The mandatory national standard for "electronic cigarettes" will be officially implemented on October 1 this year. As major mainstream e-cigarette brands have successively obtained "licenses", e-cigarette national standard products will be launched one after another with the implementation of the new national standard.

Higher tax rates may lead to higher product prices

On the evening of November 26, 2021, the Chinese government website announced that in order to strengthen the supervision of new tobacco products such as e-cigarettes, the State Council decided to revise the "Regulations on the Implementation of the Tobacco Monopoly Law of the People's Republic of China", adding an article as Article 65: " Electronic cigarettes and other new tobacco products shall be implemented with reference to the relevant provisions of cigarettes in these regulations." On April 12 this year, the State Administration for Market Regulation and the National Standardization Administration approved and issued the mandatory national standard for "electronic cigarettes", starting from October 2022. Effective from the 1st. The release of the mandatory national standard of "E-Cigarette" means the end of China's e-cigarette production phase without national standards for a long time, which is of great significance to the industry.

As an important measure to standardize products and the industry, the introduction of the national standard for "E-cigarettes" has aroused the attention of the industry and consumers, and it stipulates that "the characteristic flavor of the product should not be made to present other flavors than tobacco" has attracted a lot of attention. On the other hand, regarding the impact of this policy on the future price of electronic cigarettes, relevant experts pointed out that one of the characteristics of cigarettes is heavy taxation. According to the cigarette consumption tax rate adjusted in June 2009, the tax rate of Category A cigarettes is 56%, and the consumption tax rate of Category B cigarettes is 36%. With the implementation of the new standards in October, the increase in the tax rate of e-cigarettes may bring about a significant increase in the price of terminal e-cigarette products.

Non-national standard products appear concentrated buying tide

The reporter noticed that there have been media reports recently that the national standard e-cigarette products will be subject to an additional 36% consumption tax with reference to Class B cigarettes, which may bring at least 30% price increase of major products such as RELX, grapefruit and magic flute on the market.

During the visit, the reporter saw that before the implementation of the mandatory national standard of "Electronic Cigarette" on October 1, the market price did not rise because non-national standard products such as flavored cigarettes that can still be sold normally do not involve consumption tax. Sales staff of many e-cigarette stores admitted that due to the general concern that the price of national standard products will increase after the consumption tax is added, consumers have concentrated on buying and hoarding non-national standard products such as flavored cigarettes in many regions.

In an electronic cigarette shop of less than 10 square meters located near Sanlitun, Chaoyang District, Beijing, there are many consumers who come to buy products. The store owner said the increase in customer purchases was mainly due to concerns about rising prices after the tax hike and the imminent end of production of flavored e-cigarettes. Regarding the operation of electronic cigarette stores before the national standard, a Shenzhen electronic cigarette store owner said that currently the best-selling flavored cigarettes in the store are out of stock. "I used to worry about whether the non-national standard inventory could be cleared before October 1, but now I am more worried about whether more popular products can be introduced during this time." An e-cigarette shop owner admitted frankly.

In the interviews with consumers, most consumers who have concentrated purchasing needs said that "the current price is lower", "more flavors" and "seize the last discount" have become the main purchasing motives. Some of them said that they encountered a shortage of popular flavored e-cigarettes.

The industry will usher in standardized development under strong supervision

Regarding the reasons behind the hot sales of flavored electronic cigarettes and other non-national standard products in the current market, relevant experts said that in addition to saving future expenses to pay for the flavored pods that will be discontinued, consumers are currently uncertain about the new national standard products in the future. Attitude is also one of the important reasons.

However, the expert also emphasized that the mandatory national standard GB 41700-2022 "E-Cigarette" approved by the State Administration for Market Regulation and the National Standardization Administration focuses on strengthening the protection of minors, and the taste, safety and safety of e-cigarettes for minors. In the long run, the electronic cigarette industry and consumer market under strong supervision will become more and more formalized.