Tobacco Asia

36 tobaccoasia Issue 6, 2026 November / December Since China's regulatory overhaul in 2022, those private manufacturers have operated under licenses issued by the tobacco regulatory authority. The manufacturing base remains heavily concentrated around Shenzhen and is deeply integrated into the global vapor supply chain. From January through July 2026, China exported slightly more than US$6 billion in vape-related products, a 5.8% increase over the same period in 2025, according to Chinese Customs data analyzed by 2Firsts. But industry experts cautioned against interpreting the increase as a re- turn to record levels of growth. "The recovery is clear, but the longer compar- ison matters," said Echo Guo, co-founder and c.o.o. of 2Firsts. Export value remained 6.2% below the comparable period in 2023 and 7% below 2024's level. "At this point, the data support a recovery from the 2025 decline," Guo said. "They do not yet establish a new long-term peak." Nicotine-containing vape products remained the largest category, gen- erating US$3.96 billion and accounting for 65.9% of exports. Devices and empty components generated US$1.95 billion, or 32.4%. Products using nicotine alternatives remained much smaller at US$104.4 million, or 1.7% of exports, but accounted for 12.9% of the increase. "The established category still dominates export value, while newer and more flex- ible product structures are becoming more important to growth," Guo said. The US remained by far the largest declared destination, receiving US$1.98 billion in vape-related products from January through July, account- ing for 33% of China's total. The United Kingdom ranked second, followed by Germany, South Korea, and Russia. But shifts between destinations beneath the global total were substantial. "A relatively modest global growth rate therefore conceals a much larger movement of trade between destinations," Guo said. She also warned that customs destinations are declared trading partners and do not necessarily in- dicate the products' ultimate consumer markets. Heated tobacco moves closer Within China Tobacco, heated tobacco appears considerably further along the path to market than other next-generation categories. A 2Firsts review identified 117 procurement documents published in 2025 and 2026. After consolidating tender notices, retenders, failed bids, candidate announcements, and final awards, researchers identified 46 inde- pendent project chains, 41 of which were classified as core next-generation tobacco and nicotine projects. The scope of those projects is substantial. "The procurement activity covers analytical testing, product development, filters and tobacco stick structures, raw materials, process equipment, factory infrastructure, production services, pack- aging, logistics and heating devices," Zhao said. "In other words, the observable unit is no longer just an individual research project. We are begin- ning to see an industrial support system forming around the product." Across the 41 core projects, 2Firsts used a five-stage readiness framework. R1 denotes basic research, R2 product and process validation, R3 engineering and production preparation, R4 sus- tained supply-chain and premarket support, and R5 domestic market operations. Twenty-six projects had reached R3 or R4. "For heated tobacco products, our assessment is between R3 and R4," Zhao said. "For nicotine pouches, it is earlier, between R1 and R2." But the researchers repeatedly warned against treating industrial preparation as evidence of commercial- ization. "The important distinction here is that in- dustrial readiness is not the same as market readi- ness," Zhao said. China Tobacco Jiangsu, for example, has procurement for paper tubes for heated-cigarette production and multiyear production services. Other projects include heated-tobacco testing, processing equipment, factory utilities, packaging, logistics, and heating devices. A Jiangsu production outsourcing project running from 2026 through 2028 has a budget of RMB34.1 million (US$5.09 million) and an esti- mated workload of about 9,200 new-tobacco pro- duction shifts. Nationwide courier procurement also covers new tobacco products and samples. But those logistics are more consistent with "sam- ple circulation, consumer testing, and other limit- ed-distribution needs" than with bulk commercial replenishment, according to Zhao. "The system is clearly beyond the lab, but that does not mean it has reached the domestic commercial market loop," he said. That may be the most important distinction when assessing China's heated-tobacco preparations. The infrastructure is emerging, but a mass commercial market has not. Regulation is evolving alongside it. China began the national standards-setting process for heated cigarettes and nicotine pouches in 2026. A draft mandatory national standard for heated cigarettes was released for public comment in July. Procurement activity for testing materials, packaging, equipment, and production support was already visible before those later regulatory milestones. "The safer interpretation is that industrial preparation and regulatory framework building are moving in parallel," Zhao said, "and as always, timing alone does not establish causality." Unlike other tobacco products in China, e-cigarettes can be produced by private companies. Credit: SarahJohnson, Pixabay.

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