Tag: China

Gathering Clouds

Photo: Comugnero Silvana
How tobacco rules would change China’s vapor business
TR Staff Report
On March 22, 2021, China’s Ministry of Industry and Information Technology published a draft of regulations that would subject vapor products to tobacco rules. The news caused share prices of leading Chinese e-cigarette companies, such as RLX Technology and Smoore International, to plunge from the stratospheric heights they had reached prior to the announcement.
The prospect of operating under the umbrella of China’s State Tobacco Monopoly (STMA) has clearly frightened investors, but what exactly would it mean for the vapor business to be governed by China’s tobacco rules? Bullet Finance, a Chinese-language business publication, recently interviewed Miao Wei (not his real name), a former officer in charge of raw materials at the China National Tobacco Corp (CNTC) who now heads an e-cigarette company.
With some 350 million smokers, China is the world’s largest tobacco market and the world’s largest potential market for vapor products. In a prospectus accompanying its initial public offer in January on the New York Stock Exchange, RLX Technology reckoned that vaping products have a penetration rate of only 1.2 percent in China compared with 32.4 percent in the U.S. Those numbers suggest considerable opportunity for growth. If Chinese smokers embrace e-cigarettes in meaningful numbers, the vapor business should thrive.
The tobacco business is a formidable source of income for the state, however. In 2018, it contributed an estimated 5.45 percent of the country’s tax revenue. The government is unlikely to sit by idly as its cash cow deflates. While officials cited health as a reason to regulate vapor products like tobacco, the desire to sustain revenue is likely to be an equally strong motivation.

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Understanding the System
To appreciate the potential impact of tobacco-style regulations, vapor executives must understand how the Chinese tobacco industry works, Miao told Bullet Finance. Unlike the vapor business, which comprises numerous private companies competing for business, China’s tobacco sector relies on central planning and coordination. Individual manufacturers have little autonomy under this system.
From the cultivation of leaf tobacco to the retail sale of finished product, China’s state monopoly guides all tobacco companies’ actions. Prior to the tobacco growing season, the CNTC determines planting areas, establishes production targets and specifies the desired leaf grades. Once the crop has been grown, the CNTC purchases tobacco at set prices. Likewise, the CNTC is heavily involved in the development, selection and procurement of raw materials, such as filters, paper and packaging.
Significantly, sales and manufacturing functions are split between different entities under China’s tobacco monopoly. Cigarette manufacturers merely fulfill production targets set by the CNTC, which then purchases the products at set prices. The CNTC handles sales to retailers, who must be licensed by the monopoly to carry cigarettes. The CNTC determines how many cigarettes they receive, how much inventory they may carry and at what prices they should sell, which means the monopoly also specifies the retailer’s profit margin.

Individual cigarette manufacturers have little autonomy under China’s centrally guided tobacco system.
(Photo: Taco Tuinstra)
Current Rules
Unlikely the tobacco industry, the vapor sector has historically been lightly regulated in China, perhaps because of the business’ relative youth and small size. Most hardware and e-liquids produced there are exported. The Shenzhen region supplies more than 90 percent of the world’s vapor products, and China has presumably been happy with the positive trade balance.
Vaping products in China are not considered tobacco products like they are in Europe and the United States. Instead, e-cigarettes are treated as consumer goods. In the absence of heavy restrictions, the vapor sector has boomed. After the invention of the modern e-cigarette by a Chinese pharmacist, the country has spawned some of the world’s most valuable vapor companies.
Like RLX Technology, most Chinese vapor companies are light on assets. They design products, register trademarks and handle sales. Production and raw materials procurement are typically outsourced to foundry factories, such as Smoore International. This keeps assets low and minimizes investments. Vertically integrated companies that handle all aspects of the vapor business, such as Boulder International, are rare in China, according to the Bullet Finance article.
While many of these firms manufacture for export, an increasing number is keen to serve the budding domestic vapor market. In November 2019, however, the Chinese government prohibited the online sales of vapor products, citing concern about youth initiation. Remarkably, the vapor business continued to flourish in the wake of the crackdown, with companies boosting online sales to foreign customers and shifting domestic sales to brick-and-mortar stores. In January 2020, RLX Technology pledged to invest more than cny500 million ($77.35 million) over the three years to open 10,000 outlets in China. Boulder International opened more new Chinese vape stores in the first quarter of 2021 than it did in all of 2020, according to Bullet Finance, raising its store count above 2,000.

Under a tobacco framework, the CTNC would likely designate and closely monitor suppliers of raw materials.
(Photo: Smoore International)
Potential Implications for E-cigarettes
Integrating e-cigarettes into the tobacco regulatory framework would change China’s vapor industry beyond recognition, according to Miao. The CTNC would designate and closely monitor suppliers of raw materials such as nicotine liquids, salt and heating coils. This would standardize vapor companies’ procurement procedures of raw materials.
Because the CNTC handles tobacco research and development, it would likely do the same for vapor products. Instead of multiple private players competing to produce technical breakthroughs, product development would depend on the efforts of a single state-run entity.
A separation of production and marketing functions would force vapor companies to choose what part of the business to specialize in—product design, R&D or manufacturing, for example. The most lucrative part—sales—would be off-limits, however, as that area is reserved for the CNTC under the monopoly system. Many companies would be relegated to contract manufacturers, a big change for some of the leading e-cigarettes firms whose business has been built on heavy marketing and few assets. A company like Smoore, however, would already meet the definition of “manufacturer” under the cigarette monopoly system, according to Miao.

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In managing the vapor business, the CNTC would also be considering its role as a generator of tax income. Decisions about e-cigarette volumes and pricing would in part be determined by how these variables affect the targeted government revenue. That means it will be difficult to predict the volume and value of e-cigarettes each year and whether the price of vapor products will be higher or lower than that of cigarettes.
With CNTC setting profit rates, vapor companies are unlikely to achieve the dizzying margins that they recorded as private entities—a prospect that explains the steep drop in vapor stocks following the Ministry of Industry and Information Technology’s March 22 announcement.
The draft legislation reportedly faces strong opposition not only from the vapor business but also from public health advocates. The Beijing Tobacco Control Association noted that the STMA has historically failed to protect people against the risks of smoking, saying that the monopoly was “essentially performing the corporate functions of a tobacco corporation.”
Some see positives in stronger industry oversight, however. According to analyst Xiao Yue, who was also quoted by Bullet Finance, the rules could help tackle the problem of false advertisements in the sector and better protect the rights of consumers.
The comment period ended April 22. China’s State Council has not indicated when it will decide on the proposed legislation.
With thanks to Amei Zhang, China analyst at TMA
June 1, 2021
Report Explores China’s Tobacco-Heating Market

Photo: David Mark from Pixabay
Research and Markets has published a new report on the world’s largest potential market for heat-not-burn (HnB) products—China.
The report provides an overview of China National Tobacco Corp. (CNTC) subsidiaries’ HnB marketing activities from 2017 to 2020.
The report reviews all HnB products that were officially released in domestic and foreign markets as well as cooperation ties in the Chinese HnB market.
China Tobacco has a market of 300 million smokers with a significant part being active HnB users. The domestic HnB sector is dominated by CNTC. It has launched HnB products in Sichuan, Yunnan, Guangdong, Anhui, Hubei, Heilongjiang and other provinces and has been actively engaged in overseas markets. CNTC HnB brands are presented in many foreign markets, mostly in Asian countries and eastern Europe.
Most HnB devices are promoted with dedicated consumables. HnB devices are either produced at facilities of CNTC subsidiaries or are OEM versions developed by third-party manufacturers. The CNTC subsidiaries with the largest number of HnB devices in the domestic market are based in Sichuan, Yunnan and Guangdong.
The report includes a brief review of HnB electronic devices produced in cooperation with major Chinese hardware manufacturers. There is also a brief description of companies engaged in the Chinese HnB market, and a complete list of HnB products with release dates and corresponding references in domestic and foreign markets, a map of presence of CNTC HnB brands in foreign markets and a timeline of CNTC HnB products by release date.
April 21, 2021
China Rising

Photo: Meccasky | Dreamstime
China’s vapor market has been growing rapidly from a small base. How it will evolve from here depends largely on the government.
By Timothy S. Donahue
There are 350 million smokers in China. The country consumes an estimated 1 trillion cigarettes per year. As the largest cigarette market in the world, it would make sense for China to embrace vapor products as a less risky alternative to combustible tobacco. However, with a state-run tobacco monopoly and billions of dollars of taxes at stake, industry experts say the Chinese vapor market is complicated and slow to implement regulations.
Despite impressive growth, China’s vapor market is still insignificant compared to its tobacco market. As of the end of 2019, an estimated 7.4 million people in China were regular e-cigarette users, according to Cloris Li, a spokesperson for Smoore International, parent to FEELM and the Vaporesso brand. “That means the electronic cigarette industry in China can still potentially convert a large number of smokers,” said Li. “Considering China’s status as the biggest tobacco market, it has enormous potential to continue the current rapid growth rate. In 2018, Chinese e-cigarettes and auxiliary products had a market size of CNY5.52 billion [$848.38 million] and it is predicted to grow more than double to CNY11.28 billion by 2022.”
Vaping products in China are not considered tobacco products like they are in Europe and the United States. Instead, e-cigarettes are considered a consumer goods product. During the E-Vapor and Tobacco Law Virtual Symposium, sponsored by the law firm of Keller and Heckman, two industry experts discussed the current vaping and tobacco market in China. One speaker noted that because e-cigarettes do not fall under the definition of tobacco, as defined under the country’s monopoly laws, China has yet to implement any major restrictions on vapor products.

China, where the modern e-cigarette was invented, has become the manufacturing hub of the fast-growing global vapor industry. (Photo: Timothy Donahue)
“When looking at the regulation as it relates to e-cigarettes in China, we are seeing what I would classify as slow development,” the speaker said. “On a national level, [there are] no mandatory laws or regulations as it relates to e-cigarettes[-related] or e-tobacco-related products. That may change at some point; we don’t know. But what we do know is that it does not fall under the definition of tobacco at the present time.”
With little regulatory guidance, China’s vapor market has been booming both in terms of domestic consumption and manufacturing exports. China, where the modern e-cigarette was invented, has become the manufacturing hub of the fast-growing global vapor industry. This has led to the rise of several major corporations, including the world’s most valuable vapor company, Smoore International. When Smoore went public in mid-2020, its stock grew by nearly 150 percent on its opening day of trading on the Hong Kong Exchange.
The value of Chinese e-cigarette maker RLX Technology, parent to the RELX brand, jumped 146 percent during its trading debut in January 2021 after raising $1.4 billion in its U.S. initial public offering, the first major U.S. listing this year by a China-based company. In its prospectus, RLX stated that vaping products only have a 1.2 percent penetration rate in China compared with 32.4 percent in the U.S. The Electronic Cigarette Industry Committee estimated China’s 2020 e-cigarette sales at CNY14.5 billion, an increase of 30 percent from 2019 (CNY11.2 billion). By comparison, the U.S. e-cigarette market in 2019 was worth $5.34 billion and is expected to reach $6.50 billion in 2020, according to Grandview Research.

When Smoore International went public on the Hong Kong Exchange in mid-2020, its stock grew by nearly 150 percent on the first trading day. (Photo: Smoore International)
RLX is doing its part to accelerate e-cigarette sales in China. In early 2020, the company launched its two flagship RELX vape shops in Shanghai and Beijing. Today, RELX has partnered with 110 authorized distributors to supply its products to over 5,000 RELX-branded partner stores and over 100,000 other retail outlets nationwide, covering over 250 cities in China, according to its prospectus. Revenue for the company nearly doubled in the nine months ended Sept. 30, 2020 to $324 million, with a net income of $16 million.
Along with the Smoore and RLX IPOs, China’s vaping industry continues to attract lots of attention from the capital market, according to Li. “This year, in 2021, many more second-tier brands are spearheading efforts to acquire financing to expand the market [in China], especially markets in lower-tier cities,” Li said. “For example, MOTI intends to invest CNY1 billion to open 10,000 stores. Snow Plus even announced its intent to distribute future stock shares to distributors to open more stores.”
To date, the Chinese government has passed two major pieces of legislation for vapor products. In 2018, it made it a crime to sell a vapor product to anyone under 18 years of age. In November 2019, the government prohibited online sales of vapor products to prevent youth initiation. In 2020, the country passed the Law of the People’s Republic of China on the Protection of Minors. That law is aimed at preventing parents or other guardians from “indulging or instigating minors” to smoke or vape.

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The Chinese government wants to avoid the rapid rise in youth vaping that occurred in the U.S. If the U.S. figures replicated domestically in China, it could harden Beijing’s stand on the category, according to a 2021 report from ECigIntelligence. For now, e-cig usage among Chinese youth remains relatively low. A 2019 survey by the Chinese Center for Disease Control and Prevention found that 8.6 percent of high school students aged between 15 years and 18 years in China had used “tobacco” products during the previous 12 months.
Between July and August 2020, authorities collected comments on a bill that would restrict the public use of e-cigarettes nationwide and establish specific areas where vaping would be allowed. “The amendments to the Law on the Protection of Minors would prohibit vape stores from operating near schools, ban e-cigarette sales to minors and vaping in schools, kindergartens and anywhere else where young people are gathered,” the report states. “The bill would also require vendors to ask for an identification document if in doubt about a purchaser’s age while shop owners would be required to put up a prominent ‘no sales to minors’ sign. If the proposals are adopted and e-cigarettes are regulated under the same umbrella as traditional tobacco products, it would be China’s first national law specifically restricting e-cigarettes.”
In 2020, the Chinese government also floated the idea of banning vapor products completely. Another proposal suggested that e-cigarettes should be regulated as tobacco products while prohibiting their promotion as smoking cessation products. While the government has not indicated it will act on any of these proposals, the discussions send a clear message to the industry that politicians are willing to step up and regulate e-cigarettes, according to the report.

With online sales banned, vapor companies have been investing in brick-and-morter outlets.
The authors point out that Chinese rules can impact a market virtually overnight. Prior to the country’s ban of online sales of vapor products, there were hundreds of thousands of products available on the internet. The day after the announcement, an online search for e-cigarettes would have yielded zero results. “When the authorities do put something in writing and announce something that they want to put into effect, it can happen oftentimes almost immediately,” the report states.
While the Chinese government is yet to release any vapor regulations concerning components and manufacturing, several industry players have come together to self-regulate the industry. In 2017, draft regulation or standards were developed on the industry level. While not mandatory national standards, the rules give a good sense of what the industry considers sensible in terms of specifications, requirements and limitations.
“The same holds true with the group standards concerning the raw materials, about the diluents, the flavorings, and some requirements as it relates to physical, chemical, hazardous substances. They go into some test methods,” a presenter at the Keller and Heckman seminar said. “Not always, but typically, the authorities will look at these group standards, voluntary standards, and start to adopt some of that language when they make mandatory national standards. So, having a good sense of what these [recommended standards] look like … that would be important.”
Further complicating China’s vapor market is the China National Tobacco Company (CNTC), the state-run tobacco monopoly. If the monopoly chooses to enter the vapor market, it could devastate the independent vape shops that proliferate the Chinese market. “The state monopoly has yet to signal clearly how it will regulate e-cigarettes or whether it will sell them. If it does, it has the power to regulate its competitors out of the market,” the report states. The industry is acutely aware of this risk. In a November 2019 interview with Reuters, one investor in a Chinese e-cigarette start-up compared the combined regulatory and competitive threat posed by CNTC as “a knife on the neck.”
CNTC is a source of major funding for the Chinese government. Its contribution accounted for an estimated 5.45 percent of the country’s tax revenue in 2018. That amounts to CNY10.8 trillion, according to media reports. If CNTC were to enter the vapor market, the monopoly’s existing 5 million domestic retail outlets could present a major challenge for private vape shop owners.
Kate Wang, CEO for RELX, told Reuters that she’s “not worried” about the government’s impact on the sector. The products will continue to remain available, she said, “as long as there’s proof that this is a good solution for smokers.”
Market overhaul: China seeks to regulate ENDS like tobacco
It has long been anticipated that the tobacco monopoly in China would one day regulate electronic nicotine-delivery systems (ENDS). At press time, China’s Ministry of Industry and Information Technology (MIIT) and the State Tobacco Monopoly Administration (STMA) released a draft proposal to overhaul rules governing the ENDS market.
Shares in RLX Technology, parent to China’s market-leading RELX e-cigarette brand, plunged in the wake of the announcement. Just two months after the vapor maker’s billion-dollar debut on the New York Stock Exchange, RLX shares fell by more nearly 45 percent to $10.69 per share on March 22, having reached a high of $19.46 per share on March 19.
An online copy of the draft regulations suggests the government intends to regulate ENDS like ordinary cigarettes. The ministry is seeking public comments on the draft regulations until April 22. The implications of the draft regulations could be far-reaching. With an estimated 300 million smokers, China is the world’s largest potential market for vapor products.
“In view of the homogeneity of new tobacco products such as e-cigarettes and traditional cigarettes in terms of core ingredients, product functions and consumption patterns, new tobacco products such as e-cigarettes shall be implemented in accordance with the relevant provisions of the Regulations on Cigarettes,” the draft proposal states. “The implementation … will greatly enhance the effectiveness of e-cigarette supervision, effectively regulate e-cigarette production and operation activities, solve the product quality and safety risks of e-cigarettes, false advertising and other issues, and effectively protect the legitimate rights and interests of consumers.”
While the news will have some impact on the global ENDS market, the Chinese manufacturers producing for international markets will likely continue operations. “Depending on how they regulate and to what extremes, it could be devastating to the companies operating in the consumer market in China,” said a representative of a major China-based ENDS manufacturing company who asked for anonymity. “We expect that there will be players that remain in the market, possibly working alongside the Chinese government in the promotion and sales of vaping products. Right now, we are just waiting for a better understanding of what this means for China’s domestic market. A worst-case scenario would be an outright ban on all products, but this is unlikely.”—T.S.D.
Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

April 1, 2021
Prospect of Vapor Regs Boosts China Tobacco

Photo: Shenzhen Smoore Technology
Chinese stocks related to the traditional tobacco business rose following suggestions that China would regulate e-cigarettes like tobacco products.
Cigarette packaging provider Letong Chemical and cigarette printing and filter maker Shaanxi Jinye Sci Tech & Education surged by the daily cap of 10 percent, according to the South China Morning Post.
By contrast, vapor companies tanked. Smoore lost HKD106 billion in market cap while RELX Technology shed $14.45 billion on the New York Stock Exchange immediately after the announcement.
On March 22, China’s Ministry of Industry and Information Technology and the State Tobacco Monopoly Administration released a proposed policy that aims to address tobacco product quality issues and false advertising. Without providing details, the agencies indicated that the changes would also apply to vapor products. The changes are currently subject to a public consultation that ends April 22.
Having taken arduous and often herculean steps to remain compliant with all government regulations, Kaival Brands and the leadership at Bidi Vapor hope that additional supervision of e-cigarette manufacturing will help raise standards for the devices worldwide.
Kaival Innovations Group
With around 300 million smokers, China is the world’s largest tobacco market and the world’s largest potential market for vapor products. iiMedia Research estimates that the Chinese e-cigarette market could reach CNY10 billion ($1.53 billion) in 2021. There were more than 170,000 vapor companies as of February 2021. The market is also expected to grow in the future year.
In 2019, Chinese authorities banned e-cigarettes from online shopping channels. The restrictions prompted e-cigarette companies to invest significantly in developing physical stores across the country. RELX Technology, for example, received 30 percent of its revenues from online sales prior to the ban. In January 2020, the company pledged to invest more than CNY500 million over the three years to open 10,000 authorized sellers in China.
Some vapor companies welcomed the prospect of greater supervision over the e-cigarette sector in China. U.S.-headquartered Kaival Innovations Group, which distributes the Bidi Stick brand, said the announcement would have no effect on its operations.
“Having taken arduous and often herculean steps to remain compliant with all government regulations, Kaival Brands and the leadership at Bidi Vapor hope that additional supervision of e-cigarette manufacturing [in China] will help raise standards for the devices worldwide,” the company wrote in a press release.
March 25, 2021
China OKs Synthetic Nicotine Patent

Photo: Michal Jarmoluk from Pixabay
The China Patent Office has approved Next Generation Labs’ (NGL) patent application covering the process for the preparation of R-S [synthetic] nicotine, issue number 201580069647.2.
The approval will give NGL the ability to better enforce its intellectual property rights. NGL is the world’s largest manufacturer of S-isomer, R-S isomer and R-isomer synthetic nicotine sold under the registered brand name TFN.
According to NGL, the U.S. and Korean markets have been inundated with dozens of fake synthetic nicotine products and brands, and many manufacturers have misleadingly labeled bulk pure nicotine, bulk vape liquid mixtures, and vaping and oral nicotine products as made with TFN. In many instances, the nicotine contained in these products is not synthetic, tobacco-free or nontobacco but is in fact derived from tobacco sources.
For almost a decade, NGL has spent considerable effort establishing a strong global intellectual property portfolio that has become distinctive of the company’s goodwill and of the high quality adult consumers expect of TFN-branded nicotine.
NGL now intends to fully enforce its rights against many of these so-called synthetic nicotine brands.
Next Generation Labs
NGL has been taking direct action in the United States and through its sole South Korean distribution partner NextEra to limit the misleading claims of unscrupulous sellers of pseudo-synthetic nicotine and against manufacturers and brand owners who misrepresent that their product contains TFN-branded synthetic nontobacco nicotine.
“With the assistance of the Chinese authorities, NGL now intends to fully enforce its rights against many of these so-called synthetic nicotine brands at their point of manufacture and will take the lead with national customs agencies to limit the flow of fake synthetic nicotine products at trade exit and entry points in China, the U.S., EU, U.K., South Korea, India, Canada and Australia,” the company wrote in a press release.
March 23, 2021
China Wants to Regulate ENDS Like Tobacco

Photo: Taco Tuinstra
The Chinese government wants to overhaul the rules governing the market for electronic nicotine-delivery systems (ENDS), according to the South China Morning Post.
Draft regulations posted online by the Ministry of Industry and Information Technology (MIIT) suggest it will seek to regulate these products like traditional cigarettes. The ministry is seeking public comments on the draft regulations until April 22. With an estimated 300 million smokers, China is the world’s largest market for tobacco products and the largest potential market for ENDS.
The news caused the share price of RELX, China’s largest e-cigarette brand, to plunge. At 2:45 p.m. today, its value on the New York Stock Exchange was down nearly 45 percent to $10.69 per share after a recent high of $19.46 per share on March 19.
RLX Technology raised $1.4 billion during its initial public offering (IPO) in January this year. It sold 116.5 million shares with a target price of between $8 and $10 a share. Its market debut turned its 39-year-old founder, Wang Ying, into a billionaire overnight with an estimated net worth of $24.8 billion.
In its prospectus, RLX stated that vaping products only have a 1.2 percent penetration rate in China compared with 32.4 percent in the U.S. According to the China-based Electronic Cigarette Industry Committee, China’s 2020 e-cigarette sales were an estimated CNY14.5 billion ($2.2 billion), an increase of 30 percent from 2019. The U.S. e-cigarette market in 2019 was worth $5.34 billion, according to Grandview Research, which expects the U.S. market to reach $6.50 billion in 2020.
RELX recently announced a partnership with 110 authorized distributors to supply its products to more than 5,000 RELX-branded partner stores and more than 100,000 other retail outlets nationwide, covering over 250 cities in China, according to its prospectus. Revenue for the company nearly doubled in the nine months ended Sept. 30, 2020, to $324 million, with a net income of $16 million, the latest figures available at the time of this writing.
Under scrutiny
Vapor companies are increasingly facing scrutiny from regulators in China. In 2018, the country made it a crime to sell a vapor product to anyone under 18 years of age. In November 2019, an online sales ban was implemented in order to further prevent youth initiation. In 2020, the country passed the Law of the People’s Republic of China on the Protection of Minors. That law is aimed at preventing parents or other guardians from “indulging or instigating minors” to smoke or vape.
The China National Tobacco Corp. (CNTC), which holds a monopoly of tobacco manufacturing in China, is a major source of funding for the Chinese government. Its contribution accounted for an estimated 5.45 percent of the country’s tax revenue in 2018. That amounts to CNY10.8 trillion, according to media reports. The vapor industry in China, by contrast, remains largely in private hands. If CNTC were to enter the vapor market, the monopoly’s existing 5 million domestic retail outlets could present a major challenge for private vape shop owners.
Until today’s announcement, the vapor industry seemed to shrug off the impact of stricter regulations, continuing to perform well even in the face of the coronavirus pandemic.
Tobacco Reporter covered the trials and tribulations of China’s vapor industry in-depth in its April 2020 print edition (see “Double Whammy”).
March 22, 2021
Chinese Lawmaker Calls for Smoking Ban

Photo: Tobacco Reporter archive
A Chinese lawmaker has called for a nationwide ban on smoking in indoor public places.
The proposal was brought by Chen Jingyu, a cardiothoracic surgery expert and deputy at the 13th National People’s Congress.
As of February, 20 cities had adopted regional laws to restrict indoor smoking in public venues, but that is not adequate for China to achieve its Healthy China Action Plan, Chen told The Global Times. The Healthy China Action Plan aims for more than 80 percent of China’s population to be covered by smoke-free protections by 2030.
Currently, there are more than 300 million smokers in China, and more than 1 million people die of smoking-related diseases annually, according to Xinhua News Agency.
Allowing special smoking areas in indoor public places, such as restaurants, entertainment venues and airport terminals, violates the WHO’s Framework Convention on Tobacco Control (FCTC), Chen noted. Scientific research shows that there is no safe level of exposure to tobacco smoke, and the only way to effectively prevent nonsmokers from suffering from secondhand smoke is to completely ban smoking in indoor environments.
The FCTC requires all indoor public places, public transport facilities and indoor workplaces to be smoke-free.
China signed the FCTC in 2003, ratified it in 2005, and the treaty came into legal force in China in 2006.
In a survey conducted by the China Association for Smoking Control, 91.9 percent of respondents expressed support for a smoking ban.
March 4, 2021
Graphic Warnings May Reduce Cigarette Gifting

Photo: Tobacco Reporter archive
Having pictorial health warnings on cigarette packages may reduce the sharing and gifting of cigarettes in China, according to a new study published in Tobacco Control.
Sharing and gifting cigarettes are common in China. These social practices promote cigarette consumption, and consequently may reduce quit rates in China. This study investigated sharing and gifting cigarettes, and the relationship of observing pictorial health warnings to attitudes towards sharing and gifting cigarettes in China.
The researchers conducted an online nationwide cross-sectional study of 9,818 adults in China. They assessed experiences of sharing and gifting cigarettes, and attitudes towards sharing and gifting cigarettes before and after viewing text and pictorial health warnings on the packages.
Most current smokers reported experiences of sharing (97 percent) and gifting (around 90 percent) cigarettes. Less than half of nonsmokers reported sharing cigarettes and receiving gifted cigarettes, but more than half (61.4 percent) gave cigarettes as a gift to others. More than half of non-smokers but less than 10 percent of smokers disagreed with sharing and gifting cigarettes.
After observing both text and pictorial health warnings on the packages, disagreement with sharing and gifting cigarettes increased by more than 10 percentage points among both smokers and nonsmokers.
January 14, 2021
Vapor Market Booming Despite Online Ban

Photo: Timothy Donahue
China’s vapor market has mushroomed offline after the country banned online sales of e-cigarettes about a year ago, reports Bloomberg. Not even the coronavirus has stopped the expansion.
RELX Technology, the country’s largest player, opened more than 1,000 stores in the first half of 2020, and said in January it planned to add 10,000 outlets within the next three years. Its rival, Yooz, has also boosted the number of stores.
Shares in Smoore International Holdings, the world’s largest maker of vaping devices and components for brands, have more than quadrupled in value since the company’s July debut, making it one of Hong Kong’s best-performing initial public offerings of the year. RELX and Yooz are both clients of Smoore.
Smoore founder Chen Zhiping’s net worth has surged to $14.2 billion, according to the Bloomberg Billionaires Index.
While the coronavirus outbreak affected Smoore’s production and operations in the first quarter of the year, it still managed to post a 19 percent increase in revenue to CNY3.9 billion ($592 million) for the first six months, with more than half of its sales coming from mainland China and Hong Kong.
Smoore held one-sixth of the global market share for vaping products by revenue last year, and that pie is poised to grow further, according to Frost & Sullivan data it cited in its prospectus. The $36.7 billion global e-cigarette market will reach $111.5 billion by 2024, increasing at an annual compound rate of 25 percent, projections show.
Mounting restrictions on vapor products globally, including a ban on certain e-cigarette flavor in the world’s largest vapor market, the United States, haven’t scared off investors. Stocks linked to China’s consumer sector have been particularly popular this year as the nation has been among the first to emerge from the pandemic.
December 22, 2020
China May Step up E-Cigarette Oversight

Photo: Taco Tuinstra
The Chinese government may tighten its grip on e-cigarettes, according to a new report from eCigIntelligence.
Legally, the China National Tobacco Co. (CTNC) has a monopoly over both combustible and vapor products, but the organization has not exercised its authority to date. According to the report, that could change in the future.
There are three possible scenarios, according to the market intelligence provider: “One possible scenario is that the government may allow private companies to continue operations but under close observation to ensure their products do not target non-smokers or minors.
“The government could also decide to crack down on the e-cig market, which as the report explains would have a significant negative impact on the growth in sales of tobacco-alternative products in the country. A third scenario would involve the China National Tobacco Company extending its existing control over traditional cigarettes to vaping products.”
December 17, 2020