Inc. from importing and selling e-cigarette products. In early 2011, the FDA seized a large number of e-cigarette imports at U.S. customs, leading Sottera to file a lawsuit in the Supreme Court. In the second half of 2012, the Supreme Court ultimately ruled against the FDA's ban on e-cigarette sales, one of the key reasons being that the court recognized e-cigarettes as tobacco products rather than pharmaceutical products under FDA jurisdiction.

After this turmoil, the U.S. e-cigarette market opened up and began to develop rapidly. In many European countries, however, the debate over whether e-cigarettes are pharmaceutical or tobacco products continues.

The development of the overseas e-cigarette market is also driven by major multinational tobacco giants.

Faced with the potential for a massive e-cigarette market, companies like Philip Morris International, British American Tobacco, Imperial Brands, Altria, Lorillard, and Reynolds have begun to develop or acquire e-cigarette businesses to complement the shrinking cigarette market.

British American Tobacco has significantly strengthened its market expansion efforts for non-cigarette tobacco products since 2012, investing over £100 million specifically for the research and promotion of smoke-free tobacco products. By acquiring the e-cigarette company CN Creative, they have continuously increased their investment and research in e-cigarette products.

At the expo, consumers inquire about related information

According to reports from Tobacco Reporter, to further expand the European e-cigarette market, British American Tobacco launched a new brand of e-cigarettes, VYPE, in the UK, France, and Germany in 2013.

Lorillard acquired e-cigarette manufacturer BLU ECIGS for $135 million in April 2012 and further innovated BLU CIG e-cigarette products, studying the deep inhalation of e-cigarette products.

Reynolds American Tobacco has also continuously innovated its VUSE e-cigarettes, including using patented technology chips to ensure that e-cigarettes can evenly release nicotine to enhance the consumer's inhalation experience.

On February 3, 2014, Altria announced the acquisition of e-cigarette manufacturer Green Smoke for $110 million.

With the development of the overseas e-cigarette market, some uncertainties and risks have gradually emerged.

Firstly, the safety of e-cigarettes has not been officially confirmed. Currently, many countries that allow e-cigarette sales do not have clear regulatory bodies; some are managed by tobacco control departments, while others are overseen by food and drug administration departments, leading to relatively chaotic management.

Countries have differing views on whether e-cigarettes should be recognized; some countries take a conservative stance, and the global legal status of e-cigarettes still needs further validation, with relevant laws and regulations yet to be improved.

Secondly, due to the complex manufacturing process, the overall cost of e-cigarettes remains high, limiting the main consumer demographic to the middle and upper classes, making it difficult for the general public to afford, which affects its promotion.

Additionally, the overseas e-cigarette market faces issues such as gradually diminishing tax advantages, some technical barriers that have yet to be overcome, and a lack of unified product quality standards.

In recent years, more and more relevant laws and regulations regarding e-cigarettes have been or are about to be introduced.

In the U.S., as of early this year, according to the National Conference of State Legislatures, 41 states have banned the sale of e-cigarettes to individuals under 18 years of age.

The FDA has also strengthened its regulation of e-cigarette products. On April 13 of this year, the FDA's official website released news, warning three different companies—VaporZ from the UK, Vaperz Ltd from the U.S., and Dr. K from the U.S.—not to use FDA-related labels and promotions regarding e-cigarettes or e-liquid on their websites.

In Europe, in February 2014, the EU revised its Tobacco Products Directive, which included amendments regarding e-cigarette products: prohibiting e-cigarette manufacturers and traders from advertising their products, while also imposing strict regulations on quality control, information disclosure, and ingredient transparency for e-cigarette products. This regulation is still strictly enforced in most EU countries.

The e-cigarette industry standards drafted by the French Standards Association (AFNOR) are about to be released, and these standards are likely to be promoted at the EU level.