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  • The e-cigarette industry is becoming a tricky puzzle to solve.

  • American regulators are threatening to crack down as teenage vaping is on the rise.

  • "We want to get to the bottom of a very unusual situation."

  • The Trump administration is considering a ban on fruity flavors popular with younger people and Congress approved raising the minimum age to purchase tobacco products including e-cigarettes from 18 to 21.

  • All these factors have now made the U.S. a lot more complicated market for e-cigarette companies like Juul Labs to figure out.

  • And this crackdown is starting to have a ripple effect around the world.

  • While companies scramble to adjust to possible tighter regulations in the U.S., they're also facing backlash from what could be their next biggest market.

  • Asia Pacific is the biggest smoking region in the world by far and therefore has the biggest potential in terms of consumer base for American and international e-cigarette companies.

  • Juul's regional head of sales said the company viewed Asia as a high priority region.

  • It's home to more than half the world's cigarette sales.

  • But Asia itself is already complicated because of different regulatory regimes, smoking cultures, and socioeconomic levels.

  • The already complex puzzle is becoming even more challenging.

  • So what exactly are vaping companies up against?

  • Vaping is a nascent industry in India and offers companies a huge opportunity.

  • The country comes in second with the most number of tobacco users in the world.

  • But vaping-related deaths in the U.S. has spooked Indian regulators.

  • The deaths appear to be linked to vaping products containing THC, the psychoactive compound in marijuana rather than traditional nicotine e-cigarettes.

  • The Health Ministry explicitly referenced what was happening in the U.S. in terms of vaping and vaping deaths and youth access and so on as a reason for implementing this prohibition.

  • In September, the Indian government announced an executive order banning the sale and production of nicotine e-cigarettes.

  • If caught, you could end up in prison for up to three years.

  • Experts say India is just one of many countries that are starting to point to growing health concerns in the U.S. over vaping.

  • For instance, Rodrigo Duterte, the Philippine president, who was once a heavy smoker himself, ordered a sweeping ban on public vaping.

  • I am now ordering the law enforcement agencies to arrest anybody found vaping.

  • Some countries like South Korea are more open to the vaping industry.

  • It's mostly driven by younger consumers who are willing to embrace things that are cutting-edge and techy.

  • Younger adult consumers are looking for more sophisticated, more advanced, more technologically interesting ways of consuming nicotine in the same ways they're looking for those things in other aspects of their lives as well.

  • But even here there are challenges.

  • There are two types of high-tech cigarette alternatives, devices that heat tobacco and e-cigarettes, which vaporize nicotine liquid.

  • But they're regulated differently.

  • South Korea and Japan are the world's two top markets for heated tobacco products.

  • In both countries Iqos, from the tobacco giant, Philip Morris, is sold in convenience stores, supermarkets and even airports.

  • But it's a whole different story for nicotine liquid that's used in products like Juul.

  • In Japan nicotine liquid is considered a medical product so it's highly regulated.

  • This has basically cordoned off Juul from entering the country.

  • South Korea has also advised people to stop using liquid e-cigarettes and is looking into investigating whether to ban sales.

  • Some countries are impervious to the crackdown.

  • Because entering China is going up against the country's state-owned company: China Tobacco.

  • Tobacco is economically very important to China almost to the point of being a strategic... a national strategic asset.

  • The domestic industry generates substantial revenue for local governments and ensures tens of millions of jobs in tobacco farmlands.

  • International companies have been trying for years to sell traditional cigarettes in China but have had a hard time.

  • It won't be easy for e-cigarette makers either, who are already being urged by the Chinese government to stop selling and advertising e-cigarette products online.

  • And the biggest challenge in China might not be the state but actually Chinese smokers.

  • There are over 300 million smokers in China and about 7 million used e-cigarettes.

  • But that's less than 1% of China's total population.

  • For many Chinese smokers e-cigarettes are just too expensive compared to traditional cigarettes.

  • A e-cig and refill pod can cost them US$40, while a pack of cigarettes on average costs about US$1.

  • Traditional cigarettes are also embedded in the country's ingrained smoking culture.

  • It's very common to share cigarettes, to gift cigarette products, that sort of social sharing aspect of cigarette consumption is one that obviously is very difficult to replicate using an e-cigarette.

  • Smoking culture is strong across Asia and initiatives to get people to quit has not been as successful as in the U.S.

  • Some academics say the tobacco smoking epidemic has gotten worse in Asia in the past few decades.

  • Cracking the vaping market in Asia won't be about just adapting to regulations but first convincing smokers that they need to switch to an alternative.

  • Whoever figures it out could win big but the puzzle won't be an easy one to solve.

The e-cigarette industry is becoming a tricky puzzle to solve.

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Why Asia Is the Next Battleground for Vaping | WSJ

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    Nina posted on 2020/02/21
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