2015 was a busy year for 25-year-old Pan Weiren’s chain of vaping supply shop. Earlier this year, his e-cigarette shop and bar Mr. Vape opened a fifth location in Wangjing, a busy neighborhood in Chaoyang district.
Pan got into vaping while he was studying abroad in California. But it wasn’t to wean himself off cigarettes. Pan remains a dedicated smoker who sees vaping as a lifestyle choice and hobby.
“I like the design of the vape pens, and I like to get creative when mixing my own vape juice,” Pan said.
Like many vape store owners in China, Pan got his start by selling vape pens and juice on Taobao. He also exported Chinese-made vape pen to the US.
“The US is probably the world’s largest market for vaping. But young Chinese are very open to new things too. So I started selling [e-cigarettes] to my friends and the product was received very well. Then I opened a store on Taobao.”
Pan opened his first store by Ritan Park in 2014.
World’s Leading Producer
Hon Lik, a Chinese pharmacist, is considered the father of modern vaping. About a decade ago he invented the first EGO style vaporizer to help himself quit smoking. Today China is the world’s leading manufacturer of vaporizing products. The industrial city of Shenzhen is widely considered to be the center of the entire vape pen supply chain. Its factories there produce the entire spectrum of products from ciggalikes to high wattage box mods.
Although China has the world’s largest smoking population, with an estimated 300 million daily smokers, vaping is still an uncommon practice – even in first-tier cities like Beijing and Shanghai. In 2012, China smoked a total of 2.4 trillion cigarettes: – roughly 5 cigarettes per person per day.
But with rising public awareness about the hazards of smoking and the Chinese government’s hardening stance on smoking in public, more and more people are thinking about switching from smoking to vaping.
Last year, after years of aborted attempts, Beijing banned public smoking and increased the consumption tax on wholesale cigarettes from 5 percent to 11 percent. Li Baosheng, general manager of e-cigarette maker Smoore, told Reuters that the harsher control of tobacco is great news for e-cigarettes, adding that lax smoking rules had previously slowed the country’s vaping business.
“My sales have been increasing on Taobao,” Pan said. “Roughly, I see 800 more customers each month.” Indeed, even a tiny portion of the 300 million daily smokers would offer an attractive prize for China’s domestic market.
International traders also showed an interest in China’s e-cigarette market. According to CECMOL, China’s largest platform for e-cigarettes, the British tobacco company Imperial Tobacco Group has already registered to attend the third VapeExpo this April in Shenzhen. As a traditional tobacco company, Imperial has been showing interest in e-cigarettes. Last February the company created e-cigarette brand JAI; it acquired popular e-cig brand Blu later in the year.
Analysts are also optimistic about China’s vaping market.
“China won’t be able to become a kind of ghetto of tobacco, so there will have to be some movement towards an alternative,” Shane MacGuill, London-based tobacco analyst at Euromonitor told Reuters.
However, current tobacco sales in China are largely governed by state monopolies. Tobacco imports made up less than 1 percent of China’s tobacco industry in 2012, according to Euromonitor. E-cigarettes might offer an alternative way for international companies to enter China, but to what extent the government is willing to promote the e-cigarettes and to what extent it will allow outsiders to play in the China market remains unclear.
“It will happen, but it will take longer,” MacGuill told Reuters.
Most of Pan’s customers are young Chinese males between 20 to 35. A lot of them learn about vaping because they want to quit smoking. Vape juice comes in many varieties: some contain zero nicotine, some contain 6 milligrams and some contain more; customers can choose the amount of nicotine based on their preference.
For non-smokers who decide to vape, the effects of inhaling vape juices are also under-explored. Last year, a San Diego-based researcher published a study in the journal Oral Oncology, arguing that vaping may be “no better” than regular cigarettes. The scientists treated cells in petri dishes with vapor from a nicotine-based e-cigarette and a nicotine-free e-cigarette and found that the cells exposed to either vapor were more likely to become damaged or die than those that had not.
Prior to that research, a study by the Harvard School of Public Health found the artificial flavorings used in e-cigarettes also contained harmful chemicals. However, to what extent these chemicals damage cells and to what extent they may cause disease remains unclear.
The unclarified health risks and contradictory media coverage about e-cigarettes have made it hard for the government to regulate the industry. China currently has no regulations on vaping.
The majority of US states and most of Europe countries have banned minors from using e-cigarettes. The US Food and Drug Administration tried to regulate e-cigarettes in early 2014 and received more than 100,000 public comments on their proposed rules, which today are awaiting final action from the Office of Management and Budget.
Small business owners in US are under pressure because the rules would require federal approval for most flavored liquid nicotine juices and e-cigarette devices sold in shops. George Conley, president of the American Vaping Association, an advocacy group, told Fortune that it might affect 8,000 to 12,000 vape shops in the US and the estimated 1,000 manufacturers and wholesalers of vaping equipment.
While US departments are taking time to make the tough decision, China’s regulations seem in flux. “I think China will just follow US or Europe policies,” Pan said.
“Most of the people in China’s industry are small business owners. There are not many giants in the e-cig business,” Pan said. The young entrepreneur owns 11 vape stores across the country and he is the supplier for many other vape businesses.
For Pan, vaping is not just business. “In my eyes, vaping is a lifestyle and a tool for young Chinese to find likeminded friends. China is developing too fast: people need to slow down and enjoy life,” Pan said.