Tag: China

  • Pulling its Punches

    Pulling its Punches

    Photo: Christoph Burgstedt

    China, the world’s largest supplier of e-cigarettes, has failed to take full advantage of the risk reduction opportunities offered by vapes.

    By George Gay

    An Aug. 27 heading on a story in Singapore’s The Straits Times proclaimed, “300 million and counting: Why China just can’t kick the cigarette habit.” Newspaper headings are normally not written by the writers of stories and are aimed at grabbing the reader’s attention, but they should accurately reflect the story. In this case, however, there is a disconnect because whereas the story credits China with having an estimated 300 million smokers, nowhere does it say that number is rising, which I would expect given that the heading adds “and counting.” Indeed, the story does not claim that volume consumption is heading up, saying rather that such figures are not published.

    Another thing that immediately struck me about the heading was the use of the word “habit” rather than “addiction,” which seemed to suggest two things. One was that the story was not going to follow the course of many stories in other countries where the failure to end or significantly curtail cigarette smoking is put down to an inability on the part of authorities to force/encourage smokers to break their addiction despite their using methods that include everything from making cigarettes unaffordable through requiring manufacturers to degrade these products and insulting smokers in respect of their personal hygiene, to, if those smokers are lucky, encouraging the use of reduced-risk products in place of cigarettes. This story, the heading promised, was going to be about other issues.

    At the same time, the heading seems to question whether kicking smoking is a goal worth pursuing. After all, while the usual definition of addiction involves a compulsion that causes harm to the person indulging in the addictive activity, that is not the case in respect of a habit. After all, somebody might be in the habit of repeatedly looking at their mobile phone while supposedly out enjoying the company of a friend over coffee, which, of itself, is unlikely to cause them direct harm, though they might be in danger from the reaction of a sensitive but increasingly irritated friend sitting across the table, at least in polite societies.

    But hang on, the mood changes in the first sentence of the story, which reports that 20 years after adopting the World Health Organization Framework Convention on Tobacco Control [FCTC], “China is still addicted [my emphasis] to cigarettes.” Overall, the word “habit” occurs four times in the story and the word “addicted” twice. This might seem like a small point, but when the subject is what many people believe is the most preventable cause of disease and death worldwide, a reader should be able to expect that basic issues have been properly considered before going to print. English and, I guess, most other languages have what I would call vague words such as “habit” and “addiction,” which can be useful but which need to be used with caution, and clearly not where such vagueness can lead to confusion.

    I am not saying that it is not valid to use “habit” and “addiction” in reference to the same activity, but at least some attempt should be made to explain the distinction and to use the words, not as simple synonyms, but appropriately each time. I might be happy, for instance, to entertain the idea that for some people, smoking is an addiction that is difficult to break while for others it is a habit they can pick up now and again without becoming addicted, but I cannot accept that for the same individual, smoking can be both a habit and an addiction. 

    Muddled Thinking

    I worry that such issues are not considered properly, not only in the case of the The Straits Times but in stories published around the world every day of the week, something that leads to misunderstandings and pressure being put on politicians to enact unhelpful legislation. The public is served up stories that are beset with muddled thinking. We are told, for instance, in The Straits Times story that despite years of anti-smoking campaigning in China, people continue to smoke partly because cigarettes are cheap, there is a lack of public education, and Big Tobacco—presumably meaning the State Tobacco Monopoly Administration (STMA) and the China National Tobacco Corporation—is protected. But how is it possible to reconcile the claims that there have been years of anti-smoking campaigning when cigarettes are still cheap? The WHO and most other tobacco control bodies say that tax-induced cigarette price increases comprise the most important factor in getting smokers to quit. And there surely cannot have been years of anti-smoking campaigning without public education. I ask you, to whom was this campaigning directed?

    I am not saying that the claims are irreconcilable, but they do require some explanation. Is the reason that the extensive anti-tobacco campaigning has been unsuccessful down to the fact that China has followed FCTC policies that, overall, do not work, or that do not work in China, or is it the case that China, either intentionally or unintentionally, has not applied them properly?

    In fact, the story suggests that a major reason why anti-tobacco campaigning has had limited success is down to the power of the STMA and the pushback that it employs when anti-smoking policies are put forward, at least outside the biggest cities. I am happy to accept that this happens, but it does raise a question: Why did China sign up to the FCTC when it must have been aware that implementation of its policies was going to be resisted by a powerful state organization? The answer to the first part of the question, why did it sign up to the FCTC, probably comes within the wide-ranging category of “it seemed like a good idea at the time”—perhaps because at that time, China wanted to be seen as part of the international order, or maybe it was for some other, less obvious reason.

    The answer to the second part of the question is possibly more interesting. Could it be that China does not buy into all the negative publicity that surrounds tobacco? In many other parts of the world, the perceived wisdom is that tobacco is overall economically negative, but is this the case in China? Isn’t China, along, perhaps, to a lesser extent, with Brazil, something of a special case because its tobacco industry is highly economically active, from the tobacco fields, through manufacturing, to retail stores and throughout all the supporting industries and businesses that these activities imply? Frankly, it would be odd if China took the same attitude to tobacco as, for instance, the U.K., where there is no commercial tobacco growing and virtually no tobacco manufacturing. Differences in the healthcare systems of the two nations might also mean that economic calculations come up with different results.

    Could it be, also, that China does not buy into the tobacco health debate in the same way that many other countries do? In a world plagued by pollution, perhaps it finds it hard to accept the death toll normally attributed to tobacco smoking alone, as I do. I can think of other reasons why China might take a different view of cigarette consumption to that taken by some other countries, but I don’t want to encourage a sack full of letters of outrage, so I shall keep them to myself.

    A Missed Opportunity

    I am not saying that such thinking comes into play in China. In fact, I would be surprised if it does because, strangely, China seems to forge a tobacco path that is not that much different to the paths forged elsewhere and one where, certainly in places, it is aligned with the WHO’s de facto policies.

    Take reduced-risk products, for instance. One would have thought that in China, vapes would have comprised a powerful tool for allowing smokers to transition away from cigarettes—perhaps a more powerful tool even than it is in many other countries. I say this because The Straits Times story makes the point that smoking plugs into long-established social mores in China, one of which means that cigarettes are considered appropriate business gifts. Elegantly designed vapes would surely make acceptable—perhaps even better—alternatives in this regard and could be made to reflect the often-elegant, iconic branding of cigarettes.

    But China seems not to have taken full advantage of what vapes could offer it, which is especially odd given that, I assume, it is the world’s leading supplier of vaping devices. Rather, it seems to have fallen for the idea that flavored vapes, the vapes most effective in encouraging smokers to switch away from cigarettes, should be banned because they are attractive to young people.

    To me, this is the same sort of muddled thinking that crops up time and again in other countries. But at least it possibly provides an answer to the question implied by The Straits Times. Perhaps China will be able one day to break its cigarette “habit,” but, with one hand tied behind its back, it is going to take an awfully long time.

    But then the reporter from Singapore should understand this. Singapore, I think, once proclaimed that it would quit smoking by 2000, and that was in the days when “quit” meant just that, not reduce the smoking rate to 5 percent or thereabouts. Did it make that deadline? No; a quarter of a century later, it is still a work in progress, and it is likely to be so for many years to come. It likes to operate with two hands tied behind its back—it bans vaping outright.

  • Death Sentence for Former STMA Leader

    Death Sentence for Former STMA Leader

    Image: Wit

    The Intermediate People’s Court of Dalian has sentenced He Zehua, former deputy chief of China’s State Tobacco Monopoly Administration, to death for taking bribes, reports Xinhua.

    The sentence comes with a two-year reprieve, after which the penalty could be commuted to life imprisonment with no possibility of parole or further commutation.

    He was also deprived of his political rights for life, all of his personal property was confiscated, and his illegal gains were turned over to the state treasury. 

    The court found that between 1998 and 2023, He took undue advantage of his various positions, including those as a senior official at local tobacco monopoly agencies, as well as the State Tobacco Monopoly Administration deputy chief, to illegally assist his connections in business operations, project contracting and personnel promotion and recruitment

    In return, He accepted more than RMB943 million ($132.6 million) in money and gifts.

    In its ruling, the court considered the large amounts of money involved and He’s cooperation with the investigators and in returning the illegal gains, which have been recovered in full.

    Several STMA leaders are under investigation for corruption. Earlier this month, authorities arrested former STMA head Ling Chengxing and announced a probe into the activities of STMA Deputy Head Xu Ying.

  • Hong Kong Crackdown Nets $72 Million in Illegal Smokes

    Hong Kong Crackdown Nets $72 Million in Illegal Smokes

    Credit: Timothy S. Donahue

    Hong Kong customs officers seized untaxed cigarettes worth HK563 million ($72.1 million) during a nearly three-month illegal trade crackdown, coinciding with a tobacco tax increase in February.

    Assistant Commissioner Barry Lai Chi-wing said officers clamped down on the post-pandemic trend of smuggling the contraband into the city in small portions from February 19 to May 14 in an operation code-named “Tempest.”

    Part of the operation also took place after Financial Secretary Paul Chan Mo-po announced in this year’s budget that the tobacco tax would be raised by 80 HK cents per stick with immediate effect, according to media reports.

    The increase raised the average cost of a pack of 20 cigarettes by HK$16 to more than HK$90. A pack costs HK$19 to HK$38 on the black market.

    During the operation, 4,347 people, aged 15 to 89, were arrested. Officers confiscated 139 million sticks of suspected illicit cigarettes, 105kg of cigars, and around 1,525kg of manufactured tobacco products, which had a market value of HK625 million. The tax take would have been about HK454 million.

  • China Tightens Smoking Restrictions

    China Tightens Smoking Restrictions

    Photo: Taco Tuinstra

    China is ramping up its efforts to control smoking. In 2023, 44 cities introduced or revised regulations, bringing the total number of cities with relevant regulations to 254 nationwide, according to national health authorities.

    According to the Xinhua News Agency, 24 regions at the provincial level in China have rolled out smoking regulations, and the proportion of the population protected by comprehensive smoke-free regulations is continuing to increase.

    Experts from the National Health Commission (NHC) released the data on Saturday ahead of World No Tobacco Day on May 31.

    Meanwhile, as China pledges to protect 80 percent of its population with smoke-free laws by 2030, experts on tobacco control on Sunday called for the country to introduce a national smoking control regulation as soon as possible.

    Smoking control, including preventing smoking and encouraging smokers to quit, is a viable approach for both population-wide disease prevention and individual healthcare, according to Wang Lu, a health expert from the NHC.

    Curbing smoking doesn’t aim to deprive people of their right to smoke, but to free people from being hurt by secondhand fumes, Zhang Jianshu, a senior expert at the Chinese Association of Tobacco Control, told the Global Times on Sunday.

  • China Tobacco Deputy Head Investigated

    China Tobacco Deputy Head Investigated

    Photo: RomanR

    Chinese authorities are investigating Xu Ying, deputy head of China’s State Tobacco Monopoly Administration, for suspected “severe violations of disciplines and laws,” reports China Daily, citing the Communist Party’s Central Commission for Discipline Inspection and the National Commission of Supervision.

    Xu started his career in the administration in 1988. In March 2014, he became the deputy head of the administration.

    Earlier this month, law enforcement officers arrested former STMA head Ling Chengxing on suspicion of accepting bribes and abusing power.

  • Ex-STMA Chief Arrested

    Ex-STMA Chief Arrested

    Photo: andriano_cz

    Ling Chengxing, former head of China’s State Tobacco Monopoly Administration, has been arrested on suspicion of accepting bribes and abusing power, reports China Daily, citing a May 7 statement by the Supreme People’s Procuratorate.

    Among other transgressions, Ling reportedly accepted banquets, sought benefits for relatives in employment and school admissions and secured benefits for others in the cadres selection and appointment.

    Ling also accepted gifts, sought special treatment in transportation and medical care for his relatives and used his position to benefit others in business operations, employee hiring and job promotions.

    In return, he accepted large amounts of property, according to the allegations.

    Originally from Jiangxi province, Ling joined the Communist Party of China in 1977 and began working in 1980. He held positions, including executive vice governor of the province.

    Ling was the head of China Tobacco from May 2013 until his retirement in July 2018. He was placed under investigation in October 2023.

    In April, Ling was expelled from the Communist Party of China for violating the party’s disciplines and engaging in duty-related illegalities.

  • Feeling the Squeeze

    Feeling the Squeeze

    Photo: Taco Tuinstra

    A crackdown on vapes has pushed some Chinese companies out of business and encouraged others to prioritize international sales.

    By Stefanie Rossel

    China is the world’s center of e-cigarette production, accounting for approximately 90 percent of vapor hardware. Between 2022 and 2023, China’s vape product exports increased 12 percent, according to ECigIntelligence. Domestically, however, the vape category seems condemned to disappear, although with over 350 million smokers and an estimated annual smoking-related death rate of more than a million, the country’s potential for reduced-risk products is huge. This year, the country’s vaping population stands at 3.5 million, ECigIntelligence estimates.

    The rise of China’s internal vape market was short-lived. Initially, there was little awareness of e-cigarettes in the country. In 2013, domestic vape sales surpassed $13.75 million, and the sector continued to grow rapidly until November 2021, when China’s State Tobacco Monopoly Administration (STMA), the administrative arm of China National Tobacco Corp., which with around 2.5 trillion cigarettes a year is the world’s largest producer, asserted its authority over the vape industry.

    In November 2022, the Electronic Cigarette Management Measures (ECMM) took effect, putting substantial restraints on manufacturers catering to the domestic market. The measures regulate the production, sale, marketing and import and export of all vape products, including cartridges, vape sets and products sold as a combination of cartridges and sets, but not heated-tobacco products, which will be regulated as traditional cigarettes.

    It is worth noting that the ECMM legalized an industry whose legal status was previously dubious. Whether the legal space it gives vape manufacturers is enough to keep their domestic business viable is questionable, however; none of the companies approached was prepared to comment on the record.

    Among other requirements, the new regulations prohibit the sale of e-cigarettes with flavors other than tobacco on the domestic market. The document also sets a wide range of technical standards, including permitted ingredients and additives, nicotine levels, testing and safety standards and accreditation. Manufacturers, wholesalers and retailers of vape products are required to obtain a license from the STMA and are obliged to process all transactions through an e-cigarette transaction platform overseen by the monopoly. Other measures include prohibition of vape product advertising and a ban on e-cigarette sales through vending machines or any other self-service mechanism.

    Shortly after the ECMM entered into force, e-cigarettes became subject to a consumption tax. The rate for the production and import of e-cigarettes is 36 percent while the rate for wholesale is 11 percent.

    Sharp Decline

    Mercedes Gorgni

    The ECMM follows a tightening of other rules, such as the decision at the end of 2019 to ban the online sale and advertising of e-cigarettes in response to concerns about underage vaping. In April 2022, the STMA released a new set of trial policy measures, which sought to control the structure of the e-cigarette industry by regulating where production capacity is concentrated and dictating the distribution of vape product retail outlets.

    One-and-a-half years after their introduction, the rules have taken a toll on domestic vape sales. “The market uninterruptedly grew from 2017 up to 2020 when the online ban of e-cigarette sales dampened the growth. However, the increasing popularity of prefilled pods and the increase in prices still generated a 26 percent growth rate compared with 2019 despite the setback in accessibility,” says Mercedes Gorgni, China analyst at ECigIntelligence.

    “The peak of the market was reached in 2021 at an estimated RMB19.7 billion ($2.7 billion) with 7 million adult vape users. Regulations in 2022 resulted in a sharp decline in the domestic market. The market value is estimated to have shrunk to RMB9.3 billion in 2023 and 3.8 million users due to restricted flavors, tax-induced price increase and a declining number of retailers offering products.”

    The shift in regulations, Gorgni says, posed a challenge for smaller and medium-sized companies within the industry, as adapting became increasingly difficult. “On the other hand, leading firms such as RELX leveraged their superior capabilities and resources to meet these stringent government demands, securing approval by the first half of 2022. RELX was—and still is—the leading brand in China. During 2021–2022, net revenue of Fog Core Technology, RELX’s holding company, saw the impact of the new regulations, dropping from RMB8.5 billion to RMB5.3 billion, with a further decline in 2023 when revenues fell to RMB1.5 billion.”

    The new regulatory environment, which favors larger companies capable of meeting the complex technical requirements, has incentivized domestic brands toward seeking opportunities beyond national borders, Gorgni explains. “It’s only natural that leading domestic brands like RELX, Yooz and Moti are now also pivoting their focus toward international markets as a strategic move to diversify their product offerings and mitigate investment risks. At the same time, several Chinese manufacturers are relocating to Southeast Asian countries like Indonesia and Malaysia, making the most of the benefits of lower labor costs and more favorable trade tariffs, thereby enhancing their competitive edge in the global market.”

    More recently, RELX’s market share has declined as other, mostly compatible, pod brands are widely sold informally, mainly via online platforms such as WeChat, Douyin or Xiaohongshu, in flavors other than tobacco and flavored disposables. “The illegal or informal market has certainly expanded, especially due to the availability of flavored disposable vapes sold online at significantly lower prices than on vape or retail stores,” says Gorgni.

    China’s illicit vape market is significant yet challenging to accurately quantify. With the government intensifying its crackdown on e-cigarettes, physical sales have become increasingly difficult. “However, the online black market is flourishing, offering popular models such as the ‘bubble teacup’ or other designs featuring cartoons, typically coming in sweet flavors and large capacities,” says Gorgni. “Moreover, pods designed to be compatible with RELX devices, indistinguishable in design and available in over 20 flavors from various brands like VS, Yeeg and Zgar, can easily be purchased with just a conversation on WeChat. These vapes are then discreetly shipped to buyers through common mail, a practice that has become widespread with the rise of e-commerce platforms like Taobao. Some vape shops surveyed by ECigIntelligence have also started adapting to this situation, acknowledging that a portion of their customer base prefers to have their purchases mailed to them given the inconvenience of visiting physical stores.”

    Focus on Exports

    Offline enforcement of e-cigarette sales regulations is stringent, according to Gorgni. “Conversations with the Electronic Cigarette Chamber of Commerce, which represents over 650 manufacturers in Shenzhen, have revealed there will be an increase in government crackdowns over the next four months. This enhanced enforcement aims to limit the growing illegal market for vaping products in China,” she says.

    Many retailers have already gone out of business following implementation of the ECMM. Prior to the regulations, the market was flooded with a vast number of specialist and generic e-cigarette retail points, with approximately 190,000 retail stores and 47,500 specialist vape retailers operating across the country, according to Gorgni. “After the new regulations, which required retailers to get authorization to sell e-cigarettes, took effect, the number of specialist retail points plunged to under 15,000, signaling a significant shift in the industry landscape,” she says.

    “Retail stores can now apply either for a license to sell e-cigarettes or traditional tobacco, incentivizing retail chains and supermarkets to play safe and possibly to maintain combustible cigarette sales. In 2022, a survey carried by ECigIntelligence showed that more than 70 percent of legal e-cigarette retailers faced financial challenges, with less than 10 percent remaining profitable.”

    Online, enforcing the new rules proves more challenging. “Sellers skillfully navigate the digital landscape by continuously opening new accounts, using alternative terms in posts and comments to avoid direct references to e-cigarettes, and engaging with potential customers through comments on popular videos and posts,” says Gorgni. “This method of operating under the radar complicates efforts to monitor and control the online sale of e-cigarettes, underscoring the complexities involved in regulating the digital aspect of the vaping market.”

    The regulatory measures were introduced in accordance with the country’s “Healthy China 2030 Plan,” which was released in 2016 and calls for a comprehensive strengthening of tobacco control to reduce the smoking rate to 20 percent among adults over the age of 15 by 2030. So far, progress remains slow. According to Gorgni, more than 25 percent of Chinese aged 18 and over were smokers in 2022, with men making up more than half of the smoking population. “With the focus on regulating e-cigarettes more strictly and limiting the availability of flavored vapes, consumers who previously turned to vaping as an alternative to smoking may revert to traditional cigarettes. It is expected that smoking rates may stabilize or even increase slightly,” she says.

    With the increasing focus on exports and the growth of the global vape market, Chinese vape manufacturers will likely continue to prioritize overseas markets due to the challenges and restrictions in their own domestic market. “The export volume of disposable vapes has been rapidly increasing, proving a shift toward international markets,” says Gorgni. “Enforcement being done by governments, like the U.S., is vital to avoid their population accessing low-quality vapes and eventually suffering the consequences. The STMA is aware of this situation and has made its regulations accordingly. Western governments should make use of this and improve communication with its Chinese counterparts to curb contraband practices and protect their own population.”

  • Suppliers Updated on New U.K. Landscape

    Suppliers Updated on New U.K. Landscape

    John Dunne (Photo: UKVIA)

    John Dunne, director general of the U.K. Vaping Industry Association (UKVIA), traveled to China to educate vape companies on Britain’s changing regulatory landscape.

    The U.K. will ban disposable e-cigarettes from April next year, and the Tobacco and Vapes Bill, which is currently working its way through Parliament, seeks to give ministers unprecedented powers to ban flavors and decide how vapes are packaged and sold.

    Speaking at the headquarters of the Electronic Cigarette Industry Committee of the China Electronics Chamber of Commerce (ECCC), Dunne shared his expert knowledge to conduct on-site compliance training to some of the world’s leading vape companies, including Elf Bar, SKE, ELUX, HQD, Hangsen, Greensound, Aspire, ICCPP, RELX, ALD, Uwell and Zinwi.

    Describing the U.K. regulatory landscape as “complex and changeable,” Dunne said issues such as the protection of minors, battery recycling and environmental protection were high on the agenda of politicians, regulators and the general public.

    “It is absolutely vital that all companies operating in the U.K. are fully compliant with all local laws and work at all times to show the industry in the best possible light,” he said in a statement.

    Dunne said the UKVIA would continue to work with the ECCC to help members comply with current requirements, prepare for future regulatory change and to foster global cooperation to promote the development and prosperity of the global vaping industry.

  • Former STMA Head Expelled from Party

    Former STMA Head Expelled from Party

    Photo: Oleg

    The Communist Party of China has expelled Ling Chengxing, former head of the State Tobacco Monopoly Administration, reports The China Daily, citing an April 22 announcement by the country’s top anti-graft watchdogs.

    According to the Communist Party of China Central Commission for Discipline Inspection and the National Commission of Supervision, Ling violated the party’s disciplines, committed duty-related illegalities and is suspected of bribery and abuse of authority.

    Among other transgressions, Ling accepted banquets, sought benefits for relatives in employment and school admissions, and secured benefits for others in the cadres selection and appointment, the agency said.

    Liang also accepted gifts, sought special treatment in transportation and medical care for his relatives and used his position to benefit others in business operations, employee hiring and job promotions.

    In return he accepted large amounts of property, according to the allegations.

    Originally from Jiangxi province, Ling joined the Party in 1977 and began working in 1980. He held positions, including executive vice-governor of the province.

    Ling was the head of China Tobacco from May 2013 until his retirement in July 2018. He was placed under investigation in October 2023.

  • Malawi Growers Urged to Tap into China

    Malawi Growers Urged to Tap into China

    Photo: Taco Tuinstra

    Malawi authorities are urging farmers to tap into the Chinese tobacco and soybeans markets, reports Xinhua.

    During the Agriculture Investment Conference on April 19 in Lilongwe, Alfred Mwenifumbo, controller of agriculture, extension and technical services, said sales to China would boost foreign exchange earnings and strengthen the economy.

    Dominated by smallholder growers, Malawi’s tobacco industry could benefit greatly from the Chinese market, Mwenifumbo said. He encouraged large-scale farmers to join the industry to improve the quality of Malawian tobacco and compete with other countries.

    Mwenifumbo suggested that Malawi could increase its forex earnings by up to 30 times if more commercial farmers with large landholdings entered the industry and accessed the Chinese market, noting that existing investors are ready to support local farmers in expanding their operations to seize market opportunities.

    The conference also discussed the investment potential in crops such as macadamia nuts, groundnuts, wheat and maize, highlighting their significant returns.

    Tobacco Reporter highlighted Malawi’s efforts to diverse its economy in its June 2023 issue (see “Broadening the Base”).