Tobacco Asia

42 tobaccoasia Issue 6, 2022 November / December were banned in China, leading to major e-commerce platforms having to remove the products from their platforms but also causing offline stores to grow rapidly. Smoore was listed on the Hong Kong Stock Exchange in 2020, followed by RELX listing on the New York Stock Exchange in 2021. Last year also saw FDA grant its first approval for an e-cigarette, Vuse Solo. The present China is home to 90% of the world's e-cigarette produc- tion, largely in Shenzhen or "Vapor Valley". 2FIRSTS forecasts that the global e-cigarette mar- ket will reach US$108 billion this year, with China's e-cigarette exports forecast to reach RMN187 billion (US$26 billion). Q1/2022 figures show that 65% of China's exports were disposable devices, 17% open-sys- tems, 8% pod systems, and 10% other products such as e-liquids and herbal or CBD products. The main export markets for China's e-cigarette industry in 2022 are the US (58%, US$10.54 billion), Europe (24%, US$4.89 billion), Russia (8%, US$9.7 bil- lion), Southeast Asia (5%, US$6.9 billion), and the Mid- dle East (4%, US$5.5 billion). Known for its innovative r&d efforts, China's e- cigarette industry saw 1,771 e-cigarette patent applica- tions in Q1/2022, with the expected total for the whole year forecast at 7,084 applications. In 2020 and 2021 the number of e-cigarette patent applications reached 5,738 and 5,818, respectively. The future This year, the State Tobacco Monopoly Administra- tion (STMA) issued the Administrative Measures for Elec- tronic Cigarettes and the State Administration for Market Regulation (National Standardization Administration) issued national standards for electronic cigarettes. The standards include requirements that e-cigarettes must include nicotine; tobacco-based heat-not-burn devices are not classified as e-cigarettes but rather as cigarettes; e-cigarettes must be a closed system that does not allow the user to fill their own liquid; flavors other than to- bacco are not allowed; synthetic nicotine is not allowed, only nicotine extracted from tobacco leaves is allowed; nicotine levels cannot exceed 20mg/g, the total amount of nicotine does not exceed 200mg, and the amount of nicotine released per puff does not exceed 0.2mg; and only a list of 101 additives are allowed. Under the new standards, nicotine suppliers must obtain a production license and are subject to quota re- strictions, as are suppliers of e-liquids and accessories. However, suppliers of batteries and packaging are not in- cluded in the e-cigarette regulatory system. Domestic sales distributors must have a tobacco wholesale license and go through a pre-market review of product requirements. Export distributors need to go through export product filing, with priority given to products that are compliant with the standards in the destination countries. Domestic retailers must hold a tobacco retail license that includes e-cigarettes and are not allowed to hold brand exclusive sales. China currently has around 50,000 e-cigarette retail- ers and 5.5 million tobacco retailers. Rather than hindering the progress of China's e- cigarette industry, e-cigarette regulatory policies will not only help accelerate the development of standards and quality for the industry through the licensing system, but will also provide a template for global regulations, ac- celerating the introduction of similar e-cigarette policies around the world. With the strict regulation of China's domestic market, an increasing number of Chinese e- cigarette brands will accelerate their global development, which will advance the global e-cigarette penetration rate as well as bring about increased market competition. And, with a mature regulatory environment, companies can more bravely increase their investment in r&d. Un- der the new e-cigarette regulatory policies, the tobacco taste, environmental protection, protection of minors, as well as some other areas, will become the focus of r&d. 2FIRSTS expects a new round of technological changes will come in the next 1-2 years. For foreign companies looking to work with the Chinese e-cigarette industry, 2FIRSTS encourages them to make sure their Chinese supplier has a tobacco mo- nopoly production license; make sure their Chinese sup- plier has sufficient production quotas to support their growing demand; and to make sure that the product has a registered trademark and that it meets the require- ments of the product standards of the country where it is to be sold. 2FIRSTS has a licensed manufacturer da- tabase which can be found at https://www.2firsts.com/ license.

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