2FIRSTS Market: Russian E-cig Market under 'Honest Mark'
On April 1, Russia's "Honest Mark" officially came into effect. On April 11, at the plenary session of the State Duma, Russia passed a package of e-cigarette regulatory bills for three consecutive readings, including prohibiting e-cigarette flavoring additives and online sales, displaying electronic cigarettes offline, and increasing the minimum price of electronic cigarettes, etc.
On April 14, according to Russian media 59.RU, some e-cigarette retail stores in Perm underwent relevant rectification. Some businesses use blinds to cover the e-cigarette counters, and some use dark glass windows to hide the counters. 59.RU said in the report that the new e-cigarette bans will not affect large companies, but it will likely make small companies withdraw from the market.
In this regard, 2FISTS conducted interviews with many e-cigarette distributors and practitioners in China and Russia to understand the attitudes of all parties to Russia's package of e-cigarette regulatory policies and the Russian e-cigarette market.
Regulatory Tightening: Gray Customs Logistics Providers Switching to Legal Customs Market
2FIRSTS interviewed many Russian logistics service providers and learned that the logistics supervision of e-cigarettes in Russia has been relatively strict recently, mainly checking whether the goods have "honest marks" or "tax evasion." The logistics provider said gray customs products need to "see the opportunity to pick up the goods."
The gray customs method refers to artificially avoiding part or all of the legal processes of customs review in the customs clearance process of international trade goods transportation to avoid tax payment and other fees for taxable goods; or to declare customs through other artificial means, for example, false reporting, concealment, and misreporting of commodity categories, and the method of bribing some customs reviewers to achieve the purpose of low or no tax entry for products.
A logistics provider mainly in the gray customs market said it is considering switching to the legal ("white") customs market, exploring the rules of the legal customs market, and striving for transformation for long-term development.
However, some practitioners expressed concern about the customs market, believing that "the price of white customs products is too high."
Existing distributors only accept legal customs products
Wang Juncheng, general manager of the Russian logistics company "Esutong (Russian fast clearance in Chinese)", told 2FIRSTS that there are dealers who only accept white customs products. In this regard, the 2FIRSTS Moscow News Center asked several dealers, and they all confirmed this information and said they would no longer accept gray-customs products.
In addition, Wang Juncheng also revealed that the customs clearance on white customs products has also become more stringent. "From April, importing e-cigarettes from Russia needs to provide EAC certification for e-liquid products, but before April, only tobacco rods need to be submitted." Wang Juncheng said, "If there is no EAC-certified e-liquid product, the products will face customs clearance problems."
E-cigarette Companies Remain on the Sidelines and are Optimistic About Compliance Operations
According to the preliminary understanding of 2FISTS, under a series of regulatory policies, the Russian e-cigarette market is roughly divided into three situations: large-scale compliant dealers remain on the sidelines; some large wholesalers are dumping goods, category hoarding. According to the feedback from logistics providers, there is currently a slight increase in orders.
The Russian media 59.RU mentioned in the report that the price of disposable electronic cigarette products in Russia might increase. The reason is that the government said it would set a minimum price, making it impossible to buy e-cigarettes at low prices anywhere. Retailers said that the cost of e-cigarettes might increase by 200-250 rubles, depending on how suppliers set prices.
Some domestic e-cigarette practitioners also said that it is good for Russia to set a minimum price because the current price of e-cigarettes in Russia is chaotic and will disrupt the market.
Most of the e-cigarette practitioners interviewed are relatively optimistic about the regulatory policy. Russia has no apparent order to ban flavored e-cigarettes, nor has it clearly stated the scope of additives, indicating that the Russian e-cigarette market can continue to be preserved.
There is still a chance to keep the market, and the supervision in place can also enable Russia to expand the white customs market.
2FIRSTS will continue to pay attention to the progress of Russia's package of e-cigarette regulatory policies, so stay tuned.
Also read:
Russia Passes New Bill Banning All Vape Flavors
Russian PM Mishustin Considers Ban on E-cigarettes
Timeline of Russian Vape Law Development
Q&As Held on Russia's E-cig Policy, Russian Gov Researcher Participated
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