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Hong Kong's ban on electronic cigarettes should not be a big problem for tobacco companies. The Hong Kong market is not particularly large and the population is one of the most affected by smoking in the world. Nevertheless, the action is based on the growing appeal of e-cigs among teens and Hong Kong's decision to ban the manufacture, import and sale of these alternatives tobacco could encourage other governments to follow his example.
Scott Gottlieb, US Commissioner for the Food and Drug Administration (FDA), says e-cigarettes may be useful in reducing traditional smoking among adults, but he does not want to allow their proliferation to the detriment of luring among adolescents. He has already begun to take action against e-cigs manufacturers for their lack of action in preventing use by teenagers and said he was ready to withdraw e-cig department shelves if necessary.
Regulators elsewhere in the world could also become more emboldened, damaging the potential of e-cigarettes and other alternatives to replace declining sales of traditional tobacco products.
A surprise shot
The Hong Kong move has surprised the industry. Last summer, the authorities appeared to be moving towards electronic cigarette regulation, in the same way as traditional tobacco products: prohibition of sale to minors, ban on advertising of products and prohibition of manufacturers to sponsor events.
Hong Kong already regulates electronic cigarettes containing nicotine as a pharmaceutical product. This is how Japan regulates largely electronic cigarettes. Electronic devices use devices as classified in a similar way. The Japanese regulation of e-liquids is the reason Philip Morris International (NYSE: PM) has become the owner of the Japanese e-cig market with its iQOS heated tobacco device, which creates a nicotine-infused vapor by heating tobacco instead of using e-liquids. That's why PhilipMorris is able to ship more domestically heated tobaccos than traditional cigarettes. With other forms of electronic cigarettes actually banned, the market is almost entirely autonomous.
But the ban on Hong Kong does not only concern electronic cigarettes. It also forbids devices that do not burn like iQOS and British American Tobacco(NYSEMKT: BTI) iFuse Glo as well as herbal cigarettes. Carrie Lam, chief executive of Hong Kong, believes that there is "a lack of sufficient evidence to prove that the products can help quit smoking," although many studies and user testimonials indicate the opposite . These studies are among the main reasons why the FDA has chosen to become more accommodating with the devices here.
Use in adolescents is a stumbling block everywhere
In fact, the ban could be linked to the fact that cigarette consumption in Hong Kong has dropped dramatically in recent decades, from 23% to just 10% of the population in the 1980s. about 15% of adults smoke in the United States.
It may be more difficult to convert these recalcitrant smoking cigarettes to an electronic cigarette, as Philip Morris observes in Japan. Having attracted many early adopters of its heated tobacco product, Japan is facing slower sales and higher marketing costs in Japan, as older smokers are more difficult to convince. Maybe that's why Hong Kong says the products are not as effective at helping smokers quit.
At the same time, Hong Kong seems to face an explosion of e-cigarette use among primary and secondary school students. By implementing the ban, it aims to prevent these students from becoming habitual users.
The key to take away
Some 27 countries ban e-cigarettes and many others are considering how best to regulate their use. Hong Kong now joining the ranks of those who ban devices – while its citizens do not even have a significant smoking problem – could be a fatal blow to the vision of a great future for tobacco without tobacco.
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