The end of e-cigarette regulation uncertainty in China

Broughton's Head of Regulatory Affairs, Lloyd Smart, and Regulatory Consultant, Xiangyin Wei summarise China's Tobacco Monopoly Law Changes and what this means for Electronic Nicotine Delivery Systems (ENDS) companies based in China and internationally.

Until recently e-cigarette products manufactured and sold in China were unregulated, leading to concerns around product quality and safety, and the protection of public health. A recent change on 26^th November 2021 gives the country’s State Tobacco Monopoly Administration (STMA) jurisdiction over both traditional cigarettes and latterly e-cigarettes. Here we outline what this means for Electronic Nicotine Delivery Systems (ENDS) companies based in China and internationally, plus implications for the sector in general.

Overview of the Tobacco Monopoly Law Changes

Next Generation Products (NGPs) such as e-cigarettes will now be managed in the same way as combustible cigarettes. Changes to be aware of include:

• Increased government agency control over how ENDS manufacturers sell and manufacture products
• ENDS companies will need to apply for a license (even if all products are for export)
• All products must comply with the new National Standard (excluding products for export only)
• Regulation of products likely to be introduced following an initial transition period (3-5 months)
• A single transaction platform will be implemented for product distribution (including imported products)
• No new products can be brought to market until at least the end of the current transition period
• Synthetic nicotine not permitted for use in products to be sold in China (export permitted)
• Only non-refillable pods allowed
• License needed to import finished products
• Exporting of products will continue to be encouraged

What are ENDS companies required to do?

21^st December 2021 saw a key milestone in the calendar of events in relation to the new control mechanism.

Companies selling or manufacturing ENDS products for domestic sale or export needed to register via an online notification system by that date.

The types of information required to register, included details of:

• Product ingredients, pod volume, flavour
• Product name, model, type, packaging, price
• Manufacturing activities, production scales, suppliers, import/export volume
• Sales volume and area

 After the initial transition period, all ENDS companies must apply for product authorization for new or existing e-cigarettes to be sold in China. Following application, companies will be advised whether they are eligible for a license. Only those entities that receive a license will be permitted to continue selling or manufacturing their existing products.

At present, the review time and application details at this initial stage have not been published - industry will be keen to establish the requirements.

Who's likely to be most affected?

Within China, larger ENDS companies are unlikely to be too concerned about the recent change. These companies are likely to have the information required for marketing authorization, to have suitable manufacturing controls in place, and to welcome future regulation designed to push poor quality products out of the market.

Smaller companies in China, however, may not have, or may struggle to provide, the required information for marketing authorization.

Whether small or large, another major factor to consider is the part these companies play in supply chains for ENDS companies outside of China. Internationally, companies that purchase finished products from China, may face interruptions to supply during the transition period.

Latest industry estimates are that China produces ca 90% of the world’s e-cigarettes, and most of them are for export.

Increased control - good or bad?

Overall, responsible companies that have suitable control measures in place for product quality and safety, or those which feature these within their supply chain, are likely to see this as a positive step.

There has been a great deal of uncertainty within the sector in China for years, and many feared that e-cigarette products might even be banned due to concerns around youth use. With many online sellers applying irresponsible strategies, which include marketing their products as food, it is no surprise that there have been pockets of opposition within the country to next generation products.

These changes allow responsible companies within our sector to come together to demonstrate how alternative high-quality products are an important and appropriate element of tobacco harm reduction.

Seize the opportunity

The recently announced changes to e-cigarette regulation in China offer an excellent business opportunity for companies that want to build consumer trust by showcasing their product’s high quality and safety standards. As with all regulatory requirements, the most important initial step is to understand fully what’s needed – to provide reassurance or identify gaps that need to be addressed. And to act quickly; seizing the opportunity while making sure you don’t get left behind as the market changes.

With many years’ experience working with leading tobacco and e-cigarette companies around the world, our regulatory teams have a deep understanding of how to navigate the marketing authorization process and can help you understand the draft National Standards and Management Rules for e-cigarettes that are likely to be put into place following the transition period.

Our best-in-class product analysis team can also help you start to generate any information and data you may need. Plus, if it’s determined that the design and/or formulation of your product needs to change, our R&D team can also guide you through that process.

To identify your next steps, contact us to book a meeting with our regulatory services team, so that we can help you advance a smoke-free future in China and beyond. If you’d like to learn more about regulatory pathways and how they create new business opportunities for forward-looking companies then read our recent Regulatory Digest below:

Can we help you?

Broughton have deep CRO capabilities and an experienced team of scientific and regulatory professionals to manage full service global regulatory projects. Our knowledge of global regulatory pathways offers significant insights that can be incorporated into your project plans. Our mission is to accelerate safer nicotine-delivery products to market; creating a smoke-free future.

Book a meeting with us today to discuss your requirements.