China calls for businesses to shut down e-cigarette online shops

Josh Horwitz, Reuters

Posted at Nov 01 2019 08:05 PM

SHANGHAI - China's tobacco regulator on Friday issued a notice asking e-commerce platforms and businesses to shut online stores that sell electronic cigarette products, in a move aimed at stopping minors from purchasing e-cigarettes through the internet.

The notice came not long after online platforms and retailers in the US launched similar takedowns amid government scrutiny toward the effects of vaping on public health.

It also arrives as a bevy of Chinese startups race to capture a piece of China's massive potential market for e-cigarettes.

The notice, which was dated October 30, was published one day later on the website of state monopoly China Tobacco, which is overseen by the country's tobacco regulator.

In order to "further strengthen the protection of the physical and mental health of minors," the regulator "urges e-cigarette producers, retailers, or individual sellers to temporarily close online sales websites or channels" and "urges e-commerce platform to temporarily close e-cigarette shops," the regulator stated.

China is home to over 300 million smokers, making it the world's largest market for smokers.

In recent years, Chinese startups have taken venture capital money and launched products with similar design characteristics to those made by Juul - the e-cigarette company backed by Altria Group Inc. that swept the United States with its compact form factor and potent nicotine salt formulation.

Relx, founded by former employees of Uber China, and Snow+, founded by a team of former bitcoin entrepreneurs, are among the domestic market leaders.

The companies currently operate in a regulatory grey area in China, as no national-level rules exist that provide standards for the safe manufacture and sale of nicotine salt-based e-cigarettes.

Meanwhile, China Tobacco operates as a state-backed monopoly, controlling the sale and distribution of all tobacco products across the country. The unit also generates nearly 6 percent of the country's total tax revenue, according to government figures.

In September, an official Juul online store briefly appeared on Chinese e-commerce sites run by Alibaba Group Holding Ltd and, only to disappear days later. Juul and the retailers did not comment on the store's abrupt takedown at the time.

In a public statement, Relx said it will comply with the regulator's notice and shut down its online sales channels. Snow+ told Reuters it would comply with the regulations as well.

Alibaba and did not immediately respond to requests for comment.

Over the past year, Walmart, Walgreens, and other American retailers have pulled e-cigarettes from their shelves, following a public health scare over their impact on minors.