China has joined a handful of countries in banning flavored vapes to combat underage use of nicotine. Starting October 1, e-cigarette companies are only allowed to sell tobacco-flavored vapes in the country, an effort by the government to “standardize” the production, sales and consumption of the novel tobacco product. China’s e-cigarette makers had a short-lived boom before regulators began reining in the lucrative industry around three years ago. First, it was a ban on the online sales of vapes . Then in May this year, a set of comprehensive regulations went into force , effectively subjecting e-cigarettes to the purview of China’s tobacco authorities.
The ban is long in coming and investors anticipated the change. Relx, which as of 2020 commanded 70% of China’s pod vape market, has lost over 95% of its stock value since its debut on NYSE in January 2021. Shares of Smoore, a major manufacturer of vaping devices based out of Relx’s home city of Shenzhen, are down 90% since hitting an all-time high in January 2021. A ban on flavored vapes is like a death knell to the vaping industry. Tobacco-flavored products accounted for only an insignificant amount of e-cigarette sales, according to a survey conducted by Landong, a Chinese media publication focused on the vaping industry. Other major measures from the regulations include a tobacco tax on e-cigarette sales and stringent new requirements on how a vape is made, from its battery, ceramic coil and nicotine content to fragrance. Meeting all these criteria could cost a fortune, which means the shoddy, scruffy type of vape sellers that were crowding the market before will struggle to survive. Well-funded Chinese vaping startups such as Relx and Myst have long begun international expansion to diversify their revenue streams. In 2020, Relx kickstarted the costly and time-consuming ordeal of obtaining FDA approval in the U.S. Myst, which was co-founded by a former Juul scientist , had entered Malaysia, Russia, Canada and the United Kingdom as of May last year . China’s clampdown on vaping flavors stems from the same concern shared by other jurisdictions: health risks for young people. In a notice from 2019, the country’s tobacco authority had this to say:
“The current electronic cigarette market in China is chaos. The quality of products varies substantially, and a large number of them has safety issues around unsafe additives, leaky e-juice, and shoddy battery. In particular, some companies are casually adding addictives to change the flavor and color of e-cigarettes to make them more appealing, but this is causing severe damage to underage users’ mental and physical health.” In 2019, the U.S. government was getting ready for a policy to ban flavored e-cigarette products. In June, European Union lawmakers are proposing to ban flavored heated tobacco products. As the world’s largest producer of vaping devices, China’s e-cigarette factories will likely see their demand shrink as regulators around the world continue their battle with the vaping industry. China plans e-cigarette regulation as industry booms
