China Holds 87% of Global E-Cigarette Patents, With Export Share Exceeding 90% Amid Tightening Globa

On one hand, there is the "explosive development" of e-cigarettes and the "crazy influx" of capital. On the other hand, the "harmfulness" of e-cigarettes has been recognized by many parties, and regulatory gaps are gradually being exposed. The controversies and discussions surrounding e-cigarettes are becoming more frequent.

Recently, the Public Health Technology Supervision Research Group of Tsinghua University released the "Report on the Regulatory Status of the E-Cigarette Industry in Public Health and Technology Supervision (2019)" (hereinafter referred to as the "Report"), which shows that the e-cigarette industry has achieved rapid growth in just over a decade, but the "explosive development" does not match the current "lagging supervision" globally. Currently, domestic regulation of e-cigarettes has gaps in industry standards and regulatory mechanisms. It is worth noting that this is also the first blue book of the Chinese e-cigarette industry.

The report's lead author, Yan Fei, an associate professor of sociology at Tsinghua University, mentioned on the report's release website that the "good regulation" mentioned in the report has not been implemented in China. This indicates that the Chinese e-cigarette market is still in a period of barbaric growth, which is very detrimental to the development of the industry.

Since the invention of e-cigarettes by pharmacist Han Li in 2003, the impact of this traditional cigarette alternative on the human body has been controversial. At the same time, the pursuit of capital, mixed markets, and legal vacuums have kept the e-cigarette industry on the edge of regulation.

The report shows that with increasingly strict tobacco control policies worldwide and the gradual increase in health awareness among people, traditional tobacco products, primarily cigarettes, are facing a decline in demand. Under this backdrop, new alternatives represented by e-cigarettes are showing a vigorous growth trend.

Data shows that since last year, the number of e-cigarette production suppliers and sales has surged. In 2018, the sales of new tobacco products reached 24.7 billion RMB, and it is expected to reach 45 billion RMB by 2024, reaching 75 billion RMB. New brands and new product versions are also accelerating. As of August 2018, there were 25,979 global e-cigarette patents, with China accounting for 87%.

It is also against this backdrop that the Chinese e-cigarette market has welcomed investment points, with venture capital firms such as Source Code Capital, IDG, and Zhenge entering the e-cigarette market, investing in brands like IJOY, RELX, and "Smart Victory E" - tobacco companies like "Energy", American Juul Labs, JUUL, gippro (Long Dance), MOTI Magic Flute, etc., with the highest single financing amount reaching 300 million RMB.

Recently, Xiao Ye e-cigarette's official spokesperson, Chen Guanxi, and Luo Yonghao began collaborating to produce e-cigarettes. According to media reports, Xiao Ye bid tens of millions, reigniting discussions about e-cigarettes.

The report indicates that by 2017, China had reached 7.4 million e-cigarettes, making it the world's largest producer (accounting for 95% of global e-cigarette products) and exporter (accounting for 90% of global share) with pricing power in the international market.

At the same time, the pursuit of capital has accelerated this enthusiasm. Currently, there are thousands of e-cigarette companies in China, with new brands emerging almost daily. Some leading e-cigarette companies have valuations exceeding 2 billion USD. Meanwhile, the industry has also created approximately 2 million jobs. In Shenzhen and Dongguan, many mobile phone and drone OEM factories have completely transitioned to e-cigarettes.

The report shows that nearly a thousand e-cigarette and accessory manufacturers are located in Shenzhen alone, accounting for 90% of global production, forming an "industrial model of 'Made in China, consumed in Europe and America'". However, the e-cigarette industry faces a series of challenges, such as insufficient basic research, prominent quality and safety issues, lack of standards, and weak regulation. How to effectively monitor the e-cigarette industry and promote healthy and sustainable development has become a focus of social market attention.

Moreover, it is worth noting that despite the numerous controversies surrounding new products like e-cigarettes, the government's concepts, methods, and measures for controlling e-cigarettes show significant differences. However, with the rapid expansion of market size and the rapid increase in product varieties, the government is paying more attention to e-cigarettes. Many countries and regions have begun to implement legal supervision over e-cigarettes.

As mentioned in the report, although China is one of the first e-cigarette producers, the high-quality e-cigarettes produced in China are mainly exported to Europe and America, while counterfeit and low-quality e-cigarette products flood the domestic market. Due to the lack of clear industry standards and regulatory mechanisms, some companies pursue short-term profits, leading to dangerous situations such as "stumbling bombs" that are unqualified, leaking oil, and battery quality not meeting standards, resulting in explosions.

"The threshold for this industry is very low; it is rumored that one or two million can start an e-cigarette company. Some small manufacturers can make quick profits, but product development and quality control are not in place," said an industry insider. #p#分页标题#e#

Therefore, the blue book recommends implementing industry legislation and regulatory systems in the country. Specific strategies include: product classification - for example, products containing nicotine and those without nicotine, such as "vaporized coffee", which should be managed differently; the most common nicotine vaporization systems on the market can be divided into batteries, vaporization devices, and cartridges. Batteries and vaporization devices are electronic products. Nicotine is actually a cartridge. Therefore, supervision should be based on the actual situation of the products. Additionally, full-process management should be completed in production and sales plans.

In addition to establishing an industry access system, the report also clearly states that the purpose of supervision should be to promote the overall welfare of society, ensuring the health of the majority of residents, and forming a gradual, multi-subjective governance participation. Furthermore, companies should fulfill their social responsibilities, preventing e-cigarettes from being sold to minors under 18, which is the bottom line and conscience of the industry.

It is worth noting that legislation on e-cigarettes and the introduction of international standards are underway. Earlier, it was reported that departments such as the Ministry of Industry and Information Technology, the National Health and Family Planning Commission, the State Tobacco Monopoly Administration, and the National Municipal Administration are all involved, with timelines expected by the end of this year.

According to Yan Fei, the speed of e-cigarette development has greatly exceeded expectations, which will also attract government attention. Currently, national standards have not yet been issued, but some industry associations have begun preliminary supervision and regulation; however, national standards are ultimately needed to supervise enterprises.

"E-cigarettes have exposed many problems. If they are not addressed, they will trigger a series of reactions, ultimately leading to bad money driving out good money," he said.

Meanwhile, he believes that after national standards are issued, the industry will face significant reshuffling, which is the only way for Chinese e-cigarettes to become standardized and healthy.