China’s e-cigarette laws and regulations, the industry ushered in new changes

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    1. E-cigarette manufacturers are required to work overtime to apply for production licenses. 35 related enterprises have already been granted production licenses.

    China’s e-cigarette production and wholesale license application thresholds. To obtain a tobacco monopoly manufacturer license, the following conditions must be met.

    1. Production capacity should be matched with capital.

    2. Ensure that production conditions are met in terms of technology and equipment requirements

    3. Meet the requirements of the national industrial policy regarding electronic cigarettes.

    4. State Council administrative department of tobacco monopoly specified other conditions.

    First batch of enterprises will apply for production licenses by September 30, 2022. The factory must register with the market supervision department and complete its information declaration before November 10, 2021.

    The review has already received relevant information from many companies and brands. 

    “For manufacturers, especially domestic factories and brands, the key point is to meet the requirements of the Chinese national standard (i.e., the national standard), which entails perfect research and development and third-party testing and certification information. 

    Kodi, the founder of e-cigarette manufacturer Aokitvaping, said, “Aokitvaping passed the safety test for the sticks, the flavor test for the cartridges, and the safety test for the batteries.” 

    Therefore, Aokitvaping has completed the development and preparation of national standard products, and will soon pass the e-cigarette regulation audit.

    On June 13, Jincheng Pharmaceutical (27.990, 0.34, 1.23%) announced that its wholly-owned subsidiary, Shandong Jincheng Pharmaceutical Chemical Co., Ltd. In accordance with the law, the State Tobacco Monopoly Bureau reviewed the application for a (new) tobacco monopoly manufacturing enterprise license and approved it.

    A total of 35 e-cigarette-related enterprises have completed their production licenses, according to Cai Tong Securities (7.140, -0.01, -0.14%) statistics based on the official website of the State Tobacco Monopoly Bureau as of June 30, including four nicotine producers, 17 vape atomizer producers, four brands of e-cigarettes, and ten supply chain companies.

    Currently, in the upstream has begun to issue licenses for the production of brands and factories, more or less for vape oil production enterprises. 

    Because of more testing and inspection aspects on the factory and brand side, or a gradual state approval and issuance process, downstream retail has also started issuing licenses based on the provincial guidelines and the number of stores.”

     “It is too early to predict the overall adoption rate, but future changes to product standards and processes will also have a greater impact on the industry.” Kodi, founder of the vape brand Aokitvaping, told Sina Finance.

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    2, Electronic cigarette manufacturers and brands to step up research and development of tobacco-flavored products

    This year, the “electronic cigarette” national standards will be implemented on October 1. 

    After the end of the transition period, products that do not pass the technical review will not be listed for sale. 

    Accordingly, e-cigarette brands have intensified research and production of tobacco-flavored e-cigarette-related products that are close to the national standard.

    As Kodi explained, Aokitvaping has developed and stockpiled new tobacco flavors in many ways and is now actively promoting the technical review. 

    For many brands, including Aokitvaping, the flavor standard is a relatively new form of standardization. 

    Some emerging tobacco flavors may emerge on the market in September-October, he predicted. Every week, the testing agency will inspect products one after another, since they are extremely busy. They are working overtime. 

    In the electronic cigarette trading platform online, some brands have already begun putting traditional tobacco flavors ahead of time.

    China’s e-cigarette laws and regulations, the industry ushered in new changes 

    3. New tobacco taxes are coming as channels and transaction forms change.

    Despite a number of enterprises and retail stores obtaining the relevant permits, the majority cannot get the permits.

    Aoitvaping Kodi, a well-known domestic e-cigarette brand, said that with the clarity of laws, regulations and supervision, the industry will reshuffle, for a certain scale, legal compliance manufacturers, businesses will be good, while the solution to the legalization of the problem will also have a positive impact on the minds of users, thereby ensuring the industry’s long-term growth.

    Previously, on June 15, the national unified electronic cigarette trading management platform (hereinafter referred to as the “trading platform”) went live online.

     “The platform is currently in trial mode; the official launch will take place after the transition period, during which the platform will be gradually switched on and adapted,” Kodi said.

    According to the “Electronic Cigarette Trade Management Rules (for trial implementation)”, the price of electronic cigarette products regulated primarily by the market should be determined by the market.

     According to Kodi, a fully competitive market will be the future of electronic cigarettes. Tax adjustments will be the next biggest change in price, from the current general tax to a new tobacco tax. 

    Observing the overall transaction chain of the market after compliance with the previous large changes, the price is not simply affected by the product’s production cost, but also by changes in the channel and form of transaction. Further observation is required.” 

    At the same time, industry regulations are tightening, and many electronic cigarette companies are focusing their efforts on exports.

     According to industry data, there are more than 1500 Chinese electronic cigarette manufacturing and branding companies, and more than 70% export their products abroad.

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