Unexpected “Force Majeure”
On November 1, Beijing time, China Tobacco Monopoly Bureau issued a directive: to ban all online sales of e-cigarettes and e-cigarettes advertisements. After that, various e-cigarettes brands responded with enthusiasm and issued their statements respectively, announcing their strong support for this directive (the ban). It seems that, together, they will work harder to keep the minors away from nicotine products. The scene was spectacular and weird–they did not comply with the directive to remove all their online sales of e-cigarettes immediately but waiting: Since the major e-commerce platforms have not received further notice to comply with the directive, so most of the e-cigarette brands continued to sell its e-cigarette products online.
The timing of the policy is quite intriguing: its less than two weeks before the “Double 11 e-commerce festival”(happens in 11th, Nov, every year, the biggest e-commerce promotions in China, like the Black Friday), and 1st, Nov is the time when most e-cigarette brands start pre-sale online.
A few weeks ago, VAPEBIZ published an article about the current age verification system already installed in China’s e-commerce platform to prevent minors from purchasing e-cigarettes online. In practice, it has been proven to be the best way to curb minors’ vaping. While in the offline sales channel like physical stores etc, and the efficacy of the control measure can be judged in convenient stores selling cigarettes: Even a Children can easily buy any cigarette on an errand for his father. From this point of view, this control measure is a laughing stock in the name of “protecting minors from e-cigarette harm”, making it skeptical about other motives of the policy-issuing department.
At this critical moment, according to an informant, the e-commerce platform is also seeking a compromised solution – using the user age verification system to bargain with the China Tobacco Monopoly Bureau. All efforts failed. On November 6th, Beijing time, China’s e-commerce platform has completed the removal of all e-cigarette products, and all brands’ online store flagship stores have also been closed.
The Sword of Damocles
On the evening of the 5th, the relevant person in charge of the Monopoly Supervision and Management Department of the State Tobacco Monopoly Administration said that the tobacco monopoly supervision departments in critical areas are jointly discussing with the relevant law enforcement agencies about the main e-commerce platform, and urged them to close the e-cigarette stores in time and remove the e-cigarette products. More stringent regulatory measures will be taken.
This time, the statement directly indicated the attitude of “communication.” (an equivalent to compulsory under Chinese context ) Almost at the same time, JD blocked the keyword search of “e-cigarette” and some e-cigarette brands. The next day, JD completely removed all e-cigarette shops and products.
From this, the e-commerce platform ushered in a wave of concentrated e-cigarette cleansing. “After all, there is no chance fighting against the national will,” said an e-cigarette founder.
Some WeChat public account received the “Self-inspection of e-cigarette sales and e-cigarette marketing content notice”, requesting that the e-cigarette purchase channel and relevant media content on product marketing information be removed before the 7th Nov Otherwise, the public account will be banned. This means that in China, the most comprehensive and influencing WeChat public number platform will no longer have any e-cigarette purchase channels and advertisements. As a result, not only was China’s electronic cigarette manufacturers hit hard, but the relevant media in the industry also suffered a huge impact. This policy change will cause many practitioners in the e-cigar industry to lose their jobs, such as the marketing department, and e-cigarette media workers.
Campaign to Manipulate Public Opinion against E-Cigarette
It’s not just about closing sales and promotion channels. This time, the Chinese government will launch a series of a campaign to alter public opinion against e-cigarettes: On the afternoon of November 7, China’s eight departments responsible for propaganda, health, and health jointly issued an announcement: comprehensively carry out the promotion of e-cigarette hazards.
Taking into account the strong coverage of the government’s propaganda department and China’s unique social environment, e-cigarettes will quickly fall into the unprecedented turmoil of public opinion in China. Of course, this is not insurmountable industrial persecution, but because some brands have been destroying the image of the industry that is at risk in the past.
Some e-cigarette manufacturers have been trying to copy JUUL’s initial promotion method, targeting young people with nasty marketing strategy, packaging e-cigarettes into “fashion products”, and even putting disposable e-cigarettes in stores near primary and secondary schools. Rich in tastes and colorful shapes will undoubtedly attract minors to try, and this behavior not only runs against to the original intention of e-cigarette research and development, but also greatly harms the health of minors, and is seriously hurting the image of the industry, for short-term benefits. The industry has pushed the opposite of social morality.
The leading e-cigarette brands depend heavily on online sales have suffered a lot.
This effect is not only at the sales level but also at the organizational structure level, which means that the e-commerce brand’s previous e-commerce sector will lose its value. The personnel of the e-commerce sector is either abolished or diverted to other lines of business. In any case, for brands with a high proportion of online investment, the shock caused by the ban is inevitable.
Due to the ban, part of the inventory is transferred to the offline sales channel, which may bring an inventory backlog. One agent said that there are already dumping under panic.
Marketing and operations are the advantages of most cross-border e-cigarettes brands that used to be internet companies, so those brands have chosen online sales channels to start with. But when the battlefield moves to the offline, this advantage will be instantly eliminated.
Zhao Yangbo, vice president of Qiqi Capital Investment, analyzed two important variables that consumers decided to choose e-cigarette brands in the past, one is online sales, and the other is brand volume. When the line is banned, it means that the exposure of consumers to the e-cigarette brand has become limited.
Some e-cigarette brands are trying to establish their own private domain traffic before e-commerce is removed. They conduct the diversion of users of the e-commerce platform, establish a community one-to-one, and want to recover some of the previously accumulated traffic.
In this article, VAPEBIZ does not talk about tobacco taxation, conspiracy theory, or struggle of interests, from the perspective of social public health environment, some e-cigarette companies are indeed destroying the whole industry step by step. Fairly speaking, this series of regulatory measures are in full compliance with the current situation.
The series of regulatory measures launched by the Chinese government in the past few days are suspected of “defective considerations in detail”, but they are beneficial to the long-term development of the e-cigarette industry. VAPEBIZ thinks this is a non-commercial cruel shuffle of the e-cigarette industry. Lack of supervision will lead to problems such as unqualified workshops, indiscriminate marketing, counterfeit and shoddy products, and expansion of nicotine abuse by minors. These will only create more lung disease and public health accidents and another negative impact on both society and the industry.
It is understandable that companies must pursue their profits, but don’t forget that the original intention of e-cigarette research and development is to use nicotine delivery equipment to help smokers addicted to cigarette addiction and even quit nicotine dependence in a way that harms (rather than completely harmless). At the same time, electronic atomization equipment is not only compatible with nicotine. In the future, it will assume a more positive responsibility for medical and public health. It is necessary to know that the CBD atomization market is quietly growing.
Further reading about tobacco/vaping policy in China: