Caixin
Jul 14, 2020 07:49 PM
BUSINESS & TECH

Tobacco Regulator Sets Sights on ‘Covert Online Sales’ of Vaping Products After Ban

China's hybrid national tobacco regulator and manufacturer announces a two-month e-cigarette crackdown focused on illegal and false advertising, as well as online sales, which were technically banned in China last year.
China's hybrid national tobacco regulator and manufacturer announces a two-month e-cigarette crackdown focused on illegal and false advertising, as well as online sales, which were technically banned in China last year.

China’s state tobacco regulator has launched a crackdown on “covert online sales” of e-cigarettes as part of efforts to keep the controversial products out of the hands of minors.

The State Tobacco Monopoly Administration (STMA), which effectively both sells and regulates Chinese tobacco products, announced the two-month blitz in a video and telephone conference Monday.

Spot inspections began three days earlier on July 10, according to details of the campaign posted on the regulator’s website.

The announcement is a signal that the regulator intends to enforce a ban enacted on Nov. 1 for online e-cigarette sales, and it also helps flesh out some of the detail. Last year’s online ban, which followed a prohibition on sales of e-cigarettes to minors, brought questions about whether it would extend to WeChat public accounts and microblogs.

This week’s blitz singled out “We Media,” which comprises official WeChat channels, microblog accounts and other forms of online self-publishing, among targets of scrutiny.

The STMA has also directed each provincial tobacco monopoly bureau to set up a joint action group with the local regulator to clamp down on illegal online sales, false advertising, and vending machine sales, and ensure legitimate businesses are verifying the age of their customers.

The regulator also encouraged the public to squeal on those they see flouting the rules via two consumer hotlines, 12313 and 12315, and post warning signs about penalties for selling e-cigarettes to minors.

One seller contacted on WeChat on Tuesday, nevertheless, offered to courier e-cigarettes to Beijing from the vape manufacturing hub of Shenzhen. When asked about the dubious legality of the sale, they said, “I understand your concern, but this industry still has honest people in it.”

When pointed to the STMA announcement, the seller responded, “Oh, we’re going to lose our jobs.”

“It will bring the industry down … we’ll have to switch to new products,” the seller said.

Just what impact the crackdown will have on China’s 11 billion yuan ($1.57 billion) domestic vaping market, the world’s fifth-largest, remains unclear. Analysts told Caixin previously that increased regulation could spark sector-wide consolidation and increased investment in the biggest e-cigarette companies.

Manufacturers might be buoyed by the fact that Monday’s announcement also reiterated the goal of “promoting the high-quality development” of the vaping industry.

China exports far more e-cigarettes than it consumes domestically, with Chinese vape-makers exporting 43.8 billion yuan worth of the products last year, an annual increase of more than half.

Young people are the largest vaping demographic in China and, according to official statistics, around 45.4% of e-cigarettes were purchased online last year.

In November, Caixin revealed that STMA, which oversees and shares staff and offices with China National Tobacco Corp., the world’s largest tobacco company by sales, was weighing whether to also ban most brick-and-mortar stores from selling e-cigarettes.

The products have been a source of sustained global controversy for their potential harmful effects and concerns they are marketed at young people. With cigarette smoking going out of style in many markets over its acute impact on human health, many of the most popular vaping brands have now been bought up by traditional tobacco companies.

Vaping fears came to a head last year when a wave of hospitalizations and deaths from lung injury were linked to the products. The U.S. Centers for Disease Control reported 2,807 hospitalizations and 68 deaths through February this year, and the agency later determined that vitamin E acetate, an additive contained in some products, was strongly linked to the outbreak.

Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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