Regulation Brings New Era for Electronic Cigarette Industry

Recently, news has been released about the e-cigarette industry: "The first batch of national standard e-cigarette products officially hit the market, with Shenzhen selling the first unit nationwide. At 11am, the first batch of national standard e-cigarette products were delivered to a certain e-cigarette specialty store in Futian District by the Shenzhen Tobacco Monopoly Bureau. Afterwards, the store sold one Yooz Phantom 'Star River Dream' atomizer rod and one box each of 'Wangjiang has a path' and 'Forest revival' atomizer cartridges, making this the first nationwide sale of national standard e-cigarette products.

In the 16th issue of the Democracy and Rule of Law Weekly in 2022, a series of reports were published on the "strong regulation era" for electronic cigarettes. Since March of this year, a number of regulatory documents, such as the "Regulations on Electronic Cigarette Management" and the mandatory national standard for electronic cigarettes, have been intensively issued, accelerating the standardized development of the electronic cigarette industry. People are looking forward to the continuous promulgation of new regulations to facilitate a healthy development of the electronic cigarette industry in a standardized and regulated market.

In the past, due to the lack of regulation and standards for electronic cigarettes in our country, the "wild growth" of electronic cigarettes has brought a series of problems: different product quality standards, false and exaggerated advertising, increasingly younger age of e-cigarette users, and harmful additives that pose a serious health risk. These hidden risks have created enormous safety hazards.

Fortunately, all chaos came to an abrupt end with the implementation of the new regulations.

On March 11th of this year, the State Tobacco Monopoly Administration issued the "Regulations on the Management of Electronic Cigarettes", which officially went into effect on May 1st. Among them, it is clear that the sale of flavored electronic cigarettes, other than tobacco flavor, is prohibited. The mandatory national standard for electronic cigarettes also followed, bringing unprecedented shock to the electronic cigarette market, and the once bustling sales counters suddenly appeared deserted.

From the implementation of national standards in April this year to its official implementation on October 1st, electronic cigarette manufacturers have had a five-month transition period. During this period, it was explicitly stated that existing electronic cigarette production and business entities may not expand their production capacity or establish new electronic cigarette retail outlets. Regardless of whether they are leading or small enterprises, the challenge faced is how to conduct compliant R&D on their products during the transition period, in order to smoothly complete their transformation. This has almost become a major competition among electronic cigarette manufacturers, where the number of offline stores seems to directly determine the industry’s next round of reshuffling, even bringing transformative changes to some small enterprises that have long been in the "grey area".

According to the statistics from the Electronic Cigarette Committee of the China Electronic Commerce Association, in 2021, there were over 1,500 electronic cigarette manufacturing and branding companies in China, directly employing approximately 1.5 million people and indirectly generating employment for 4 million people, totaling approximately 5.5 million people in the industry. Furthermore, the enormous overseas electronic cigarette consumer market has spurred the production and export of electronic cigarettes in China, with about 90% of electronic cigarettes in China being exported.

The implementation of regulations and national standards means that the wild growth of the electronic cigarette industry will no longer be allowed, causing a certain degree of disturbance to its current development status. However, in the medium to long term, electronic cigarettes will have a "legal status" and "unified standards". Consequently, the quality and safety of electronic cigarette products will be effectively guaranteed, and people's awareness and confidence in electronic cigarette products strengthened. Therefore, the new regulations on electronic cigarettes are actually a period of growth pains for the industry, and companies that successfully overcome this period will have broader development opportunities.

It is reported that after the release of national standards, electronic cigarette manufacturers have fully invested in product research and development and participated in the national unified trading platform pilot. Currently, 27 brands and a total of 75 products have been approved for listing through technical review. As the mandatory national standard for electronic cigarettes has been officially implemented for less than a month, it remains to be seen whether electronic cigarette companies are fully prepared.

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