China is the world’s leading producer of e-cigarettes and vape juice, and home to the bulk of the world's lithium deposits - the key ingredient in vape batteries.
It’s understandable then that recent news of a new lockdown and a flavoured e-liquid ban has caused quite a stir in the vape industry. But what is really going on in China, and what does it mean for vaping across the globe? Here’s everything you need to know.
New lockdown as Covid cases surge
Last weekend, it was announced that 17.5 million people in Shenzhen were being placed into a Covid lockdown as cases soared across the country. All businesses, apart from those classed as essential, have now closed completely or staff are working from home.
This means that product supply out of the area has ended until the lockdown is lifted, but there’s no sign of a reopening date any time soon. Whilst it’s not such a huge issue right now, it will start to affect the supply chain later as a backlog of orders starts to build up.
Flavoured vapes to be banned from May
To make matters worse for the Chinese vape industry, following news that the State Tobacco Monopoly Administration announced changes to the country’s e-cigarette regulations from the 1st May.
The rules have been tightened in terms of the establishment of e-cigarette, nicotine and atomizer production enterprises. Any new business must now be examined by the relevant administrative department under the State Council, with the aim of balancing production with quality management.
All manufacturers must now register with the tobacco authority, and Chinese-based businesses need to apply for a licence. They have to demonstrate that they are financially able to conduct business and that their production facilities meet new, stricter standards.
The biggest change however, is a new ban on flavours other than tobacco. The new “Chinese E-Cigarette National Standards” document now states that, “Flavours other than tobacco shall not be offered in products to reduce the appeal of e-cigarettes to the underage”. At this stage it doesn’t look like it will impact exports, but the State has proposed a domestic ban of 122 flavours including fruits, dessert and drink blends.
What impact will it have on the vape industry?
Following news of the changes, China’s biggest e-cigarette brand RELX saw its shares drop by 36%. Despite this, they reported profits of $300.368 million in the fourth quarter of 2021, up 17.7% compared to the same period last year.
RELX didn’t seem too worried though. They believe Chinese vapers will continue to use its products after the regulations, stating, “overseas experiences showed that flavour restrictions will only have short-term effects, especially on current inventories and preparations”.
Whilst the industry around the world will still be able to buy flavoured vapes, including disposables, manufactured in China, it’s a huge blow to the domestic market. There are currently more than 300 million smokers in China, which equates to nearly one-third of the world’s total.
Considering that smoking kills more than 1 million people in China each year, a new ban on flavours is bad news for the health of the country. A review into flavoured vapes found that restrictions on vaping flavours would “risk seriously reducing the life-saving potential of vape devices”, and that flavours used in e-cigarettes are “inextricably linked to smoking cessation”.
Time will tell how heavily the new flavour ban will impact smoking rates, but those importing flavoured vape products will be pleased to know that it doesn’t currently impact exports. However, this regulatory shift in China might lead to an increase in reliance on UK and Europe based vape manufacturing, especially if it begins to effect exports in the future.