Hong Kong Underground Vaping Market Investigation — Overseas Websites, Hidden Transactions, and a Gr

 the mass transite-cigarettesTransaction disclosure: Two Firsts (2FIRSTS) recently conducted a multi-day survey in Hong Kong to gain an in-depth understanding of the circulation channels, consumer purchasing patterns, and identification of authenticity of e-cigarettes in Hong Kong two years after the implementation of the smoking ban.

Special statement:

1. This article is only for internal research and exchange in the industry and does not recommend any brands, products, or investment;

2. Minors are prohibited from visiting.

3. This article is limited to information on China Hong Konge-cigarette marketResearch does not involve any current political reports.

Survey of Hong Kong's e-cigarette underground market

--How do underground networks sell e-cigarettes?
Consumers either buy fakes or pay nearly ten times the price.
If you can't buy e-cigarettes, is it a better result to switch back to "white label cigarettes"?

Wen| Charlotte Yu from China Hong Kong

[Two First Originals] Today, with the help of intelligent algorithms, online buyers have easier access than ever to products they may be interested in. In China Hong Kong, if you have used or are using e-cigarettes, you may encounter alternative smoking equipment accessories such as lanyards or leather protective cases when browsing second-hand trading platforms.

These seem to be "historical legacies" because Hong Kong has completely banned e-cigarettes and alternative smoking products for nearly two years-starting from April 30, 2022, Hong Kong will completely ban e-cigarettes. In addition to prohibiting public smoking, it also prohibits import, promotion, manufacturing and sales.

However, on the product details pages of these smoking device accessories, a hidden entrance will reveal a different world to visitors. Here, the trade that should have died-the e-cigarette trade-still seems to be booming in the city.

In early December 2023, the Two Susts (2FIRSTS) conducted a survey in Hong Kong for several days. Two years after the smoking ban was implemented, can e-cigarettes still be purchased smoothly in Hong Kong?

Overseas websites hide e-cigarette information

In early December, 2FIRSTS tried to order e-cigarettes in bulk in Hong Kong. On the product details page of a shopping website disguised as an e-cigarette silicone protective cover, 2FIRSTS found the contact information located in the product description information and successfully contacted the seller using the instant chat application WhatsApp.

The response was quick. After 2FIRSTS sent the message, the seller immediately sent back multiple product catalog maps. All pictures use visual elements with a unified style. Although the design is outdated, it is very eye-catching.

 Part of the product catalog map provided by an e-cigarette seller in Hong Kong to 2FIRSTS| Source: Interviewee

2FIRSTS conducted inquiries about product shelf life to confirm whether the product was in stock before the implementation of the smoking ban in Hong Kong. The seller replied: "We guarantee that what you buy is not second-hand goods. We order directly from the manufacturer and guarantee you the latest batch."

When asked about the origin and manufacturer of the product, the seller chose to avoid the important issues. Among Hong Kong consumers, there is still widespread prejudice against the quality control of "Made in China" products. In order to retain customers, sellers claim that all products currently circulating in Hong Kong are produced in the mainland. "If someone tells you that the product is not produced in the mainland, it must be lying to you."

"Is there a way to verify the authenticity?" 2FIRSTS asked.

The seller recommended LANAVAPE, the only brand among these e-cigarettes that provides security codes. It also called the brand a "big name" and very popular in Southeast Asia.# p#pagination title #e#

After payment, the seller invited 2FIRSTS to join the telegram group. There are more than 1000 members in the group, but words are banned and all posts come from group administrators. Among these posts, in addition to the latest arrival information that is regularly updated, there are also randomly sent cute expressions and celebrity gossip.

 After completing the purchase, 2FIRSTS was invited to a Hong Kong e-cigarette telegram group with more than 1300 members| Source: 2FIRSTS

In order to avoid legal risks, some e-cigarette sellers choose to register websites outside Hong Kong, such as a website where 2FIRSTS places orders. The website is said to be registered in Malaysia and claims that all goods are shipped outside Hong Kong, so any possible violation of Hong Kong laws has nothing to do with them. It is worth mentioning that during the investigation, 2FIRSTS found that although the seller claimed that "all goods were shipped outside Hong Kong," packages sent from "Malaysia" to buyers were still shipped from Hong Kong, which means that Hong Kong has a warehouse to store goods.

 Even if it is claimed that "all goods originate from outside Hong Kong", it can be seen from the logistics information that the shipment location is still Hong Kong| Screenshot of logistics platform

Famous brands can also be seen among the products listed on this websiteyueshi（RELX) and EBDESIGN (ELFBAR American products). For further inspection, 2FIRSTS ordered these two products separately.

covert transactions

In the e-cigarette transaction process, both buyers and sellers attach great importance to privacy, but they do not receive equal protection.

The fastest transaction was completed in half a day, and the entire purchase process was almost as smooth as ordering takeout.

2FIRSTS chose to transfer face-to-face at a subway station with a large number of people in Hong Kong, and even the freight was free. After paying the amount to your personal account through FPS (Hong Kong's popular real-time online transfer and payment service platform), you only need to make an appointment for a time period and meet with the delivery person at the agreed location. After the delivery man arrives, the buyer stops in the paying area. The delivery clerk will deliver the package to the buyer outside the subway gate, who does not even have to swipe the subway card.

 2FIRSTS makes an appointment at the MTR station where the delivery man delivers the package. 2FIRSTS staff were waiting outside the gate.| Source: 2FIRSTS

"If there is a quality problem, can I contact you?" 2FIRSTS asks the delivery person. The delivery man, who was in his early twenties, suggested that 2FIRSTS consult the customer service of the "WhatsApp account you chatted with before" because he was not familiar with the product and only charged a commission for delivery.

If buyers want to further increase the privacy of their shopping, they can also choose a more flexible delivery method. Some sellers can send orders to smart mailboxes across the city, allowing buyers to self-service pick up items 24 hours a day.

Some sellers hide their cards tightly. When 2FIRSTS tried to purchase iQOS, one seller said it would only accept cash on delivery to avoid leaving a transaction record or being "cheated by customs (phishing enforcement)."

 A Hong Kong seller insists on cash on delivery, reminding 2FIRSTS to be careful of "customs delivery snake or deception"| Source: 2FIRSTS

It's not just the transaction that sellers don't want to leave a mark. When 2FIRSTS placed an order on WhatsApp with a seller claiming to be a registered company in Malaysia, the other party turned on the automatic message deletion function to ensure that the message automatically disappeared from the chat history seven days after it was sent.

 In order to protect its privacy to the greatest extent possible, a seller set the instant chat account used to communicate with customers to "automatically disappear seven days after the message is sent." Accounts are also registered with Malaysia mobile phone number| Source: 2FIRSTS

However, business owners seem less concerned about customer privacy than their own privacy.

Depending on the privacy policies on the shopping website pages, the personal information they collect may be used for credit review or to process product and service requests and updates provided by partners on behalf of buyers, including but not limited to insurance and financial products. Once buyers create accounts and purchase products from sellers, they agree to these questionable terms by default, leaving a huge potential risk to personal privacy.# p#pagination title #e#

 If you want to buy e-cigarettes on this website, buyers must register an account and agree to a series of privacy terms. Some of them are not entirely reasonable. |Source: Screenshot of shopping website

A product that is difficult to distinguish between real and fake

Even if buyers complete all purchase steps carefully, there is no guarantee that the product delivered will meet expectations. Most e-cigarettes secretly circulated in Hong Kong's underground market have managed to circumvent basic quality controls.

During the investigation and purchase process of 2FIRSTS, only one batch of LANAVAPE products successfully passed the anti-counterfeiting code verification. After scanning the code, the landing page confirmed that the purchased product was produced by a manufacturer in Shenzhen. The seller said that "due to the ban imposed by the mainland, exports are not allowed" and said that the product was exported from the mainland and then entered Hong Kong from Southeast Asian countries.

 The only LANAVAPE that passes anti-counterfeiting verification| Source: 2FIRSTS

Information provided by other brands on sale is often untraceable. In most cases, even if you scan links and enter the verification page, the website itself is an isolated page full of exaggerated designs and a large number of invalid links. A poor spray print on an "EBDESIGN" product aroused 2FIRSTS suspicion when it was opened. After scanning the anti-counterfeiting code on the package, the carefully disguised verification page displays "The anti-counterfeiting code you queried is correct", but all links on the website cannot be clicked and it is a standard isolated page.

 Poor spray print on an "EBDESIGN" product aroused 2FIRSTS suspicion when opening the box| Source: 2FIRSTS

 The left picture shows the EBDESIGN official security code verification page; the right picture shows the verification page guided by the security code on the suspected ELFBAR replica purchased by 2FIRSTS.| Source: Network screenshot

This suspicious verification page (www.hnbzzp.com/uploads/images/20230711/verify.html src="https://www.vapejoin.com/file/upload/202312/08/120858801.png"/>  2FIRSTS manually re-entered the 18-digit security code provided by the purchased "EBDESIGN" product on the EBDESIGN official verification page, but this time it failed to pass the verification.| Source: Screenshot from EBDESIGN official website

"Joy Mirage" was one of the products purchased during the 2FIRSTS investigation. The product does not provide a means to distinguish between true and false. However, its packaging clearly states that the product is "not for sale".

 The box of the "Yuexie Mirage" purchased during the 2FIRSTS investigation is clearly marked with the words "Not for Sale and Special Supply"| Source: 2FIRSTS

In addition, there is no warning message engraved on the fuselage, which raises deeper doubts about its authenticity. This product was first launched in December 2020. However, with the entry into force of the new national standard, starting from October 1, 2022, all domestically solde-cigarette productsAll must include warning labels.

2FIRSTS also ordered the "Fluum" product with one more letter than the famous Flum. According to packaging information, the product is produced by a company called Disco (Dongguan) Electronic Technology Co., Ltd. The Guangdong-based manufacturer has registered 10 brand trademarks, with names and logos very similar to popular brands in foreign markets.

 Disco (Dongguan) Electronic Technology Co., Ltd., located in Dongguan, has 10 trademarks registered under its name, and its names and logo styles are similar to those of some mainstream brands.| Photo source: Aiqicha

The market has little choice and creates living space for low-profile inferior brands and even counterfeit products. A poorly regulated market leaves consumers unprotected. Smokers are forced to switch to low-end products with poor quality control as substitutes.

People who refuse to quit smoking #p#paginated title #e#

Laws outlaw transactions on paper, but have little impact on reducing actual demand.

During the 2FIRSTS survey, one of Hong Kong's largest music festivals, the three-day "Clockenflap", had just ended. You can meet more e-cigarette smokers here than anywhere else in Hong Kong.

There is a designated smoking area at the music festival site, and the use of cigarettes or e-cigarettes outside the smoking area is prohibited. But even in the crowded audience area at halftime, you could still smell a strong smell of smoke. You can often see a small group of people passing smoking equipment back and forth to connect with each other and kill time.

 On December 3, 2023, at a music festival held in Hong Kong, a woman was using an e-cigarette in an audience area other than the smoking area.| Source: 2FIRSTS

A female smoker surnamed Guo shared her experience with 2FIRSTS:"Music activities like this will more or less relax you. Given the smoking ban indoors and the fact that many colleagues dislike smoke, I usually smoke one outside the building (where I work). There are not many worries on this occasion."

When asked how to ensure nicotine supply, she said the first device she used was the iQOS iluma One, purchased in Japan in 2019. "I bought it at a duty-free shop in Japan for about 2, 500 yen (about HK $132)," she recalls. But if you want to buy in Hong Kong today, that's another story. During the survey, sellers contacted by 2FIRSTS in Hong Kong charged HK $1190 for the same product, almost nine times the purchase price of Miss Guo at that time.

The e-cigarette equipment currently used by Miss Guo costs HK$1300. She consumes about one a daythe cartridge, so the monthly nicotine expenditure is approximately HK$250. Still, she said that cigarettes are not a big expense for her, and she can maintain a "stable inventory" through online shopping.

"My dealer has set up a telegram group, and we never chat in the group. This group is just used to post some new news instantly." Miss Guo showed the group chat history to 2FIRSTS. There are about 400 members in the group, and the atmosphere looks very similar to the telegram group that 2FIRSTS joined during its last purchase.

Faced with the Hong Kong government's smoking ban, Miss Kwok and other group members are still reluctant to quit smoking. Lee Chi-gwong, director of the Hong Kong Christian Youth Night Service of the Hong Kong Federation of Youth Groups, said that since 2021, the service has interviewed about 100 young people who use e-cigarettes on the street, and only about 5% of them have expressed their willingness to quit smoking.

However, some former e-cigarette smokers have begun to use traditional cigarettes to ingest nicotine. A smoker surnamed Liang told 2FIRSTS that after the smoking ban was implemented, he started using traditional cigarettes instead of e-cigarettes because he was "not very good at shopping online" and "didn't want to make it too troublesome."

In February 2023, the Hong Kong government further increased tobacco taxes by 30%. The price of each pack of mainstream cigarettes rose to HK$74. Duty-not-paid cigarettes (commonly known as "cheap white cigarettes") have quietly gained popularity and become an affordable choice for price-conscious buyers like Mr. Liang.

Among duty-paid cigarettes sold in Hong Kong, the tar content per cigarette generally does not exceed 13 milligrams. According to surveys by local agencies, due to lack of quality control, the tar content of "cheap white cigarettes" per cigarette ranges from 30 mg to 50 mg, which exceeds the nicotine and carbon monoxide content of legal cigarettes and will greatly increase the risk of cancer.

High law enforcement costs

After the investigation, 2FIRSTS contacted Hong Kong Customs about the matter. Customs transferred 2FIRSTS to the Hong Kong Department of Health, saying that the Department of Health's Tobacco Control Office (the main enforcement unit of the Smoking Ordinance) will be responsible for handling e-cigarette-related issues.

2FIRSTS attempted to contact the Department of Health's Tobacco Control Office. The call was transferred to 1823. This is an answering center responsible for receiving complaints about all areas of government services. Even if a complainant wants to provide clues, he cannot report the case directly to office staff.

In May 2023, the Hong Kong Department of Health issued an announcement announcing law enforcement figures against alternative smoking products. In the first year after the Hong Kong smoking ban came into effect, the office received 386 referrals and 124 related complaints regarding the sale of alternative smoking products, but only 5 summonses were issued and no convictions were achieved in court.

 #p#Pagination Title #e#

Tang Shunliang, a practicing lawyer with 15 years of experience in the tobacco industry, told 2FIRSTS that investigating online trading of e-cigarettes can be very difficult. He pointed out that confirming whether a person has committed a sale and determining the identity of the offender is difficult in legal practice. It is difficult for law enforcement officials to follow up, let alone reach a final verdict.

The Department of Health also admitted in this report that under the category of "sale", about 45% of the cases involved did not have sufficient information or evidence for further follow-up, or could not be prosecuted due to insufficient evidence after consulting the Department of Justice.

In addition, Lawyer Tang also pointed out that brands may also face penalties if they acquiesce in products entering a market such as Hong Kong that is prohibited by law. In other words, if the seller encountered during the 2FIRSTS investigation is telling the truth, manufacturers who receive orders directly from Hong Kong sellers are likely to encounter trouble.

Hong Kong's comprehensive ban on alternative tobacco products has taken six years from its proposal to its implementation. When the ban settles in 2021, it can be said to be "what everyone expects." However, as formal products withdraw from the market in a law-abiding manner, the persistent supply and demand gap allows speculators to take advantage of the situation, leaving local consumers to bear higher-priced and lower-quality products from underground markets. Still active in the underground market in Hong Kong, in this investigation conducted by 2FIRSTS, a situation of rampant counterfeit goods and runaway prices. Consumers who have turned to "white label cigarettes" due to economic pressure have also boosted the market for illicit cigarettes and non-duty-paid cigarettes, further causing considerable tax losses to the Hong Kong government.

One and a half years after the e-cigarette ban came into effect, the contrast between the original intention of tobacco control and many realities is worthy of consideration by all parties. In addition to a one-size-fits-all ban, will there be better thinking and models to achieve further win-win results for multiple interests such as public health, consumer rights, and government taxation?