Tag: State Tobacco Monopoly Administration

  • Chinese Vapers Stocking up Ahead of Flavor Ban

    Chinese Vapers Stocking up Ahead of Flavor Ban

    Photo: Victor Moussa

    Vapers in China have reportedly been stocking up on flavored liquids in anticipation of a ban. A staff member at a RELX store in Shanghai told Sixth Tone that his shop had seen an increased demand for flavored pods since the government announcement, with grape and cola-flavored varieties selling out almost instantly.

    On March 11, the State Tobacco Monopoly Administration published the final “Management Rules for E-cigarettes,” which includes a ban on domestic sales of nontobacco-flavored e-cigarettes. The rules are scheduled to take effect May 1.

    The move was welcomed by anti-vaping groups such as the Campaign for Tobacco-Free Kids, which said the rule would help prevent children from becoming smokers. “Children who use e-cigarettes are more than twice as likely to use cigarettes in the future, according to the World Health Organization,” said Yolonda Richardson, executive vice president for the Campaign for Tobacco-Free Kids, in a statement. “China’s new policy is the right move to protect Chinese kids from these addictive products.”

    The flavor ban is part of a long list of new requirements for the vaping business. China’s new rules also ban refillable products and synthetic nicotine while limiting the strength of e-liquid to 20 mg/mL.

    Manufacturers, wholesalers and Chinese retailers will be required to conduct all business on a “unified national electronic cigarette transaction management platform,” and exports will be restricted to vapor products allowed in the destination countries.

    The new rules will force e-cigarette sellers like RELX to sell competitors’ brands in their Chinese stores—something they don’t do currently.

    With more than 300 smokers, China remains the world’s largest cigarette market, representing considerable potential for vapor companies. The country’s domestic e-cigarette market has grown at a rate of 70 percent a year since 2013, according to the Global Times, and is valued at about $1.3 billion.

    China exports $15.6 billion of vaping products annually, according to the Shanghai Daily.

  • Sneak Peek at New Vapor Rules in China

    Sneak Peek at New Vapor Rules in China

    Photo: Kajsym Yemelyanov

    Starting May 1, China will begin enforcing the licensing rules for e-cigarette production, wholesale and retail entities. The new rules, the draft of which was first announced in December 2021, apply to all hardware and e-liquid products, including all components and ingredients.

    “The administrative department in charge of tobacco monopoly of the State Council takes charge of national supervision and management of electronic cigarettes, and is responsible for the formulation and organization of implementing electronic cigarette industry policies,” the regulations state. “The administrative department in charge of tobacco monopoly of the State Council shall organize professional institutions for technical review of electronic cigarette products based on inspection and testing reports and other application materials.

    “Electronic cigarette products not sold in China and only used for export shall comply with the laws, regulations and standards of the destination country or region,” the rules state. “If the destination country or region does not have relevant laws, regulations and standards, they shall comply with China’s relevant laws, regulations and standards.”

    Critically the new rules also ban nontobacco flavors and the sale of open systems. The importation of any vaping related products, such as pre-mixed e-liquids, must also be approved by Chinese authorities, according to the regulations.

    Any company that produces e-cigarettes in China must now get a license. If a company wants to expand its production or product portfolio, the company must garner approval from the State Tobacco Monopoly Administration. All nicotine must be tobacco derived and purchased from approved sellers in China. Chinese regulators will also establish a comprehensive e-cigarette traceability system to keep track of vaping products.

    “Electronic cigarette wholesale enterprises shall not provide electronic cigarette products to units or individuals that are not qualified to engage in electronic cigarette retail businesses,” the regulation states.

    The rules also specify that “enterprises or individuals that have obtained the tobacco monopoly retail license … shall purchase electronic cigarette products from local … wholesale enterprises, and shall not exclusively operate the electronic cigarette products sold on the market.”

    According to an industry expert, this means all retail outlets must sell multiple brands and not just a single brand. Traditionally, companies such as RELX only sold their own brands in their stores.

    Additionally, authorities will establish a “unified national electronic cigarette transaction management platform” that e-cigarette industry businesses that have obtained tobacco monopoly licenses must conduct all transactions through.

    The rules also encourage stakeholders to report illegal activity. “Rewards will be given to units and individuals who have made meritorious deeds in reporting cases of illegal production and sales of electronic cigarette products, e-atomization material products and electronic cigarette nicotine,” the rules state.–T.S.D.

  • China Mulls Ban on Flavored E-Cigarettes

    China Mulls Ban on Flavored E-Cigarettes

    Photo: Victor Moussa

    China will ban nontobacco flavors in e-cigarettes if an updated draft of standards for the vaping industry becomes law, reports Shine.

    In November 2021, China’s State Council amended the country’s tobacco monopoly law to include vapor products and requested public input on its proposed regulations for the segment.

    While the original proposal appeared to permit nontobacco flavors, the new draft, published on March 11, underlines the importance of reducing the appeal of e-cigarettes to youth, stating: “Flavors other than tobacco taste shall not be offered in products.” To be specific, 21 additives, referring to tastes like plum, rose and orange, are removed from the list.

    As some U.S. states and European countries already have flavor bans in place, industry experts believe the new regulations may have a greater impact on the domestic market rather than exports.

    In an interview with Securities Times, an unnamed industry insider said sales volumes of tobacco-flavored e-cigarettes in the domestic market are dwarfed by other flavors.

    The March 11 publication sent stocks of Chinese vapor companies tumbling. Shares of RLX Technology, which had just reported strong revenues for 2021, dropped more than 36 percent and closed at $1.49 on the New York Stock Exchange on Friday.

    The updated draft is now available on the State Tobacco Monopoly Administration’s website. The administration is asking for public feedback until March 17.

  • Broughton: China Vapor Laws is Opportunity

    Broughton: China Vapor Laws is Opportunity

    Photo: Smoore

    Recent amendments to China’s Tobacco Monopoly Law present an opportunity for responsible companies to demonstrate how alternative high-quality products are an important and appropriate element of tobacco harm reduction, according to Broughton.

    Writing on the website of the contract research organization, Broughton’s head of regulatory affairs, Lloyd Smart, and regulatory consultant Xiangyin Wei summarize China’s tobacco monopoly law changes and explain what they means for electronic nicotine delivery systems (ENDS).

    On Nov. 26, 2021, China’s State Council amended the country’s tobacco law, giving the State Tobacco Monopoly Administration jurisdiction over e-cigarettes. Next-generation products will now be managed in the same way as combustible cigarettes.

    Among other things, this means that ENDS companies, including exporters, will need to apply for a license. A single transaction platform will be implemented for product distribution and all products must comply with a new national standard. Regulation of products likely to be introduced following an initial transition period of between three and five months, during which no new products may be brought to market. Products with synthetic nicotine will be banned in China.

    According to Broughton, the recently announced changes to e-cigarette regulation in China offer an excellent business opportunity for companies that want to build consumer trust by showcasing their product’s high quality and safety standards.

    “As with all regulatory requirements, the most important initial step is to understand fully what’s needed—to provide reassurance or identify gaps that need to be addressed. And to act quickly; seizing the opportunity while making sure you don’t get left behind as the market changes,” write Smart and Xiangyin.

  • Vapor Companies Brace for Radical Change

    Vapor Companies Brace for Radical Change

    Photo: Taco Tuinstra

    China’s domestic e-cigarette market is going to look very different next year. On Nov. 27, the State Council gave the State Tobacco Monopoly Administration (STMA) jurisdiction over vapor products. Shortly after, the STMA issued draft rules for the sector.

    While much remains unclear, the draft does offer some insights, according to an industry source who spoke to Tobacco Reporter’s sister publication, Vapor Voice, on the condition of anonymity because he didn’t have permission to speak on the matter.

    For starters, China will allow only closed pod systems with tobacco-derived nicotine and tobacco-derived nicotine salts. Flavors will be permitted, and cartridges can’t leak, according to a translated copy of the proposed rules.

    Unlike some other countries, China will allow only tobacco-derived nicotine. The rules do not allow for a synthetic nicotine. “Nicotine extracted from tobacco should be used, and the purity should not be less than 9 percent,” the standards state. “Benzoate, tartrate, lactate, levulinate, malate and citrate of nicotine are allowed, and nicotine for preparing the above nicotine salts shall meet the requirements of [the previous statement].”

    However, synthetic nicotine will still be allowed in products for export. What isn’t clear is if that synthetic nicotine must be shipped into China premixed in PG and/or VG and held in bond or if a pure synthetic can be imported.

    “There’s no legal imports of nicotine as far as we can tell,” the Vapor Voice source said. “There’s seems to be no leeway for legal imports of a pure synthetic nicotine. However, we think if people import e-liquids with nicotine as a certain percent of that, that’s okay.”

    “We don’t know if it’s 10 percent or 20 percent and it can only be brought into the country to be manufactured for re-export—that appears to be okay. That is just how we are interpreting the rule though, maybe someone else is seeing it differently.”

    It also seems that the proposed rules also do not allow for a company to import finished vaping products into China and then sell them domestically without having a license and being registered with STMA. However, the country will continue to encourage exports, and wants domestic manufacturers to develop markets overseas.

    “What they’ve really done is they’re clamping down on anything that is destined for the domestic market,” the source said. “They’ve also tapped into the tax department. Any time a manufacturer wants to manufacturer an e-cigarette or parts for an e-cigarette, they have to have a local representative from the taxation bureau there. And each day’s production that they run, they have to pay tax on those products at the end of that day. They’re clamping down in terms of what people can do as well as trying to ensure that they collect relevant taxes from all the manufacturers.”

    Chinese vapor manufacturers are still waiting to understand what needs to be done officially for a company to produce vaping products for either the international or domestic market. “We’re still waiting on that,” the source told Vapor Voice.

    “The important piece isn’t the product standards. What I’m really interested in is the registration process, who’s allowed to do what, who has to issue licenses, because now there’s an emergency management bureau involved, not just STMA, so it’s a lot of people. We’re also trying to figure that piece out.”

    China’s product standards do clarify what types of products China will allow domestically. The country will only allow closed-pod systems to be sold, stating that “devices and cartridges using e-liquid should have a closed structure to prevent artificial filling.”

    Additionally, while flavors are approved only under a “temporary permit for additive in e-vapor matter” and any substance or flavor not listed “shall be used only after being proved to be safe and reliable by risk assessment,” the standards state. The listed additives include flavoring extracts such as coffee, cocoa, prune and vanilla bean.

    The standards allow for a maximum of 20 mg nicotine per milliliter (mL).

    The outlook for China’s domestic manufacturers the outlook is grim, according to the Vapor Voice source. While international players will likely survive, they are confused about what will expected when the rules are finalized.

    In Shenzhen, the capital of global vapor manufacturing, the industry is said to be in a state of shock. “Everybody, from big to small, is scrambling to try and find out how this relates to them,” the source said. “They all have to register immediately with State Tobacco Monopoly to continue doing business. They have to register what they’re going to be manufacturing, what their exports are, where they are going. It’s a complete disaster.”

  • Cullip: China Could Revolutionize THR

    Cullip: China Could Revolutionize THR

    Martin Cullip (Photo: Tobacco Reporter archive)

    China has the potential to revolutionize global tobacco harm reduction now that its government has asserted authority over e-cigarettes, according to consumer advocate Martin Cullip.

    On Nov. 26, China’s State Council on Nov. 26 amended the country’s tobacco monopoly law to include vapor products, which means that vaping products and their manufacturers will be regulated by the Chinese government under the same process as cigarettes.

    The announcement triggered feverish speculation about the impact of the new rules, with some commentators fretting that tobacco rules would put vapor companies out of business and others welcoming the prospect of enhanced product safety and quality.

    Writing in Filter, Cullip points not only to the vapor industry’s economic significance to China, but also to the potential domestic health benefits of sensible regulation. China, argues Cullip, has a lot to gain from financially from domestic harm reduction, when the country’s high smoking prevalence in an aging population creates heavy costs in health care and lost productivity.

    Cullip is also encouraged by China’s willingness and ability to stand up the World Health Organization, which remains ideologically opposed to tobacco harm reduction.

    While the government would seem to have much to gain from blocking the growth of safer alternatives such as e-cigarettes and tobacco-heating products—the state-owned CNTC sells more than 40 percent of the world’s cigarettes—there are many incentives for the government to push things in an entirely different direction, according to Cullip.

    China manufactures the vast majority of the world’s vape products. More than 170,000 businesses engage in e-cigarette production and the supply chain, employing around 3 million people. The CNTC is also the world’s biggest holder of tobacco harm reduction patents, owning almost 27 percent of all related patent publications.

    “It is difficult to imagine the government strangling the market—even if this is motivated more by profit than by its citizens’ health,” writes Cullip.

  • Chinese Regulations to Reverberate Globally

    Chinese Regulations to Reverberate Globally

    Photo: Cultura Allies

    China’s recently announced intention to regulate e-cigarettes as tobacco products will reverberate around the world, according to an analyses published on Keller And Heckman’s The Continuum of Risk blog.

    On Nov. 26, 2021, China’s State Council announced it would amend the country’s tobacco monopoly law to subject e-cigarettes to the same requirements as traditional cigarettes. On Dec. 2, the State Tobacco Monopoly Administration (STMA) published on its website the draft management rules for e-cigarettes for public comment.

    The draft rules define “e-cigarette” as an electronic delivery product that produces nicotine-containing aerosol for human inhalation. The definition does not include heat-not-burn tobacco products, which are already regulated as combustible cigarettes in China, according to Keller and Heckman. The draft rules make clear that e-cigarettes should be regulated like tobacco products by STMA and its local agencies and provide that e-cigarettes must comply with the e-cigarette national standard.

    Among other things, e-cigarettes will be subject to premarket registration upon a safety review by the STMA under the draft rules. Producers and sellers of e-cigarettes in China must obtain the same tobacco monopoly licenses as traditional cigarette manufacturers. In addition, all vapor product companies will be required to trade on a national e-cigarette platform to be set up by the SMTA. The draft rules also contain requirements to protect minors such as age-restrictions and warning labels.

    Because the draft rules’ registration and production licensing requirements apply to all e-cigarette manufacturers operating in China, they will also impact products sold abroad. China manufactures more than 95 percent of the world’s e-cigarette hardware.

    In 2019, China notified the World Trade Organization about its first national standard on e-cigarettes, which covers raw materials, technical requirements, testing methods and labeling, among other topics. On Nov .30, 3021, China published updated draft of the standard for comment.

    According to Keller and Heckman, the STMA plans to implement the standard “three to five months after its publication.”

    During the transition period, existing enterprises can continue manufacturing and operational activities. However, investors are banned from investing in new e-cigarette enterprises; existing e-cigarette production and operation entities must refrain from constructing or expanding production capacity, and they may not establish new e-cigarette retail outlets and market new products. “New import of e-cigarettes” will also be suspended during this period.

    The public comment period for the draft management rules closes on Dec. 17, 2021, 15 days after its publication, and the public comment period for the draft standard closes on Jan. 29, 2022.

  • E-Cig Leaders Welcome China Tobacco Rules

    E-Cig Leaders Welcome China Tobacco Rules

    Photo: Timothy S. Donahue

    China’s recently announced regulatory framework for e-cigarettes should secure the vapor industry’s future in that country, according to leading players in the business.

    On Nov. 26, China’s state council amended the tobacco monopoly law to include vapor products, meaning that, going forward, e-cigarettes will be managed like combustible cigarettes.

    With more than 300 million smokers—27 percent of adults—China is the world’s largest tobacco market. It also produces about 90 percent of the world’s e-cigarettes, primarily in the technology manufacturing hub Shenzhen.

    The government and the tobacco industry are, essentially, one entity in China, with the State Tobacco Monopoly Administration regulating the industry and China National Tobacco manufacturing tobacco products.

    To date, the vapor industry in China has operated in a legal grey area. Regulation had been widely anticipated, but many feared that it would wipe out the sector. The Nov. 26 announcement, however, was welcomed by leading players in the business. Industry representatives say it removes uncertainty and will weed out bad actors.

    In background article on the recent news from China, Filter cited Smoore global PR manager Frankie Chen, who expects national mandatory standards to significantly improve product safety and provide global vapers with better products.

    “Since the standards set higher requirements for vaping manufacturing, it is expected that only the responsible manufacturer with comprehensive safety management can be compliant,” Chen was quoted as saying.

    RLX Technology, too, welcomed the new regulatory framework. “We believe the sector will enter a new era of development—an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection,” said RLX Technology chairperson and CEO Ying Wang at the presentation of the company’s third quarter results.

    RLX Technology Chief Financial Officer Chao Lu said the company is well prepared for the new operating environment. “The investments we made in products, talents, research, and compliance in the third quarter and beyond will place us in advantageous positions under the new regulatory paradigm,” he said.

  • China Rules to Require Industry Licensing

    China Rules to Require Industry Licensing

    Photo: chokniti

    China’s State Tobacco Monopoly Administration issued new draft rules governing e-cigarettes on Dec 1, reports Reuters. The move follows a decision by China’s cabinet last week to give the country’s tobacco monopoly oversight over the e-cigarette business.

    According to the draft rules, companies selling e-cigarettes in China must meet national standards in order to register with the tobacco authority and do business legally. Companies engaged in the production of e-cigarettes must also receive a special license from the tobacco authority, provided they can prove that they have the funds for production and a facility with equipment that meets standards.

    The tobacco authority said that it will establish a “unified national electronic cigarette transaction management platform” that all licensed e-cigarette wholesalers and retailers “must sell products through.” Tax collection and payment of e-cigarettes, meanwhile, “shall be implemented in accordance with national taxation laws and regulations,” the regulator wrote.

    China’s e-cigarette sector has been growing rapidly following the international success of vapor products. Market leader RELX Technology went public in New York in January.

    The vapor business in China operated in a legal grey zone thus far. Analyst had been expecting the government to assert control over the sector for some time now, and the recent announcements end months of speculation over what regulations might look like.

    China’s cigarette industry works under a state-run monopoly directly controlled by the tobacco regulator, which dictates pricing and distribution for brands and generates tax income for the government.

  • China Orders Arrest of Former STMA Inspector

    China Orders Arrest of Former STMA Inspector

    Photo: Oleg

    Chinese provincial authorities have ordered the arrest of Pan Jiahua, a former senior disciplinary inspector at China’s State Tobacco Monopoly Administration, for suspected bribe-taking, reports Xinhua.

    Pan’s case was transferred to the Anhui Provincial People’s Procuratorate following an investigation by the National Supervisory Commission and the Communist Party’s Central Commission for Discipline Inspection (CCDI).

    The joint probe found that “Pan has lost his ideals and convictions, betrayed the responsibilities and duties he was entrusted with, and desecrated his position as a disciplinary inspector by engaging in discipline-violating activities.”

    According to the investigators, Pan abused his position to seek benefits for owners of private tobacco businesses, took overseas trips sponsored by private business owners, arranged jobs for relatives and friends in the tobacco system, and allowed his relatives to use his influence to profiteer from the tobacco business. Pan accepted large amounts of money and valuables in return for securing interests for others in business operations, according to the CCDI.

    Pan has also been expelled from the Communist Party of China for his actions.