China’s state media Xinhua News Agency released an article on the risks of e-cigarettes on August 4, sending Chinese e-vapor stocks falling on the following day, as reported by Caixin on August 5. The article pointed out that many e-cigarette manufacturers and retailers continued to sell their products to minors despite official prohibition. It also warned of vaping’s potential damage to brain development, especially to the young. On August 5, the shares of Shenzhen-based Smoore International , the world’s largest vaping device producer, subsequently opened 8% lower and was down 1.28% at market close. The shares of RLX Technology , parent of e-cigarette brand RELX, also closed about 5% lower that day as a result.

Chinese authorities have formulated a series of regulations targeting the e-cigarette market since 2018. In August 2018, China’s State Administration for Market Regulation (SAMR) and State Tobacco Monopoly Administration (STMA) issued a joint notice about prohibiting sales of e-cigarettes to minors. It was followed by another notice in November 2019 about protecting teenagers from the damage of vaping while eliminating online retail channels for vaping devices. In addition, the two bureaus joined forces again on July 13 last year to launch a thorough inspection of the domestic e-vapor market, three days after Smoore International’s IPO in Hong Kong. The recently revised national law on juvenile protection also added a legal ban on e-cigarette sales to minors.

Despite these multiple layers of regulatory enforcement, the e-cigarette market continued increasing in China. The domestic market size of vaping devices reached RMB8.3bn last year, up from RMB0.5bn in 2013, and was projected to exceed RMB10bn this year. The growing market particularly appealed to the young’s attention. According to the Chinese Center for Disease Control and Prevention, in 2019, there were about 10m domestic e-cigarette users above the age of 15, and 45.4% of users were between the age of 15 to 24. Xinhua also reported that the percentage of middle-schoolers who had heard of e-cigarettes grew from 45% in 2014 to nearly 70% in 2019. China was also the world’s largest e-cigarette manufacturer, accounted for 95% of the global production in 2019, although 90% of the products were exported.

Sources:

https://www.caixin.com/2021-08-05/101751835.html

https://www.globaltimes.cn/page/202108/1230633.shtml

http://www.xinhuanet.com/politics/2021-08/04/c_1127730603.htm

https://www.sohu.com/na/409610108_120679143

https://www.qianzhan.com/analyst/detail/329/191231-84e38662.html

https://baijiahao.baidu.com/s?id=1701229491328961964&wfr=spider&for=pc

https://bg.qianzhan.com/trends/detail/506/210305-1f0cf34a.html