Shenzhen is synonymous with the vape industry; but what do we know about this city in the Guangdong Province of China?
The Linchpin of the Vape Industry
Shenzhen, China, is better known as the vaping capital of the world. This city is responsible for 90% of the vape products sold across the globe1M. Standaert, “Shenzhen, vaping capital of the world, holds its breath as health concerns spiral,” The Guardian, Dec. 01, 2019. Accessed: Jun. 18, 2024. [Online]. Available: https://www.theguardian.com/world/2019/dec/01/shenzhen-vaping-capital-of-the-world-holds-its-breath-as-health-concerns-spiral#:~:text=In%202018%2C%20more%20than%202. Over 1,000 factories work around the clock to create popular brands like Elf Bar, Vaporesso, and Voopoo.
Shenzhen: An Ecological Perspective
You would be forgiven for assuming that the e-cigarette factories in Shenzhen are in constant conflict, but sources suggest that the opposite is true.
One paper titled Research on the Ecological Deconstruction of E-Cigarette Industrial Clusters in Shenzhen, China2Y. Xu, X. Song, X. Li, Z. Wang, and Y. Zhang, “Research on the Ecological Deconstruction of E-Cigarette Industrial Clusters in Shenzhen, China, and a Niche Analysis of Related Enterprises,” Sustainability, vol. 14, no. 9, p. 5606, Jan. 2022, doi: https://doi.org/10.3390/su14095606, concluded that “a complete industrial chain, from raw material supply, to product processing, to sales, has been constructed.”
Researchers go on to say that the e-cigarette industry in China is comprised of hundreds of players, each working for the benefit of themselves and others. Each player focuses on an individual “e-cigarette module” such as e-liquids, atomizers, batteries, and chips, and “the innovation of one module usually drives the innovation of others, which promotes the product renovation of e-cigarettes”, creating a symbiotic relationship.
For example, one manufacturer upgrades the heating strips that go into atomizers to create a tastier e-liquid experience. The upgraded atomizers require batteries that have higher power, which forces battery manufacturers to upgrade their products.
This continuous process of creation and reinvention spurs the vape industry on and creates mutually beneficial relationships between manufacturers.
The same research paper also concluded that “there is little inhibition between manufacturers” and that, to “acquire commercial legitimacy and development opportunities”, enterprises “often join forces to establish public organizations, such as the Shenzhen Electronic Cigarette Committee.”
Since it was established in 2017, the Shenzhen Electronic Cigarette Committee has been the only official nationwide committee in China’s vape industry. It bridges the gap between companies in the industry and regulatory authorities. By collaborating, manufacturers can influence legislation and benefit their own interests.
Vape Legislation in China
Unsurprisingly, vape legislation in China is constantly changing. The government has to toe the line between protecting public health and protecting an industry that produces billions in revenue each year.
In 2019, the State Tobacco Monopoly Administration (STMA), which is China’s answer to the FDA, made headlines when it banned the online sale of vape products. It provoked outrage again in October 2022 when it banned the sale of all e-liquid flavors apart from tobacco.
These regulations were considered controversial because they included nothing about the export of e-cigarette products. Manufacturers in China are still allowed to export flavored e-liquid, but they must comply with the regulations of the destination country.
Is the STMA Effective?
Despite being at the epicenter of the vape industry for over a decade, China has only recently taken steps to regulate the market.
Much like the FDA in the U.S., the STMA appears to have little authority over the changing tide of the vape industry, despite its powers. In part, this can be attributed to the relatively slow process of reclassifying vape products as tobacco products under the law, which has the broad, sweeping effect of subjecting them to regulations that have already been established.
Here’s a snapshot of anti-vape legislation in China in 2022.
- October 25, 2022 – China’s Ministry of Finance, General Administration of Customs, and State Tax Administration released the Announcement of the Collection of Consumption Tax on Electronic Cigarettes3“快讯！电子烟将征消费税！,” Weixin Official Accounts Platform. https://mp.weixin.qq.com/s/oKG66WjYG-e0MRh2EJgRnQ. This announcement states that e-cigarette products will be subject to consumption tax and added as a sub-item under the tobacco tax item list. From November 1, 2022, e-cigarettes have been subject to an ad valorem tax, in this case meaning the customs valuation of the goods. The tax for the production and import of e-cigarettes is set at 36%, while the wholesale rate is 11%. The same announcement clarified that e-cigarettes are eligible for the tax refund and exemption policy, suggesting that the Chinese government wants to encourage manufacturers to export e-cigarettes.
- September 28, 2022 – The STMA issued a notice encouraging manufacturers, retailers, and wholesalers to comply with nicotine strength regulations.
- April 25, 2022 – The STMA released Several Trial Policies and Measures on Promoting the Legalization and Standardization of the Electronic Cigarette Industry. This document details how the STMA intends to update existing rules and regulations and further standardize the vape industry.
It seems that regulatory bodies such as the STMA and the FDA can’t move quickly enough to catch up with rapid innovations in the vape industry. As the industry sprints ahead, the STMA is still struggling to create watertight legislation.
Economic Impact of the Vape Industry in China
- In 2023, the vape industry in China reached an estimated $2.27 billion4“China E-cigarette And Vape Market | Industry Report, 2030,” www.grandviewresearch.com. https://www.grandviewresearch.com/industry-analysis/china-e-cigarette-vape-market-report#:~:text=The%20China%20e%2Dcigarette%20and
- From 2023 to 2030, the vape industry in China is expected to grow by a compound annual growth rate (CAGR) of 34.2%
- When the flavor ban was implemented, the value of the nation’s exports of e-cigarettes and related products jumped by 29.9% to $5.49 billion5Chris Kirkham, David Kirton, “China e-cigarette titan behind ‘Elf Bar’ floods the US with illegal vapes” December 6, 2023 https://www.reuters.com/world/china/china-e-cigarette-titan-behind-elf-bar-floods-us-with-illegal-vapes-2023-12-06/
Health Impact of Vaping in China
The health impact of smoking traditional cigarettes has been widely publicized, but the health impact of vaping has yet to receive the same amount of airtime.
Regardless of the underwhelming research, most scientists agree that “although the long-term health effects of e-cigarettes are still unknown, current evidence shows that e-cigarettes have an adverse effect on the function of the user’s respiratory system, cardiovascular system, endocrine system, etc.”6Zongshuan Duan, Yu Wang, Jidong Huang, Pamela B. Redmon, Michael P. Eriksen, “Reasons why Chinese smokers prefer not to use electronic cigarettes” 2020;18(December) doi: https://doi.org/10.18332/tid/130477
Attitudes to E-Cigarettes in China
In a review of 21 studies, researchers analyzed awareness of e-cigarettes in different regions of China according to gender, age group, and smoking status7W. Wang, Y. Cai, Z. He, and N. Feng, “Electronic cigarette use in China: Awareness, prevalence and regulation,” Tobacco Induced Diseases, vol. 17, no. April, Apr. 2019, doi: https://doi.org/10.18332/tid/105393.
- Awareness was higher in men compared to women in all age groups
- E-cigarette use in China was lower than in developed countries
- The relationship between e-cigarette use and smoking cessation is still unclear
- Awareness of e-cigarettes is increasing
In another study, researchers sent a cross-sectional survey to students of Shanghai Jiao Tong University and Fudan University8Wenyuanyue Wang, Maojie Lu, Yuyang Cai, Nannan Feng, “Awareness and use of e-cigarettes among university students in Shanghai, China” Dis. 2020;18(September) doi: https://doi.org/10.18332/tid/125748.
Here are the findings from a total of 869 students.
- 88.4% were aware of e-cigarettes
- 4.6% had used e-cigarettes at least once in their lifetime
- 1.7% were current e-cigarette users
- Males and smokers were more likely to use e-cigarettes than females
The 4.6% of people who had ever used e-cigarettes were asked why they started using them.
- 55% said they are “less harmful than traditional cigarettes”
- 37.5% said they are “helpful for quitting smoking”
- 27.5% said they enjoy the “diverse flavors”
- 22.5% said they wanted to “avoid secondhand smoke”
- 17.5% said they are “fashionable”
- 12.5% said they “can be used in smoke-free places”
- 10% said they are “alternatives to traditional cigarettes”
The survey also asked students about their perceptions of e-cigarettes.
- 72.6% thought that e-cigarettes were environmentally friendly alternatives to traditional cigarettes
- 8.5% thought that e-cigarettes were completely healthy, and 69.5% thought that they were less harmful than traditional cigarettes
- 51% thought that e-cigarettes were less addictive compared to traditional e-cigarettes
- 21.6% thought that e-cigarettes didn’t contain carcinogens
Another paper recorded young people’s responses to the flavor ban in China9X. Weng et al., “Perceptions of and responses of young adults who use e-cigarettes to flavour bans in China: a qualitative study,” Tobacco Control, Jan. 2024, doi: https://doi.org/10.1136/tc-2023-058312. It found that some participants supported the ban due to perceived public health benefits, whereas others emphasized their right to choose flavored e-liquids.
Researchers also discovered that the participants “responded to the flavor ban by utilizing a variety of adaptive strategies, including purchasing flavored e-cigarettes through illegal channels or exploring alternative ways to obtain flavors.”
Like vapers in the U.S., vapers in China have little regard for new anti-vape legislation. And, since they are so close to the source, they have no problem accessing counterfeit e-cigarettes.
Counterfeit Vapes from Shenzhen
Counterfeit vapes are rife, especially now that many governments have banned vape flavors, disposables, and other e-cigarette products. Blanket bans have had little impact on the sale and consumption of vapes.
In fact, one study found that shopping queries for cigarettes and vapes were 194.4% and 161.7% higher than expected10E. C. Leas et al., “E-commerce licensing loopholes: a case study of online shopping for tobacco products following a statewide sales restriction on flavoured tobacco in California,” Tobacco Control, Nov. 2023, doi: https://doi.org/10.1136/tc-2023-058269 after Senate Bill 79311“Bill History – SB-793 Flavored tobacco products.,” leginfo.legislature.ca.gov. https://leginfo.legislature.ca.gov/faces/billHistoryClient.xhtml?bill_id=201920200SB793 banned the sale of flavored vape products in California.
Regardless of the rules and regulations, manufacturers continue to order vapes from factories in Shenzhen and sell them via online black markets. Manufacturers in Shenzhen are under no legal obligation to adhere to the rules set by the FDA, meaning they can continue to produce hundreds of thousands of e-cigarettes a week.
The FDA has attempted to stem the flow of illegal vape products by implementing import bans. It issued an import ban against the Chinese manufacturer of Elf Bar, which is called Shenzhen iMiracle. In a move that mocked the FDA, Shenzhen iMiracle attempted to sidestep the ban by renaming itself as EBCreate, thereby passing through customs with ease.
However many rules and regulations the U.S. puts in place, little can be done to stop illegal vapes from entering the U.S. unless China bans the export of e-cigarettes. Given the massive revenue that China receives from vape products, there is little chance of that happening.
Future of the Vape Industry In China
The future of the vape industry looks bright, at least for vape manufacturers in Shenzhen.
The STMA’s recent efforts to regulate the industry are praiseworthy, but government officials lack the conviction to enforce an export ban. In an attempt to safeguard Chinese citizens from the ill effects of vaping, legislators have exported the problem overseas.
Perhaps rising internal and external demands to regulate e-cigarettes will force the government to reconsider its stance on global trade. Then again, any new anti-vape legislation that focuses on air travel will be met with fierce opposition from companies that have vested interests in the global vape industry.
Instead of addressing the source of the problem, vape companies and organizations might turn their attention to awareness campaigns, which are lacking in China. This, combined with the research gap in the vape industry, presents a perfect opportunity for officials to reap the rewards of social and political approval without impacting their bottom line.
