Summary of China’s Vaping Industry Development Trends in 2021–2022

Data shows that the domestic market size of China's e-cigarette industry continues to grow, with a projected growth rate of 76.0% in 2022, reaching 25.52 billion yuan. The export market size of China's e-cigarette industry is also on the rise, with an expected growth rate of 63.4% in 2022, reaching 165.88 billion yuan.

In 2021, approximately 1.5 million people were directly employed in China's e-cigarette industry, driving about 4 million indirect jobs, totaling around 5.5 million.

Analysts from iiMedia Consulting believe that with the gradual improvement of domestic e-cigarette regulatory policies in the future, the e-cigarette industry can bring certain benefits to the domestic economy and society.

1. Gradual introduction of relevant policies for China's e-cigarette industry

Since 2021, the State Council has successively issued and improved national standards and management methods related to e-cigarettes, clarifying that e-cigarettes fall under the management of the tobacco monopoly bureau and categorizing them as new tobacco products, which has led to a more standardized production and operation in the e-cigarette industry. Analysts from iiMedia Consulting believe that the new regulations mean that e-cigarettes, as new tobacco products, have officially gained legal status at the national level, and the implementation of licenses will strengthen the regulation of the qualifications of e-cigarette market entities in production, wholesale, and retail, greatly improving the chaotic operating state in the domestic market.

2. Strong demand for smoking cessation among smokers, consumers expect e-cigarettes to provide cessation possibilities

1. Underlying demand: There is a widespread demand for smoking cessation among traditional tobacco consumers in China, and harm reduction is the core appeal of tobacco evolution.

Major health organizations abroad have conducted evaluations of e-cigarettes for several years and currently generally believe that the harm of e-cigarettes is far less than that of traditional tobacco. Survey data shows that over 90% of traditional tobacco consumers in China have thoughts of quitting smoking, 77.9% have tried, but only 23.8% have succeeded. Chinese consumers are most interested in the auxiliary effects of e-cigarettes on quitting smoking (74.6%). The strong demand for smoking cessation among smokers and the expectation that e-cigarettes can provide cessation possibilities suggest that widespread use of e-cigarettes among smokers may alleviate the burden on medical institutions and have positive social effects.

2. Market size: The domestic market size of China's e-cigarette industry is expected to reach 25.52 billion yuan in 2022.

Data shows that global e-cigarette retail sales grew from $26.8 billion in 2018 to $45.3 billion in 2020. From 2017 to 2021, the compound annual growth rate of China's e-cigarette industry domestic market size was 37.9%, with an expected year-on-year growth rate of 76.0% in 2022, reaching 25.52 billion yuan. It is estimated that by 2025, the potential market size for solid e-cigarettes in China will be approximately 53.1 billion to 88.5 billion yuan, while the potential market size for vaporized e-cigarettes will be approximately 39.6 billion to 79.2 billion yuan. In 2021, approximately 1.5 million people were directly employed in China's e-cigarette industry, driving about 4 million indirect jobs, totaling around 5.5 million.

3. Industry development is becoming more standardized, and private enterprises in China are driving technological innovation

1. Made in China: China holds an advantage in the global e-cigarette industry, with private enterprises driving industry development through technological innovation.

Data shows that in 2021, the global e-cigarette retail scale reached $56.9 billion, approximately 362.49 billion yuan; in 2021, the export market size of China's e-cigarette industry was 101.5 billion yuan, accounting for nearly 30% of the global market. Domestic private e-cigarette brands, such as RELX, have been laying out in the e-cigarette field for many years, achieving innovative results in product and material research and development, production processes, etc., driving employment across the entire industry chain from research and development to sales. Survey data shows that 60.0% and 48.2% of Chinese e-cigarette consumers prefer RELX and MOTI, respectively. Domestic private e-cigarette brands have already formed a certain recognition among consumer groups. In the future, private enterprises that gain first-mover advantages will create a demonstration effect to promote the standardized development of the e-cigarette industry.

2. Policy guidance: China is incorporating the stable development of the e-cigarette industry into a legal and standardized framework.

Major countries and regions worldwide, including Europe, America, Japan, and South Korea, have introduced clear policy guidelines and regulatory measures for e-cigarettes. China is also incorporating the stable development of the e-cigarette industry into a legal and standardized framework. Since 2021, the State Council has successively issued and improved national standards and management methods related to e-cigarettes, clarifying that e-cigarettes fall under the management of the tobacco monopoly bureau and categorizing them as new tobacco products, which has led to a more refined production and operation in the e-cigarette industry.

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