1. The electronic cigarette industry chain
Electronic cigarettes are a reduced harm product designed to be an alternative to traditional combustible tobacco. There are two types: HNB (heated, not burned tobacco products) and aerosol electronic cigarettes. Both are electronic devices powered by batteries that heat tobacco or liquid, with the former designed to heat tobacco without combustion and have a taste closer to traditional cigarettes, while the latter can use edible flavors for variety.
The electronic cigarette industry includes upstream suppliers of raw materials, midstream participants such as equipment manufacturers and brand operators, and downstream entities consisting of distributors and electronic cigarette users.
The electronic cigarette industry chain.
Source: Compiled by Zhixun Consultancy.
Part 2: Overview of E-cigarette Policies.
Countries around the world have differing policies when it comes to regulating e-cigarettes. Some support and legalize their sale, some do not take a stance either way, some completely ban their sale, and some are in the process of legislating a ban.
At the end of 2021, the State Council announced a decision to modify the Implementation Regulations of the Tobacco Monopoly Law of the People's Republic of China, which includes new provisions for electronic cigarettes and other new tobacco products to be subject to relevant regulations and standards applicable to cigarettes. This marks the end of unregulated development for electronic cigarettes from that day forward.
An Overview of China's E-Cigarette Policies
Source of information: Compiled by Zhijian Consulting.
Report on the Market Operation Status and Development Strategies of China's E-cigarette Industry from 2022 to 2028, Released by Zhiyan Consulting.
3. The Size of the E-Cigarette Market.
Electronic cigarettes resemble traditional cigarettes in appearance, smoke, taste and sensation, but are an imitation product that do not contain tar. Despite this, they still contain various carcinogenic substances. A study specifically examining electronic cigarettes concluded that they are harmful to public health and should not be used as a way to quit smoking. Regulations must be strengthened to prevent them from harming young people and non-smokers.
As people increasingly prioritize their health, the electronic cigarette market has been expanding year by year. In 2021, the electronic cigarette market in China reached a size of about RMB 10.06 billion, a year-on-year increase of 20.05%.
The Size and Growth Rate of China's E-Cigarette Market from 2016 to 2021.
Source: Compiled by iMedia and Zhixun Consulting.
Although China's electronic cigarette market currently has a relatively low global share, the large number of smokers in the country offers huge growth potential as penetration rates increase in the future. In 2021, the electronic cigarette penetration rate in China was 1.5%.
The penetration rate of the Chinese electronic cigarette market in 2021.
4. Situation of Smokers
Smokers refer to individuals who consume tobacco products, and in China, the number of smokers is approximately 350 million. For many years, China has maintained seven "world-firsts" in the tobacco industry: the largest tobacco growing area, the highest tobacco purchasing volume, the largest cigarette production, the highest cigarette consumption, the largest number of smokers, the highest tobacco-related tax revenue, and the highest number of deaths due to smoking-related diseases. In 2021, the number of smokers in China is estimated to have increased by 3.56% compared to the previous year, reaching approximately 378 million.
From 2016 to 2021, there has been an increase in the number of cigarette smokers in China and the growth rate of this population.
Source of Information: Compilation of Publicly Available Data
5. Electronic Cigarette Patents
In 2020, the number of electronic cigarette patent applications decreased due to the impact of the pandemic. However, in 2021, the number of electronic cigarette patent applications in China increased to 5,937, representing a 41.9% increase compared to the previous year.
Number and Growth Rate of E-Cigarette Patent Applications in China from 2016 to 2021.
Source of information: compiled by Zhiyan Consulting.
In 2021, the majority of China's electronic cigarette patent applications were concentrated in Guangdong province, with 21,646 filings, accounting for 69.2% of the total applications. Following closely behind was Jiangsu province, with 1,904 electronic cigarette patent applications, representing 6.1% of the total filings.
The percentage of major regions where electronic cigarette patents were primarily applied for in China in 2021.
Source: Compiled by Zhivian Consulting.
In 2021, three companies notably made significant strides within the electronic cigarette industry in terms of patent applications. Changzhou PaiTeng Electronic Technology Service Co., Ltd. filed for 1039 electronic cigarette patents, while Shenzhen Heyuan Technology Co., Ltd. and Shenzhen IPV Technology Co., Ltd. followed closely behind with 896 and 872 patent applications, respectively.
The number of electronic cigarette patent applications filed by major Chinese enterprises in 2021.
Source of information: Compiled by Zhizheng Consultancy.
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