China’s vape industry has been hit with another round of legislation. The new measures build upon a decision to move the industry under the purview of the State Tobacco Monopoly Administration and regulate e-cigarettes / vape products as tobacco products, which will put significant restraints on the industry catering to the domestic market.

On April 8, 2022, the State Administration of Market Regulation (SAMR) approved technical standards, numbered GB 41700-2022, which among other requirements ban the sale of vapes of any flavor other than tobacco. The standards take effect from October 1, 2022, meaning that some flavored vape products can be sold in China up until this date, which is beyond the initial date of May 1 stipulated in the latest administrative measures regulating the market. The document also sets a wide range of other technical standards, including permitted ingredients and additives, nicotine levels, testing and safety standards, and accreditation.

On March 11, 2022, China’s State Tobacco Monopoly Administration (STMA), the country’s top regulator of tobacco products, released the finalized version of the Administrative Measures for E-Cigarettes (the ‘measures’), which lays out new regulations for the production, marketing, and sales of e-cigarettes in China.

The latest version of the measures is an amendment of a previous draft that was released for public opinion in December 2021. Several provisions have been amended and new regulations added in the latest version. Among other new regulations, the measures now prohibit the sale of flavored e-cigarettes, a significant blow to the industry.

The measures build upon a decision in 2021 to move the industry under the purview of the STMA and regulate e-cigarettes as a tobacco product.

The measures will go into effect on May 1, 2022.

Note: In this article, the terms ‘vapes’ and ‘e-cigarettes’ are used interchangeably and refer to the same product.

Regulating China’s vape industry 

On November 26, 2021, China’s State Council announced it had amended the Regulations for the Implementation of the Tobacco Monopoly Law of China to include e-cigarettes and related products, stipulating that they are subject to the same regulations as tobacco products. This means vapes will now be subject to the same rules for licensing, production, sales, import/export, and taxation, among other rules, as traditional tobacco products.

Then on December 2, 2021, China’s State Tobacco Monopoly Administration (STMA) released a draft of the Administrative Measures for E-Cigarettes (the ‘draft measures’), a new set of measures for governing the emerging China vape industry. These measures were later amended, and a final version released on March 11, 2022.

The draft measures were based on the following Chinese laws governing the tobacco industries and the protection of minors: The Tobacco Monopoly Law of the People’s Republic of China; The Law of the People’s Republic of China on the Protection of Minors; and Regulations for the Implementation of the Tobacco Monopoly Law of the People’s Republic of China. The draft measures stipulated regulations for the production, sale, marketing, and import and export of e-cigarette products and nicotine for e-cigarettes. Perhaps one of the most significant rulings was that the industry would have to process all transactions through an ‘e-cigarette transaction platform’, overseen by the STMA. 

Overview of China’s vape industry

The China vape or e-cigarette industry has exploded in growth over the past couple of years, with early movers benefiting from unfettered access to the largest population of smokers in the world. The industry also has massive growth potential.

According to a report from Chinese data analysis firm iiMedia Research, the penetration rate of e-cigarettes had reached just 1.5 percent in 2021. This report notes that this is far behind countries such as the U.S., the U.K., and Japan, all of which have penetration rates above 30 percent. 

There is therefore significant room for expansion if companies are able to convince more of China’s 300 million or more smokers to wean off traditional tobacco.

Regulations will now be the biggest hindrance to the industry’s potential. Until recently, e-cigarettes were not regulated as a tobacco product. Companies instead operated in a legal grey area that ultimately enabled it to grow into an RMB 8.3 billion (US$1.3 billion) industry.  

This decision, although perhaps not welcomed by the industry, will not come as a surprise; the government began deliberating it back in March 2021, and the pressure on lawmakers to sign off on the decision will only have become more acute as other laws aimed at enhancing the welfare of minors were released last summer. 

The issue of the protection of minors was likely also behind the decision at the end of 2019 to ban the online sale and advertising of e-cigarettes, as concerns rose over how accessible the youthfully marketed product was to minors.

A look at China’s e-cigarette regulations 

The measures are applicable to companies that engage in the production and operation of electronic cigarettes within China and cover all vape products, including vape cartridges, vape sets, and products sold as a combination of cartridges and sets.

Heated tobacco products will be regulated as traditional cigarettes and not as e-cigarettes.

Regulations for producers and manufacturers 

Under the measures, local tobacco monopoly administrative departments are responsible for the monitoring and management of e-cigarettes in their jurisdiction.

The administrative requirements for the production of e-cigarettes have been somewhat relaxed in the new version of the measures.

The draft measures required local tobacco administrative departments to implement a registration system for e-cigarette companies and products. Companies were also required to register their vape products with the STMA before they can sell or market them in China. Eligible products were then supposed to be added to an approved product catalog.

However, the new measures have removed mentions of the registration system and product catalog, possibly because the administrative burden on local authorities to establish and manage these systems was considered too high.